Sunday, July 20, 2008

How should history remember FDR?

I've been wondering about this question on-and-off for a while now. I know most economists are unfriendly to him because of the widespread belief that his New Deal policies actually lengthened the Great Depression, but nonetheless he is consistently held in high regard in American Presidential rankings

Now, if the only criticisms against him were his economic policies, I would understand why he was held in high regard. Very few average citizens have any understanding of economics, and without any criticism it's easy to believe he was the man who brought us out of the Depression. But what about...

  • Japanese internment camps during World War II? These were absolutely atrocious and it's embarrassing to me that anyone could sign them into law. 
  • The switch in time that saved nine? This was a blatant attempt by FDR to take over the Judicial branch of the government.  It was disrespectful of the Constitution, as well, and I find it appalling. Combine this with his subsequent breaking of the two-term limit, and you have a man who made regular attempts at dictatorial power. 
  • Yalta? This was one of the worst treaties ever negotiated, from an American perspective, and FDR's ailing health is often cited as the reason he made so many concessions to Josef Stalin. I don't want to speculate on how this would've changed the world, but I do think there are a lot of ways America and the world would've been better off.

Maybe, when Social Security collapses completely from bankruptcy, people will begin to view FDR differently. Personally, I just don't understand how he gets so much love from Americans.

Sunday, July 13, 2008

Restaurant Inefficiencies

Bryan Caplan recently posted that because patrons are not charged for their water or the time they occupy their table, there is an inefficiency in the restaurant industry. In my opinion these inefficiencies are relatively small. If they were larger the highly competitive restaurant industry would already have worked them out.

There is one restaurant inefficiency which I am still trying to figure out. Prices convey information about goods; the prices in menus help guide diners' choices in meals. However, there is one price that never shows up on the menu: the price of beer. It would cost almost nothing extra to print prices by the brands of beer offered, and supply customers with extra information regarding their dining options, so why aren't beer prices listed.

Though beer prices and other alcoholic drinks are generally listed without prices, there is one category of drink where prices are always listed: wine prices. In fact, wine usually gets its own separate menu with its own prices listed. At some lower class establishments, I've even seen unpriced beer listed at the bottom of the wine list-- but you bet every wine had a price next to it. What makes wine different from Beer?

The only thing I can think is that restaurants would prefer to not list prices for any alcoholic beverage to disguise their extreme markup. Beers have national advertising campaigns to create product branding. People know Sam Adams will be more expensive than Budweiser because their commercials target different types of consumers. Wines, however, vary in quality by vineyard as well as year, and there are few national ad campaigns. Aside from price, the only wine quality question I can think to ask is, "does that one come in a box?". That is not to say that there are not vast differences in wine quality, the problem is simply how to convey this. The casual diner needs prices to inform him of wine quality, while beer companies ensure that diners are informed of this on their own.

Any other thoughts?

As a side note, I was once given the tip for impressing a date: when the sommelier comes, show him the wine list and ask him what he would recommend -- with your finger pointing to the cheapest wine on the list -- if the guy is worth anything he'll take the hint and you'll look like a stud. Conversely, you can call the waiter to your side of the table, point to the cheap wine and say we'll go with this one. When your date asks what you ordered, just say it's one of your favorites. The key to this, is making sure the wine list gets cleared before the wine is served. Hey, not everyone needs to know the price of things.

Saturday, July 5, 2008

A Stand-up Quiz

When I teach Economics, my class will be fun. If my students don't learn Economics, they will fail my class. If they don't learn how to have fun, they will fail at life. I think I might give a quiz to my students based on the SECOND HALF of this stand up routine by Nick Thune. Showing my students the first half would probably be grounds for my dismissal from the teaching profession. (For those who are not fans of the dirty jokes, I would suggest skipping to the middle of the clip)

Stand Up Quiz (feel free to submit answers):

1. Thune makes fun of the expression "kill two birds with one stone" because in fact stones are abundant relative to birds. The expression actually applies to what scarce resource?

2. Thune's lack of internet is an example of what collective action problem? Explain.

3. What has happened to the real price of an Arby's Beef n Cheddar since the deal was first introduced?

4. What else could explain Arby's ability to continue offering the 5 for 5 deal? Provide two.

5. Why is it unlikely that Arby's has been "highballing" for 14 years?

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