Friday, December 31, 2004

Resolving to Fail

Good to have you back, Ron. We’ve missed you and I’m glad you can continue contributing to the growing quality of LL&L.

Speaking of growing quality, it’s that time of the year again! That’s right, time to reach deep in yourself, find something you want to improve and hammer out a resolution only to abandon it by February. Now there are a scant few people I know (like my friend Jon) who keep their resolutions but most say them in name only. I got to thinking today why that is.

Most people in the resolution game experience the bitter taste of path dependence. Resolutions, by their very nature, require changing fundamental things about your daily life: saving more, eating better, quitting smoking and exercising all fundamentally impact our daily “path,” or routine. There are costs in the forms of money (paying for the better food or the gym membership), time (engaging in the new activity), memory (remembering to do the new thing) and custom (being comfortable doing it, or not doing it). Obviously these costs are high—lots of people don’t fulfill their resolution.

Not only are these costs high, it’s so easy to revert to the earlier path. Other forms of path dependence tend to have one time costs—to switch to the new keyboard, for example—and for all intents and purposes, they are instantly paid. Once you pay them, you are “locked-in” on a different course. These costs are usually easier to see. Resolutions are more difficult to establish because the costs are spread out and there’s genuine uncertainty of what those costs are.

Let’s take exercising, my New Year’s resolution. On January 1, I’ll start walking regularly, doing sit-ups and lifting weights. I’ll do it on the second and the third and fourth and so on but somewhere down the line, for whatever reason, I’ll stop and the resolution ends. Note that if my resolution was, say, switch to a different keyboard layout, it would be different. On January 1, I’d buy the new keyboard, throw away the old one and I’d be locked in a new path. Sure, it’ll take time to for my fingers to adjust, but with my old one in the landfill, it’s costly to move back. Even if I don’t throw it away, pulling out the cord from the keyboard and replacing it with a new one is a cost. In other words, I’m on a new path. But with exercising, it’s costly to stay on the path and costs nothing to revert (except for the reason why you wanted to change paths in the first place, but if those things were constantly on your mind you wouldn’t need New Year’s resolutions in the first place).

You can point out that there are costs of adapting to a new keyboard, and you’re right. But these costs are overshadowed by the price of the keyboard (and finding one to buy) while switching to excising over sitting can cost next to nothing if you don’t go to a gym. Indeed, a lot of these costs are predictable: prices are found, time is estimated and memory can be stimulated with post-its and to-do lists. But for New Year’s resolutions, custom is unpredictable. People have a hard time being comfortable with their resolution because, by it’s very nature, is a grand departure from what they are used to. It’s hard to integrate it into your world while with other cases of path dependence, there’s a physical object or a macro, real world force that roots you to the new path. And because there are so many times to abandon an establishing path before you’ve completed paying the custom cost, resolutions are rarely fulfilled.

That’s why they say you should only make one or two minor resolutions and not be like Jon, who’s so capricious he has to keep a list to keep them all straight. :P

All Dressed Up and No One to Call

A few brief words on this tsunami business.

Let me say by way of preface that this truly was a terrible natural disaster. The loss of more than 100,000 people is truly staggering, even in an area as populous as the Pacific Rim. My heart goes out to those who have lost property and loved ones.

That said, here is an example of sheer shortsighted stupidity on the part of the affected governments on a scale as large as the wave. I read where seismologists in California and other countries monitored the 9.0 earth quake as it happened, and quickly concluded based upon their calculations that the likelihood of tsunami wave action was quite high for those land masses surrounding the epicenter. But we didn’t have anyone to call.

In this country, we have more emergency alert systems than we can count. We have that ridiculous color coding system for the terrorism level, there is a siren on my local fire department that whines like it’s the nuclear holocaust when there’s a fire (or in the Midwest when there is a tornado), many urban areas have EAS loud-speaker systems throughout the town, and the local weatherman interrupts my regularly scheduled programming for every stinking lighting flash and rain drop. And if the stuff really hits the fan you can be sure that the sheriff or the national guard will be driving through the neighborhood with bullhorns like they do in the aftermath of a hurricane. The point here: if there’s an imminent problem that requires quick action like evacuation, we’re on that.

