Ishmael (Daniel Quinn)

As I read books, I am going to try to blog about them. Ishmael was an easy read - took me only a day - here are some quotes I found interesting along with the reasons I found them interesting. Highly recommend the book itself because it is such an easy read. As I continue to read books this summer I will try to maintain this as a sort of note-taking for myself. If there's a better way to organize it or make it more interesting, let me know!

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(page 80) "Only one thing can save us. We have to increase our mastery of the world. All this damage has come about through our conquest of the world, but we have to go on conquering it until our rule is absolute. Then, when we're in complete control, everything will be fine."

The idea of spontaneous order simply permeates throughout this book. The parallels between the above quote - discussing human control over nature - and every class I've taken - complaining about human control over politics and government - just shock me.

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(page 25) "You're captives of a civilizational system system that more or less compels you to go on destroying the world in order to live."

This casts the whole study of economics in an interesting light. I tell a lot of people that economics is the study of human behavior and the way things are - we try to explain why some countries are rich while others are poor, or why government projects for the "public good" tend to do a worse job of promoting the general welfare than private ones "for profit." And yet, this is saying, our starting point is wrong. So although we propose modest reforms to the financial system, or to the current interactions between the government and the market, what we really need to do is propose to scrap everything and begin again.

The most interesting thing about these two quotes, in my opinion, is the combination of hopefulness and hopelessness that they represent. On the one hand, Quinn suggests that the whole system is flawed and we're destroying the world. Later, though, he talks about the spontaneous order of the world, and I see him utilizing tools of economics. Our science is the most versatile of disciplines - it is so widely applicable and I think that might be its greatest strength.

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(page 90) "With nothing but this wretched story to enact, it's no wonder so many of you spend your lives stoned on drugs or booze or television."

Notice anything odd about that sentence? I see television discussed as a sister of drugs and alcohol. As an aside, it's silly to separate drugs and alcohol in the first place, but we do because our legal system does. But more to the point - do you really think television belongs in that same realm? After two years of being nearly to TV-free at school (minus the time at home when I am a TV junkie), I think I would say yes.

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(page 126) "They (man) exterminate their competitors, which is something that never happens in the wild."

Anytime I hear "the wild" in this book, I think immediately of "the market." And this brings me to a discussion from a macro class last semester. There was a rumor that Pepsi came into possession of the secret formula to create Coca-Cola recently. However, Pepsi simply returned the formula. Why?

Well, Pepsi could go about taking the formula to try to make Coke, but what good would that do? It already has a perfectly successful product, and even with the formula, it would be costly to begin to properly make Coke. Wouldn't it make more sense to simply make the formula public?

Yes, this makes sense - then anyone could make Coke. A dozen brands would pop up within the year and the price of Coke would be driven down to almost nothing!! But wait - how much brand loyalty do you think there is between Coke and Pepsi drinkers? I'm guessing that loyalty won't last long if a can of Pepsi costs 10x what a can of Coke costs. So the price of Pepsi would actually be driven down as the cost of a substitute (Coke) decreases.

Given the chance, in "the wild" world of the free market, Pepsi wouldn't try to exterminate Coke. In fact, it would return the secret formula and allow business as usual to continue.

--> Monopolistic tendencies are the result of government action only? What do you think of this statement?

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(page 138)

A discussion on famine has me thinking a lot about aid and the cycle of free food keeping poor countries poor by preventing them from ever getting agriculture started.

But I wonder how well the price system, if allowed to TRULY FUNCTION FREELY, (which it never has been allowed to do in the course of human history), would regulate population and keep us in balance with nature.

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The last 20 pages (120-140) have talked up diversity a lot. Does free market economics promote diversity? How so? Do its opposites prevent diversity? How so?

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(page 167-168) I can't even pick a quote but there's a whole section about choice. Choice is the fundamental underpinnings of a true free market system - you can choose what to do, how to do it - hell, you can choose how others do it based on who you buy from and who you do not buy from. Economics and ecology are not nearly as separated as they are made out to be.

Doctors and Doctors

I think Economics students should be required to take the Hippocratic oath before receiving their doctorate, just like med students.

Economics in Music

Examine this conversation in Barenaked Ladies' "If I had $100000:

Singer 1: If I had a million dollars/We wouldn't have to eat Kraft Dinner
Singer 2: But we would eat Kraft Dinner
Singer 1: Of course we would, we’d just eat more
Singer 2: And buy really expensive ketchups with it
Singer 1:That's right, all the fanciest ketchup.

What type of good do these singers believe Kraft dinner to be (Normal/Inferior)? How do you know? What is Ketchup's relationship to Kraft Dinner? Explain.

Get Your Obama Check

That was the title of a banner ad that caught my eye. The link took me to mikesmoneymatters.com, where Mike Donahue demonstrates the ability to get a $12,000 check from the government. To prove his honesty, he displays pictures of his kids, and openly admits he hates "all those 'get rich quick' schemes you see on TV". He even has a picture of the check to prove it is real. Best of all, he claims that for $1.99 he'll gladly send anyone a kit teaching them the secret of how to get these grants.

The offer seemed too good to be true, so I didn't rush for my wallet, but how sure was I? Well, as a rational agent, I would only participate if

P(grant)*(grant value) > $2.00

or

P(grant) > ($2/$1200)

Therefore, I was 99.9 percent confident that the grants were not as easy as Donahue claimed.

Ask Economists

A friend of mine started a new website designed to be an Economics centered question and answer forum. I should stress that it is very new and still in the development stages, but if any of you would like to check it out and say what you think, he would greatly appreciate the input. The website is called ask-economists.com.

My Calculus of Voting

Public choice economists have developed a model to explain why people vote. The model is called the calculus of voting, and can be written as such:

R = p(B) − C + D

where

R = the reward gained from voting in a given election (R, then, is a proxy for the probability that the voter will turn out)
p = probability of vote being instrumental
B = “utility” benefit of voting--differential benefit of one candidate winning over the other
C = costs of voting (time/effort spent)
D = citizen duty, goodwill feeling, psychological and civic benefit of voting

Costs are always present, and the probability of the vote being instrumental is so small that public choice claims decisions to vote are largely a component of civic pride. Waking up today, I realized that my own calculus of voting was slightly more complicated:

R = pB − C + D + S + K + I - E

where

R = the reward gained from voting in a given election (R, then, is a proxy for the probability that the voter will turn out)
p = probability of vote “mattering”
B = “utility” benefit of voting--differential benefit of one candidate winning over the other
C = costs of voting (time/effort spent)
D = citizen duty, goodwill feeling, psychological and civic benefit of voting
S = Free Starbucks coffee
K = Free Krispy Kreme Doughnut
I = Free Ben & Jerry's Ice Cream
E = Distain from other Econ undergrads when I tell them I voted.

The Ethos of the Economist

Something to think about:

When Walter Williams tells me that raising the minimum wage harms unskilled workers, particularly African American teens who become unemployed because they are priced out of a job, I agree with him.

When a certain other professor tells me raising the minimum wage will raise unemployment and hurt the economy and we shouldn't do it, I start to wonder about things that could keep wages below the equilibrium price, and that raising the minimum wage creates winners as well as losers because many people maintain their job and receive the additional wage.

They prove their points with the same graphs, they draw price floors across the same supply and demand curves and point to the surplus of labor (unemployment). However, I know Walter Williams sincerely cares about poverty in the world and sees the free market as the best solution to it. I am convinced my other professor only advocates the free market because it justifies his greed, but he packages it as humanitarian because it sells better that way.

I'm not sure if Economics has a good explanation for why I am willing to buy one product from one seller, but not to buy the same product from another seller.