The upshot seems to be that immigrants, regardless of where they are from, send money back home. This is straightforward - immigrants are not sending money to a black box but to their closest family and friends who are not enjoying the benefits of our system.

I haven't seen any complaints during the 1905-1906 periods about the dollars being sent back to Great Britain. Although, the article does note: "[o]f course, there is some offset to the stream of money flowing from the Post Office to Europe in the form of remittances from the other side to us. This return current, however, never goes above 25 per cent. of what we send."

It is said that democratic governments are myopic, scarecely looking beyond the next election. "Not so we the British," say...uhm, the British. This BBC story tells of a far reaching study, released today by UK's Office of Science and Innovation.

The 246 summary papers, called the Sigma and Delta scans, were complied by futures researchers, Outsights-Ipsos Mori partnership and the US-based Institute for the Future (IFTF).

The papers look forward at emerging trends in science, health and technology.

The scans explore a diverse range of areas from the future of the gulf stream and the economic rise of India, to developments in nanotechnology and the threat posed by HIV/Aids.

Perhaps the most tantalizing futurist prediction? Rights for robots.

The paper which addresses Robo-rights, titled Utopian dream or rise of the machines? examines the developments in artificial intelligence and how this may impact on law and politics.

The paper says a "monumental shift" could occur if robots develop to the point where they can reproduce, improve themselves or develop artificial intelligence.

The research suggests that at some point in the next 20 to 50 years robots could be granted rights.

If this happened, the report says, the robots would have certain responsibilities such as voting, the obligation to pay taxes, and perhaps serving compulsory military service.

Conversely, society would also have a duty of care to their new digital citizens, the report says.

With apologies to Philip K. Dick, Isaac Asimov et al., HT: Wired blog

Occasionally the paper from 100 years ago reveals, in a subtle way, that many of the problems we face today are not new problems, they are just our problems.

From the Dec. 21, 1906 NYT:

As Christmas Approaches

'Tis now the gladsome Christmas time
Too suddenly draws near,
When puzzled mortals, such as I,
Must face this problem drear -
   How to make every dollar do
   The necessary work of two!

From the Dec. 21, 1906 NYT:

The monster which French lawgivers intend to attack is ubiquitous. Its name is "piano," and the Minister of Finance seriously thinks of proposing a tax on those instruments not in use in a professional capacity - and they, of course, form the majority. There are in France about 500,000 pianos, and a tax of, say, 10s. would bring in the respectable sum of 250,000 [pounds]. It is very tempting to a Minister who struggles with an annual deficit.

There are clearly external benefits to higher education (although they may be inframarginal) but there are also external costs as well, something usually overlooked by those looking at the positive spillovers from higher education spending. See, for example, this article from Inside Higher Ed. Colleges and universities spent $94.6 million on lobbying Congress. This number undoubtedly understates the amount of deadweight loss due to rent-seeking because there is a lot of activity that is not captured by direct lobbying expenditures (such as lobbying of state officials). The net effect of higher education spending may be positive but these costs cannot be ignored in comparing the costs and the benefits.

It seems to me the curse of the professor of macroeconomics is the lack of fun examples to use in class. From movie clips to newspaper stories, microeconomic examples seem to abound. Unfortunately, very few movies show the protagonist and his unrequited love interest discussing the differences between frictional and structural unemployment, or the defendant crying in court that he stole from the bakery because we aren't at full employment since the Fed is engaging in unwise restrictive policies.

However, this story about marijuana seems well-suited for a discussion about national income accounting. It appears that pot is the top cash crop in the US. An obvious discussion topic is the role that black markets play in our economy. But, after reading the following

The study estimates that marijuana production, at a value of $35.8 billion, exceeds the combined value of corn ($23.3 billion) and wheat ($7.5 billion).

you could discuss several topics:
--how do they arrived at the $35.8b number?
--how is the market value for pot determined?
--does this mean we produce more pot than corn and wheat?
--if pot was legalized, would it remain the largest cash crop? (even if every pot grower grew the same amount?)

This is likely my last post until after New Year's (maybe even until after the AEA meetings). My family will be spending some time northern Michigan; hopefully there will be some good snow for Pee Wee. Whenever we return to my wife's hometown we chuckle about the photo below. It is not a photoshop creation; my wife took the photo during a trip home a few years ago. Happy holidays to co-bloggers and readers.

Last Wednesday, NPR had a report (listen here) on a variable road pricing experiment in Minneapolis. On a freeway from the downtown to the western suburbs there is a lane with embedded sensors. The price of driving in the lane varies with the amount of congestion in the lanes; more congestion leads to a higher price. Perhaps surprisingly, the NPR report does not include any snarky references to "Lexus lanes."

On irradiation, from the Wall Street Journal (subscription required):

The technology is known as food "irradiation," a process that propels gamma rays into meat, poultry and produce in order to kill most insects and bacteria. It is similar to milk pasteurization, and it's a shame some food marketer didn't call it that from the beginning because its safety and health benefits are well established. The American Medical Association, the Centers for Disease Control (CDC), the Food and Drug Administration and the World Health Organization have all certified that a big reduction in disease could result from irradiating foods.

Says Michael Osterholm, director of the Center for Infectious Disease Research at the University of Minnesota: "If even 50% of meat and poultry consumed in the United States were irradiated, the potential impact on foodborne disease would be a reduction in 900,000 cases, and 350 deaths." A 2005 CDC assessment agrees: "Food irradiation is a logical next step to reducing the burden of food borne diseases in the United States."

Eric Schlosser, author of the best-selling "Fast Food Nation," also disparages irradiation as an "exotic technology" developed "while conducting research for the Star Wars antimissile program." Scary.

None of these mythologies has ever been substantiated by science. The Centers for Disease Control concluded its investigation by noting: "An overwhelming body of scientific evidence demonstrates that irradiation does not harm the nutritional value of food, nor does it make the food unsafe to eat." According to Paisan Loaharanu, a former director at the Food and Agriculture Organization of the United Nations, "The safety of irradiated foods is well established through many toxicological studies. . . . No other food technology has gone through more safety tests than food irradiation."

So what's stopping irradiation? The answer is a combination of political pressure, media scare tactics and bureaucratic and industry timidity. And it starts with organic food groups and such left-wing pressure groups as Public Citizen that have engaged in a fright campaign to persuade Americans that irradiation causes cancer and disease. Something called the Stop Food Irradiation Project tells consumers to tell grocers not to carry irradiated foods.

The Dec. 19, 1906 NYT contains an argument for allowing women in the jury pool:

In breach of promise cases the presence of female jurors among the male jurors would certainly benefit the men, as they would at once see through the wiles of their own sex, disconnect the picture hat and the pretty gown, and disclose the hussy at heart in the pleading innocent betrayed one.

I'm above gloating of course, but I suggest that those of you who are still looking for interesting articles/examples for class might consider this Boston Globe article, pointed out by Don Boudreaux.

An economist joke

HT, Marginal Revoution

The Dec. 17, 1906 NYT has a demoralizing letter to the editor that, notwithstanding our theoretical and empirical advancements in the field of economics and the relatively large numbers of people who have taken at least one economics class in their young adulthood, might still be written today:

[Y]ou use the expression "we have combinations in restraint of trade." Why "restraint of trade"?

Manufacturers have sometimes been called upon to meet ruinous competition - competition that might cripple one or more factories and by so doing cause distress to communities or parts of communities. Somewhere along the downward scale of such competition combinations have been effected; such combinations have invariably been wholesome and should be legitimate and could not produce the proper effect if they were in "restraint of trade."

If the expression "combinations in restraint of vicious competition" were used it would be nearer correct, but why in "restraint of trade."?

The appeal to the idea that ruinous competition might harm a factory, or perhaps an entire industry, and therefore must be precluded is the language of the protectionist, even if protection comes in subtle forms. It is bad enough that cartels would be justified in such a manner in 1906. Shame on those who use the same language today.

