The Liberal Order

The stupid and evil parties demonstrate the harm arising from bipartisanship.

Remember, in politics there's the stupid party and there's the evil party. Sometimes they join together and do something that is both stupid and evil—we call it bipartisanship.

It's the inverse of the federal budget world these days, in which automatic spending cuts are leaving sought-after pet programs struggling or unpaid altogether. Republicans and Democrats for years have fought so bitterly that lawmaking in Washington ground to a near-halt.

Yet in the case of the Abrams tank, there's a bipartisan push to spend an extra $436 million on a weapon the experts explicitly say is not needed.

"If we had our choice, we would use that money in a different way," Gen. Ray Odierno, the Army's chief of staff, told The Associated Press this past week.

Of course, the jobs argument has to come into play here:

Pete Keating, a General Dynamics spokesman, said the money from Congress is allowing for a stable base of production for the Army, which receives about four tanks a month. With the line open, Lima also can fill international orders, bringing more work to Lima and preserving American jobs, he said.

Hmmm?!? Let's ignore opportunity cost, which is the true cost of government. That $436 million could indeed be spent elsewhere, possibly improving social welfare far more than it is by spending it on tanks. Yes, politics gets in the way, which is all the more reason to limit what we do through the political process. If this type of waste prevails in what most people would truly characterize as legitimate functions of government, there's no telling how much waste is encountered in those areas in which government is hardly likely to create any true social value.

 

An Old Stupid Game That Never Dies

Apparently the drivel espoused in the picture below is once again making the rounds. For some reason it never dies. 

This is why such nonsense should never get the play it's receiving.

Suppose that you have a job where you are paid on commission on a daily basis. For every item you sell you earn, say, 10% of the sale price. Your customers buy from you on a consistent basis and you sell $2,000 worth of the good each day. Your total annual sales are $500,000 and your income is $200 per day, or $50,000 per year. (Assume no inflation for now and that you work 250 days each year.) 

Your customers, who again, buy your good on a consistent basis every day and can't seem to get enough of it, think that you earn too much money, notwithstanding the fact that the benefits they receive from the good you sell far exceed your salary. Even still, they desire to punish you for your income and have all agreed to not purchase anything from you on April 15th. None of them have ceased consuming your good at all, only that they will not purchase anything from you on April 15th.

Let's say that in order to fulfill their demand for what they would normally have purchased on April 15th, half increase their daily purchase on April 14th, for total sales of $3,000 that day, and half on April 16th, for total sales of $3,000 that day. Your daily income looks like the following:

Without the boycott: April 14th = $200; April 15th = $200; and April 16th = $200. Total income over those three days is $600.

With the boycott: April 14th = $300; April 15th = $0; and April 16th = $300. Total income over those three days is $600.

Are you made worse off by your customers' decision to boycott you for one day? What if they did it for a week?

As long as they continue to consume the exact same amount, on which day or days they purchase your goods is largely irrelevant. Yes, it may be inconvenient that you don't have the income consistently, or that you might have to borrow on some days to tide you over until they come back to buy more of your good on the next day, but your average daily income has not changed.

In fact, I would argue that such ideas actually make the gas companies better off. If they knew for certain that nobody would be coming in to purchase gasoline that day, they could simply shut down, saving themselves labor costs and other costs or operation. Competition is what makes gasoline companies and retailers produce and sell every day. If they could collude in order to shut down one day with no cheating on the collusive agreement, gas companies and retailers are made better off at the expense of customers who want to purchase gasoline on that day. What a sham that the customers who appear angriest at the gas companies are the ones promoting the financial interests of the gas companies.

If you want to punish the gas companies, walk, ride a bike, don't go anywhere on that day and vow to not do what you would have done that day on a different day. In other words, as long as you continue to consume the same amount it doesn't matter on what day you buy it.

Actually, I agree with this. Everyone, buy all the gas you need for the next week today. DO NOT BUY ANY GASOLINE FOR THE NEXT WEEK. If you are successful and the price of gasoline plummets, thank you very much. I'll be filling up my cars one day during your boycott.

Is diversity at (most) elite schools contrived?

Having a child currently looking at colleges, the following two articles have a lot of relevancy. Both articles expose the inanity of the college admissions process, especially at the elite colleges, as well as ridicule the faux diversity rhetoric such colleges profess to uphold.

In today's New York Times, Claire Vaye Watkins discusses the inequities for high school students in rural areas looking to attend college, especially the elite colleges.

