Will’s theorem

by  Tyler Cowen in

(a) energy is not scarce; the historically most efficient sources (oil, coal, etc.) are;

(b) a well-functioning price system will shift energy consumption to
(cleaner) alternative energy sources as prices for historical extracted
sources of energy rise;

(c) the initial high price of alternative energy will temporarily
slow growth, but competition and technological progress will eventually
push prices below the historical trend and even asymptotically approach
zero, increasing average rates of growth;

(d) environmental quality is a global public good, but;

(e) this is most likely to be secured as a consequence of growth –
as a consequence of the technological innovation that both creates and
is created by growth – together with the rising scarcity and prices of
the most environmentally degrading energy sources.

So,

(f) there are no meaningful limits to growth from either the
scarcity of energy, or from negative environmental externalities from
economic production, since in the medium run, those externalities are
positive.

Here is the link.  I’m willing to buy that theorem with reasonably high probability.  What worries me is that first sentence: "energy is not scarce" — it also could have been written "destructive energy is not scarce."  A world where we solve our energy and environmental problems is also a world where small groups or lone individuals have great power to destroy.

In Cleveland I posed a variant of the following question: let’s say that you can blow up the world if a) you can exceed 1550 on your two main SATs, b) you are willing to spend $50,000, and c) you sincerely wish for world destruction for one month straight.

How long would the world last?

We may someday envy the problems we have now.

Portrait of David Galenson

by  Tyler Cowen in

Ask David Galenson to name the single greatest work of art from the 20th century, and he unhesitatingly answers “Les Demoiselles d’Avignon,” a 1907 painting by Picasso.

He can then tell you with certainty Nos. 2, 3, 4, 5 and so on, as well.

…His statistical approach has led to what he says is a radically new interpretation of 20th-century art, one he is certain art historians will hate. It is based in part on how frequently an illustration of a work appears in textbooks.

Here is the full profile.  Here are previous MR posts on David Galenson.  Here is Galenson’s home page.

Ramsey Rules

by  Tyler Cowen in

…the numbers reflect is a situation I’ve heard is
fairly common: in the College of Business & Economics, the 26 full
professors’ listed salaries have a median of $86,155; the 15 assistant
professors’ listed salaries have a median of $86,802. One of the
assistant professors has a reported salary higher than any of the full
professors. Another assistant professor has a reported salary higher
than all but one of the full professors.

That’s for the University of Wisconsin-Whitewater; it’s not true for the University of Michigan or for that matter Harvard.

The blind men and the elephant?

by  Tyler Cowen in

Calomiris, Longhofer, and Miles report:

We conclude that declines in house prices are highly likely to remain
small. Our analysis reveals, unsurprisingly, that foreclosures and home
prices have negative effects on each other over time, but this does not
imply a vicious cycle of collapsing prices. Our models predict that as
foreclosures continue to climb in many states, house prices will remain
flat or decline in those states — but will not collapse.

..the effect of foreclosure shocks on
house prices is small. Furthermore, other fundamental factors (such as
employment growth and a slowing of the growth of the housing supply
over the past year and a half) will cushion the impact of foreclosures.

…Even under an extreme
worst-case scenario for foreclosures…U.S.
house prices just aren’t going to fall by very much in the next two
years. In our worst-case scenario, the average cumulative decline is
about 5 percent, and only 12 states experience declines greater than 6
percent by the end of 2009.

There is more at the link, including a claim that the Case-Shiller index is unrepresentative.  Here’s another report, which does not literally contradict the first:

The percentage of mortgages in arrears in the category of loans one
rung above subprime, so-called alternative-A mortgages, quadrupled to
12 percent in April from a year earlier. Delinquencies among prime
loans, which account for most of the $12 trillion market, doubled to
2.7 percent in that time.

In other words, you can be an optimist about agency bail-outs, and a pessimist about the financial pain that many Americans will suffer.

Cleveland

by  Tyler Cowen in

Joshua Hall asked me why the people who research economics of sports tend to be so free market in their orientation (do they love competition and measurement?  I still don’t have a good answer; any takers?).  Sarah Skwire (a LibraryThing fan) and I debated who had geekier taste in popular culture; it remains a stand-off to be settled upon a future meeting.  Paul Cantor promoted his theory that Dante was a heretic and possibly a follower of Averroes; I wondered why Christ isn’t prominent in Paradiso and why isn’t Saladin of all people in the Inferno?  Medieval Sufi poetry, and the voyage of discovery toward God, is all over his work.  There was a contrast between commercial society in Deadwood vs. Mad Men (I prefer the latter).  The very charming Rachel Lomasky and I discussed which is more beautiful: natural logs or the fact that the square root of two is an irrational number?  I wondered whether a good conference could be organized on "Liberty and Computation."  And there is eugenics all over both Dreiser and Norris.  The buildings in downtown remain superb, as does the art museum.

