The fallacies of Cowen and Krugman are of the most basic sort — errors
only made possible by men captured by a deeply false conception of
"science", and hence a pseudo-scientific capital-free, causally impossible, aggregate "modeling" approach to the macroeconomy, rather than a causally real relative price / heterogeneous capital ordering process approach, just as Hayek explained in his Nobel Prize lecture.
Here is the full article. I thank Bryan Caplan for the pointer.
Addendum: Angus comments.
Under the alternative Republican plan, the government would set up an
expanded insurance system, financed by the banks, that would rescue
individual home mortgages. The government would not have to buy up the
toxic mortgage-backed assets that are weighing down financial
Here is the story. Is this the Jeffrey Ely plan (you heard it here first!)? Do any of you have more information? Does the Paulson-Bernanke rejection of this plan count as a very bad signal about the immediate solvency of major banks?
Was September 2008 the month of greatest increase in United States Wealth in History?
Doesn’t the long term economic impact of 5-10 trillion dollars of offshore oil overwhelm the trillion dollars from the bailout?
That’s from Andrew, a loyal MR reader. He sends along this link. I have not myself done any calculations of the fiscal benefits from such oil (which are distinct from the price effect, which is likely small). Does anyone know a number?
At first I thought he was going to mention the recent decline in the price of oil, which on average you can expect to be permanent. The real lesson, I would say, is how much coordination (or lack thereof) matters and how badly representative agent models perform in explaining the most important economic changes.
The consistently interesting Drake Bennett writes:
…a few scholars have started to suggest that there may indeed be another
kind of benefit from big-time sports. There’s a catch, though: the team
has to be good. In a forthcoming paper, economist Michael Davis and the
psychologist Christian End say that having a winning NFL football team
increases the incomes of the people who live and work in its hometown
by as much as $120 a year. And while the study doesn’t identify exactly
what causes the boost, the authors point to psychological literature
suggesting that winning fans are at once harder workers and bigger
spenders. In short, buoyed by the team’s success, we work longer hours,
take bigger risks, and shop more avidly, all of which helps the local
I have a simple hypothesis. Winning sports team cause local fans to feel better and thus to spend more money. Most importantly, consumption tends to be local and thus the spending shows up in the city of the winning sports team. Saved funds, in contrast, are invested but banks and securitization make these funds mobile. Savings will help the national or international economy but not the local economy so much.
Since more savings would be desirable, the best outcome is if no team wins, if a small city team wins, or if the victory is uninspiring. Detroit vs. San Antonio, anybody? That’s what the American economy needs.
Alternatively, you might think that the economic boost comes from greater confidence, higher labor supply, and other supply-side effects. Then you should root for the teams from the largest cities (Los Angeles, New York, Philadelphia) and most of all you should root against the Washington Wizards.
- “Professional athletes and executives have given $445,334 to the
two nominees – 55.8 percent to McCain and 44.2 percent to Obama,
according to ESPN analysis of figures from the Center for Responsive
Politics, a nonpartisan research group.”
- “The difference this election is that pro sports donors are more
divided. In the past two presidential elections, the Democratic nominee
has struggled to muster at most 16 percent of pro sports donations.”…
- “McCain has lots of friends in the dugout, but his biggest fans are
in football. Six of McCain’s top 10 pro sports donors are with NFL
teams, led by the San Diego Chargers, Dallas Cowboys and Houston
- “NBA staff topped Obama’s list of pro sports donors at $24,360.”
I can think of a few hypotheses to explain these results:
1. Sports figures don’t want high marginal tax rates for the upper income brackets.
2. Currently the disproportionate representation of African-Americans in sports is throwing more support to Obama than a Democratic candidate normally would receive.
3. Perhaps athletes are less likely to come from coastal elites, who are becoming increasingly Democratic.
4. Republicans have historically shown less interest in regulating professional sports than have Democrats.
5. The sport of football most embodies the ethic of martial virtue and so football players and executives are especially drawn to McCain.
Is there more?
It is here and it was produced yesterday afternoon. The point about fertility was borrowed from Steve Sailer.