Of these many and varied ways of disseminating warning of danger, these countries failed to employ any of them. Apparently, no one even picked up the yellow pages to start calling beachfront hotels and say something like, “Uh, you might want to avoid the really big wave about to crash into your hotel.” And I am forced to ask: at what point does negligence become criminal? If there is any example of how government interference and ineptitude can be dangerous, this is it.

Chris mentions in one of his recent blogs that the UN has already been critical of our low-ball offer of financial aid for these countries. I say that since we called them up and told them to tell their people (and some of ours) to get the hell out of the way, we’re not obligated. Apparently, these folks couldn’t even get a dial tone. What really grates me about this situation is that despite the fact that this was a one-in-a-million kind of thing our technology nonetheless detected it, saw it coming, and was ready to act. Not only was this was a preventable tragedy, but the governments there blatantly, and arguably criminally, failed to act. If we send them any money at all, it should be for attorney’s fees.

Thursday, December 30, 2004

The After Christmas Sale-a-thon

I like clothes, and I’m not afraid to admit it. I don’t feel girly or gay (not that there’s anything wrong with that) because I insist that my shirts bear the insignia of Izod or my pants the iconography of Van Heusen. But good guys’ clothes can get pricey. Since men tend to purchase clothes less frequently, and therefore expect those clothes to last longer and be more durable than comparable women’s clothing, ours naturally cost more than women’s clothes. Now if you’re poor like me, and you dwell in a constant state of “short on cash,” you have to find the best bang for your buck. And that brings me to the ubiquitous after Christmas sale-a-thon, going on now.

Isn’t amazing how that $50 shirt becomes just $9.99 with nothing more than the flip of a calendar page! Markdowns, blowouts, roll backs, and end of the year clearance extravaganzas of all sorts usher in savings of every kind to the savvy buyer. And so it is without shame that during this special holiday season of silent nights and commercial discounts that you will find me at the mall, and the outlet mall, and the strip malls, and Target, hell, even Wal-Mart spending every last cent that I can spare without risking having the electricity shut off. I think of it as a kind of investment – saving money whilst procuring a good that will have longer-term, recurring benefit; and things that I would have to purchase anyway eventually.

The market is not always predictable, but it often is. And this is one instance where the clearance aisle is a persistent harbinger of good: it means that the spring merchandise is ready and waiting to be shipped out for the world to buy. And these sales allow penny pinchers like me to enter the market to get “just-barely-still-in-style” fashions for pennies on the dollar. Ultimately I don’t mind wearing last year’s best – it certainly beats this year’s worst. Somehow, though, the only one who got stuff today (on MY birthday no less) was my wife. Talk about market failures.

Going Postal

An old neighborhood friend is in town for the holidays from California. Today we grabbed her brother and the three of us went to a movie. On the way we talked about life in California and I kept thinking about my article on California’s twisted laws.

For example, her cell phone is taxed at the state, county and city level with total taxes adding up to about $20 a month. But one of my friend’s more frustrating complaints wasn’t California law; it was one of the oldest national monopolies in the country: first class mail.

My friend works for a church in LA and one of her duties is sending out the bulk mail, a chore which the US Postal Service makes sure is not easy. For starters, the post office is about the only place in LA that accepts checks. Every other organization flatly refuses them since check fraud is so common and LA is so large (making it hard to track bad check writers). That, in itself isn’t a problem. But checks are the only thing they accept—no cash, no credit cards. This isn’t just a huge inconvenience for my friend; it’s a taxpayer burden. God knows how many bad checks are written to the government, but it has to be a lot since accepting checks is too much of a risk for virtually any private organization. Given that it is taxpayer money funding this enterprise, their loss is own loss.

Customer service is problem, too. Take a few thousand letters and the postal workers will pick ten at random. If all of those ten don’t meet their exact specifications (including rules regarding the distance from the content edge to the edge of the envelope’s end), they won’t accept the letters. If there was competition, people could take their hours of stuffing and sorting to another less picky sender. Instead, they have to spend more precious time micromanaging the millimeters.

