Emptying the Bottle: Mid-February '10 Links

Here is a list of the worthwhile sites I've Bookmarked recently:

• 90% of a woman's eggs are gone by age 30.
• BoozeCats.com: people drinking photoshopped cats instead of beers (shared by Costa).
• Turns your blog into a podcast.
• Republicans move more to the right (shared by Justin S.)
• Finally a big ketchup packet that you can dip in.
• Republicans and Democrats put out fire with different kinds of gasoline [cartoon].
• Venting reduces anger, opposites attract, and men aren't romantic. All wrong.
• "I don't mean to sound arrogant, but... I am."
• Student or teacher, progress makes you enjoy your work.
• I often blame politician's for our political problems, but maybe I should blame their bosses.
• If you can't compare your enemy to Hitler, try the KKK.
• Difference between a sinner, a saint, and a prude [diagram].

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The Politics of Economics

From the NYT:

when an investor’s favored political party held power in Washington, he or she generally increased holdings of risky stocks, shifted from foreign to domestic companies and traded less often. The opposite occurred when the preferred party was out of office.

This makes sense when the government is able to change the rules of the game without warning.

Make Your Own Luck

Those who know me well often say that I have pretty good luck. With a little help, so can you:

Unlucky people often fail to follow their intuition when making a choice, whereas lucky people tend to respect hunches. Lucky people are interested in how they both think and feel about the various options, rather than simply looking at the rational side of the situation. I think this helps them because gut feelings act as an alarm bell - a reason to consider a decision carefully.

Unlucky people tend to be creatures of routine. They tend to take the same route to and from work and talk to the same types of people at parties. In contrast, many lucky people try to introduce variety into their lives. For example, one person described how he thought of a colour before arriving at a party and then introduced himself to people wearing that colour. This kind of behaviour boosts the likelihood of chance opportunities by introducing variety.

Lucky people tend to see the positive side of their ill fortune. They imagine how things could have been worse. In one interview, a lucky volunteer arrived with his leg in a plaster cast and described how he had fallen down a flight of stairs. I asked him whether he still felt lucky and he cheerfully explained that he felt luckier than before. As he pointed out, he could have broken his neck.

The whole article is interesting throughout. To summarize in one sentence: if you want good things to happen, look for them.

The Comfort of Being on the Fringe

In the few years since I started this blog, I've shared some pretty abnormal beliefs. From proposing Iraq decide whether we stay or not to suggesting free trade as a solution to global conflict. From subsidizing interracial marriage to suggesting students take educational drugs. And we can't forget my request for more political apathy and oil speculation. And what's more controversial for a white male to tackle than economics of slavery? But this post is not about rehashing old debates, it's about questioning why I am so comfortable being on the fringe.

Thomas Jefferson, seen by many as America's first libertarian, was famous for criticizing the early US government for being too intrusive. Whether it was the controversy over the creation of the national bank or the restriction of free speech with the Sedition Act, Jefferson became a champion of a strict interpretation of the Constitution. However, when he became the first president from the Democratic-Republican Party, his desire to restrict the power of government seemed to lessen. His controversial war against the Barbary Pirates and his unconstitutional (by his own definition) buying of the Louisiana Purchase are prime examples.

When you have very little political influence it is easy to stay ideologically pure, but when your beliefs have real influence on the lives of American citizens, it is more difficult. It's easy for me to say the government bailout of banks won't work or that the economic stimulus is a bad idea, because my statement has no real political impact. There is a certain amount of ideological comfort that comes with being on the edges of political and social thought. You can say and think what you want with little worry they will ever be taken seriously. That said, it doesn't mean I'm wrong.

Buy Local, Waste Resources

One of the implications of doing comedy in Carrboro, NC is that I often hear the call to "buy local". The obvious problem with this is that it limits trade and limits the market, which makes citizens poorer. What is less obvious, is that it is actually worse for the environment:

Let's suppose that people do decide to "buy local" with the goal of saving the world and reducing their carbon footprint. This will increase the demand for locally grown foods, but it will also have an unintended and likely deleterious consequence; it will increase the demand for farm implements and labor.

Since the decision to buy locally is essentially the decision to forsake comparative advantage, every unit of agricultural output will be more resource intensive than it would be under specialization, division of labor, and trade.

In other words, each additional unit of output will require more resources than it would under trade. To take a concrete example, this means that the cultivation of spinach in Memphis will require more fertilizer, more rakes, more tillers, and more hoes than the cultivation of spinach in California.