Food Stamp Participation in the United States is up by approximately 47% between 2001 and 2006 but is down about 4.5% between 2005 and 2006? Is the overall increase a) the outcome of compassionate conservatism, in which the Bush administration has sought out those without enough to eat and to provide them with government aid, i.e., a supply-side effect, b) the Bush administration and the macroeconomy is driving people into hunger and therefore there has been a necessary increase in those who need assistance, i.e., a demand-side effect, or c) there is something going on here in which people are getting one over on the people like me, i.e., a free-rider effect?

The one-year reduction is arguably the recovery from Katrina/Rita, yet the dramatic increase in half a decade suggests there is a racket here, either on the demand side or on the supply side. I don't know the answer, but it would be interesting if someone does.

Where you don't want to be sued, at least according to the American Tort Reform Association or Foundation (they seem to go by both names):

Here's their 2006 Report.

From the December 16, 1906 NYT:

Flattery is a fault that is easily cured by marriage.

The man with a grievance never seems to have an impediment in his speech.

It is almost as hard to live up to a good reputation as to live down a bad one.

Slate reports a handy-dandy measure of global bellicosity.

So, which is it? Is the world more peaceful or more warlike? Since Americans are doing the lion's share of the fighting and military policing, it's difficult for us to answer the question objectively. Fortunately, there is an unbiased global economic indicator that sheds some light on the question: the Guns-to-Caviar Index.

The index is the brainchild of Richard Aboulafia, an analyst at the Teal Group. For the last 17 years, Aboulafia has been charting a relatively simple relationship: how much money the world spends on fighter jets (guns) versus how much money the world spends on private business jets (caviar).

Good deeds don't go unpunished, as this Washington Post article demonstrates.

At dawn on Tuesday more than a thousand Immigration and Customs Enforcement agents descended on six plants owned by Swift & Co., one of the country's largest meat processors. Some 1,300 workers were arrested, and operations at all six slaughterhouses were suspended. Seen in one light, the raids were perfectly justified. Both employer and employees were breaking the law.
...
Far from ignoring or shrugging off the law, the firm has been trying to comply with it. When job applicants started showing up with what the company suspected were false papers, it tried inquiring into their backgrounds -- only to be sued for discrimination by the Justice Department.

When the government created a program meant to help employers verify that their workers were in the country legally by checking Social Security numbers against a central database, Swift was among the first to sign up. And when that program didn't seem to be catching the worst offenders -- people using not false Social Security cards but stolen ones -- Swift came to Washington to testify in Congress about the problem. The reward: That was precisely the offense that ICE raided the company for on Tuesday.

This semester I started assigning an "economics puzzles" writing assignment for micro principles. You know the drill. Come up with an interesting behavioral observation that transcends the obvious (i.e., common sense) explanation, then solve it using economic reasoning. (Here's the whole assignment laid out, and here are some examples from earlier semesters.)

I used to assign this at the intermediate level, but since I no longer teach intermediate, this is my first experiment with this assignment at the principles level. On balance, the results were very cool. Not air tight economic arguments in all cases, but definitely not bad for freshmen early in their intellectual journeys. Below is a sampling (with names withheld to protect the innocent):

1. Why is it when your order a small sandwich at Togo's or a small French fries at Burger King the difference between a small and large is only a...very small increase in price?
The main reason is that labor makes up most of the price of the food that you order. The actual food itself is very cheap. However, it takes almost the same amount of labor to make a large sandwich as it would be to make a small sandwich. The reason the price difference is so small is because they are just charging you for the extra meat, bread, etc. and not the actual labor of making it. To the average consumer it makes it seem as if the retaurant is trying to give them more for their money. However, in reality the restaurant is not.

4. Why do families and friends by overpriced magazines, frozen pizzas, gift wrap and five pound tubs of cookie dough for school fundraisers? A sizeable portion of the profits from the sale don't even go to the school...
School fundraisers give an excuse to buy things a consumer would not otherwise buy. While these fundraisers almost always inflate the price of goods, they reduce other costs. What better way is there to overcome buyer's remorse (a non-monetary cost of spending) than convince the buyer they are funding education? These fundraisers can also add value to a good; how else can one convince their mother, wife, or even themselves to get a five pound bucket of cookie dough? Cookie dough is more of a liability than an asset, an unhealthy snack that probabaly won't even make it into the oven before it's devoured. But in the name of education, filling the freezer with twenty-five dollar tubs of cookie dough starts to sound like a great idea.

Do other merry DOLers have examples of "a student writes..."?

Okay, this is shameless.

But, on behalf of my man Russ Roberts, and the truly excellent podcasts at EconTalk, including Milton Friedman and many other key figures in economics....

VOTE IT LIKE YOUR BACK AIN'T GOT NO BONES!!!!!

Go to this site, and vote for "EconTalk". I'm beggin' ya, here.

And, while you are there, please consider voting for one of the most interesting conservative/talk blogs, "Betsy's Page", on the 251-500 top blogs category.

Mike Lester's cartoon is the better of the two, but this one from Chip Bok provides unsuspected context.

Mike Lester, the superb cartoonist for the Rome News-Tribune, offered his take on the UN report that cows contribute more to global warming than cars. The cartoon has some barnyard humor so I put it below the fold. Laugh at your own risk.

Many people think it's perfectly ok to use physical force to prevent prospective immigrants (i.e., people who were born on the other sides of lines politicians have drawn on maps) from entering the country because they pay few taxes, might send their kids to public schools, visit subsidized hospitals, go on welfare, speak poor English, or commit crimes.

I wonder why we can't use physical force to deport natives (i.e., people who were born on this side of the lines politicians have drawn on maps) who actually do pay little in taxes, send their kids to public schools, visit subsidized hospitals, go on welfare, can't speak English well, and do commit crimes.

"China in Revolt" paints a picture consistent with Friedman's view that markets erode authority.

By Deng’s time, frustrated bureaucrats and countless individuals, including some of the poorest and most desperate citizens in China, were ready to take the next step—ignoring central-government decrees and building large private businesses that now account for at least 40 percent of the Chinese economy. This became China’s “economic miracle,” brought to fruition even as government officials remained holed up in their offices in Beijing, preparing meticulously detailed five-year plans.

Mao built the People’s Republic on the concept of isolation—separating China from the rest of the world and the Chinese people from one another. Three decades after his death, technology has put them back in touch. In China, a cell-phone subscriber—and no country in the world has more of them—can send a text message that may be read by 100 million citizens within an hour, and acted upon by tens of thousands.

Leaving China a half-decade ago, an American banker remarked: “There’s a billion people here who don’t like following instructions.” If anything, Chinese society since then has become even more willful. It may not always be defiant, but it is frequently disobedient. For better and also for worse, we have entered a period marked by the emergence of a great people from millennia of autocratic rule. ... Thirty years after the death of Mao, the Chinese people have unfinished business to conduct, and their transition into the future is unlikely to be smooth.

I don't know if we should get rid of the penny or not, but I suspect that private issuers would respond to the current situation differently than the U.S. Mint.

The U.S. Mint has implemented a law against melting down pennies and nickels which, at current metals prices, could be worth more as metal than as currency.

The new regulations authorize a fine of up to $10,000, or imprisonment of up to five years, or both, against violators.

See more here.

From USA Today:

WASHINGTON — People who melt pennies or nickels to profit from the jump in metals prices could face jail time and pay thousands of dollars in fines, according to new rules out Thursday.

Soaring metals prices mean that the value of the metal in pennies and nickels exceeds the face value of the coins. Based on current metals prices, the value of the metal in a nickel is now 6.99 cents, while the penny's metal is worth 1.12 cents, according to the U.S. Mint.

