Sunday, December 30, 2007

Is it Hot in Here, or What?

Arnold Kling wonders about global warming, asking for a more convincing argument connecting atmospheric carbon dioxide and temperature. I don't know enough about the particulars, but the question seems reasonable enough... If anyone has any answers, I'd love to hear them.

Along the same lines, my dad brings up an interesting point while arguing that global warming is good for Pittsburgh (his hometown). Ignoring the obvious flaws in the argument (the fact that there will be massive worldwide flooding if the icecaps melt, for example), do you think some people have incentives to allow global warming to continue, at least for a period of time? How will these incentives affect any legislative changes we attempt to institute in the future?

Prisoners Don't Like Prison...

Is this really a problem? Reuters presents this story about prisoners who, in a survey, don't like their pajamas, want more space in their rooms, and want better food (sounds like my life at Mason!). I have two questions after reading this article. One, why does it matter that prisoners would prefer more bread to rice or noodles? There are too many people who can't have either one and aren't criminals for me to be too concerned over this, which leads into my second question: If we improve the quality of prisons, aren't we creating incentives for crime? If I'm a homeless person who knows I can go to jail, where there will be heat, regular meals, and maybe a television or gym, don't I go around stealing things until I get thrown into jail? Worst case would be that I steal and am not caught, in which case I am still better off. I'm sorry, but I don't see improvement of conditions in prisons as an important part of our society.

Saturday, December 29, 2007

Will We Ever Be Happy?

Albert Schweitzer once said, "Happiness is nothing more than good health and a bad memory." If that's the case, though, more money and economic growth should certainly increase our happiness. This piece in the New York Times presents both sides of the economic growth/happiness argument. I'm curious, though - do you think economic growth leads to increased overall happiness, or do you think a higher standard of living just leads to higher expectations?

Thanks to the guys at Freakonomics for the pointer.

Wednesday, December 26, 2007

How Does He Do It?

Warren Buffet is making noise in the stock market again, and he's doing so by purchasing in American company. Many call this "a vote for America".

How is it that Buffett can reveal the secrets to his investment strategies (invest in things you understand) and still do so much better than everyone else? He was right to bet on a declining dollar in 2005. Will he be right to bet on a rising America at the close of 2007?

Saturday, December 22, 2007

Incentives and Solar Energy

Reuters features a story about a correspondent in Germany who has installed solar panels on his roof, and is paid by the electricity company at an artificially high rate for the electricity he harvests. From the article:

"Thus, those with no solar panels are subsidizing those who have them. I'm not sure that's fair. But it's the law."

Is this an effective way to reduce CO2 emissions, and should the United States try to follow suit?

Thursday, December 20, 2007

Should've Seen This Coming...

Facebook is becoming a little too important to some people - even I've been guilty of exploring other people's lives for a little longer than necessary. However, it looks like the site's users are striking back. Students have developed some applications that will allow students to declare their enemies along with their friends. I find it amusing, although I am not anyone's enemy [yet].

Wednesday, December 19, 2007

So Who Exactly Is Selling?

The price of land on the moon is rising. I'm curious who is buying, but I'm more curious about who is selling. At this point, I can't really imagine anyone making a legitimate claim to lunar property to sell it in the first place. Of course, I can't imagine people are paying for nothing.

Would you buy property on the moon?

Monday, December 17, 2007

Solving the Tragedy of the Commons

I'm involved in a scholar program at George Mason, and as such, I have access to a Scholar lounge that the group built a few years ago. This lounge has a computer lab with a printer, but the printer has become a beautiful illustration of the tragedy of the commons. The basic solution to the tragedy of the commons, of course, is to privatize, but how do you privatize a printer in a lounge? No student would be willing to take that on.

How else can we solve the fact that the printer is always out of toner, paper, or both? The best I have come up with so far is putting no paper in the lounge, forcing students to invest in paper themselves (and hopefully preventing people from printing hundreds of unnecessary pages). We investigated buying a lock, forcing each person to enter a code to limit their printer use, but it was too expensive. Are there any better resolutions to this situation?

As If Any Tax Could Be Fair...

This semester, I had the pleasure of writing a thesis paper regarding the FairTax in the United States. I wound up arguing against it, and I think it's not so much because the FairTax itself is a bad idea, but because many of the arguments for it are nonsense.

Take, for example, this paper by FairTax supporter Neil Boortz. His major points:

"Here Adler once again ignores the role of embedded taxes. The price of consumer goods in this country would remain essentially the same. The embedded taxes are merely replaced by the FairTax." This is a direct quote and to me, it underscores the idiocy of Boortz's argument. If the FairTax is "revenue-neutral," as advertised by Boortz and others, it would have to collect enough revenue to replace the embedded taxes as well as the income taxes. Boortz cannot honestly believe that everyone will have more money, prices will be unchanged, and the government will continue to maintain its current expenditure. However, he repeats this same argument about embedded taxes over and over, throughout this article and The FairTax Book.

"First of all we have this silly insistence on quoting the FairTax rate as 30 percent rather than 23 percent." FairTax supporters quote the FairTax as 23% (tax-inclusive), and justify this by saying that the income tax is tax-inclusive, and therefore, we should quote the replacement tax in the same manner. However, in America, we already have sales taxes at the state level, and they are quoted as tax-exclusive. Getting hung up on the difference, to me, is focusing on nonsense rather than the substance of the argument. Personally, I'd say paying 30% really isn't a bad deal for most people, and FairTax supporters shouldn't waste their time trying to confuse the general public about tax-inclusivity or exclusivity.

There are definitely merits to the FairTax, but Boortz really doesn't outline them. He rambles and rambles about embedded taxes and 23%, failing to ever discuss the important reasons why Americans should support a FairTax. This type of argument not only drives me crazy, but also makes me question whether or not he's avoiding the issue because there are serious flaws that I am somehow missing.