I never saw a college rep at Pahrump Valley High, but the military made sure that a stream of alumni flooded back to our school in their uniforms and fresh flattops, urging their old chums to enlist. Those students who did even reasonably well on the Asvab (theArmed Services Vocational Aptitude Battery, for readers who went to schools where this test was not so exhaustively administered) were thoroughly hounded by recruiters.

My school did its part, too: it devoted half a day’s class time to making sure every junior took the Asvab. The test was also free, unlike the ACT and SAT, which I had to choose between because I could afford only one registration fee. I chose the ACT and crossed off those colleges that asked for the SAT.

- - - -

Granted, there’s a good reason top colleges aren’t sending recruiters around the country to woo kids like me and Ryan (who, incidentally, got his B.S. at U.N.R. before going on to earn his Ph.D. in mechanical engineering from Purdue and now holds a prestigious postdoctoral fellowship with the National Research Council). The Army needs every qualified candidate it can get, while competitive colleges have far more applicants than they can handle. But if these colleges are truly committed to diversity, they have to start paying attention to the rural poor.

And in today's Wall Street Journal, high school senior Suzy Lee Weiss, who was rejected admission by many elite colleges, explains (very humorously) the inequity and insanity of the admissions process. I just wish she had left out that last paragraph.

Colleges tell you, "Just be yourself." That is great advice, as long as yourself has nine extracurriculars, six leadership positions, three varsity sports, killer SAT scores and two moms. Then by all means, be yourself! If you work at a local pizza shop and are the slowest person on the cross-country team, consider taking your business elsewhere.

 

 

Where's the silver lining?

I'm puzzled why nobody has stepped forward to discuss the so-called silver lining from the recent explosion in Indianapolis, Indiana that killed two people (that's 108 fewer deaths than Hurricane Sandy caused) and displaced dozens of families (far fewer than were displaced by Sandy). Think of all the jobs that will be created rebuilding the homes. Why is that not deemed a silver lining? Maybe because there isn't one.

"Creating Jobs"? Please Get Over Yourselves

With all the pandering about "creating jobs," maybe this is what President Obama and Governor Romney have in mind.

Monday through Saturday, uninvited messengers show up at households all across America and drop off unsolicited catalogues, credit card come-ons and other paper equivalents of spam e-mail. Americans get 84 billion pieces of this stuff every year — the vast majority of which they dump, unread, in the nearest trash can or recycling bin.

If homeowners are merely annoyed, local governments are furious; it costs them $1 billion per year to collect and dispose of the waste, according to a recent New York Times report. 

Furious? This is a perfect Keyneian jobs program. We hire workers to deliver stuff we don't want and consequently throw away, which is hauled away by a new set of workers. What's not to love? Of course, no one would argue that any real value is created by this process.  

Politicians do not create jobs; jobs are a byproduct of creating value for others. When entrepreneurs and other investors take risks and innovate in order to create value for others, they often employ unused and underutilized labor to bring about their objectives, therefore improving the well-being of both its customers and its workers. Even the government can do this when it provide services valued by taxpayers more than any other use of their time and money. Anything other than that is wasting resources.

If Romney and/or Obama really want to do something that results in the hiring of unemployed and underemployed workers, there are plenty of legitimate things they can do - such as deregulation and revamping patent and copyright protections that impede competition and risk-taking - it's just that voters are not likely to respond affirmatively to most measures they should take.

UPDATE: Edited for clarity. 

The Poverty of State Collectivism - Government School Edition

In a market capitalist system properly conceived, in order to make me better off I have to make you better off relative to what anyone else is offering you with similar resources. Competition forces me to continually improve on quality at any given price, which also means discovering ways of producing the same quality at reduced cost, and therefore reduced price. Failing to do so, I go out of business and people quit dealing with me.

Why does this seem so foreign to government school bureaucrats and those with egalitarian mindsets?

Annica Eriksson, the head cook at the Falun school, received an order from the municipality to decrease the quality of her cooking after it discovered she served a variety of 15 vegetables and freshly baked bread to students each day. The municipality claims that these offerings are “unfair” to students at other local schools, who consume meals of a lesser quality, The Local reported.

School choice (and I mean total school choice - free schools from any state mandates, including curriculum requirements) forces schools to compete for students by continually innovating and discovering ways to serve students' needs rather than the interests of teachers and public school bureaucrats.

