All this just for them?

by  Tyler Cowen in

In spite of clichés about Nascar dads and Walmart moms, the actual share of voters nationally who are up for grabs is probably between just 3 percent and 5 percent in this election, polling experts say. The Obama and Romney campaigns are expected to spend on the order of $2 billion, in part to try to sway this tiny share of the electorate.

I’ll be glad when the whole thing is over.  There is also this:

In Virginia, for example, a large number of swing voters are concentrated in Fairfax County, just outside the District of Columbia…

The full article is here.

Update on Greece

by  Tyler Cowen in

… the Greek government has imposed a moratorium on all outlays other than salaries and pensions, according to Greek newspaper Kathimerini. This means that primary spending, the public investment programme and the settlement of arrears have been halted.

…If the troika does not grant the Greek government any concessions on its bailout programme, it is highly likely that the two junior parties—the Democratic Left and Pasok—will drop out of government. This would precipitate fresh elections, the third for this year alone.

If you are Greek, when is actually the optimal time to simply stop paying your bills?

That is from Megan Greene, there is more at the link.

Scotiabank vs. Tyler Cowen?

by  Tyler Cowen in

Maybe not:

Recently, in a movie theatre in downtown Toronto, the audience was suffering through the pre-movie ads when a familiar message from Scotiabank flashed on the screen: “You’re richer than you think.” That’s when one heckler loudly offered, “Not anymore!” and the theatre erupted in laughter. It turns out that was one of the tamer responses to the ad, which is playing to mocking audiences in Cineplex theatres across the country. In Vancouver, where condo prices are crashing, the ad has been met by obscenities and even the hurling of soft drinks.

And yet a shift is upon us:

In its latest batch of ads, the line appears buried underneath a much bigger block of text, featuring a brand new message that’s a little more recession-friendly: “Make the most of what you have.”

The full story is here, and for the pointer I thank Bill Wilcox.

The balanced budget multiplier?

by  Tyler Cowen in

A Spanish mayor who became a cult hero for staging robberies at supermarkets and giving stolen groceries to the poor sets off this week on a three-week march that could embarrass the government and energise anti-austerity campaigners.

Juan Manuel Sanchez Gordillo, regional lawmaker and mayor of the town of Marinaleda – population 2,645 – in the southern region of Andalusia, said food stolen last week in the robberies went to families hit hardest by Spain’s economic crisis.

Seven people have been arrested for participating in the two raids, in which labour unionists, cheered on by supporters, piled food into supermarket carts and walked out without paying while Mr Sanchez Gordillo (59) stood outside.

He has political immunity as an elected member of Andalusia’s regional parliament, but says he would be happy to renounce it and be arrested himself.

Here is more.

A Simple Strategy for High Returns?

by  Alex Tabarrok in

Morgan Housel presents some interesting data at The Motley Fool but draws the wrong conclusion:

…the single best stock to own from the 1950s to the early 2000s had nothing to do with computers, or technology in even the loosest sense. It was Altria (NYSE: MO ) , the maker of Marlboro cigarettes, which returned nearly 20% a year for 50 years. During a period when new industries transformed the lives of nearly everyone in the developed world, the most money was made in a company that stuffed tobacco into paper tubes the way it had for more than a century.

…Microsoft’s profits have grown 16-fold since 1995. Yet once again, the best stock returns may surprise you. With dividends, Microsoft has returned 511% since mid-year 1995. But Clorox (NYSE: CLX ) returned 560% during that time — so bleach actually bested the last leg of the computer revolution. Colgate-Palmolive (NYSE: CL ) returned 651% over the same period, so toothpaste did, too. As did garlic powder: McCormick returned 642%. Ditto for hamburgers, with McDonald’s (NYSE: MCD ) adding a 540% gain. Hormel Foods produced a 544% gain over the same period, so Spam was actually more profitable than computers during the big boom. Our old friend Altria scored a 1,300% gain, nearly trebling Microsoft’s return.

Admittedly, I’ve cherry-picked the dates to make my point. Back up a year or two, and Microsoft wins. But the fact that any period — a 17-year period no less — can be found during which a company with a virtual monopoly on a booming industry underperforms the dullest of products is extraordinary. It also underlines two important investing lessons…

One lesson Housel draws is that “simple products that rarely change often make better investments than those undergoing breakthroughs.” Rubbish. (Did Housel even compare simple products with breakthrough products? No. He just found some winners over a particular time frame.) The real lesson is that expectations, good and bad, are baked into prices so winners and losers are always unexpected. Unless your name is Warren Buffett, you should index.