This article presents a fair counter-argument to Boortz and his supporters.

Saturday, December 15, 2007

A Potentially Profitable Investment

Some thoughts from a couple of classes:

In Principles of Microeconomics, we have been discussing the concept of rational ignorance. Rational ignorance is the idea that at some point, it is not profitable for people to acquire more information when making a decision. This phenomenon often manifests itself among voters, who vote on economic policy without any formal economic training or nuclear policy without having studied nuclear physics.

In another class, which ended up being a sort of "history of economic thought," we spent a long period discussing personal and impersonal transactions in markets. As markets have grown and the economy has become more complex (as we have specialized and industrialized), more of our transactions have become impersonal. They are based not on trust or knowledge of a person, but on assumptions that they would not be in business if they were not qualified. An important aspect of markets, then, is feedback. Feedback allows consumers to determine how previous customers felt about a business and helped inform their decisions when embarking in these transactions.

So, to tie it all together: We are in a market of largely impersonal transactions. We base our decisions on who to conduct business with largely on feedback, because it is rational for us to be ignorant about different subjects. Consider, for example, hiring a mechanic to work on your car. You face the problem of lack of knowledge about your car, which is why you hired a mechanic in the first place. You therefore cannot know whether your car truly needs the $1,000 repair for a new catalytic converter or whether you are being ripped off. Which mechanic you hire, therefore, is very important. Feedback from others can be very important when hiring a mechanic - however, there is no collective database of information on various mechanics.

We have the means of creating such a database. Look no further than RateMyProfessors.Com, a website designed for college students to take advantage of other students' experiences with a professor and better inform their decisions of whose classes to take. I am curious as to why there are no similar sites for skilled labor. Do you think such a site would be useful? Have they not appeared because the people hiring mechanics, electricians and plumbers are not yet tech-savvy? If so, how long until they appear?

Assuming, as the Freakonomists do, that the Coase theorem holds for online domain names, maybe someone ought to buy up RateMyMechanic.Com now, to sell in a couple years at a profit when someone wants to start up this website.

Friday, December 14, 2007

Finders Keepers?

One of the headlines today on Yahoo! News is a story about a contractor who found $182,000 of Depression-Era money while remodeling a house. In the story, the contractor tries to claim "finders keepers" rule, saying that because he found the money, he is entitled to 40% of the value of the money (the homeowner has countered by offering 10%).

To me, in this situation, Finders Keepers laws really aren't relevant. The money found in the wall, in my opinion, is the property of the homeowner, who purchased it along with the home from the previous homeowner, and so on, back to the person who originally hid the money in the walls.

I went to do some reading on Finders Keepers laws. This article on a Jewish Law website raises some interesting points. The second-to-last section, titled Unstated Premise, says that in a standard contract, it is assumed that a contractor cannot simply walk away with what he finds. The contract is only to perform a certain labor for a specified amount of work. I would agree with this point, but perhaps in the future everyone should be specifying this when they hire contractors!

The Mitchell Report

The big news in the world of sports is, of course, The Mitchell Report, released yesterday. Riding the bus yesterday, I found myself defending the public's interest in performance-enhancing drugs in baseball.

Baseball is a game that puts vast importance on history. We love to compare eras and the major records are considered sacred. I can still tell you exactly what I was doing when Mark McGwire broke the single-season home run record, and I can tell you I watched a whole lot of Giants games to see Barry Bonds break the career record. For comparison's sake, football has many records (single season touchdown or yardage records are probably most important individual statistics), but none of them are as "sacred" as baseball's records.

One of the interesting results of the historical nature of the game is the way the public glazes over the changes in the game. At one point, the pitcher's mounds were not a standard height. The Los Angeles Dodgers, for example, were reputed to have the highest pitching mound in the majors for years. They were also known as a team that trotted out great pitchers year after year. Also, at one point, the spitball was legal. Players that couldn't throw fastballs could "doctor" the baseball. We have spitballers in the Hall of Fame, though. I feel like the public misses this important distinction in their constant complaints against steroids - people have done absolutely anything they can to gain a competitive edge in baseball. The Steroid Era is different, but it's not enough to justify the circus that has been made of the game.

I played baseball for a number of years as a child. I will happily attest to the fact that hitting a ball is hard in Little League, and it doesn't get any easier as you get older. Pitches begin to curve and sink, instead of simply coming straight in. The ability of today's players to hit a ball is phenomenal, and steroids don't enhance their vision or coordination. There will always be people complaining about how Barry Bonds took drugs, but how about his teammate Marvin Benard? Was it okay for Benard to take steroids because he wasn't as good, even with them?

Finally, I think the steroid controversy ought to serve as a reminder of how great the players outside the Mitchell Report really are. From Greg Maddux to Tony Gwynn, there have been plenty of "honest" players who didn't use performance enhancers and still managed to dominate the game. Maybe we ought to use the Mitchell Report to recognize the names that were unmentioned, as the true "Greats of the Game," who dominated an era even though they were chemically inferior to their competition.

Thursday, December 13, 2007


Hello blogosphere - The three of us are economics majors at George Mason University. We had the privilege of blogging with a couple of prolific experimental economists and our classmates over the course of a semester "to keep the conversation going," and we decided we'd like to continue beyond the limits of our class. Please feel free to fill the comments section, because we didn't start this blog just to hear ourselves talk. I hope that all of you enjoy and I look forward to starting a whole new conversation with no end in sight.

Compared with the totality of knowledge which is continually utilized in the evolution of a dynamic civilization, the difference between the knowledge that the wisest and that which the most ignorant individual can deliberately employ is comparatively insignificant. ~Fredrich Hayek in The Constitution of Liberty