Continuing our recent posts on the minimum wage, below is part of this morning's "Stateplace" program:

CHRIS FARRELL: The big economist complaint about the minimum wage is, yes, you know, you have good intentions to help the most vulnerable citizens in our society, but it doesn't work. It actually hurts the most vulnerable citizens in our society because when you raise the minimum wage, employers stop hiring these least-skilled workers. So that has been the traditional complaint by mainstream economists about raising the minimum wage. Good heart, bad policy.

FARRELL: Well it has been nasty in parts although recently, I follow the economic blogs, the virtual ink that has been spilled over the minimum wage, it's fascinating.

Well, Mr. Farrell, if you happen to read this economics blog, here's part of a recent paper by David Neumark:

The evidence from a large body of existing research suggests that minimum wage increases do more harm than good. Minimum wages reduce employment of young and less-skilled workers. Minimum wages deliver no net benefits to poor or low-income families, and if anything make them worse off, increasing poverty. Finally, there is some evidence that minimum wages have longer-run adverse effects, lowering the acquisition of skills and therefore lowering wages and earnings even beyond the age when individuals are most directly affected by a higher minimum.

Reuters carries the story, "Democrats to raise wages for poor workers."

The incoming Democratic-led U.S. Congress intends to give a hand to dishwashers, fast-food cooks and America's other poorest-paid workers by raising the federal minimum wage for the first time in a decade.

The article makes no mention of possible employment effects or any other negative impact. One secondary effect is claimed:

In addition to raising the pay of people who now earn less than $7.25 per hour, the proposed new minimum wage, an increase would prompt employers to increase the wages of an estimated 8.3 million other low-paid workers, according to some estimates.

"There's a spillover effect," said Harry Holzer, a former chief economist at the U.S. Labor Department. "Some employers like to stay a buck or two above the minimum."

Not only will the minimum wage increase further distort the labor market, but it will also carry baggage in the form of goodies for Republican constituents, though the Democrats might not have to give the Republicans much due to the bill's popularity:

"I think a minimum-wage bill -- pretty much a Democratic document without a lot of extras to placate Republicans and their small-business allies -- will pass, hit the president's desk and he'll sign it," said Ethan Siegal of the Washington Exchange, a private group that tracks Congress for institutional investors.

The Dec. 13, 1906 NYT reports that President Teddy Roosevelt was abandoning his "simplified English" executive order:

President Roosevelt has surrendered gracefully to the English language, and Noah Webster is to-night receiving congratulations from Samuel Johnson, Worcester, and all his chums on the other side of the Styx. Representative Landis of Indiana, Chairman of the House Printing Committee, is authority for the statement that the President will issue an oder complying with the House's wishes on the subject, not waiting for Senatorial action, and that this order will regulate thru, clipt, and dropt to Skibo Castle and other places where the air is more congenial than in Washington.

On the Freakonmics blog, Steve Levitt writes:

Whatever small offsetting impact that more reckless driving due to seat belts may have, it is trivial compared to the benefits of wearing a seat belt. Articles like the one in Time Magazine encourage people to come to completely the wrong conclusion on this question.

Here (via Lex Nex) is part of Levitt & Dubner's Feb. 19 "Freakonomics" column:

Although it is wildly reductive to put it this way, a Nascar driver has two main goals: to win a race and to not be killed. Nascar's recent safety measures seem to have considerably reduced the likelihood of being killed. So could it be that drivers are now willing to be more reckless? When crashing is made less costly, an economist would fully expect drivers to be crashing like crazy; could it be that Nascar's safety measures have led to fewer deaths but more crashes?

So Nascar has reduced a danger incentive but imposed a financial incentive, thus maintaining the delicate and masterful balance it has cultivated: it has enough crashes to satisfy its fans but not too many to destroy the sport -- or its drivers.

Maybe there's a significant difference (e.g., large dollar prizes) between NACSAR and ordinary driving, but it seems that Levitt is of two minds on the Peltzman effect. (Or maybe Dubner gives it more credence than Levitt does.) Levitt & Dubner talk of NASCAR achieving a "masterful balance" by imposing a financial disincentive to wreckless driving. Presumably such a disincentive would not be necessary if the Peltzman effect was (as Levitt writes on the blog) "not at all important in reality."

BTW, here's Josh's post on the Feb 19 "Freakonomics" column; his post includes a link to the Sobel & Nesbit NASCAR paper finding evidence of offsetting behavior.

Charles Murray stakes out a moderate libertarian position on immigration policy at National Review Online. Regarding illegal immigration, he offers the following principles:

1. Making laws about who gets to become a citizen, under what circumstances, is a legitimate function of the state.

2. Protecting borders is a legitimate function of the state.

3. Enforcing the law is a central function of the state.

4. Immigration reform must begin first with enforcement of existing immigration law. If it takes a wall, so be it.

It’s hard to disagree with (1) or (3). Everyone of course agrees with (2) when it comes to protecting borders against terrorists and invading armies. But I’m not keen on “protecting borders” against tourists and workers. I would prefer the pre-1914 world without passports. A wall along the Mexican border isn’t helpful against terrorists or invading armies.

On legal immigration, Murray declares:

2. Massive immigration of legal low-skill workers is problematic for many reasons, and some of them have to do with human capital. Yes, mean IQ does vary by ethnic group, and IQ tends to be below average in low-job-skill populations. One can grant all the ways in which smart people coming from Latin American or African countries are low-job-skill because they have been deprived of opportunity, and still be forced to accept the statistical tendencies.

But why is immigration of low-IQ workers a problem? As Bryan Caplan points out, the Law of Comparative Advantage shows that we gain from hiring people whose human capital differs from ours.

Here is Murray’s key policy recommendation:

4. When it comes to the nitty-gritty, I would … make immigrants ineligible for all benefits and social services except public education for their children.

Privatize the provision of education, and I’m agreed. Immigrants who come to work, good; immigrants who come to sponge, bad. But sponging by US citizens is likewise undesirable. The more we reduce the incentives or eligibility to sponge by US citizens as well, the less different need be the eligibility rules for immigrants.

From today's inbox:

TO: Faculty and Staff

FROM: CFO and Treasurer

DATE: Dec. 13, 2006

RE: STUDENT EMPLOYEE PAY SCALE ADJUSTED TO REFLECT MINIMUM WAGE CHANGE

Beginning Jan. 1, 2007, the minimum-wage increase approved in November by Ohio voters will take effect, making it necessary for the university to adjust its compensation structure for student employees.

Under the new structure, pay for student employees making less than $6.85 per hour will be increased to the new minimum wage. Current student employees earning more than the new pay scale will remain at their present pay rate. Under no circumstances will an individual’s pay rate be reduced.

Budgets for the 2006-2007 academic year will not be increased to accommodate the change in minimum wage.

So we have to pay our students more, but we're not going to increase the budget to pay them? Surely they're not suggesting that we're going to employ fewer students?! I mean that's crazy talk! Who would ever imagine that increasing the minimum wage would cost jobs?

And, forgive me for being excited....

BUT THE FREAKIN' NATURE BOY HAS ENTERED THE NC GOVERNOR'S RACE!

You can find the tale o' the tape here....

An interesting article on the economics of journal publishing.

Scholars as writers of papers determine what journals their work will appear in, and thus how much it will cost society to publish their work. However, scholars have no incentive to care about those costs. What matters the most to them is the prestige of the journals they publish in. Often the economic incentives are to publish in high-cost outlets. It has often been argued that page charges are a rational way to allocate costs of publishing, since they make the author (or the author's institution or research grant) cover some of the costs of the publication, which, after all, is motivated by a desire to further the author's career. However, page charges are less and less frequent.

It is not clear to me that the monopoly position of academic journals is sustainable, or desirable. But tenure decisions are SO wrapped up in rankings and refereeing that we may be stuck.

Here's what I know: it is harder and harder to find reviwers who will referee papers for me at Public Choice. Ick.

This is the concluding paragraph in a remarkable Washington Post editorial.