From an interview with Vladimir Kramnik. Note that Kramnik is playing in a regular chess tournament, shortly before with world championship match with Anand:
Is it difficult for you, because of course you cannot show your preparations, your openings for the match, so you have to choose, let us say, not your real openings…
Yes, sometimes. But it is nor really about this, it is about that fact that sometimes it would be too simple if you don’t show anything. That also gives a lot of information to your opponent. Then he knows that what you played you will for sure not play in the match. That is why you need to mix. Some things. I have to show, some things I don’t show. So I am trying to confuse as much as possible my opponent. And this is a bit difficult. Before each game I start to think if he plays this should I play this or should I play that, or even during the game I start to think maybe I should play this or maybe I shouldn’t play it. It is a little bit confusing I would say. It is easier to play when you don’t have such an event in front of you.
Kramnik has been playing indifferently lately, yet when times demand he can be the world’s strongest match player. Anand is the current world champion, noting that he won the title through a tournament structure. Match chess is all about adjustments and stamina and defense and preparation and strength of will. Winning tournaments requires that you beat the weaker players consistently and that has never been Kramnik’s strength.
Anand, by the way, can play speed chess almost as well as he plays classical slow chess. He is an amazing tactician and a brilliant defender. But does he have a deep enough strategic style to prevail in a longer and tougher setting? I’ll let you know how the match goes.
High school cheerleading accounted for 65.1 percent of all catastrophic
sports injuries among high school females over the past 25 years.
Here is the link, with a photo. Loyal MR readers will know that I am a strong and genuine non-paternalist. But if you are a paternalist, and you are looking for one place to start, well…it’s not just the injuries that should point your attention in this direction. We have to raise tax revenue from somewhere, right? Currently we are subsidizing cheerleading and, along the lines of Robert Frank’s column, that makes no more sense than subsidizing fuel.
The marriage between sport and broadcasters, though long and
successful, has been changing in a number of ways. First, the
fragmentation of audiences among hundreds of channels has given the
most popular sports enormous bargaining power. As the number of
channels has multiplied, large audiences have become much harder to
find, but sport has retained its ability to supply them.
A loyal MR reader writes to me:
Here’s an interesting fact: despite a
population of more than 1 billion, India has won a grand total of 18 Olympic medals (mostly in field hockey):
there are many obvious hypotheses, all of which may be partially
right, yet one would think these apply to zillions of other countries that
nevertheless have non-trivial Olympic presences.
So what is it?
My guess would be lack of government subsidies, combined with the possibility that non-democratic, authoritarian governments feel greater need to prove themselves on the international stage and to their people at home. The subsidies matter for the infrastructure as much as for the athletes. Throw in low social mobility, nutrition problems, and the relative lack of TV to inspire the young ‘uns and you’ve got my answer. Bad roads don’t help any either. Does this query have any other takers?
After three games, the U.S. has the worst three-point shooting percentage of any team — men’s or women’s — in Beijing.
Here is more. Can you build a simple model showing that this is in fact likely the case for the best team?
"Business is worse than at this time last year," said a receptionist at
a 22-room hotel in Beijing’s Chongwen district, where rooms cost $28 a
night. "It’s the season for traveling and last year the hotel was full.
The Olympics should have brought business to Beijing, but the reality
is too far from the expectation."
Many of the events are not very crowded, so:
To remedy the problem, officials are busing in teams of state-trained
"cheer squads" identifiable by their bright yellow T-shirts to help
fill the empty seats and improve the atmosphere.
Here is the story.
You devote two hours a week to sports fandom, you say? How much would you have to be paid to give those two hours up? You’ll be paid in terms of extra time. So if you give up your two hours of sports fandom, the benevolent genie gives you three hours for something else, whatever is your next best activity or activities. That means a net gain of an hour a week and a time rate of return of 50 percent. You won’t do that? How about four hours back and a time rate of return of 100 percent? Nope. Really?
Sports must be fun. Well…why aren’t you watching more sports?
OK, go draw your marginal utility curves and show your MU for sports first way above your MRS and then dropping off a cliff. What’s the hard-to-substitute-for "Lancastrian Z good" that makes sports so imperative for two hours but so inessential for three?
It could be a fantasy football draft in any office in America –
only these trades are real. This is the office of Traffic, a Brazilian
company leading a new, and controversial, wave of investment in
Armed with 20 million reals of their own
money (about $12 million) and another 20 million reals they hope to get
from investors, Traffic is buying up contracts of young soccer players
all over Brazil. They then lend the players to teams, who pay the
players a salary and also allow them to showcase their talents. If they
are recruited by a big European team, Traffic and its partners reap the
largest share of the transfer fee. (The player, as usual, gets any
signing bonus, and an often hefty salary.)
“Instead of investing
in the stock market or real estate,” Julio Mariz, Traffic’s president,
said, “these people are investing in buying the economic rights to