Prices are high, too, though a lot of people don’t know it. I remember Bill Maher once said that we (the American people) get a “great” deal on first class mail because it’s “only” 37 cents. I doubt that any sustainable monopoly provides deals of any sort. Sure 37 cents isn’t a lot when you send one letter, but it gets nasty when you send a thousand. And considering FedEx and UPS can send packages all over the country for a couple of bucks, there’s no reason to believe an envelope and a few pages can’t be sent for less than 37 cents. Just because you can pay for it with pocket change, doesn’t mean it’s a deal.

Contemplating My Birthday

Here I sit on this, the celebratory day of my 28th year. It does not seem that I should be that old, especially since I am only just now finishing my undergraduate education (having crammed my five years into ten). But as I reflect, I realize that there have been a world of experiences in this last decade that (except for the part where I’m as broke as any college student) make this journey more than worth it. Since graduating high school in 1995, I have lived in Baton Rouge, LA, Lexington, KY, southern West Virginia, and now back to my native Wheeling. I got married, spent a summer working for the Salvation Army in Youngstown and Maine, worked in radio, competed at academic functions, acquired a personal library of over 2000 volumes, had a kid, and saw murals of Ceaser Chavez and a urinal at Pitzer College. There have, of course, been down moments: loosing my grandfather to a hear attack, my father to cancer, but all in all I can’t complain.

So what is the point? The crucial point here is that I, me, personally made each and every one of those decisions (okay, with a little help from my wife). Even in the situations that I could not control, like my dad when he got sick, it was me who decided how I would respond. Consider this one of Aesop’s fables: The Oak and the Woodcutter:

The Woodcutter cut down a Mountain Oak and split it in pieces, making wedges of its own branches for dividing the trunk. The Oak said with a sigh, “I do not care about the blows of the axe aimed at my roots, but I do grieve at being torn in pieces by these wedges made from my own branches.” // Misfortunes springing from ourselves are the hardest to bear.

The corollary to this maxim might be that decisions made in one’s own interest are the easiest to bear. Do I regret that I did not more quickly finish school and move into a job, retirement package, and health insurance? Sure, sometimes. But on the whole I tend to think that I place more value on the experience of these last years than I do on cash assets at the bank. In fact, this is clearly the case since I explicitly chose to cash in those assets to allow me to make an investment of a different sort: an investment in myself. It’s still too early to say whether that gamble will pay off – call me in 20 years and ask. But if you ask me if I have any regrets about the decisions that I have made, I will tell you, “Not a one.” I have been allowed to live my own life, and make my own choices. My father was allowed to pass on what he and earned and accumulated in his life to me and my sister, which in turn allowed us to get farther ahead than we might otherwise have.

When people ask me how I can be a libertarian, when they inquire how it is that I can be so supposedly uncaring of those less fortunate, my tendency, like many of us, is to respond with a short treatise in free market economics or a canned rant on government control and inefficiency. Maybe I should just tell them about my birthday.

Wednesday, December 29, 2004

Time on the Horizon

It is perhaps interesting to think about the changing nature of time in the context of history. Our life spans, for example, have increased; and yet our accelerating pace of suggests that in terms of our perception, we haven’t much noticed. Clocks themselves are a relatively recent invention, and we have exacted that science down to the atomic level with our timepieces now remotely coordinated by radio signal from thousands of miles away. And if you look at ebay, you will find that time keeping antiques such as hourglasses and sundials fetch enormous sums of cash. We celebrate our birthdays religiously, and then lie about how many of them we have had. We look to genetics as the secret to longevity while being simultaneously reminded by the Good Book that life is as dew, here one moment and gone the next. Unions long ago fought for the forty-hour workweek, and we have come to associate punching a time clock with the counting down of our lives. We are centrally concerned, perhaps even obsessed, with time. Indeed Western civilization itself is based upon the notion of linear progress.