The contrast between Cuba and Chile more than 30 years after Mr. Pinochet's coup is a reminder of a famous essay written by Jeane J. Kirkpatrick, the provocative and energetic scholar and U.S. ambassador to the United Nations who died Thursday. In "Dictatorships and Double Standards," a work that caught the eye of President Ronald Reagan, Ms. Kirkpatrick argued that right-wing dictators such as Mr. Pinochet were ultimately less malign than communist rulers, in part because their regimes were more likely to pave the way for liberal democracies. She, too, was vilified by the left. Yet by now it should be obvious: She was right.

This article in the Sun-Times provides much more detail.

In the Dec. 12, 1906 NYT is an article titled "A $40,000,000 Mail Graft." That's a headline to grab your attention. In 2005 dollars, the headline would read "A $895,871,559.63 Mail Graft" - okay, not down to the penny, but you get the point.

What's going on? The article explains that:

...in 1905, the New York Central Railroad was overpaid for carrying mails to the extent of $270,000, and that within the last ten years the Government has overpaid for the carriage of mails about $40,000,000...

The cause of these overpayments. Mr. Murdock laid to the antiquated system under the present law, which is thirty-three years old. He said it is the practice to take the daily weight of mail carried for a number of successive working days in order to get the average for the year. The Sunday weight of mail would be included in the grand total, but when the average was taken the Sundays would be stricken from the total o fdays, thus reducing the divisor without a corresponding reduction of the dividend.

The weight was calculated as if all days in the week, and hence, year were included. However, the number of days was calculated by taking away the Sundays. The result? The calculated average weight of mail per day would be overstated, the railroads were paid based on average weight carried, and hence the railroads were overpaid.

Let's take an example. Assume the government/railroad honestly measured the total weight of mail carried over the course of one week to be 100 tons. If all seven days were correctly included in the calculation of the average the result would be 100/7 = 14.28 tons per day. If, instead, only six days were used in the denominator of the ratio, the "average" would be biased upward to 16.66 tons per day! The correct average would be calculated as 85.72/6 = 14.28, that is, it wouldn't change.

Was this fraud? I am no lawyer, but I don't think so. After all, the government established the payment system through legislation - which is genius. If the railroads were purposefully overstating how much actual mail was being carried, that would seem fraudulent. Yet, if the railroads were already making 16% more through the "new math" of the government, perhaps they were less prone to engage in fraud that could actually get them in trouble.

Incredible.

* Rather than "like bandits"

I'm teaching a course in Labor Economis next semester and am in the market for feature films related to the topic.

Norma Rae comes to mind but I'm open to other ideas if you have them. My e-mail is rlawson[at]capital[dot]edu. Thanks.

From the Dec. 12, 1906 NYT:

Socialism is not, as is sometimes thought, the enemy of capital. The real antagonist of Socialism, the power against which Socialism is striking, and which, if Socialism wins, must be destroyed, is the family.

Simon Rottenberg, one of the founding-fathers (so to speak) of sports economics postulated in a 1956 Journal of Political Economy paper that the then-prevailing reserve clause in professional baseball did not alter the distribution of players but did alter the distribution of the rents in the baseball labor market.

Rottenberg's "Coase-like" hypothesis in 1956 had to wait 20 years for free agency to be reestablished in professional baseball and the subsequent data for an empirical test. For the most part, Rottenberg has been supported.

Here's an anecdotal story of what Rottenberg's hypothesis is all about. In 1906, professional baseball players worked under the reserve clause - a player was tied to his current team indefinitely and could be benched, traded, or sold by his current team owner without so much as a `by-your -leave.' The December 12, 1906 NYT reports on the winter meetings of the professional baseball team owners who decided to enforce numbers on player uniforms.

In addition, there is this snippet:

It became known yesterday that President Ebbets offered $12,000 to Charley Murphy of the Chicagos for three of his players. President Dovey, the new owner of the Boston Club, increased the offer to $15,000 and then the Brooklyn President agreed to give the same amount. The names of the players were not divulged, but it is not thought that President Murphy will be in a hurry to part with his men.

From the Dec. 12, 1906 NYT:

"The dark places of the earth are full of horrible cruelty." That is a saying a great many centuries anterior to either the existence of sensational newspapers or the formation of the Congo Free State. But it seems to have an impressive modern instance in the case of the Congo Free State...The evidence of "horrible cruelty" has been so abundant and so shocking that it has penetrated to Belgium.

George Will's roundup of some strange and ominous happenings of the past year includes these:

Two U.S. explorers went to the North Pole to study how global warming threatens polar bears. They had planned to go last year, but were forced to delay Project Thin Ice because of unusually heavy snow and ice.

Modern Greece this year gave the world a new wrinkle in creative accounting: It became 25 percent richer after its GDP was revised to account for such booming service industries as prostitution and money laundering.

More on the latter from The Guardian:

The new figures are the result of Greece's determination to avoid a ticking off from the EU, which has the right to impose hefty fines on a eurozone country if its budget deficit rises above 3% [sic] of GDP. By boosting the size of its economy the Greek deficit will fall from 2.1% of GDP to 1.9%. Without the change the deficit would have fallen from 2.6% of GDP to 2.4%, according to the Financial Times.

But it might have backfired:

While the new figures will allow Greece to escape possible fines for running a high deficit, the country will pay for its honesty in other ways.

"Greece will be a victim because it will lose structural funds and will have to pay more into the EU budget," Mr [Charles Grant, the director of the Centre for European Reform] said. "I think we should therefore take them seriously."

Aging--it isn't just for wine:

It was brewed in the year that the Suez Canal opened, Charles Dickens embarked on one of his last literary tours and the Cutty Sark was launched in Scotland.

Luminous quality: Steve Wellington inspects the 1869 Ratcliff ale
But the recently-discovered cache of 1869 ale should have been undrinkable, given the conventional brewing wisdom that even the best beers are supposed to last no more than a couple of decades. Beer experts, however, say the 137-year-old brew tastes "absolutely amazing".

The Victorian beer was part of a cache of 250 vintage bottles found in the vaults of Worthington's White Shield brewery in Burton-on-Trent.

HT: Wilson

Excerpts from a news item:

The 'green-living' Toyota Prius has become the ultimate statement for those seeking to stress their commitment to the environment.

A Toyota spokesman said last night: "I cannot confirm the source of the nickel used in the Prius battery. It is true there is a slight increase in the energy required to produce the materials for the car."

A previous post on the Prius is here.

HT: JS [my favorite pre-med econ major :-) ]

From the Dec. 11, 1906 NYT:

Some 40,000 canary birds from the Hartz Mountains arrived here yesterday on the steamship Rhein, but the real story was in the troubles of Gretchen, the ship's cat.

It took six men to keep Gretchen out of that part of the ship where the songsters were caged. Twice Gretchen was ejected with force from the hold. The ship's surgeon would offer no opinion as to whether Gretchen or the watchers lost the more flesh.

Late last night the Hoboken cats were gathering about the pier to welcome the new arrivals.

Effects of Nevada's minimum wage law:

Several Nevada nonprofit organizations received grim news Friday that could affect their ability to offer jobs to disabled people. Labor Commissioner Michael Tanchek told representatives of the nonprofits that he sees no way to exempt them from a new minimum wage law that took effect last month.

Organizations including Southern Nevada's Opportunity Village and Easter Seals previously have been allowed to pay disabled clients based on the amount of work they can perform in an hour, called piece-work, instead of a set wage. The recent voter-approved boost in the minimum wage, which raises it to $6.15 an hour for employers who don't provide health insurance, makes no exemption for piece-work.

Ed Guthrie, Opportunity Village's executive director, said he hoped to be granted an exemption based on the fact that the organization's disabled workers are not considered employees by the Internal Revenue Service. But Tanchek said he sees no way around the new Nevada law, other than through another voter-approved constitutional amendment.

Read Clive Crook's "On Milton Friedman's Unfinished Work." I started clipping excerpts to post, but not much of this short article warrants omission.

