Tuesday, September 30, 2008

Balance Be Not for Kagame

During class conversation today, I felt it necessary to describe the compensating wage differential (stressful/tedious jobs are paid well and relaxing/rewarding jobs are paid poorly). I then promptly forgot why I brought it up.

I now remember. I described Paul Kagame's (Rwanda's president) desire to turn his country into a sort of Switzerland of Africa, notably a sophisticated banking center. We agreed this was a long shot but it's longer than most think. It reminded me that so many developing countries (and developed countries) wish to jump into the high end sectors. Medical plazas, software companies, financial services--industries that are prestigious and clean. Societies, and thus governments, put so much value on these services, we shouldn't be surprised that they are over supplied (part of the reason the financial sectors have been taking a beating lately).

Thus the wage differential. If a job is cool, lots of people will want to do it, depressing the wages it offers. If a sector is hip, so many will jump into it and shrink its returns. I wish we'd stop treating development (and growth) as if the whole world could get a job as ice cream taste-testers.

Wednesday, September 24, 2008

Strangest Sentence I've Heard Today

A friend of mine from college told me the following over AIM:
i certainly don't think communism can work on any kind of national scale, but socialized assistance programs, like medicine, education, welfare, and social security, ensure that even the poorest people have access to liveable standard of care - of course, the state has to dedicate itself to making that standard liveable
What is communism on a national scale other than a systematic interference with everyone in a country? You have to admire an intellect that can be so inconsistent and not go crazy.

Monday, September 15, 2008

The Elusive Quest for Price Gouging

Anti-price gouging laws are notoriously vague, a fact Florida reminds us of this week. It issued subpoenas to four gas station companies on the basis of price gouging, or according to Florida state law, "an unjustified increase in price" during a state emergency.

What's "justifiable" in this context is not something laws can determine. If a firm increases its price, that consumers determine if it's reasonable by virtue of their actions (and their continued patronage). If an increase is truly arbitrary, then competitors will keep prices lower to get all the business. This argument doesn't work if there's no competition (and no chance for it) but because Florida issued subpoenas to four companies we don't have that problem here.

Markets are not made up of faceless CEOs and wild-eyed Wall Streeters. Markets are more ephemeral than that. They are composed of the interactions of countless millions, each competing with some to appease others. Markets are ecologies, not dictatorships.

Keep Your Favorites To Yourself

The lack of media coverage over the Paralympics induced NPR to comment why they received so little attention compared to the Olympics. One caller blamed corporations, not the lack of demand. Corporations set the agenda and since they don't sponsor these games, they don't show them even though we want to see them.

If this was true, if we really are empty vessels to be filled, then why don't companies sponsor the Paralympics and then cover it? We'd watch something we want to watch and they'd get more airtime for sponsors. This doesn't happen because what matters most is viewership. This is why if a basketball game runs over, it cuts into sitcoms after it. This is why most shows get canceled after the first season. This is why we have any sort of entertainment at all and not corporations force-feeding us an endless stream of ads.

This caller likely replaced their preferences for the desires of everyone else. Just because your preference isn't popular doesn't mean it's because of some secret cabal is holding you and your brethren back. Maybe you just like unpopular stuff.

Friday, September 12, 2008

Wisdom of the Crowds

RT gives Disaster Movie 0% with 53 critics reporting.

Wednesday, September 10, 2008

Of Human Design

Mike recently directed me to a blog by a mutual vegetarian friend from college, Adam. The language is harsh: eating meat is oppression and so forth. What lovely serendipity that we covered prehistory in my development class today.

The roots of human civilization lie in what Jared Diamond calls "farmer power," or the development of food stuffs so other people can specialize in non-farming professions (soldiers, inventors, traders, etc). Critical to this was the domestication of animals for purposes of food and labor (the aforementioned oppression). Over generations brain power and survival techniques (such as good eyesight) were severely diminished. In other words, they are not natural in any normal sense of the word. Indeed they are less natural than a wooden table, since at least the wood retains original DNA. Domesticated animals are a new species.

Adam posted a few videos from Waking Life, an independent philosophical film. One character argues "the gap between, say, Plato or Nietzsche and the average human is greater than the gap between that chimpanzee and the average human," a rather strange claim given history. The average human purposefully domesticated plant and animal species, something no other animal has done. That's an astonishingly large leap from a chimpanzee.