This egalitarian ideology has had tragic consequences, leading to mass murdering of millions of people around the world throughout the Twentieth Century. This is not to say that forcing the lunch lady to reduce the quality of her meals is going to lead to mass genocide in Sweden. But egalitarianism is a slippery slope, and if it's important that something as trivial as school lunches be equal, and you're willing to force one school to degrade the quality of its lunches so students at other schools don't feel slighted, you're probably pretty far down that slope. 

Here is an old post on the travesty of choice in North Carolina schools. 

The Hilarity of the Greens

Mike Munger at KPC slams (in honorable fashion) a post by a greenie with ideas for reducing your carbon footprint. (Munger thinks the post is satire; I don't.)

This idea was more hilarious than the one Munger ridicules.

Euthanize Your Old Pet

Pets have become a common feature in most homes and are an attribute of the modern, Western lifestyle.  We all love our dogs and cats, but really, when you think about it, pets are a major producer of excess carbon.  One of the best ways to reasonably enjoy your pet and reduce your overall Carbon Footprint is to determine in advance how long your pet should live.  As a family, set a date when your pet will be euthanized.  One great way to teach children the value of pet euthanasia is to turn the occasion into a family celebration.  Let's say you've set March 10, five years from now, as your pet's euthanasia date.   For the next five years, celebrate March 10 as your pet's special day, with a family party and perhaps a visit to your pet's future burial spot.  Teach your children to think of the occasion as a birthday in reverse.  A predetermined euthanasia date will encourage your family to love and care for your furry friend while it's still young and playful.  What's more, pre-planing for pet termination not only works towards reducing your family's Carbon Footprint, but guarantees long term reduction in veterinary expenses.

What a wonderful idea. "Kids, one more month with old Sparky and then the dog gets it. Be happy!" 

Actually, we have two cats and I've contemplated this idea on a regular basis. But not for reducing my carbon footprint.

UPDATE: The fine print at the bottom of the GreenTremayne.com page notes that it is totally satirical. 

Learning Economics Through Bank Robberies

Via Craig Newmark comes this interesting article about bank robberies. It offers great examples for learning economics, business and finance.

What's the marginal revenue product of an accomplice if you want to rob a bank?

According to the study, for each additional person involved in a bank robbery, the criminals can expect to add about $14,000 to their take.

And this is largely due to gains from specialization:

"It is advantageous to divide tasks—monitoring the bank lobby, accompanying staff to vaults to ensure maximum takings, driving the getaway car and so on," they write. "In short, it may be more professional, and the larger returns may reflect that."

Find underserved markets and exploit them:

In 2006, the average bank robbery netted about $4,330, compared to an average of $1,589 for all commercial robberies. Avoid convenience stores—the average take there is just $769.

The most lucrative target? Armored cars.

You learn about expected loss and cost-benefit analysis.

[B]anks with fast-rising security screens that block off tellers from would-be-bank-robbers seem to help,according to the study. They severely reduce the likelihood of a large windfall.

But with most robbers taking a mere pittance and bank robberies being a relatively rare crime (there are more than 6,000 commercial banks in the United States and thousands more credit unions), it's barely worth it for banks to invest in the screens, which cost a couple thousand per teller window to install.

In other words, P•L < C. The expected loss from a bank robbery (i.e., probability of my bank getting robbed times the loss if it happens) is less than the cost of installing security screens. Though it is understood that the emotional toll from a robbery is high on bank employees and customers.

A credible threat is important:

In England, bank robbers who threatened employees and customers with a gun stole, on average, about $16,000 more than robbers who were unarmed.

But that increases the risk of retaliation:

Of course, showing off a gun raises the risks as well—armed robbery almost always comes with a minimum jail sentence and makes things more dangerous.

According to the FBI, in 2010, 16 people were killed during bank robberies—13 of them were the perpetrator.

This means that there could be a kill-kill equilibrium.

 

Can we ever have too few airline accidents?

A great test question that Walter Williams used as part of his Intermediate Microeconomics exam was, "Given that airline safety is costly, can there ever be too few airline accidents?" The answer, of course, is yes. It is a simple application of supply and demand where diminishing marginal benefits of some spending or action goes against increasing marginal costs. This applies to everything, including to airline safety. Certain safeguards and safety checks provide tremendous value at little cost, but you eventually encounter spending that provides almost zero benefit at extremely high cost. (Can you say, TSA screening?)

We know that when you spend other people's money you overspend relative to how you spend your own money. A great example of this is provided by today's News & Observer with this story on North Carolina and its push to pave every state-maintained road.