David Horowitz ("Academic freedom for students") reports on remarkable goings-on in the Pennsylvania university system:

[W]hen the regulations were examined, it was evident that they applied only to professors. In other words, students not only did not know their rights, they didn't have any. The committee has recommended that this deficiency be corrected, and universities have already stepped forward to do so.

"Students having concerns about situations that arise within the classroom, or concerns with instructor behavior in a course that violates university standards of classroom conduct as defined in Policy HR64, 'Academic Freedom,' may seek resolution according to the recommended procedures. ...

"It is not the function of a faculty member in a democracy to indoctrinate his/her students with ready-made conclusions on controversial subjects. ...

"No faculty member may claim as a right the privilege of discussing in the classroom controversial topics outside his/her own field of study. The faculty member is normally bound not to take advantage of his/her position by introducing into the classroom provocative discussions of irrelevant subjects not within the field of his/her study."

Don Boudreaux's letter to Kai Ryssdal, host of American Public Media's "Marketplace," appears (with permission) here:

Dear Mr. Ryssdal:

Marketplace routinely frets about the size of the U.S. trade deficit. So I was surprised when on yesterday's show, just after David Johnson reported that Intel earns 85.4 percent of its revenues from abroad, you asked Mr. Johnson if it "troubles" him "that all these big American companies are so dependent now on revenues from overseas."

Firms earn lots of revenues from overseas by selling lots of goods and services overseas. Such sales reduce the size of the U.S. trade deficit.

Now I don't worry one whit about the trade deficit. But your frequent fretting about this deficit, combined with your concern that many American firms earn substantial revenues from their foreign operations, tells me that you don't grasp even the basic principles of international trade.

This letter opens my eyes to yet another way that trade can be misrepresented: Selling abroad makes us dependent on foreign money. Of course, buying from abroad makes us dependeent on foreign products.

Add this gem to the usual litany of woes:

Running a trade deficit means that foreigners are taking away jobs from Americans who could be producing the imported products. At the same time, the implied foreign investment makes us dependent (that word again) or the whims of foreigners. Never mention the people who have jobs because of those investment.

Running a trade surplus means that, on net, Americans are investing overseas. The long-run implication is obvious: We are building factories to provide jobs for foreigners, when that money could be used to build American factories. As a result, foreigners will be able to produce more in the future and we will become dependent on their products because of our short-sighted policy of allowing Americans to build factories elsewhere.

Critics of trade just can't lose.

Don expands on this at Cafe Hayek.

Don's post suggests that this type of reasoning (?) be called msilitnacrem--reverse mercantilism. His email message suggested that "Marketplace" should be renamed "Stateplace." Both suggestions have merit.

If you want to stir up some discord in your household, I recommend Christopher Hitchens's "Why Women Aren't Funny."

Why are women, who have the whole male world at their mercy, not funny? Please do not pretend not to know what I am talking about.

The chief task in life that a man has to perform is that of impressing the opposite sex, and Mother Nature (as we laughingly call her) is not so kind to men. In fact, she equips many fellows with very little armament for the struggle. An average man has just one, outside chance: he had better be able to make the lady laugh. ... Women have no corresponding need to appeal to men in this way. They already appeal to men, if you catch my drift.

She who faces Death by torture for
each life beneath her breast
May not deal in doubt or pity—must
not swerve for fact or jest.

In international rankings, the United States is third in economic freedom, produces 28 percent of the world's $44 trillion of output with less than 5 percent of global population, and ranks between third and seventh in GDP per capita. What a great country!

Unless you're one of the 7 million Americans in prison, on parole or on probation within the criminal justice system. That's one for every 32 adults in the U.S.

With a prison population of 2.2. million, the U.S. ranks first (not third, not seventh) in putting the stripes on people. From a current Reuters Story, "U.S. has most prisoners in world due to tough laws,"

According to the International Center for Prison Studies at King's College in London, more people are behind bars in the United States than in any other country. China ranks second with 1.5 million prisoners, followed by Russia with 870,000.

The U.S. incarceration rate of 737 per 100,000 people in [sic] the highest, followed by 611 in Russia and 547 for St. Kitts and Nevis. In contrast, the incarceration rates in many Western industrial nations range around 100 per 100,000 people.

This, of course, is not a new phenomenon. But reports like this are important, uncomfortable reminders of the social costs of mandatory sentencing, three-strikes, and criminalization of voluntary exchanges (drugs mainly, but also prostitution, gambling, etc.). Reforms are justified, and underway, on many fronts. (Read more beneath the fold.) The logical conclusion of these reforms calls into question the very nature of criminal law. As Bruce Benson writes in his entry, "Crime," in the forthcoming Encyclopedia of Libertarianism,

In a restitution based system crime (perhaps more appropriately called intentional tort) should involve only intentional, non-consensual acts entailing the initiation of force, fraud, or coercion against another person since only those acts justify pursuit of restitution. This eliminates all so called "victimless" or "consensual" crimes such as prostitution, drug consumption, gambling (that is not fraudulently rigged), and so on that are so prevalent today. Thus, criminal law would not be able to victimize individuals who voluntarily consume goods and services while imposing no cost on others... [O]ffenses against non-voluntary victims should be treated as intentional torts.

According to Wikipedia's entry on Mandatory Sentencing, the idea is realistic:

Australia, Mexico, New Zealand and some other countries employ a system of mandatory restorative justice, in which the criminal must apologise to the victim or provide some form of reparation instead of being imprisoned for minor crimes. In serious crimes, some other form of punishment is still used.

Check out their incarceration rates compared to U.S.
Download file
Source: International Centre for Prison Studies

From the Dec. 9, 1906 NYT:

Never hit a man when he has got you down.

Don't wear out your welcome. It's hard to get another.

No man can make a mistake without learning something.

No man can serve two masters such as dyspepsia and optimism.

Some people believe everything they hear, and take the rest for granted.

Some men never succeed because they are afraid of doing more than their share.

Some men seem to get a heap of melancholy satisfaction from being misunderstood.

Necessity is the mother of invention, but the children don't always turn out well.

Re: Frank's post , Dartmouth basically does this now.

On May 23, 1994 the Faculty voted that transcripts and student grade reports should indicate, along with the grade earned, the median grade given in the class as well as the class enrollment. Departments may recommend, with approval of the Committee on Instruction, that certain courses (e.g., honors classes, independent study) be exempted from this provision. Courses with enrollments of less than ten will also be exempted. At the bottom of the transcript there will be a summary statement of the following type: 'Exceeded the median grade in 13 courses; equaled the median grade in 7 courses; below the median grade in 13 courses; 33 courses taken eligible for this comparison.' This provision applies to members of the Class of 1998 and later classes.

Here are the median grades in Spring 2006 in economics courses at Dartmouth:

06S ECON-001-01 81 B -
06S ECON-001-02 81 B -
06S ECON-001-03 34 B
06S ECON-001-04 31 B
06S ECON-002-01 46 A /A-
06S ECON-010-01 68 A -
06S ECON-010-02 68 A -
06S ECON-010-03 37 B +
06S ECON-020-01 59 A -
06S ECON-020-02 59 A -
06S ECON-021-01 25 B +
06S ECON-021-02 33 B
06S ECON-022-01 65 B +
06S ECON-022-02 65 B +
06S ECON-025-01 34 B
06S ECON-026-01 58 B +
06S ECON-026-02 58 B +
06S ECON-027-01 33 B
06S ECON-038-01 34 A
06S ECON-039-01 33 B +
06S ECON-046-01 43 A -
06S ECON-046-02 43 A -
06S ECON-046-03 43 A -
06S ECON-046-04 24 A -
06S ECON-046-05 24 A -
06S ECON-049-01 20 A -/B+
06S ECON-049-02 20 A -/B+
06S ECON-056-01 42 B +
06S ECON-081-01 16 A

My thinking on grade inflation is similar but not identical to Wilson's. Instead of switching to ranks, I'd simply add an additional column to each student's transcript. The additional column would contain the gpa for each class taken. For example, a student's transcript might indicate a grade of B+ with a class gpa of 2.6. If one wanted to take one more step, transcripts could also report cumlative class grade point averages. Little Johnny, for example, might have a 3.3 gpa in classes with a cumulative gpa of 3.6. By contrast, Little Susie might have a 3.2 gpa but have earned that gpa in classes with a cumulative gpa of 2.7.

