The Liberal Hour

The authors are G. Calvin Mackenzie and Robert Weisbrot and the subtitle is Washington and the Politics of Change in the 1960s.  Everyone interested in social change, or for that matter American political history, should read this book.  It doesn’t unearth new material but it is a good summary of what is known.  The jacket flap sums it up:

For a brief period in the 1960s, more progressive legislation was passed in Congress than in almost any other era in American history.  Demands that had lingered for decades on the political agenda finally entered the realm of possibility.  Reform has seldom come with such speed, such sweep, and such consequence.  What drove this political sea change?…[the authors] argue that the primary force behind it was not the counterculture, but those in the traditional seats of power.

If you study the history portrayed in this book, you are more likely to believe that an Obama victory would not bring radical change to American economic policy.  It’s hard to find the comparable "shock troops" in Washington right now.

“Customer only” bathrooms

Ilan, a loyal MR reader, asks when a restaurant decides to make its bathrooms "customer only."  I see a few factors:

1. Fear of drug use or illegal drug dealings in the bathroom; the importance of this factor seems to have declined over time.

2. The belief that some people will buy a drink just for bathroom rights.  We did this in Brooklyn on Saturday and it was worth it.

3. The desire that only paying customers shape the ambience of a restaurant; this is important in areas with gangs.

On the other side of the equation is fear of Jack Henry Abbott, the realization that any restriction is not fully enforceable, the desire to cultivate good will among potential customers, and giving the visitors a chance to look at the food and atmosphere. 

Overall I’ve found that restaurant restrooms are more available to non-customers than ever before and I attribute this to the aging of America and the greater likelihood of a sharply declining marginal cost curve.  In other words, at least until this year raw materials expenses weren’t so important so the profit value of an extra customer was pretty high and restaurants would do a lot to cultivate good will.  In general rising commodity prices mean decreasing margins (retail prices don’t rise by full offset) and thus adjustment on other margins, such as portion size and service quality.  The bathroom isn’t as clean as it used to be either.

How can a stuffed shark be worth $12 million?

It was a bargain, I say.  Here is my review of Don Thompson’s excellent The $12 Million Stuffed Shark: The Curious Economics of Contemporary Art.  Here is one excerpt from my review:

Should we think such purchases are silly or noble? Many people recoil
from the contemporary art market as the home of pretension and human
foible, but as expensive pursuits go, the art market is a relatively
beneficial one. The dead shark cost $12 million to buy but, of course,
it didn’t cost nearly that much to make. So the production process
isn’t eating up too many societal resources or causing too much damage
to the environment. For the most part, it’s money passing back and
forth from one set of hands to another, like a game – and, yes, the
game is fun for those who have the money to play it. Don’t laugh, but
we do in fact need some means of determining which of the rich people
are the cool ones, and the art market surely serves that end.

Geo-engineering to cure global warming?

Robin Hanson summarizes one case for it.  I don’t know much about the technologies but my worries are mainly political.  Won’t the Russians benefit greatly from a warming world, both because they are a bit cold and because they will access a warmer Arctic?  Would the UN Security Council approve climate engineering?  Probably not.  If the United States did it on its own, could that be perceived as an act of war?  If geo-engineering is cheap (which is part of its very promise), and unilateral action is acceptable, don’t other countries also get to take their shot at influencing the environment and moving us toward an optimal climate?  What does the resulting equilibrium look like?  Who moves last?  How would we feel if someone changed the U.S. climate to make many parts of the country colder?

Should the driving rules favor cars or bikers?

Not everyone likes DC drivers and more here, both from Megan.  I am more sympathetic to the position of cars and their drivers (NB: I don’t ride a bike.)  I see two major arguments:

1. Riding a bike is dangerous no matter how considerate the drivers, at least in the car-intensive cities of the United States (maybe not in Amsterdam).  Furthermore accidents and potential accidents impose costs on both parties and more generally Coasian externalities are symmetric.  The first best equilibrium involves less mutual contact and the cheapest way to bring that about is probably to discourage biking.  (After all, they’re the ones who can be scared off with risk of death and dismemberment.)  That means road rules which discriminate against the interests of bikers.

2. If a bike has to stop and wait ten seconds for a car, that biker loses ten seconds of travel time.  If a car has to stop and wait ten seconds for a bike, the driver loses ten seconds of travel time.  The expected loss in distance traveled is much greater for the car, especially in areas where cars are going fast (i.e., the disputed areas when safety is a concern).  Furthermore the cars are more likely inhabited by people with a higher value for their time, at least on average if not for every biking blogger. 

