I once attended a talk given by Richard Pipes. During the Q&A afterward, someone spent about five minutes going on a rant about how private property was immoral and that all things belong to God, so it's even sinful to say that my yard is mine and not accessible to any one of God's creatures who wants to use it.
Pipes sat there patiently listening to this member of the audience have his say and then ask how he responds to this argument. Pipes politely and respectfully answered the questioner (I thought beautifully and using real world examples of the human atrocities that resulted under political systems where property was collectively owned.), not once raising his voice or getting defensive. It was a lesson in how a master responds to criticism of his work.
I often get frustrated listening to Jon Stewart for his one-sided remarks and sometime petty attacks, but I give him credit for the way he handled Bill O'Reilly in this clip. It reminds me of Richard Pipes and offers a great lesson on listening and mirroring back what your critic is arguing as a way of making your own point.
What Adele is referring to in this refrain from her song, Someone Like You, is that she failed to diversify her relationship portfolio. She went "all in" in her romance and rather than her investment paying off (i.e., it lasted in love), it turned out to be a bad investment and it hurt instead.
Much like a stock portfolio where you hold a large number of stocks of companies in different sectors, you should also diversify your relationship portfolio and maintain solid friendships with other people. If one of them leaves, or you find that a relationship with one of the friends is not working out, there are plenty of other friends with whom to associate. Once you are fairly certain that that special one is really "that special one," then maybe it's time to take a big risk and go all in on that person, committing yourself only to him or her. (Hey, you wouldn't argue that going all in on Wal-Mart and buying only Wal-Mart stock is a good investment, would you?)
Now, Adele was in her twenties when she was engaged and maybe to her she felt that he was "that special one." Maybe she felt that it's time to get married and that the marginal cost of searching for someone better exceeded the marginal benefit to her were she to find someone better. Consequently, she took the risk and went all in.
This is not the case with adolescents, and a recent study demonstrates why teens should diversify their relationship portfolio and not go all in and date.
Adolescence is when children first begin to push boundaries on the way to adulthood. While they may think they know what’s best for them, they sometimes lack the foresight to see the consequences of their actions.
Study participants who didn’t date had better overall academic performance, while those who dated earlier in middle school were twice as likely to begin using alcohol and drugs in high school, the researchers said.
All right, so maybe that's a lot of correlation rather than causation. Children who tend to date in middle school exhibit impulsive behavior in all areas of their lives, including drinking, drugging, dating and school.
“A likely explanation for the worse educational performance of early daters is that these adolescents start dating early as part of an overall pattern of high-risk behaviors,” Orpinas said in a press release.
Other amplifying factors include the emotional difficulties teens often face in middle and high school: bullying, depression, and anxiety. All of these have been linked to higher rates of smoking, drinking, and drug use.
In other words, if you've hired an advisor to manage your portfolio, ask him or her when she first began dating. If they say middle school, take your money and run before they lose it all in risky investments.
So the dating isn't the cause of the social problems, but is likely a response to other troubling factors in the adolescent's life. If you see your middle or high school-aged child dating, maybe they're looking for something currently lacking at home. Family is the best relationship asset to hold while growing up, but if kids find family an unsafe investment that's not paying off, they'll go looking for other, more lucrative ways of realizing an emotional return.
I think it's all this investment jargon that sustains the romance in my relationship.
Writing in today's New York Times, Tyler Cowen explains the difference between the economists' perspective on policy versus the layperson's or politician's perspective. Economists tend to make the broader moral argument.
A case in point: immigration and international trade.
Imagine that it is your professional duty to report a cost-benefit analysis of liberalizing immigration policy. You wouldn’t dream of producing a study that counted “men only” or “whites only,” at least not without specific, clearly stated reasons for dividing the data.
So why report cost-benefit results only for United States citizens or residents, as is sometimes done in analyses of both international trade and migration? The nation-state is a good practical institution, but it does not provide the final moral delineation of which people count and which do not. So commentators on trade and immigration should stress the cosmopolitan perspective, knowing that the practical imperatives of the nation-state will not be underrepresented in the ensuing debate.