That’s what’s so good about Liberty Fund conferences.

Aleksandr Solzhenitsyn dies at 89

by  Tyler Cowen in

Here is one obituary.  He did not in every way favor liberty, but he did more for liberty than almost any other person of the late 20th century.  I find First Circle and Cancer Ward to be his best fiction, although they are not his most widely read works.

That said, I don’t favor nationalizing his funeral, as that would give the impression that Russia is now a free country.

Here is a piece on the economics of Solzhenitsyn, by the excellent Cecil Bohanon; Cecil was at the Liberty Fund conference with me.

Addendum: Read Bryan Caplan: "But if any writer can make future generations of Russians look on the
Soviet era with the horror it deserves, it’s the man who stared down
the Soviet Union at the height of its power – and outlived it by 17
years."

Theory of Moral Sentiments, standing on one foot

by  Tyler Cowen in

Will Wilkinson cuts through the book’s odd organization:

To be happy is to be loved and praised. Also, to be happy is stoic
indifference to love and praise. The love of high relative standing is
based on misery-making self-deception. And this self-deception turns
the wheels of industry, which produces wealth, and leaves even those of
low relative position in a good absolute position. Which is all you
really need to be happy! That is, as long as you are stoically
indifferent to love and praise, to relative position. Which, really,
none of us are, because, OMG, we really really want other
people to think highly of us. And, hey, again, that’s a pretty good
thing when you think about it, otherwise none of us would be
self-deceived enough to do all the crazy hard work that creates the
wealth that leaves us all in a good absolute material position. So, you
personally should probably worry about becoming actually praiseworthy,
instead of just seeking to receive praise, because you’ll be happier if
you deserve it, whether or not you get it. Unless everyone is doing
this. In which case we’ll all just be poor, which isn’t good at all.

You’ll find the other foot at the link.  The book is arguably a comic tragedy and you could write a third foot about the role of fortune in the argument.  Will is maybe reading a bit backwards from Wealth of Nations, but for a Platonist (I’m not saying Will is one) this should be allowed.

Hypergamy is the word of the day.

by  Tyler Cowen in

Yes, men are also, to their own detriment, continually surrounded with images of exceptionally attractive women. But this has less practical import, because–to say it once more–women choose.

Or:

The decline of matrimony is often attributed to men now being able to “get what they want” from women without marrying them. But what if a woman is able to get everything she wants from a man without marriage? Might she not also be less inclined to “commit” under such circumstances?

This essay is not politically correct and at times it is misogynous and yes I believe the author is evil (seriously).  The main behavioral assumption is that women are fickle.  So they are monogamous at points of time but not over time; Devlin then solves for the resulting equilibrium, so to speak.  The birth rate falls, for one thing.  The piece also claims that the modern "abolition" of marriage strengthens the attractive at the expense of the unattractive.  Some of you will hate the piece.  I disagree with the central conclusion, and also the motivation, but it does seem to count as a new idea.  If you’re tempted, read it.

I thank Robin Hanson for the pointer.

Silly questions to bug people with

by  Tyler Cowen in

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?

The language tax

by  Tyler Cowen in

Or should I have called this post "The language subsidy"?  Anyway, here is the latest from David Albouy, courtesy of the NBER:

The wage differential between Francophone and Anglophone men from 1970 to 2000 fell by 25 percentage points within Quebec, but only by 10 points Canada-wide, largely because the wages of Quebec Anglophones fell by 15 points relative to other Canadian Anglophones. Accordingly, the Canadian measure of the Francophone wage gap better reflects the changing welfare of Francophones than the Quebec measure. Over half of the reduction in the Canadian Francophone wage gap is explained by rising Francophone education levels. In Quebec, the declining number and relative wages of Anglophone workers is best explained by a falling demand for English-speaking labour.

Here is the paper.

Freedom Fries Under Attack

by  Alex Tabarrok in

The Los Angeles council has just passed on ordinance banning new fast food restaurants in a poor section of South/Central LA.  William Saletan calls it Food Apartheid and writes:

We’re not talking anymore about preaching diet and exercise, disclosing
calorie counts, or restricting sodas in schools. We’re talking about
banning the sale of food to adults….It’s true that food options in low-income neighborhoods are, on
average, worse than the options in wealthier neighborhoods. But
restricting options in low-income neighborhoods is a disturbingly
paternalistic way of solving the problem.

Milton Friedman once said:

I don’t think the state has any more right to tell me what what to put in my mouth than it has to tell me what can come out of my mouth.

Friedman was talking about drug prohibition but today the target could just as easily be food prohibition.

Hat tip on the Friedman quote to Don Boudreaux at Cafe Hayek.