Saturday, February 20, 2010

Video on Cit United V FEC: Munger v. Nichol

Video in link; took out embed because it was annoying since it restarted every time you load the blog.

(It's an hour long, including Q&A. I speak last...starting about 22:30)

Cheeky Greekys

This is so great in so many ways. Thank you Mr. Reuters!

Greek opposition lawmakers said on Thursday that Germans should pay reparations for their World War Two occupation of Greece before criticising the country over its yawning fiscal deficits.

"How does Germany have the cheek to denounce us over our finances when it has still not paid compensation for Greece's war victims?" Margaritis Tzimas, of the main opposition New Democracy party, told parliament. "There are still Greeks weeping for their lost brothers".

So, I am sure you don't need any help in breaking this down, but seriously, WTF???

Greek public finances are shot because of the lost interest on German reparations? 

When caught with both hands in the cookie jar, the first thing that occurs to you is to try and play the Nazi card? 

In 2010?

But the very best part of all this is that Germany HAS ALREADY PAID REPARATIONS to Greece!


From the same article:

In 1960, Germany paid Greece about 115 million deutschemarks to compensate victims of Nazi persecution.

Oh, Greece, is there anything you won't stoop to?

Hat tip to RSP

Can You Judge a Sleaze Book by Its Title?

The Texas billionaire’s pregnant bride: An evolutionary interpretation of
romance fiction titles

Anthony Cox & Maryanne Fisher, Journal of Social, Evolutionary, and Cultural Psychology, December 2009, Pages 386-401

Abstract: In this paper, we focus on the titles of popular modern romance novels,
published by Harlequin Enterprises, in order to ascertain whether these books pertain to women’s sexspecific mating interests. Presumably, market demands have shaped the titles of Harlequins, such that books with titles that reflect topics of interest to women will sell the best. Two forms of analysis were undertaken to investigate whether the titles are in agreement with predictions informed by evolutionary psychology. First, we identified the most frequently occurring words to determine the most prevalent issues addressed by titles. Second, we performed a qualitative analysis to identify the most popular, recurring themes that appear in the titles. Our results indicate that Harlequin romance novel titles are congruent with women’s sex-specific mating strategies, which is surmised to be the reason for their continued international success.

(Nod to Kevin L)

Friday, February 19, 2010

Econ Karma gonna get you.

Wow, talk about bad timing. People could the entire Euro sovereign debt crisis be the universe's way of sticking up for its most favored sons and daughters (economists)?

Have you seen this? Stupid economists, how could you have kept saying and saying the euro was far from optimal on economic grounds? 


Oh, never mind.

Anybody wanna help start up Econ Journal Watch Watch?  

Thursday, February 18, 2010

The Duke Lacrosse case gets a new twist

The accuser in the case, Crystal Mangum, was arrested in Durham last night:


A judge set her bond at $1 million during a Thursday morning court appearance.

This seems like a bit of overkill, as no one was actually harmed, the "arson" is from burning her significant other's clothes in the bathtub, and the "identity theft" is from giving the police a false name when they arrived at the scene. The child abuse is because there were three children in the house at the time of the domestic dispute.

Oh, Durham PD, will you ever do anything right?

I can tell you this right now, If a Durham cop ever tries to arrest me, I will resist to the best of my abilities!

Just What I Needed

Anonyman writes that the CORRECT answer for investment, and monetary policy, in my Fox Business fiasco, would have been something like this. So, let me address the gold / silver / fiat money question.

I have just never understood why there is so much concern over currency, as if this were the number one problem. No question that a fiat money does in fact give the government enormous power. But the currency is more a reflection of power the state already has, rather than a cause of it. Three short points:

1. If the currency is "backed," or convertible, then the government has to store a gigantic amount of physical bullion as a reserve. But then the government can easily devalue the currency by changing the official, as opposed to black market, exchange rate of dollars for gold. There is no protection there, none. And you can't fix the exchange rate, because the value of gold as a commodity and investment in its own right fluctuates, a lot. That means the actual value of dollars would fluctuate with a commodity. That's not stability, that's giving government more power than it had before.