Larry informs me that the Lindsey essay is available here.

I suggest a radical approach to grade inflation: get rid of it by getting rid of grades. Aside from being subject to inflationary pressures, grades are odd creatures in the first place. Every instructor has complained about the difference between a high-B and a low-B student, hence +/- grading which reduces but does not resolve the problem.

Why not just rank each student in each class? We already do this with grades, except that all students with a given grade are implicitly assigned the same rank. In a system based on ranking, a student's transcript would report the mean percentile rank, perhaps with a supplemental histogram of percentiles in all classes taken.

Not only would ranking rather than grading remove the possibility of grade inflation, it would also reduce students' incentives to seek out crip courses in order to pump up the average. One could still take a crip course to free up time for studying other subjects, but could not count on a higher grade (now rank) in the course to directly affect the overall average.

Brink Lindsey (subscription required) calls for a new fusion of libertarians and progressives. He characterizes the current state of affairs thusly:

Yet progressives remain stubbornly resistant to embracing capitalism, their great natural ally. In particular, they are unable to make their peace with the more competitive, more entrepreneurial, more globalized U.S. economy that emerged out of the stagflationary mess of the 1970s. Knee-jerk antipathy to markets and the creative destruction they bring continues to be widespread, and bitter denunciations of the unfairness of the system, mixed with nostalgia for the good old days of the Big Government/Big Labor/Big Business triumvirate, too often substitute for clear thinking about realistic policy options.

Hence today's reactionary politics. Here, in the first decade of the twenty-first century, the rival ideologies of left and right are both pining for the '50s. The only difference is that liberals want to work there, while conservatives want to go home there.

Lindsey points to a few cases in which some fusion has occurred and closes with the following assessment of what would be required for his program to be realized:

It must be based on a real intellectual movement, with intellectual coherence. A movement that, at the philosophical level, seeks some kind of reconciliation between Hayek and Rawls.

If such an exploration could be launched, liberal and libertarian thinkers would begin talking with one another and engaging one another regularly. Over time, they would come to see themselves as joined in a common endeavor. And, in the shared identity that would emerge, there would be plenty of room for continuing disagreements, even sharp ones, just as there is in any robust political movement.

Can liberals and libertarians really learn to work together? I don't know, but their alternative is most probably to languish separately.

Re: Tim's post below, the best idea I've heard to rein in grade inflation was this:

First, double tuition.

Second, tell students that they would get a rebate on their tuition if their grades were good. If you get straight A's you get 75% back, straight B's 50% back, straight C's 25% back--something like this. Note that if the average student gets B's then this is revenue neutral.

Third, make sure each faculty member (or at least department) gets a cut of the revenue generated from his students.

At first glance you'd think the students would clamor even more for better grades, and I'm sure they would. But you have to imagine the faculty member's point of view too. Sure if the professor gives high grades, the students will like him, but then the net revenue will be low and his pay raise and travel budget may be cut. If he gives all F's, then students won't enroll in his courses and his pay raise and travel budgets may still be cut (the wrong side of the Laffer Curve). An equilibrium of sorts should develop if the professor wants to maximize his pay/budget. Then the admin could adjust the rebate formula to get the desired grading/budgetary outcomes. And more dynamically, it should draw better students, hoping to get large rebates, to the university.

[Btw, I know Paul Beaumont and just laughed my a$$ off. The Full Beaumonty! The females of my FSU cohort felt the same way as Tim's, but that's a new term to me.]

I have subscription about to expire to Trails.com. The site has chapters from dozens of hiking books in .pdf form that you can retreive. I have 38 free downloads remaining. So if anyone wants any information about a mountain or hiking trail, let me know and I'll see what I can do.

Nothing, however, can be more absurd than this whole doctrine of the balance of trade, upon which, not only these restraints, but almost all the other regulations of commerce are founded.

Wine too? That's odd.

As if grades aren't inflated enough already. I'll plead guilty too.

Anyone have any suggestions on how better to align the incentives of instructors (want to teach ideas and course material) and students (a few want that; most want a good grade)? The Full Beaumonty at FSU (so nicknamed because, when I was there, all the female grad students thought he was hot and arguably wished he would perform said dance) once argued that we should abolish all curriculum requirements, core classes, exams, etc. To get your degree you would get one exam, and it would be up to you to take whatever classes you felt you needed to pass that exam.

The ABC Family cable network will air “The Year without a Santa Claus,” the original Rankin-Bass puppetoon (stop-motion-animated; similar to but not quite the same as Claymation because it uses hard puppets rather than modeling clay), this Saturday (9 Dec.) at 5pm Eastern (4pm central). And again on Friday, 15 Dec., 7/6c; Weds. 20 Dec. 7/6c; and Sun. 24 Dec. 9/8c.

Sure, you’ve seen (or deliberately skipped) it every year since in debuted in 1974; why see it again? Because you’ll need to refresh your memory before you tackle the new live-action version, which NBC will air Monday, December 11th at 9/8c. John Goodman plays Santa, Delta Burke plays Mrs. Claus, Chris Kattan (naturally) plays the devious elf Sparky. Carole Kane is Mother Nature, Harvey Fierstein (!) is the Heat Miser; Michael McKean is the Snow Miser. In case you think I must be making all this up, here’s the IMDB link, and here’s a YouTube clip.

Lopez comments on the economics of his upcoming nuptials. Sorry, Ed, but you ain't seen nothing yet. Here's your indifference curve set after marriage:

I thought Larry Summers was treated poorly by Harvard, but the folks at Harvard don't really care what I think. That said, Dr. Summers was mentioned in this Chronicle story:

Mr. Summers’s controversial remarks about the aptitude of women in science and mathematics helped lead to his ouster as president last February. Today he participated in an hourlong discussion at the Brookings Institution, a think tank, about several new papers on science and economic growth. There was no talk about female scientists — until the very last question, that is. An audience member asked the panel about what universities should do to help women in the sciences avoid glass ceilings in their careers. All eyes swung to Mr. Summers.

Immediately grabbing a microphone, he said, "Maybe I should say something about that." The audience roared with laughter.

"Larry, maybe you shouldn't," quipped one of the other panel members.

"Let's say I've had an opportunity to be educated on the topic," he shot back, smiling.

It's really very simple, actually. If M=income, N=leisure, H=work, w=wage, and T=time endowment, then your usual labor-leisure choice set is:
.

But the choice set while planning your own wedding is:
.

We should have hitched up wagons in Vegas, baby.

The Idea Channel is currently streaming both the 1980 and 1990 versions of Free to Choose. The site also announces a PBS program on Friedman's life and work that will air on January 29. (Hat tip to A Bama Blog.)

On November 20, some of Friedman's colleagues at the University of Chicago gathered to pay tribute. Click here to watch the program, which includes Gary Becker, Eugene Fama, Robert Lucas and Sam Peltzman.

