EclectEcon

Richard Posner deserves the next Nobel Prize in Economics

Please consider using these links if you are ordering from Amazon:    Amazon.com,   Amazon.ca,   Amazon.uk

You First

I don't believe a word of this for many reasons. But it does generate some interest.

Despite everything you may have heard from your mom, picking your nose and eating what you find may have some health benefits, according to a biochemistry professor at the University of Saskatchewan in Saskatoon.

Please note that the prof who suggested this hypothesis teaches at The University of Saskatchewan. My teaching of late has been at the University of Regina.

Can 73 Climate-Change Models ALL Be Wrong?

I have no idea how reliable this information is. But if it is correct, and if the observed data all lie outside and below the predictions of the models, then it is time for the people who model climate change to change their models.

Note that these are temperatures from the "troposphere". Also see this for comments. 

Theatre Programmes

One of the reasons I like to arrive early at the theatre is so I can read through the programmes. At the local amateur and semi-professional level, I like to read the directors' notes and the biographies of the casts and crews. At the professional level, I enjoy reading the notes about the performances.

Lately, though, I have been disappointed by many theatre programmes.

Several of the recent London Fringe Festival shows had no programmes at all. They should; even if they are only quick half-sheet notes. Furthermore, those shows that did have programmes provided useful and interesting information for the most part, but they didn't distribute them until we went into the theatre, which was only five minutes before the performances began and hardly allowed enough time to read the programmes in advance. In the future, it would be nice if the producers of Fringe Festival shows all had programmes and distributed them at the time we buy our tickets so that while we are waiting in the lobby we can read about the actors and read the programme notes.

Also over the past month I have attended several shows in Stratford. The Stratford Festival provides extensive programme notes for their shows, but they also have some problems with their programmes. First, the print is gray, not black, and the lack of contrast makes the programmes difficult to read in the dim theatre light. And second, the blathering insights from professionals are just too long in the time available and too, well, blathery, for my tastes (though I understand others might like all those words).

One programme I really liked recently was the one for Marlowe's Edward II. The director (Kaitlyn Rietdyk) wrote interesting notes and insisted the actors' bios list only three credits and nothing else. A general statement thanking everyone's family and friends suffices; colour me curmudgeonly, but there's no need for each actor to write these things in their bios.

Bob Fogel Was My Hero

Robert Fogel died today. The Nobel-Prize winning economist was 86. There is a wonderful obituary for him, describing his life and his impact on the study of economic history in the NYTimes. I'd like to offer some personal reflections on this man because he played an important role in my decision to return to studying economics.

I took two courses from Professor Fogel in the winter and spring of 1967 during his first few years at The University of Chicago. I was technically a Chicago Theological Seminary student, but I had pretty much decided to leave seminary. Fortunately, the seminary was affiliated with The University of Chicago, and I was able to take some economics courses there to complement my theological studies. 

One of the courses I took was called "Strategic Factors in American Economic Growth" and was taught by Fogel. I had no idea who Fogel was, and I thought I was going to study economic theory about economic growth. 

I got to the first day of class and realized, much to my chagrin, that I had actually registered for a course in Economic History. Bleah. I had absolutely no interest in studying economic history. But Fogel was captivating in that first class (of about 20 grad students and 5 upper-level undergrads). 

I signed up to give the first in-class presentation (about three weeks hence) and had a blast. Fogel was a treat -- he worked us through the "new" methodology of economic history which was basically just seeking data and subjecting hypotheses to empirical test. I also started attending the Economic History workshops, where I learned a great deal and again had a wonderful time. Despite my horrid undergraduate record, Professor Fogel tried to get fellowship money for me to continue my studies in economic history there, but my record was just too horrid for that to happen.

At one point I asked him, "What did you do before you went to graduate school?"

He replied, "I was a professional student radical."

"Really??"

Fogel: "Actually I was an organizer for the Communist Party."

I was stunned. He seemed like a traditionally neo-classical economist to me. 

"What happened? What made you leave that?"

"I kept predicting the demise of capitalism, and it wasn't happening, so I decided to study why."

Fogel was such an inspiration to me that when I continued my graduate studies in economics at Iowa State University, I tried to specialize in economic history. It didn't work out there, but I did manage to take some courses on the History of Technology in the engineering faculty, and one of the papers I wrote for one of those courses (in the spirit of everything I had learned from Fogel), led to my first academic publication, "Ancient Metal Technology and Cultural Dispersion: An Economic Analysis of Three Aspects."

Fogel's enthusiastic and open support for me was a source of strength. It helped build my confidence and reassure me that I had a future in economics. 

I loved that man.