If property rights are protected, the proper use of resources is calculated in the price. If you purchase based on price, then you are doing what is best for the environment. That said, it is likely that not all property rights are well defined. The cost of the pollution produced in shipping products across the country is not fully paid by producers. However the solution is to tax the pollution, like a gas tax, not stop trade. This may not satisfy the soul of the socially conscious, but that sounds more like a problem with the soul than with the solution.

Worthwhile Sentences on Economic Problems

From True/Slant: "about 1/3 of cosmetic surgery is consumed by people who make less than $30,000 a year."

From the Freakonomics Blog: "Assuming all 5.5 trillion cigarettes produced around the world each year get smoked, smokers produce 84,878 tons of particulate air pollution annually — about half the pollution put out by all the cars in America."

From Matt Yglesias: "Why are we spending a multiple of Afghanistan’s total GDP on fighting a war in the country?" and "Couldn't more be done, for cheaper, with cash for bribes and development?"

From Tyler Cowen: "We no longer have an independent central bank in this country, at least not for the time being."

From Thomas Jefferson: "I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale."

*Past worthwhile sentences.

Cadillac Health Insurance Tax

In the comments of an old post, a reader asked my opinion of the Democrat's proposal to tax "Cadillac" health insurance plans. My initial reaction was that I didn't understand the plan because when you tax things you get less of them. So taxing citizens with very nice health insurance plans would result in less health insurance. I was right. However, loyal reader and friend Justin Scott pointed out that this might not be so bad.

Justin pointed me to a short podcast from Planet Money that discussed how taxing those with large health insurance benefits would actually encourage them to get less lavish insurance and result in them purchasing less health care. The decrease in health care services would presumably be the procedures that would yield very little benefit in the first place (they were only doing them because the insurance paid for it). Instead of getting their pay check plus huge health insurance benefits, these workers would now get a bigger pay check will less health insurance coverage. They get paid more, they consume less health care, prices go down.

So a tax on health insurance would actually decrease the price of health care for most people. Confused yet? Although I agree with the underlying logic, it is incredibly convoluted. The government is proposing that we tax "Cadillac" health insurance plans, which are given by employers because they receive a tax break from the government. So why don't we just remove the employer tax break for insurance like I proposed last year? If you goal is to get consumer to feel the cost of their health care, having them buy it themselves is the best way. My guess is because it doesn't sound very good to the voters.

One final worry. The tax has two purposes, make consumers count costs and raise money. However, the two are opposing. If it encourages people to cheaper health insurance to avoid the tax, then health care costs decrease. If people avoid the tax, no one pays. I wonder how much they accounted for that in the $150 billion it is suppose to raise?

Difference Between Humans and Animals, Part II

A while back I discussed the difference between humans and animals. Like most debates, there is already someone smarter who's done the work for you. If this video is too long for you, as it was for me, you can download it as a mp3 using this site.

The most interesting part of this for me was his last point. In the same way we witness animals with a spark of humanity, every so often we can see the spark of something greater than humanity in ourselves.

The Next Big Change in Education

The last big change in education was in the early 1900's when most states began to force all students to attend public schools. A hundred years later, the next change will be a movement back home. Like a growing number of jobs, teaching and learning can be done almost as well from a distance using the internet. As a motivated student (that's a key issue) wouldn't you rather hear the best economics 101 professor online than the average professor in person? Or wouldn't you rather be 1 of 500 students in a class and pay 1/10 the price? I'm not suggesting that colleges will cease to exist, there are so many non-economical benefits after all. What I am suggesting is that online classes will become a regular part of college and high school education. Less motivated students will just have to pay more for the personal touch. I'm so sure this will happen in the next few decades, I'm already preparing. My notes are all digital and I'm focusing on Advanced Placement, classes with a tangible benefit for students. If you're worried about how much you can learn by listening to a lecture online, I suggest you check out online lectures of Harvard professor Michael Sandel on Justice.

Emptying the Bottle: Early-February '10 Links

Here is a list of the worthwhile sites I've Bookmarked recently:

• 10 ways to prevent stores from manipulating your unconscious [graphic].
• A blog committed to making aid more effective.
• How beer could have helped to create human civilization.
• People watch news to affirm what they already believe, except for viewers of Al Jazeera.
• The death of health care reform isn't a victory for anyone [cartoon].
• Obama tries to stop, start risk taking practices [cartoon].
• Why banks are making huge profits (note: didn't fully understand all the facts).
• For a marriage to be successful men need a more attractive women, women don't.
• Economics of the free press [audio].
• Country by country breakdown of man-made satellites around Earth [graphic].
• Electronic gun safety that automatically disables when not close to a custom wristwatch.
• You have to earn 2.5x as much to to equal the benefits of working for yourself.

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