2006-2007 George H. Moor Chair Programs
Spring Semester, 2007

Environmental Protection: A Question of Moral Imperatives
Thursday, February 15, 2007
5:30 p.m. Bridge of Learning
J. R. Clark
Probasco Chair of Free Enterprise
The University of Tennessee at Chattanooga

About the speaker: J. R. Clark earned the Ph.D. in Economics from Virginia Polytechnic Institute under the Nobel Laureate James Buchanan. He holds the Probasco Chair at The University of Tennessee at Chattanooga, and is the author of six books and numerous academic articles published in the United States, Japan, Italy, Canada, France, India and Russia. Prior to coming to UTC, Clark was with the Joint Council on Economic Education in New York, chaired a large economics department in New Jersey, held the Hendrix Chair, and was a research fellow at Princeton University. In 1996, he was inducted into the Mont Pelérin Society and elected to its board of directors in 2006. Currently he serves as Secretary/Treasurer for both the Southern Economic Association and the Association for Private Enterprise Education. His consulting experience includes Fortune 500 companies, government agencies, universities, and publishing firms as well as performing litigation support for law firms in personal injury, wrongful death, business evaluations and matrimonial cases. He has received significant grants in entrepreneurship from the J. Howard Pew Freedom Foundation Trust, is Past President of The Association of Private Enterprise, and held seats on the boards of the Palmer R. Chitester Fund and William B. Cockroft Foundation. Clark holds an Airline Transport Pilot's rating and currently flies light corporate class aircraft.

--

Demand and Technological Change in Energy Markets
Thursday, March 29, 2007
5:30 p.m. Bridge of Learning
Lynne Kiesling
Senior Lecturer, Department of Economics, Northwestern University
Senior Fellow, Reason Public Policy Institute

About the speaker: Dr. Lynne Kiesling is a Senior Fellow at Reason Public Policy Institute and a Senior Lecturer of Economics at Northwestern University. Dr. Kiesling's research focuses on regulation and technological change, and other issues in regulation and privatization. In particular, Dr. Kiesling is increasingly called upon to offer commentary and analysis of the ongoing electricity crisis in the Western United States and gas price fluctuations in the Midwest and nationwide. In this role, Kiesling appears regularly on local, regional, and national programs and publications, and has authored numerous publications. Through Reason Public Policy Institute 's California Electricity Crisis Resource Center (www.rppi.org/electricity), for which she manages content, Kiesling seeks to shape the debate and public opinion about workable, market-oriented energy policies. Before joining Reason Public Policy Institute , Dr. Kiesling taught economics and public policy at the College of William and Mary in Virginia, during which time she published extensively in academic journals. She has also worked as an international economic consultant for PricewaterhouseCoopers LLP. Dr. Kiesling holds a Ph.D. in Economics from Northwestern University, specializing in industrial organization, information theory, public finance and economic history. She also holds a B.S. in Economics from Miami University, Oxford, Ohio.

--

Sullivan Lecture at Capital University Law School*
Friday, April 13, 2007
Capital University Law School
Randy E. Barnett
Carmack Waterhouse Professor of Legal Theory
Georgetown University Law Center

About the speaker: Randy E. Barnett is the Carmack Waterhouse Professor at Georgetown University Law Center, where he teaches constitutional law. He has also taught torts, criminal law, evidence, agency and partnership, and jurisprudence. After graduating from Northwestern University and Harvard Law School, he tried many felony cases as a prosecutor in the Cook County States' Attorney's Office in Chicago. In November 2004, he appeared before the U.S. Supreme Court to argue the medical cannabis case of Gonzalez v. Raich , after successfully arguing in the Ninth Circuit in 2003. He also represents the Oakland Cannabis Buyers Cooperative. He also coauthored an amicus brief to the Supreme Court in the case of Lawrence v. Texas. Professor Barnett lectures internationally and appears frequently on radio and television programs such as the CBS Evening News, The News Hour (PBS), Talk of the Nation (NPR), and the Ricki Lake Show. Professor Barnett's scholarship includes more than eighty articles and reviews, as well as seven books, including Restoring the Lost Constitution: The Presumption of Liberty, (Princeton, 2004), which was awarded the Lysander Spooner Book Award for the best book on liberty for 2004,Contracts Cases and Doctrine (Aspen, 3rd ed. 2003) and Perspectives on Contract Law (Aspen, 3rd ed. 2005). His book The Structure of Liberty: Justice and the Rule of Law (Oxford, 1998) was awarded the Ralph Gregory Elliot Book Award and has been translated into Japanese. Professor Barnett is a senior fellow of the Cato Institute in Washington DC and the Goldwater Institute in Phoenix, Arizona. Before moving to Boston University, he was the Legal Affairs Contributor for WBEZ (NPR) in Chicago where he broadcast a 15-hour series on the Bill of Rights.
*co-sponsored with Law School

Every year we have to listen to the inevitable cries from this or that team that is left out of the big national title game in college football. This year it's Michigan. "Why can't we have a tournament like other sports or football at other levels?" they ask.

Count me in the minority that acutally likes the Bowl game system and dislikes tournaments.

What I don't like about tournaments is that every team, except one, finishes the season with a loss. Every team, except one, no matter how great a season they had ends up with a bitter taste, a "woulda, coulda, shoulda..." GMU basketball fans had a fantastic season last year, but let's face it, it was more bitter in the end than sweet.

The reality is only one team can win the "national title." But I like the fact that after the bowl season is over exactly 50% of the teams in the post season will look back on the season with a warm feeling of a bowl victory.

Sports games are inherently zero-sum, and therefore not like real life (notwithstanding all the sports/life metaphors we have to endure), but 50% winners and 50% losers strikes me as closer to real life than 1 winner and N-1 losers.

A new study covered in Runner's World:

An Austrian study that made worldwide headlines last week suggesting a link between marathon running and skin cancers, possibly including the dangerous malignant melanoma (MM), turns out to be somewhat less worrisome than many news reports indicated. Of course, sun exposure is a known cause of skin cancers, and runners do go out in the sun (in skimpy clothing), so they should be careful. But the research study uncovered no melanomas among either the 210 marathoners or the 210 control group members, and never attempted to measure skin cancer incidence. "On clinical examination, no skin lesions suggestive of MM were diagnosed in either group," wrote the authors, a group of running aficionadoes and marathoners/triathletes from the University of Graz in Graz, Austria.

However, the marathoners clearly had more liver spots and atypical moles, and received more referrals, than the control subjects. Of particular interest to runners, all three findings were associated with increased levels of training. In other words, those who trained the most (over 44 miles a week) had more liver spots, atypical moles, and referrals than those who trained less. Presumably, the more you train, the more time you spend in the sun. Here's the data on miles/week of training and incidence of atypical moles, liver spots, and "referrals."

The Dec. 5, 1906 NYT reports on Congressmen proposing to raise their salaries (once again):

A proposition is underway to increase the salaries of Congressmen to a point where they will not be tempted to eke out their incomes by porch-climbing and panhandling...If the Democrats can be induced to restrain their propensities for making the eagle scream, the measure stands an excellent chance.

At present, a Congressman gets $5,000 a year, which is what he used to get when Pennsylvania Avenue was a mud road and the best hotel cost about what a hallroom in the northwest section does now. Nobody has the least doubt that the pay ought to be raised to $7,500, but every Congressman is mortally afraid of the how about "salary grabs" which is sure to be raised...

The Speaker's solution of the difficulty was for the Committee on Rules to report a bill, separate from the Legislative bill, and have it put through, provided the Democrats would agree not to make a fuss. The Democrats can vote against the bill, if they like, for the sake of keeping up their record for economy, but they must not make speeches about the toiling masses whose sweat-bedewed bread is being wrenched from them to pamper the children of luxury in the halls of legislation. If the Democrats will not bind themselves to this course of conduct, the bill is to be dropped and nothing more done about it.

In other words, we pay Congressmen the same today, in real terms, as we did 100 years ago. In return, we have a much more intrusive and paternalistic government. Correlation or causation?

From the Dec. 5, 1906 NYT:

The tailor whose shop is located near Columbia University sighed as he regarded a crowd of students passing his doorway. "The college boy is the worst dressed young man in America," he announced. "Why so?" inquired the customer to whom he was talking.