A great departure from their wild ancestors, modern farm animals are basically bags of meat with scarcely a glimmer of intellect. They were bred to be property, and non-sentient at that (save for the most encompassing definition of sentient). Even by their cousin's standards they are stupid. Of all the oppressions of the world, meat-eating hardly seems like a worthy one to fight.

Thursday, September 04, 2008

Markets in Everything: Cancer Sniffing Dogs

The Economist recently had a story of how doctors have smelled patients breath as a way to test for sickness. It's inprecise and can't detect everything, so Carolyn Willis outsourced the smelling of sickness to dogs.
One of the first practitioners of the field of olfactory diagnosis, Carolyn Willis of Amersham Hospital in Britain, decided to contract the job out to dogs. They, she reckoned, have the necessary nasal apparatus to sniff out illness, and there was already some anecdotal evidence that they could, indeed, smell people with cancer. It worked. For the past four years her sniffer dogs have been diagnosing bladder cancer. She is now training them to detect prostate cancer and skin cancer as well.

Wednesday, September 03, 2008

Numbers Are Like Fire: Don't Play With Them

I question the potency of the argument put forth by Obama's chief economist (Laura D'Angelo Tyson) on the Colbert Report last night that the economy performs better under a Democratic president than a Republican one. While glancing at the data suggests such a correlation might be there (my analysis program is currently on the fritz so an eyeballing had to do), too many complications render the explanatory power weak.

Variance Within Presidents A party maintains control of the presidency for a minimum span of four years (even if the sitting president resigns of leaves office, his VP maintains the party "dynasty") though several do so for eight, sometimes more. But GDP growth fluctuates a great deal within such a span of time, sometimes going negative. Since our dependent variable doesn't change nearly as much as growth rates do, we lose a lot of our explanatory power.

Policy Variance The Democratic and Republican parties of today aren't constant. This limits our scale of analysis to a much smaller time frame (I went back to the 1930s) and even then there were changes. Also the politics that defined most the difference between the parties were Cold War issues, not economic ones.

Measurement Issues I used real GDP growth to analyze the relationship; Tyson no doubt used similar data. But this data is flawed because it treats government spending as growth, even when that spending is simply a transfer payment (such as Social Security). I'm currently looking for non-government numbers.

Lag Issues Colbert joked about this but there really are lags in policies, sometimes reaching ten years. Since the presidency oscillated between parties for a while, lagging the variables could result in the opposite conclusion.

Causation Issues Perhaps people are more willing to vote for a Democratic president when times are good. Since more government spending has been a staple of Democrats since FDR (Republicans play a similar game, of course, but to a lesser extent), the public might simply be buying a normal good. Wealthier people are more willing to buy feel-good government programs.

The Theory This is likely the biggest problem with the story. What's the explanation for why a Democratic presidency would fair better for the economy than a Republican one? The one I hear the most is that they help the "little guy", but it's not clear how paying someone because they are poor will incentivize them to be wealthier. Moral hazard issues abound. Their preference to cutting taxes for the non-rich helps, but it's usually paired with a tax increase for the wealthy. Unless you believe the richest tend to only buy and invest in each other, this story doesn't get you far. Income mobility remains quite high in the US, repeating the incentive issues that crop up in "helping the poor."

Monday, September 01, 2008

Cogs In the Machine

Economists are often scoffed at our "dismal" view of the world, that people respond to incentives first and foremost. There are no saviors, no heroes, no Santa Claus. There is no romance to politics except for what we wish was there. Politicians respond based on the choices they have, a constant as universal as gravity. Mr. Obama is not immune to such failings nor does Mr. McCain's "insider" status make him a shadow of Mr. Bush. While they have wishes and goals their actions will always be different than their speeches, a reality long recognized but rarely applied.

There are no good guys and bad guys. There are only people responding to incentives. Mr. Obama wants everyone to believe he'll be an engine of change, a Santa Claus figure that will make everything alright, and he'll surely offer token alterations to convince the populace of exactly that. But we have this world because that's the one that rewards decision makers. The fundamentals won't change because no desire to risk losing office. Only changing the rules of the game will change how the government work and Mr. Obama mentions nothing of such alterations. Believe the stereotype of the two-faced politician because there is nothing new in this election cycle.