We free-market types are especially concerned with time in that markets rely on price, and one of the primary determinants for setting price is time – especially the time it takes to do or make something. Time is a resource just as surely as your car, house, or certificate of deposit. This last semester reminded me painfully of this reality. With a semester that exceeded 21 hours, plus a family and other obligations, the premium I in turn placed upon my time increased significantly, to the extent that I was forced to scale back production in other areas of my life – this blog one of them (though I might add that my own blog was also sacrificed). This semester was quite interesting. As some of you know, I am finishing up my senior year at Bethany College. That means that all of my courses are either capstone courses or otherwise upper division classes in addition to an internship and senior project. In fact I just finished my internship with – ironically enough – the Pittsburgh City Council (much more on that to come). I greatly regret that I have been silent for these last months, and am hopeful that my good friends will welcome me back to their company with smiles and hugs (okay, maybe not the hugs). In any case, you should expect to hear from me much more frequently these next months. (Also, a special hello to Mike, the newest member of LLL: I hope that we will become better acquainted as the weeks roll on.)

One final thought. While I think that Steven Davies was absolutely correct, and that things are getting better, there nonetheless seems to be in our midst and in our time a sense that the future is bleak. Our day is marked by a loss of hope and faith in the potential of mankind. The generation that sent man to the moon now trembles at the thought of sending him to Mars (don’t worry David – I’m not plugging NASA). When is the last time we built a Statue of Liberty? A pyramid (which, by the way, are the ultimate precision time pieces)? A Hoover Dam? Whatever our bias about the way in which these kinds of things tend to come about, the lack of them does seem to suggest a certain lack of vision or grandeur. Pal Valery has commented that, “The trouble with our times is that the future is not what it used to be.” I submit to you that it might time to change that.

Sunday, December 26, 2004

Reading with Paul

Whew! What a week! Christmas has finally come and gone along with bookshelf space. I receive a total of seven books this year, primarily thanks to a new tactic I’m adopting: thumbing through the laissez faire books catalog, circling favorites and handing it off to the family. It’s an absolutely great method and it’s a lot easier than wadding through the book store.

My most anticipated book I got this year is Guns Germs and Steel, by Jared Diamond, a work I originally heard about at an IHS seminar in the summer. The basic premise of it is providing an ultimate explanation for why some civilizations advanced faster than others. Not merely stating that Europeans (and to some extent, East Asians) became world powers because they had guns, powerful germs to infect others and steel, Diamond proclaims why they had these things. The straightforward answer is one economists can related to: specialization. Due to ecological and geographic forces, these places developed the best agricultural infrastructure, allowing other people to devote their time to other tasks: governing, inventing, exploring, military training and manufacturing.

This is where things get weird. Scanning the praises on the back, I caught a name that made me do a double take: anti-globalizationist and famed stasist, Paul Ehrlich. Ehrlich is famous for his various books on population growth—how it’s reaching a maximum—and for losing a bet with master resource economist, Julian Simon. (The bet was if the prices of various raw materials would go up or down over the course of several years—Simon correctly stated that they would decrease, representing a lessening scarcity.)

What’s the deal? A book featured in a libertarian catalog is praised by someone who is widely known as being anything but. You could argue that it’s history and thus neutral territory. There’re two things wrong with this. First, I doubt anything’s “neutral territory,” especially something as fundamental as history, especially a work that explains the underling reason for everything about our society and sets the bedrock for 13,000 years of human existence. Second, Ehrlich isn’t that famous. I can’t imagine publishers are so vying for his opinion that they would crowd out someone more renowned or connected with the topic. So why is Ehrlich quoted?

My best guess is two completely different interpretations. According to Ehrlich’s praise, “[The book’s] account of how the modern world was formed is full of lessons for our own future.” My take on Gun, Germs and Steel thus far is that specialization and private property led to greater wealth for those societies that practiced them. This difference is positive-sum in its nature; Diamond suggests that if other continents developed these things, they would be rich, too. Economics as a positive-sum interaction is not one anti-globalizationist accept so I assume that Ehrlich is thinking of the conquests of the poor by the rich. The “lessons for our own future” he sees are ones about protection while I see lessons for progress.

I don’t want to judge to quickly as I’m early still in the work, but I think Ehrlich is interpreting the book so far from its original intent, he’s missing the point. Diamond says that more people enhance societies because it allows for greater specialization and chance for invention. Ehrlich is a staunch supporter of lessening the world population. Ehrlich states the best salvation is “self-sufficiency,” when a society produces its own demands and doesn’t depend on importing. Yet Diamond cites specialization as a key to economic growth. This means societies must not produce other things, requiring them to import.