The state has spent hundreds of millions in the past two decades to blacktop 13,000 miles of roads, bringing asphalt to the driveways of nearly 200,000 homes, DOT records show.

Crews are still at it and now are reaching the bottom of the list, with only 1,842 miles still eligible for paving. They are working in the most rural and least populated spots, such as Mark Teague Road, and in hard-to-pave, mountainous terrain in the west, such as at Lower North Fork Road in Jackson County near the Tennessee border.

Crews there have nearly finished widening work and are preparing to pave a 2.5-mile dead-end road that climbs up the side of a mountain. It has about 30 houses, half of them considered “part-time” or second homes. There are no churches and, except for a bed-and-breakfast, no businesses.

Taxpayers are spending nearly $3.8 million on the project.

Granted, at least one resident who lives on this road is happy to see it paved; she obviously benefits from it. But not everyone sees the great benefits of seeing paved even the roads on which they live.

Mark Teague Road near Pittsboro in rural Chatham County is a half-mile-long strip of gravel that cuts through some woods and then dead-ends at a vacant brick ranch house surrounded by farmland.

The state road looks more like a driveway for Elizabeth Hopp, whose family lives in one of three houses off the lane. When crews showed up recently to widen the road bed, build erosion control for a pond and get ready to pave the road with asphalt, she wondered why the state was upgrading a road that goes nowhere. The cost to taxpayers: $225,000.

“I don’t really see the need for this,” Hopp said. “Maybe this is some kind of progress, but it seems sort of strange to me.”

And it's not as if even the News & Observer doesn't see the inefficiencies in all this.

The program costs have increased sharply over the past 23 years, and the benefits have diminished.

More miles were paved, on roads serving more houses, before 1997 than during all the years since, according to DOT figures. During those first eight years, the paving program served 18 homes for every mile of asphalt. DOT’s upcoming two-year work plan calls for paving roads that average 8 homes per mile.

Fast-rising prices for fuel and asphalt have pushed up construction costs for all kinds of road projects. DOT’s average cost for paving gravel roads has increased from $250,000 per mile in 2007 to $350,000 today. At that price, it would cost the state $644 million to pave those remaining miles.

Now if only the N&O's editorial staff could see that this applies to education spending as well. 

Should It Be A Crime to Use A Washing Machine to Give Your Baby A Bath?

There are two reasons for charging and prosecuting someone for criminal behavior or negligence: one is about retribution and the other deterrence. 

The first says that you punish a wrongdoer as retribution for his or her misdeed(s) - you harmed somebody so we're going to harm you back. The other says that we punish a wrongdoer now to deter others from acting similarly in the future.

Watch the video below of a man (presumably the father) putting a child in a washer at a laundromat and then closing the door. It could have ended tragically, but it didn't. Luckily, an attendant at the laundromat was able to disconnect power to the machine and then open the door.

 

Now, do you not charge the father for child endangerment given that a) the child was not physically harmed, and b) it was probably just a stupid prank gone amiss, not an actual intent to hurt the child?

The principle of retribution says to let it go; he learned his lesson the hard way. The principle of deterrence says to charge him and penalize him so that any person who thinks about doing something like this in the future will think twice knowing they'll likely face criminal charges for their act.   

This actually happens more than you would think. But I'm also not certain that charging the father will deter that many people from doing something like this again. (Though you can never know the successes of such a deterrent.) Few people will ever know about his criminal charge and maybe a video like this going viral has far more of a deterrent effect than convicting him of negligence and child endangerment. And if someone can attach his name to it, a little shame might deter others as well.

UPDATE: New Jersey's prosecutor decides to not press charges against the man.

"By looking at the video it is clear there was no attempt to harm the child," he said.

Here is the New Jersey statute regarding child endangerment.

Cruelty to a child shall consist in any of the following acts: (a) inflicting unnecessarily severe corporal punishment upon a child; (b) inflicting upon a child unnecessary suffering or pain, either mental or physical; (c) habitually tormenting, vexing or afflicting a child; (d) any willful act of omission or commission whereby unnecessary pain and suffering, whether mental or physical, is caused or permitted to be inflicted on a child; (e) or exposing a child to unnecessary hardship, fatigue or mental or physical strains that may tend to injure the health or physical or moral well-being of such child.

Emphasis mine. I'm not certain the prosecutor doesn't have a case, but again, there appears to be no willful intent to harm the child. The prosecutor is accepting the retribution argument rather than the deterrent argument.