The case for favoring the bikes is that taxing the privileges of cars will lead to truly safer behavior through greater driver caution.  Maybe.

Will chimes in, Arnold too.  Arnold is unhappy.

Vroom!!!

A Girl Named Florida

I’ve been reading Leonard Mlodinow’s The Drunkard’s Walk: How Randomness Rules our Lives.  The book covers the Monty Hall problem, Bayes’s Theorem, availability bias, the illusion of control and so forth.  If these are unfamiliar, look no further for an entertaining account.

On the other hand, I can’t say that I learned much I didn’t already know.  Nevertheless, I still enjoyed reading the book – it’s well written and filled with interesting nuggets (Did you know that the great mathematician Paul Erdos refused to believe that you should switch doors?).  If you teach probability theory or intro stats you will find lots of good examples to brighten up your lectures. 

One problem did intrigue me.  Suppose that a family has two children.  What is the probability that both are girls?  Ok, easy.  Probability of a girl is one half, probabilities are independent thus probability of two girls is 1/2*1/2=1/4.

Now what is the probability of having two girls if at least one of the children is a girl?  A little bit harder.  Temptation is to say that if one is a girl the probability of the other being a girl is 1/2 so the answer is 1/2.  That’s wrong because you are not told which of the two children is a girl and that makes a difference.  Better approach is to note that without any additional information there are four possibilities of equal likelihood for the sex of two children (B,B), (G,B), (B,G), (G,G).  If we know that at least one is a girl we can remove (B,B) so three equally likely possibilities, (G,B), (B,G), (G,G), remain and of these 1 has two girls so the answer is 1/3.

Ok, now here is the stumper.  What is the probability of a family having two girls if one of the children is a girl named Florida?

At first it seems impossible that knowing the name should make a difference.  Surely, the answer is 1/3 just as before?  After all, every child has a name.  But knowing the name does make a difference.  Here’s a hint, Florida is a rare name.

I don’t know how to title this post

Via Mark Thoma, Joseph Stiglitz makes lots of claims.  Here is one of them:

For a quarter-century, there has
been a contest among developing countries, and the losers are clear:
countries that pursued neo-liberal policies not only lost the growth
sweepstakes; when they did grow, the benefits accrued
disproportionately to those at the top.

He does not name the countries.  Is Chile supposed to be a loser?  Or does he have the more corrupt Latin American states in mind?  How about Ireland or for that matter the economic policies of Mrs. Thatcher?  Was it a mistake for so many states to drop communism?  How many African nations — the real losers — have adopted neo-liberal policies?  Do Singapore and Hong Kong count?

Presumably China counts as a winner and of course it has a relatively strong state.  Oddly some of the communists saw capitalism as building the economic superstructure for socialism and then communism.  In reality the nominally socialist and communist government of China built the public sector superstructure to support a later capitalism.

Here’s another claim Stiglitz makes:

One senior Chinese official was
quoted as saying that the problem was that the US government should
have done more to help low-income Americans with their housing. I
agree.

In my view, while the private sector is largely to blame for what happened, the U.S. government has, over the years, done far too much to encourage the housing sector.  I guess Stiglitz thinks it should have done even more.

I find the content of his essay difficult to understand, on a number of levels.

Markets in *everything*

Both the action and the substance, in fact:

The remote town of Musiri in the Tamil Nadu state has hit upon a unique idea to teach its residents proper hygiene: pay them money each time they use the toilet.

Users can make up to $0.14 a month to relieve themselves in a specially constructed toilet. Not a princely sum, but it’s extra cash flow that low-income residents can make just for answering nature’s call.

The government-backed program serves two purpose: It encourages people to discard age-old practices of urinating and defecating in the open, leading to diseases. And the waste product goes into research to test their effectiveness as fertilizers.

Here is the full story and thanks to Marco for the pointer.  One point is that both the income and substitution effects predict the villagers will put on weight.

Sentences to ponder

If one believes Grogger’s effects are causal, then investing in the
ability to not “sound black” looks to have a huge return – roughly of
the same magnitude as getting one more year of schooling.

Here is much more, by Steve Levitt, all of interest.  Two other points: "sounding southern" is almost as bad for your wages as is sounding black and blacks who "sound white" earn the same wages as whites, of course adjusting for education, work experience, and so on.