2. If the currency is actually made up of a certain amount of gold or silver alloy, then again its value would fluctuate with the price of the commodity. Worse, it would be heavy, inconvenient, and would wear out over time, wasting tons of gold each year rubbed off on the inside pockets of consumers. How would credit cards work? Very little of our money is currency. You can't possibly have real metal money, because that would (again) be more of a restriction on liberty than the current system.

3. We could get rid of fiat money altogether. Just private money. But the transactions costs of doing that, worrying about inflation and fluctuating exchange rates between different private currencies, would be enormous.

Here's the thing: the government doesn't control the money supply NOW. If you have a credit card, or several, you can create large amounts of new money, all by yourself. Anytime you secure a new line of credit, and actually spend it.... there goes the money supply. And if the government buys bonds, in "open market operations," that doesn't mean that banks will lend. The velocity of money is endogenous, as we have seen recently as credit dried up and people (and banks) held much larger cash balances in the forms of savings and reserves.

Again, I'm not denying that a fiat money creates enormous power for the state. Of course it does. But the war on drugs, the war in Iraq, the Patriot Act, restrictions on the right to marry, restrictions on hiring, regulations and taxes on small business, involuntary annexation....I could go on. Why would you start with money, as the number one problem?

And if you DO think that money is the problem, why not work on fractional reserve banking, derivatives, restrictions on competition in insurance, and so on? The obsession with the currency.... I don't get it.

More on Google case

More info on Google case, dismissed for lack of standing.....

The decision itself

Box Cutter Didn't Help Much

Robber with box cutter found hiding inside a box.

They'll never think of looking for me here! 

Bad Day on TV

I have blogged before about television. It's a bad gig. Don't like it, and clearly not good at it.

But, got the call from FOX: come on the show, and talk about Greece. So I gave my thoughts on the situation in Greece. (Okay, these are likely Angus's thoughts, but I may have gotten them right. I tried to listen carefully.)

1. People are fleeing the Euro, which makes the fall self-perpetuating. But Euro seemed stable just last summer, as recently as September, in fact rose against dollar all summer. Does instability matter, within such a large area? After all, within EU everything is in Euros. That's the advantage of a currency union. (Answer: Yes, it matters. EU depends on imports of most raw materials, especially petroleum. If the Euro falls, it will actually help German economy, and France to lesser extent. But the problem is not a decline in the Euro, but rather break-up of the currency union. The main problem is POLITICAL, not ECONOMIC. The only way to save the PIGS (Portugal, Ireland, Greece, Spain) is to take actual money away from the larger nations and prop up the financial systems. Technically possible, but what is in it for the big players, France, Germany, not clear why they would pay for bad policies in PIGS. Greece is small, and could be propped up. A welfare state to pay for poor folks is one thing. But paying for the lies and fake accounting of the Greek government, in the aftermath of the Olympic fiasco, is quite another.)

2. Could this kind of meltdown happen in US? (Answer: Strangely, less likely now, though US is sucking pretty hard. The only main rivals for international currency of choice are the dollar and euro. Dollar is in trouble, because of huge deficits, accumulated debt. US may lose its credit rating, as threat of default becomes real. Problem is that the debt, denominated in dollars, can really only be exchanged for euros, or euro-denominated assets of some kind, if you want to sell dollars, or dollar-denominated assets, on secondary markets. Amazingly, it is STILL better to park your funds in dollars, and US government bonds, than in most other places, especially (post-Greece) in Euros. Problem is that there are huge, truly huge, amounts of cash on the sidelines. People are looking for a safe haven, and also for some kind of return. US rates are so low that investors are getting no return. But the Euro collapse on markets, and political instability in Europe, actually mean that US is somewhat protected in the short run. BUT IT WON'T LAST. Level of US debt is not a problem, but the rate of increase IS a problem. If Asian countries sitting on cash mountain get out of dollars, the effects would be catastrophic. We could see large inflation, and high real interest rates, within three years. In the best case scenario, by 2020 80% of US federal budget will be spent on entitlements and debt service. We have given up all our room for maneuver. One more crisis, and the US might default on its debt. Combined with EU problems, could actually cause worldwide financial meltdown. We are looking at 1932, not 2009, as the worst case scenario.)