Hat tip: Newmark’s Door.

The benefits of learning a second language

by  Tyler Cowen in

Bryan has had a few recent posts criticizing the notion of multilingualism for (most) Americans.  As a general advocate of learning foreign languages, I have a few points in response:

1. There is a sizable literature on the cognitive benefits of bilingualism.  I get nervous when I see the topic discussed without reference to the main claimed benefits.

2. I believe that good fluency in a second or third language significantly expands one’s ability to see and understand and also articulate other points of view.  And most of the very great thinkers of the past were fluent or semi-fluent in multiple languages.  By teaching other languages at an early age, we can make our most productive thinkers deeper and more productive.

3. Ideally foreign languages can be taught to individuals when they are young, well before high school, thus very much lowering the opportunity cost of such instruction.  Just toss out some of the other material, making sure to keep mathematics and English literacy.  Most of Western Europe does this quite well, and I hardly think of those children as miserable.  I don’t see why this has to cost anything at all.

4. I am reasonably sympathetic to the “we’re so uncommitted to this notion we’ll never see it through so let’s not bother trying” response to my attitude.  (In particular it is harder for Americans to get within-culture reinforcement for language learning in the way that Europeans so often do, either from American popular culture or from crossing a nearby border.)  Yet that’s a far cry from believing it would actually be a mistake to invest resources in that direction, if indeed we would see it through.

Here is one stimulating discussion of the topic, in English of course.

*Queen of Versailles*

by  Tyler Cowen in

I enjoyed this movie, although I didn’t think it lived up to its most enthusiastic reviews.  It is striking how much economics the film contains.  The implicit macro model of the crash emphasizes the credit channel, rather than the monetary channel.  Repeated cuts to nominal wages fail to work because credit/liquidity is a complementary factor of production.  There is another implicit model of lender asymmetry, namely that your old lenders may try to drive you under, to get the collateral, and competition from new, less informed lenders cannot step in to fill the gap.  The fixed costs of bankruptcy are high.  The male protagonist in the movie is a Caplanian pro-natalist, and a satire of such at the same time.  Habits are formed, and then unformed, and possibly will be formed again.  The wealthy are not so different from the rest of us.  Someone didn’t read Aristotle, or for that matter Markowitz and Tobin.

Facts about Medicare

by  Tyler Cowen in

I’ve got a modest proposal: You’re not allowed to demand a “serious conversation” over Medicare unless you can answer these three questions:

1) Mitt Romney says that “unlike the current president who has cut Medicare funding by $700 billion. We will preserve and protect Medicare.” What happens to those cuts in the Ryan budget?

2) What is the growth rate of Medicare under the Ryan budget?

3) What is the growth rate of Medicare under the Obama budget?

The answers to these questions are, in order, “it keeps them,” “GDP+0.5%,” and “GDP+0.5%.”

Let’s be very clear on what that means: Ryan’s budget — which Romney has endorsed — keeps Obama’s cuts to Medicare, and both Ryan and Obama envision the same long-term spending path for Medicare. The difference between the two campaigns is not in how much they cut Medicare, but in how they cut Medicare.

That is from Ezra Klein, and here is further comment.

Old Lady Opposition to Driverless Cars

by  Alex Tabarrok in

I think driverless cars will change the design of cities, revolutionize retailing, and greatly change our driving culture, soon for example you will need a license to drive…well, you know what I mean. The scale effects on this technology are tremendous, once it works for one car it works for all. The technology won’t be expensive and it will get better every year. The technology will also get better the more driverless cars their are. Once these cars become common, for example, I expect speed limits for driverless vehicles to be substantially increased.

I do worry about lawsuits in the early years. I am not worried, however, about the following attack on driverless cars which appears to be real although it seems like something from the Onion:

One of the reasons I don’t think this will work is that the technology will be offered first as an option, like cruise control, which will appeal most to the safety conscious. The elderly in danger of losing their license, for example, may appreciate a driverless car. Personally, I would like the driverless option for night driving and I would be much happier lending my teenager the car if I could say “but only if you use the Google option!” At first when there is an accident people will ask, “did he have the driverless option on?” But soon they will start to say “if only he had the driverless option on.”

I do think, however, that technologists should change the name to the electronically chauffeured vehicle. Electronically chauffeured vehicles will appeal to the affluent, the influential and the productive.

The ubiquitous Daniel Lippman gets the hat tip.