So am I silly for commenting a book I’m only 80-some-odd pages in or is Ehrlich just off his rocker? Given that friends tell me the book has a strong libertarian theme and LFB sings its praises, I have the feeling Ehrlich only pays attention to the facts that he likes and ignores the rest. This, of course, is not a new pattern.

Sunday, December 19, 2004

The Government Before Christmas

Every Christmas since God knows when, I’ve watched The Nightmare Before Christmas, one of Tim Burton’s better films. It’s about where holidays come from and what happened when someone from “Halloweentown” discovered “Christmastown.” This explorer—Jack Skelington—is tired of being the “Pumpkin King” (which I assume is the star of the annual Halloween festivities) and anxiously tries to understand Christmas so his comrades can celebrate it. I was humming songs in anticipation of my movie-watching ritual when I discovered this seemingly kind gesture by Jack is really a libertarian lesson in action.

Jack doesn’t just want to celebrate Christmas with his Halloween friends. The folks of these holiday towns bring their holiday to the real world. Now Jack wants a crack at it and doles out Christmas jobs to Halloween workers. In doing so, Halloweentown emulates the state—and Jack an important politician—as it shoves its nose in places it doesn’t belong. Not surprisingly, Halloweentown gets Christmas horribly wrong.

Some of the strongest evidence comes from the fact that they kidnapped Santa Claus, using coercion to get their way. Jack snagged Cringle’s hat and—with Santa out of the way—impersonated him so Halloweentown could take care of Christmas. This is exactly what government does when it takes over an industry.

Government never does a good job at the industry and neither did the Halloween folks. Instead of giving people what they wanted (like Santa or the private sector does), Jack and the crew gave them horror-themed gifts (exactly what they thought the people would like). Jack-in-the-boxes had monstrous surprises, a Christmas (Halloween?) tree tried to eat an old lady and there were shrunken heads all around. The National Guard was called in, people barricaded their homes (including their chimney) and there was general chaos and sorrow. It was a disaster.

Why did the Halloween people do such a bad job even though they meant well? Because they had exactly the same problems government has: they lacked the knowledge. In the song where Jack tries to explain Christmas, he points out this knowledge is tacit: “It’s a world unlike anything I’ve ever seen / And as hard as I try / I can’t seem to describe / Like a most improbable dream” and local: “Well, at least they’re excited / Though they don’t understand / That special kind of feeling in Christmas land.”

But even Jack doesn’t get it right. There’s a whole song he sings as he tries to figure Christmas out and in the end he simply concludes: “Just because I cannot see it / Doesn’t mean I can’t believe it!” He merely believes “in Christmas” and he assumes that belief is all that’s needed. He doesn’t consider there are things involved he can’t understand: knowledge that’s wrapped up in the holiday. Because he simply “believes,” he combines Halloween values with Christmas customs (just as state legislators combine their values with industry customs).

With his mere belief comes the slippery slope of tyranny. In the song that he “figures out” Christmas, Jack moves from communism (“And why should they have all the fun? / It should belong to anyone”) to fascism (“Not anyone, in fact, but me / Why I can make a Christmas tree / And there’s no reason I can find / I couldn’t handle Christmas time”) to outright megalomania (I bet I can improve it too / And that’s exactly what I’ll do. [Evil laughter] ”). Remind you of anything?

I’m all in favor of experimentation and trying new ideas and combinations but not when it’s forced on people, as Jack forced his version of Christmas on the world. Like the typical politician who wants to expand his realm of control (though Jack did it because he was bored: not a common reason government meddles with industry), Jack made fundamental mistakes because he lacked the tacit and local knowledge needed to pull off the endeavor. He had to resort to stealing, kidnapping and other coercive acts. Thus, he had no incentive to correct this knowledge problem. This bit of a song Jack sings at the end of the movies sums up many politicians’ reaction when they unwittingly discover their new pet policy only made a mess of things:

“But I never intended all this madness, never / And nobody really understood—well, how could they? / That all I ever wanted was to bring them something great / Why does nothing ever turns out like it should?”