Anyway, I hear back from the producer. Neil Cavuto, host at FOX, is interested in hearing how the US might turn out like Greece, not how Greece going down saves the US bacon in the short run. (Here's Neil, in action on Fox)
Sure, I can do that. There are parallels, absolutely, and the fact that US has an independent monetary authority could make things more dangerous. After all, Greece can't devalue the drachma, because they use euros. Their "sovereign" (as if you can call the Greek government anything but a kleptocracy) debt would normally be devalued by one of the two big economic oxidizers, currency devaluation or inflation (one is an exchange rate change, the other is increase in money supply, but their effects are identical). Greece can't do either, and so the pressure builds.... Anyway, the parallel is an easy story to tell.

1. US is on path to fundamental change in the size and role of government. It has ALREADY HAPPENED. By 2020, under the best circumstances, 80% of federal budget will be service on debt and entitlement payments. We have built a fiscal straitjacket. Let me emphasize: it's true NOW, already. (This is more or less straight Angus, plagiarized, or as we say when we look at my c.v., "coauthored.")

2. There are two options available to the US that is not available to PIGS: Monetary inflation, and currency devaluation. PIGS are members of EU, and so have no independent monetary policy. Problem is that if US inflates, that is de facto default on debt. Catastrophic for world economy. We could bankrupt ourselves, ending ability to borrow, by inflating. Result would be double digit interest rates for years, with real rates on the order of three percent, in order to service new debt. We can't inflate our way out of all of it. But given that our annual deficits are now 10% of GDP, inflation may start to seem attractive.

3. Alternative: Look at Greece, because that is our future.
Explosion in euro-denominated debt, strikes, high unemployment, and government increasingly controlling financial and investment decisions of private firms. We think it can't happen, but we are on the steep part of a slippery slope. US debt/GDP ratio will approach 1. Our bonds have shaky ratings. And our taxes are going to go mostly to finance pensions, bailouts, and deficits. Instead of investing in the young, and the talented, we are going to invest in the old, and the bankrupt. Don't be smug, because not only could the Greek nightmare happen here--unless something changes, it will, within the next decade. Look at it this way: The EU limit for annual deficit as a percent of GDP? 3%, no more. Current level in Greece, so large that people are going nuts? 11% What about the US? Last year 9%, this year and for the next five years: 10%+.

Anyway, I do the interview. We go in order: Donald Trump, John Sununu, Mike Munger (one of these things is not like the other song) Neil is kind enough to let me answer the question, at length, drawing out the parallels between Greece and US deficits, and consequences. I do get to use my one prepared zinger: We used to make cars, and other things people wanted to buy. But right now, the only export keeping the US alive is.... debt! Our number one export is debt. If people stop buying that, we are hammered.

So, Neil asks, "But isn't the fact that Greece is pulling down the Euro actually HELPING the US? I mean, the only choices for currencies are euros or dollars, right?"

Since this had been my original claim, the one the producer had said not to make, I was somewhat stumped. Neil went on to ask about where to put money, where to invest, if my claims were true. The one thing I know for certain is that I am not qualified to give investment advice. So I filibustered, Neil got pissed, interrupted, and repeated his question: "Professor, professor, you didn't understand my question. I said, where should we invest? If you know so much, what is the solution?" That's pretty much where things ended.

I am going to go hide in the bathtub. I hate television.

Wednesday, February 17, 2010

Some Links: Do the Hoaxie-Pokesie

Some links. No rhyme, no reason, but some links.