The graph below adds more evidence that our economy is currently struggling through sectoral changes and not necessarily a shortage of aggregate demand. Worse still, the employment problems will persist for a while.
The left scale measures the labor force participation rate for those with a college degree, while the right scale measures the labor force participation rate for those with a high school diploma and no college. Both have ten percentage point ranges, from 70% to 80% for college graduates and from 55% to 65% for those with a high school diploma but no college.
Both declined since 2008, but it's the change since October 2012 that is troubling. The labor force participation rate for those with a college degree increased half a percentage point, while for those with a high school diploma and no college it decreased 1.5 percentage points, with almost half of that decrease coming in February alone.
Manufacturing jobs of the past are gone. The opportunities for someone with a high school diploma and no college degree are drying up, causing more to leave the labor force. There are plenty of employment opportunities for people with an adequate skill set—largely literate, some aptitude for mathematics, and able to solve problems—but we are not educating the next generation of workers sufficiently to take on these jobs. Watch the video below the graph for a more thorough explanation of this. It is a very insightful discussion of the current situation from economists Russ Roberts and Ed Leamer.
All three offer great lessons of why being dishonest with your customers (Dish Network is the worst of the three) and gouging them is not good business practice. The beauty of market capitalism is that if I feel someone else will better serve my interests, I'll exit my current relationship with an offending company. The Internet now allows for people to inform others of their dissatisfaction with a business.
Where the market is broad and there are many alternatives, you had better cooperate. If you choose the noncooperative solution, you may find you have no one to noncooperate with.
Bud Rountree was at a Boise Hawks game in 2008 when a foul ball smacked him in the face. He had left his seat and was talking to someone, according to reports, when he heard the crowd cheer, turned back toward the field and got plunked. The resulting injury eventually cost him his eye.
Rountree then sued the Hawks, a Single-A affiliate of the Chicago Cubs. Five years later, after various appeals, it turns out his case will go to a jury. Twelve people — not "The Baseball Rule"— will decide whether the team was negligent in Rountree's injury.
Ultimately, the Idaho Supreme Court wrote in its ruling, "[E]ven though the court may have the power to adopt a rule, such as the Baseball Rule ... we find no compelling public policy requiring us to do so."
All right, so there are certain things that are such a big part of the game that by participating you assume liability for harm caused to you by someone else who is acting as part of the game. By purchasing a ticket to a baseball game—in which part of the enjoyment is catching a foul or homerun ball if you are lucky enough to have one come your way—you assume the liability of being hit by a ball or bat. You have to be vigilant and watch for those things because you know they happen. The same is true of driving near a golf course or driving range, or living on a golf course. It's true for baseball players who get spiked by a player sliding into second attempting to take the defensive player out. And it's true for most things in life. We cannot eradicate all potential harms without significantly changing how we enjoy something, so while participating you have to take the necessary precautions to protect yourself.
This does not mean that the offender has free reign to act negligently, but that if they are acting within the normal expected behavior of the game, you assume the liability for harms you experience as a participant or a spectator of that game. If you don't want the liability, don't participate or watch.
How will baseball react if Bud is successful in his suit? By substantially changing the experience of the game. This may be necessary—it may be long overdue—but the game will change substantially.
Imagine what would happen if "The Baseball Rule" fell out of favor. Would stadiums and team owners move fans away from the action? Or play games in a glass bubble, separating players from fans? Would fans start suing for other, less serious injuries? Or even the mental anguish of a line drive whizzing past their face? Yes, these are purposely extreme scenarios, but make no mistake, the fear of litigation could be a paralyzing precedent.
A more realistic scenario is separating the stands from the field with netting that prevents flyballs from leaving the field of play. For many, that's part of the enjoyment of going to the game.
Bernanke says “using monetary policy to try to influence the political debate on the budget would be highly inappropriate” and “it is important to keep politics out of monetary policy decisions.” But monetary decisions powerfully and predictably influence political debates.
Will Rogers said, “Be thankful we’re not getting all the government we’re paying for.” Today we are not paying for all the government we are getting, and the political class benefiting from this practice should be thankful for the Fed’s low interest rate policy, which makes running deficits inexpensive. In addition to making big government cheap, this causes a flight of investors from interest-paying assets into equities — the rising stock market primarily benefits the wealthy — and commodities, rather than job-creating investments.