"Because the college boy goes in for such exaggerations," was the answer. "Instead of following a new fashion with restraint, he seizes upon it and enlarges on it until on his figure an attractive garment becomes a caricature. Look at those boys. Notice their shoes - soles an inch thick and extensions all out of proportion. Take notice of their coats, their trousers, their overcoats, their waistcoats - all overdone, all burlesques of the real fashion...If he were simply and quietly well dressed he is afraid no one would know he was a college man, so he takes every feature and exaggerates it...So on account of his tendency to distort everything, I call the college student the worst dressed young man in America."

Read all about them in Arnold Kling's offering on education and entrepreneurship. I was especially pleased that Kling included accrediting agencies as one of the significant barriers to improving higher ed.

HT: George Leef

Last Friday, I was the guest speaker for the Middle Georgia Economics Seminar Series (a consortium of Mercer, Wesleyan, and Macon St.). I thoroughly enjoyed my visit; my paper is here. There was a good turnout of students (at 3:30 on a Friday!) and they came prepared with interesting questions. I also enjoyed meeting faculty members Ihsuan Li, Allen Lynch, Scott Beaulier, Atul Saxena, and Phil Taylor. Thanks to all for a pleasant visit.

While visiting friends this weekend, my son watched A Christmas Story for the first time. When the movie was over he came downstairs and I asked him how the movie was. He said, "It was good. This guy got shot in the face." Without skipping a beat, my friend said, "What were you watching - the Dick Cheney story?"

This OSU-hating Columbus resident, who is also an FSU alumnus, has only one thing to say about the BCS championship game:

GO BUCKS! GO BUCKS! GO BUCKS!

(I can't believe I said that.)

Washington Times on medical tourism:

"[M]edical tourists" have a vacation in an exotic place where they can soak up the sun, visit a few golden temples or other landmarks and end up with a new hip or knee, a healthy heart -- or a robot-controlled joint replacement, a procedure that has not yet been approved in this country.

In addition, "they return with a lot more money left in their pockets -- sometimes 70 [percent] to 80 percent more than if they'd been treated in the United States," said Diana M. Ernst, a public-policy fellow in Health Care Studies for the Pacific Research Institute (PRI).
...

However, there are still some roadblocks to a groundswell of U.S. support for medical tourism. For example, a North Carolina paper-products company interested in sending an employee to India for shoulder and gallbladder surgery and giving him the $10,000 it expected to save ran into difficulties with a union that represented some of its employees.

"Large American insurance companies have not fully jumped aboard the medical-tourism bandwagon, so the number of medical tourists remains paltry compared to the millions of surgeries performed in the U.S. every year," Ms. Ernst said.

[Uwe Reinhardt, a health economist at Princeton University] said medical tourism will only grow in the coming years. "And if it is used a lot, this has the potential of doing to the U.S. health care system what the Japanese auto industry did to American carmakers," he said.

With a generous grant from the Market-Based Management Institute, the Association of Private Enterprise Education announces the:

Economic Communicators Contest

First Prize: $10,000
Second Prize: $5,000
Third Prize: $2,500

ABC News reports:

U.S. District Judge James Robertson ruled Tuesday that the government had violated the law because the vision impaired could not tell the difference of one bill's denomination from another.

He ordered the Treasury Department to come up with a new design for paper money.

Possible devices (variously used in other countries) for making a $20 bill distinguishable from a $1 bill by touch include: different sizes, foil patches, rough patches, raised printing, and series of perforated dots.

The US Treasury, which prints US currency notes for the Federal Reserve, objects that the costs of redesigning and retooling would exceed the benefits. Spokesmen for the vending machine and slot machine industries are naturally concerned about the potential need for a costly re-fitting of millions of machines to accept new notes. Banks’ automatic teller machines may similarly need re-tooling to dispense differently sized notes.

If we wanted to weigh the costs and benefits, is there an accurate way to determine whether it is worth the cost to redesign the currency for the sake of some subset of users? We can imagine an academic economist making an honest attempt to do a serious cost-benefit analysis, recording the Treasury's estimate of retooling expenses and using questionnaires to form an estimate of blind currency users’ willingness to pay. But such an analysis, even if better than nothing, is a poor substitute for a real market test. On the cost side, a bureaucracy (unlike profit-driven competing firms) has little or no incentive to find, much less report, the minimum cost method of retooling. On the benefit side, it is impossible to measure actual willingness to pay by such methods as questionaires. Those problems aside, it’s unlikely in the extreme that the government will ever base its decision on such an analysis. Judge Robertson didn’t cite or ask for any cost-benefit study – he simply ordered a redesign.

We need to ask an even more basic question: Why should currency design be a government decision at all? It becomes a government decision, of course, when government is the monopoly provider of currency. But that's not the only feasible arrangement. Currency notes were privately printed in the United States during the nineteenth century, by such security printing firms as the American Bank Note Company, and issued by hundreds of private commercial banks. Even today banknotes are privately and competitively issued in Scotland, Northern Ireland, and Hong Kong. The Royal Bank of Scotland, for example, stocks its “cash dispensers” (ATMs) with Royal Bank notes. Under competitive pressure, private issuers all denominate their notes in the standard monetary unit (dollars in the US, pounds sterling in the UK), because that is what consumers want. But each bank strives to make its own brand of notes more attractive for users through pleasing designs and advanced counterfeit-proofing devices. In the past, banks even experimented with different sets of denominations – for example, some banks issued $3 bills – in hopes that consumers might find them useful.

Re-privatizing the issue of currency in the United States would give us a true cost-benefit test as to whether it is worth adding tactile devices to distinguish denominations. If a bank could cover the costs of producing blind-friendly notes by attracting enough blind customers to its ATMs, it would. Not every bank would need to follow the same policy. Today, under Federal Reserve monopoly, we are stuck with one-size-fits-all currency even where one size doesn’t in fact fit everyone so well.

I've made basically the same argument here in favor of privatizing the US$1 bill and the US$1 coin and likewise for the €1 note and coin.

Without such a market test, we are left either with merely guessing whether the benefits to the blind exceed the extra production costs, or with cost-be-damned edicts like Judge Robertson’s.

BTW, I have recently signed on to write columns for Free Market Network News. A longer version of this piece will appear there on Monday.

Back in October I noted here that Northern Ireland's private Ulster Bank (a subsidiary of Nat West) would be issuing a new banknote to commemorate native soccer legend George Best, who died one year ago. Today comes the news that all one million of the £5 notes have been snapped up by collectors. The going price on eBay is currently about 6 times face value.

The Dec. 1, 1906 contains an advertisement for an Auto Show at Madison Square Garden from Jan. 12 - 19, 1907. Here's the list of manufacturers scheduled to present their wares:

From the Dec. 1, 1906 NYT:

No one will be much surprised that ex-Mayor Seth Low has paid to the Treasury of the city $27,000 or more for taxes he had erroneously thought when he made out his statement of taxable property that he was not legally bound to pay...The point of peculiar public interest in the transaction is that the tax law is in such a condition that a gentleman of Mr. Low's knowledge, and his business and official experience, earnestly desirous to pay all that he ought to pay, was unable correctly to tell how much that was, and was finally forced to secure the trained judgment of a prominent lawyer to solve the puzzle for him.

From the movie, Tenacious D and the Pick of Destiny, comes this wonderful, and very crude song, "The Government Totally Sucks." Lyrics and a link to listen are found below the fold. WARNING: very foul language!

HT: JCH

No, this isn't a rant about anti-immigration economists. I just wanted to share the following clip from the movie Clueless that I've showed in class to introduce my discussion of immigration. It helps to reinforce to my students the importance of the argument that led to a conclusion. To often they think because they got the right answer they deserve 100 percent, even if everything leading them there was wrong.

I've placed the clip below the fold.

TANSTAAFL is often attributed to Milton Friedman. Allister Heath ("The amazing freebie economy") points to the actual source:

It was Robert Heinlein, the libertarian science-fiction writer, who famously coined the adage 'There Ain't No Such Thing As A Free Lunch' Tanstaafl for short in his 1966 cult classic, The Moon Is a Harsh Mistress.