1. Dean Smith wants terminal groin. His neighbor, John Edwards, already has one.

2. A remarkably successful hoax, and my attempt to put the hammer down (P. 3). But I have to give the OP credit: it worked beyond all expectations. Well done, lad(dette).

3. "Do employers discriminate by gender? A field experiment in female-dominated
Alison Booth & Andrew Leigh, Economics Letters, forthcoming. Abstract: We test for gender discrimination by sending fake CVs to apply for entry-level jobs. Female candidates are more likely to receive a callback, with the difference being largest in occupations that are more female-dominated.

Chin Music

From some dude allegedly named Glenn Thrush:

Evan Bayh (D-Ind.) is retiring, but he's not the retiring type, ridiculing congressional job creation efforts on "The Early Show."


A senior House Democratic aide:

“It is hard to stomach lectures from Sen. Bayh on Jobs. For most Americans, if they were as unproductive in their jobs as Bayh has been in his, they wouldn’t have the luxury of quitting — they would be fired.

Awesome! Can I get a Kaboom?

It's never too early to say I told you so

So last night was game one of the Caron Butler error, whoops I mean era, for Dallas.

And the result? Thunder 99, Mavs 86. Mr Butler? 4 - 16 from the floor with 4 turnovers.

So of course I am going to draw my preferred regression line through this single datapoint and proclaim that the big trade did not really improve Dallas enough to take them to a higher level than they were going (that's what blogging is all about, right?).

Not that I fault Dallas for trying something new. They were not really going anywhere before. I don't think they will get home court for the first round of the playoffs. Right now they are tied in the loss column with the Thunder, who implausibly sit 1/2 game out of fourth place in the West.

I think Marcus Camby will help Portland more than Butler will help the Mavs.

Tuesday, February 16, 2010

Are we STANDING for this?

Lost the STOP GOOGLE! suit. Darn.

And, on a strange technicality. Turns out I did not have "standing" to sue.

In other words, it's my money (or part of it). It's state policy, and I live in the state. But you can't sue.

Note that this is NOT sovereign immunity, saying no one could sue the state. This is just that no one can sue the state. Get it? Neither do I...

(UPDATE: Anonyman shares this wisdom.... Think of standing like this: Your spouse wakes up and comes down stairs for coffee, she looks at you with an icy stare and says that in her dream you asked her to participate in a freaky three-way, and she's ticked at you because of her dream. You can now respond that since you were not a party to the dream, she does not have standing to be mad at you.

I'm sure it will work like a charm.

Oh, yeah. THAT will definitely work...)

Yes the Senate is broken (but not in the way you might think)

We are now awash in pleas to "fix the broken Senate", with particular emphasis on getting rid of the filibuster. 

Now, I know that the fair filly is not in the Constitution, but I think the Senate and its vaunted unlimited debate is filling a role the founders wanted, namely slowing down the popular passions of the people's House! Thus I don't view Senatorial delaying and navel gazing as a big problem.

I do think the Senate (and House) is badly broken though, as evidenced by their inability to even bring sensible legislation to the floor in times of dire emergencies.

The stimulus bill was what, about 1/3 weird and unseemly earmarks?

The health care crisis is at least as much about controlling costs as it is about increasing the number of people insured and the bills in each chamber utterly failed to seriously address cost control.

Congress people often use Federal Agencies and SOEs as their own personal experimental laboratories leaving us with the bill when the experiment blows up (Barney F. and Fannie/Freddie).

Congress is broken because it has acquired more power than mere mortals can handle.

I really don't know how we are going to fix that, but by all means, let's not pretend that changing some rules of procedure will fix the problems in our broken legislative branch.