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The Fed, born in 1913, is now the largest buyer of 30-year Treasury securities. And it, not Congress, which supposedly controls the government’s purse strings, funds the $447.7 million Consumer Financial Protection Bureau, which is headed by a person not lawfully in office. (Richard Cordray was installed by Obama by a process that a court has recently ruled amounts to a spurious “recess” appointment made to vitiate the Senate’s power to advise and consent to presidential appointments.) So before blowing out the 100 candles on the Fed’s birthday cake, consider the perverse result of current Fed policy: Although money is promiscuously printed to keep interest rates low, credit is tight as money flows toward high-return assets. Such as gold.
Another supposed indication that the median household in the U.S. is losing ground.
[A] new study that finds median-income families in only one major U.S. city actually can afford the typical new vehicle.
For a normal good, as incomes rise people consume more of that good. The opposite is of course true if incomes are declining—we consume less of it. So if fewer Americans can afford the typical new vehicle, it must be proof that the median household in the U.S. is finding it harder to make ends meet. This of course might make for a good story, but it is lousy reasoning. (See the video below for a very good counter to the argument that Americans are losing ground.)
When we talk about the effect of changing income on the demand for a normal good or inferior good, everything else is presumed held constant. Other factors like prices of that good or substitute and complementary goods haven't changed; tastes haven't changed, and expectations are the same.
In other words, incomes might be going up, but demand can still fall for some normal good or service if other factors are changing as well. For example, how about the changing quality of cars?
Even the most basic of today's cars are generally loaded with features that were once found on high-line models a few decades back - if they were available at all - such as air conditioning, power windows, airbags and electronic stability control, as well as digital infotainment systems.
And, more importantly:
They also have to meet ever tougher federal safety, emissions and mileage standards that have added thousands to the typical price tag.
Other factors are also changing, including the fact that other things are now available to consume our incomes that weren't available previously. Smartphones and data plans, which run upwards of $200/month for a family of four are prevalent in even households with incomes below the median; bigger entertainment systems with more programming options; more household amenities (i.e., appliances, flooring, countertops, etc.); and education with higher tuition for our children. Factors like these now consume a larger portion of our income, leaving less for consumption of cars.
What I do like however, is that this article presents an opportunity to teach two great lessons.
First, if automobile manufacturers are truly building too many cars that are unaffordable to the median household, they soon will. Nobody—no government agency—needs to convince Ford, Toyota, GM, or any other auto manufacturer to meet this currently underserved market and stop oversupplying a market that few can afford your product. It is in their self-interest to do so and at least one of them will discover which features in are desirable to the median household, which are not, and produce the car that provides the greatest value per dollar to that segment of society. If not, they will forego potential profit, and possibly go out of business.
The second lesson, which is truly disturbing, is actually part of the article.
According to the 2013 Car Affordability Study by Interest.com, only in Washington could the typical household swing the payments, the median income there running $86,680 a year.
When the rent-seeking society earns the highest household incomes in the country, more of the best and brightest will pursue employment in that sector rather than in other sectors. Rather than working in sectors that create value for society, they seek out jobs that transfer wealth among the working members. If median household incomes are really declining, this may be a cause. It should trouble us all that most of the highest income households in the U.S. are concentrated around Washington, DC.
More Americans are for cutting spending, at least as far as Social Security, scientific research, health care and environmental protection go, as illustrated in the graph below.
That all sounds good and well, but, as I explained in this post from more than two years ago, Americans are fine with cutting spending in the abstract, but they're not willing to see their favorite programs cut. Congress has no incentive to ever reduce the deficit and debt.
The chart below expresses Americans' favorite programs to cut.
Foreign aid is far and away the most popular suggestion for the chopping block, but even here, it’s a close call — 48 percent of respondents said cut it, 49 percent said keep it the same or increase it. (Foreign aid makes up less than 1 percent of the federal budget.) In no other spending area is there majority support for cuts.
Did you get that? Foreign aid and the State Department have the least support among Americans, but account for less than 1% of the budget. Things are going to get ugly, sooner rather than later.