Monday, December 13, 2004

Liberating Europe

In response to Washington Post op-ed that called for subsidizing Boeing so it can compete with European subsidized Airbus, Don Boudreaux wrote his own op-ed with the mandatory longer explanation at Café Hayek.

Don’s right about a lot of it, but he’s wrong when he says “For as long as any foreign subsidy lasts, it is a gift to consumers. We consumers who are not taxed to fund these subsidies should be thankful.”

No, we shouldn’t be thankful; we should be outraged. In this interconnected world, their loss is our loss. Don himself points out: “A subsidized firm spends much time and effort and resources playing politics; this is time and effort and resources not devoted to improving operating efficiencies and the firm’s facility for anticipating and satisfying consumer demands.” There’s an opportunity cost here. If Airbus won’t improve its product, we don’t get the improvement. Sure, we might get some gold-plated arm rests, but we won’t get the genuine novelty and innovation that can only come with fierce, mind-stimulating competition.

We also loose money. Those European taxpayers won’t burn their refund in their backyard if the government cuts the subsidy and passes on the saving. Believe it or not, they will buy something (and to be sure, some of it from us). Simple mathematics tells us the net worth of all the buying will add up to all that gold-plating. Except in this case, it will serve a worthwhile function.

Thursday, December 09, 2004

Call In the Squad

The economy is about to explode.

At least that’s what the Wall Street Journal seems to think. The front page of the Marketplace section of Tuesday’s Journal ran an article titled: “Economic Time Bomb: U.S. Teens Are Among Worst at Math.” Our fifteen-year-olds ranked 24th out of the 29 countries included in Organization for Economic Development and Cooperation for math scores. The article goes on to quote Richard Murnane, a Harvard University economist: “It’s their productivity that will determine economic growth and whether my generation gets Social Security.”

Technically right, but sensibly wrong (and, as I’ll show, technically wrong to some degree). It’s not their productivity that will grant you Social Security; it’s their productivity in ten or fifteen years, and that makes all the difference. I don’t know why the WSJ thinks fifteen-year-olds are running the economy; maybe that’s because they’re running the WSJ.

So that might have been harsh, but I have reason. The article goes on to say that math scores for ACT and SAT scores are up slightly, but up from what they don’t say. Well, this article from (found by a simple Google search) tells us SAT scores were at a 30-year high just two years ago. The WSJ article then tries to play down the rising math scores, saying the test are too easy; “eighth-graders aren’t tested on fractions and percentages.” Granted it’s been a while since high school, but I don’t remember taking the SATs in eighth-grade.

For the sake of argument, let’s suppose that math scores for US citizens really are going down. Are we still sitting on a time bomb? Absolutely not; the Journal’s own article provides us with the answer (though they dress it up like it’s a bad thing). “US employers rely heavily on foreign applicants to fill high-tech jobs.” This is where Mr. Murnane misses a crucial point: he’s dependent on these people for his Social Security, too. And because foreigners are better at math (generally speaking), Americans can focus on other things: management, design, advertising, marketing, certain avenues of research and thousands of other professions that don’t require a deep understanding of mathematics (or at least requires a calculator and the knowledge to operate it). We can’t, and we don’t have to, be good at everything.

Whoever thought defusing a bomb would be so easy?

Sunday, December 05, 2004

Being Pricked To Death

The American Academy of Medical Acupuncture reported in their news letter this month that they might get their own board. While working on a bill for the licensure of nonphysician acupuncturists, “there was heated discussion among the different groups of nonphysician acupuncture practitioners in [Michigan], on the specifications of the credentialing process they will need to undergo, but a consensus was met. The bill mandates the formation of an acupuncture board, which will refine the details of credentialing. This board is set up to include three physicians.”

Acupuncture isn’t for me—I just don’t believe “chi” is running though us and needles will stop it and I’m very wary of any treatment that claims it can fix virtually anything—but I have no problem if other people want to pay people to stab them. I do have big problem with paying for it, the nation’s acupuncture bill runs high. Universities have acupuncture training courses, Medicare and Medicaid cover acupuncture, insurance companies are often forced by law to cover acupuncture—including frivolous ones—and the Office of Alternative Medicine supports studies of acupuncture. Now acupuncturists are getting their very own taxpayer-funded board.

Somebody stab me.