Trading Up

Envy, Altruism, and the International Distribution of Trade Protection

Xiaobo Lü, Kenneth Scheve & Matthew Slaughter
NBER Working Paper, January 2010

Abstract: One important puzzle in international political economy is why lower-earning and less-skilled intensive industries tend to receive relatively high levels of trade protection. This pattern of protection holds even in low-income countries in which less-skilled labor is likely to be the relatively abundant factor of production and therefore would be expected in many standard political-economy frameworks to receive relatively low, not high, levels of protection. We propose and model one possible explanation: that individual aversion to inequality — both envy and altruism — lead to systematic differences in support for trade protection across industries, with sectors employing lower-earning workers more intensively being relatively preferred recipients for trade protection. We conduct original survey experiments in China and the United States and provide strong evidence that individual policy opinions about sector-specific trade protection depend on the earnings of workers in the sector. We also present structural estimates of the influence of envy and altruism on sector-specific trade policy preferences. Our estimates indicate that both envy and altruism influence support for trade protection in the United States and that altruism influences policy opinions in China.

Estimates of the Trade and Welfare Effects of NAFTA

Lorenzo Caliendo & Fernando Parro
University of Chicago Working Paper, November 2009

Abstract: In this paper we build into a Ricardian model the role of trade in intermediate inputs, sectoral linkages and differing productivity levels across sectors. The model can be used for both ex-ante and ex-post trade policy evaluation. We also propose a new method to estimate sectoral trade elasticities. Estimation requires only trade and tariff data and does not require the assumption of bilaterally symmetric trade costs. With the model and estimates of sectoral trade elasticities for the year 1993, we evaluate the trade effects of the North American Free Trade Agreement (NAFTA). We do so by incorporating into the model the change in tariffs from 1993 to 2005 to calculate the implied changes in exports and imports. We compare these calculated changes to their observed counterparts and find that the model matches the observed outcomes well. We find that as a consequence of the tariff reductions, real wages increased in all NAFTA countries. Mexico had the largest gains, while Canada and the United States gained relatively more from trade liberalization with the rest of the world than from trade liberalization within NAFTA over the sample period.

(Nod to Kevin L)

Monday, February 15, 2010


How in the world can it be that Canadians can't make ice??

I know economists can't make accurate predictions, but this is more basic than that. It's like a crew of economists not being able to draw and correctly label a supply and demand diagram.



another one bites the dust

Man, people. Democratic politicians are, how shall I put this politely, PUSSWEILLERS!!

Evan Bayh is the latest to announce that he won't face the voters this fall.

Will the last Demo pol left please turn out the lights?

While I think it's very funny how little fight appears left in the Dems, please don't think I am pleased about the possible return of the Republicans. Heaven forfend. I am kind of a "pox on both your houses" guy. As is well documented in this blog, I love gridlock!


The Grand Game!

It's been a while. But the Grand Game is back! It turns out that the folks who run England's criminal justice system would prefer to prosecute homeowners who try to defend themselves. It makes some sense, I have to admit. Homeowners can't run, and the state can hold them hostage because the state controls title and transfer of title.


David Cameron has stoked the row over the prosecution of ‘have a go heroes’ by saying that burglars leave their human rights at the door when they break into a property.... The moment a burglar steps over your threshold and invades your property with all the threat that gives to you, your family and your livelihood, I think they leave their human rights outside,” he said.

Keir Starmer, the Director of Public Prosecutions, has criticised the... proposal, saying that the current law for householders accused of attacking intruders: “works very well”.

Last month, Munir Hussain, a businessman, was freed from prison on appeal after being jailed for using a cricket bat to batter an intruder who had broken into his home and tied his family up, leaving the burglar with brain damage.

Mr Cameron has also spoken up in defence of Mylene Klass, the television presenter and musician, who was told off by police for waving a knife at intruders who broke into her garden, describing the warning as “ridiculous”.

Lord Mandelson, the Business Secretary, dismissed Mr Cameron’s suggestion that burglars should forfeit their human rights as a “wonderful sound bite”.

He told the BBC’s Politics Show: “What sort of country is he trying to create?

"Of course it will receive short-term public applause from those who want to get tough on burglars, as we do in our Government, but where's the practical common sense policy thinking?"

Here's my practical common sense policy thinking: If you break into my house, and then threaten and tie up my family, then I am not obliged to be careful in how I react. If I have a bat, or a 2-iron, and I do NOT hit you in the head, as hard as I can, I may get tied up, too. We aren't talking about some guy who got lost. THE INTRUDER TIED THEM UP. Time for Mr. Cricket Bat. Sure, I can't enslave the intruder, or capture him and torture him. But I am not trained to calibrate how hard I hit with the bat.

Anyway, KPC readers, please pick out the most asinine elements of the story, the beyond stupid quotes, and let us know, in comments!


(UPDATE: My bad. Nod to my man Craig Newmark.....Furthermore, a commenter on N's Door clarifies that the cricket bat beating took place outside. An interesting question, I guess. Clearly I can beat the guy if he is threatening me. If he runs, maybe not. And once he is outside.... I see the point. Always useful to have a few facts, what?)

And while I'm on the topic...

Sorry for so many basketball posts. I guess I have Thunder fever. Here's one more.

It is a bad idea for Cleveland to pick up Amare Stoudemire!! This trade is rumored to be close to completion and I don't think it will help the Cavs get over the proverbial hump this year. Amare plays no D, has already shown he can't play with Shaq, and to my mind, is a fairly overrated player.

This trade makes no sense to me from a basketball perspective. Tyler however, provides an interesting rationale for why it might happen anyway.

Mango Man

For all my earnest friends who work for NGOs: Good intentions are not enough.

(Nod to Anonyman)

Sunday, February 14, 2010

Steve Nash is 7 kinds of awesome.

And here I will list four reasons why.

1.  At 36 years of age he is shooting 51% from the field (44% on 3s), 94% from the line and averaging 18 points and 11 assists per game.

2. He lit the Olympic flame at the Vancouver games.

3. After which he headed for Dallas where he won the skilz challenge at the all star festivities.

4. and they there's this:


I rest my case!

Rodney Schools an Econ Prof

What product are you making? "It doesn't matter." Actually, it probably DOES matter.

I had forgotten this scene from the movie "Back to School."

I DO remember the scene where he asks the female English prof if she'll tutor him, so that she can help him "straighten out my Longfellow."

A Valentine Quiz

A short (one question) Valentine's quiz on level of marital understanding for men. Your wife comes downstairs in the morning, pours the tea (which, thank God, you made for her), and stares over the cup at you with a look of pure hate.

Your internal warning bells go off. Still, it will be worse if you don't ask. "Good morning dear, is everything okay?"

Still staring through slitted eyes, she spits out the words, "I had a dream. You were 'The Bachelor,' and you wanted to be with me AND another woman, two of us."

So, do you:

A. Say, "Dear, that could never happen! I'm not a bachelor; they wouldn't let me on the show. Otherwise, though, that sounds good! Maybe we can call someone?"
B. Raise your eyebrows, nod your head slowly, and stare out the window, in deep contemplation.
C. Say, "C'mon, it was only a dream. You know you are the only one for me!"
D. Pretend to have a gran mal seizure and flop on the floor in a coma, doing your best to swallow your tongue.

Now, it is obvious that A is the wrong choice. But now I have direct empirical evidence that B is also a pretty bad choice. In fact, choosing B causes lots of small-fist-sized bruises to appear on your upper arm. So, if this happens to you, go with C and hold D in reserve in case it doesn't work.

Mavs fail chemistry 101

The Dallas Mavericks have acquired Caron Butler, Brendan Haywood and DeShawn Stevenson from the Wizards.

They didn't give up very much. Just a curiously ineffective Josh Howard, Drew Gooden, James Singleton, and Quinton Ross.

On paper, it seems like a good deal, except for the fact that Haywood and Stevenson are total knuckleheads.

Plus, I am not a rider on the Caron Butler bandwagon. He gets a lot of good press around the league, but to me he's borderline knucklehead too.

Bottom line is that I don't think this trade puts the Mavericks any deeper into the playoffs than they were already going before it happened.


A funny valentine