(photo from the NYTimes online edition)

Gubmnt Is Power

Reflecting on Eric Snowden's revelations about NSA snooping, Don Boudreaux at Cafe Hayek writes,

 Government is power.  Government is not to be trusted.  Ever.  Even if you believe that some government is and will always be necessary, that ‘necessary’ piece of government should always be regarded as a prudent lion tamer regards the big carnivorous cats that are ‘necessary’ for him to make a living.  To imagine that seemingly subdued purring lions can be trusted to be dealt with in any ways that do not include the use of strong cages, leashes, ceaseless and deep suspicion, and escape hatches is the height of romantic absurdity – wishful thinking of the most extreme and inexcusable sort.  Government is by its very nature a dangerous, untrustworthy, dishonest, arrogant, slippery entity – characteristics that are by no means reduced anywhere near to insignificance by a wide franchise, regular elections, and sturdy ink-on-parchment documents called “constitutions.”

Unless you are a high-ranking government official, government - no government – is ever “Us.”  It is always “Them.”  And They are not to be trusted.  Ever.

... which is why I have drifted toward being a quasi-libertarian. 

I notice Don misspelled "gubmnt".

Compliment vs. Complement

In less than an hour this morning I saw each of these two words misused. Once in a review about eggs benedict and once in another review.

Here is a piece from Grammar Girl that points out the difference:

Compliment

A compliment, with an "i," is a kind or flattering remark. If a guy says he likes your dress, he’s giving you a compliment. He’s complimenting you.

Complement

A complement, with an "e," is a full crew or set, and when something complements something else, it means they go well together. You might talk about a picture frame that complements a photo or the crew complement needed to operate a ship.

A Trick to Remember the Difference

To remember the difference between the spellings of these words, be a nice person and tell yourself

I like to give compliments.

Put the emphasis on the "I" when you say or think it. The "I" can remind you that the type of flattering compliment is spelled with an "i." 

 

Statins? hmmmm.

My father died of a heart attack when he was 43. My mother died of heart disease when she was 78. But three of my four grandparents lived into their 80s, and one grandmother lived to 96.

This history, combined with my cholesterol blood readings, has led my family physician to recommend that I take statins as a preventive measure. My good cholesterol is sky-high good, but the bad cholesterol and total cholesterol readings are in the "moderate-to-high" risk range. The cholesterol readings themselves would not have led her to put me on statins, but combined with my family history they did.

I had doubts and questions, resisting them for a long time. And now I read this, which suggests that statins as a preventive medicine are not all that effective and can have some serious side effects.

The medical community is debating the pros and cons of using statins for prevention as more independent research comes out on side-effects. This week, a study in JAMA Internal Medicine suggested statins may be associated with an increase in musculoskeletal conditions and pain, especially in physically active individuals.

"If you look at all the studies that have ever been done with statins for primary prevention, so for people who have never had a heart attack or a stroke, if you give a statin to a patient for about five years we can reduce the chance of a person having a heart attack or a stroke by about one per cent," said James McCormack, a professor of pharmaceutical sciences at the University of British Columbia.

This stuff raises serious doubts in my mind about continuing to take statins as a preventive measure. The comments there are lengthy and well-worth reading as well.

One recent meta study is here [h/t Jack]. My take on this article is that the higher potency statins might have some small effect on reducing heart attacks, strokes, etc., but that the effect is small and barely significant, either statistically or medically. The material in this study is fairly well-summarized in its Figure 2 and the accompanying table, reproduced here (you may have to click on it to see it clearly).

The potential effectiveness of statins is masked, somewhat, by the inexplicable use of a log scale on the horizontal axis. Also, I would settle for 90% confidence intervals for things like this. But still, it looks as if statin use as a preventive measure has at best only a small expected effectiveness on average. 

And yet for a person saved from a heart attack, that is hardly a minor effect.

Related articles

Benefits of statins for prevention of heart disease questioned

Statins could lead to muscular injuries, scientists warn

The Ins & Outs of Statins

Cholesterol drugs may cause muscle pain

Statin Use May Be Linked To Musculoskeletal Conditions And Injuries

Agriculture Policy and Sugar: The Rich Get Richer

George Will has a terrific column in today's Washington Post in which he takes on the US sugar industry, its protection from competition, and the gubmnt subsidies it receives, both directly and indirectly. I would add that because the price of sugar is high, that leads to increased demand for high-fructose corn syrup, which has affected many things (including the taste of Coke?)*. 

In the last four years, the U.S. sugar price has averaged between 64 percent to 92 percent higherthan the world price. The costs are dispersed to hundreds of millions. The benefits accrue primarily to 4,700 sugar beet and sugar cane farms....

The government guarantees up to 85 percent of the U.S. sugar market for U.S.-produced sugar. ... Surplus sugar — meaning that which U.S. producers cannot profitably sell — is bought by the government and sold at a loss to producers of ethanol, another program whose irrationalities are ubiquitous.

President Lincoln’s biggest blunder was ....  creating the Agriculture Department. Since 1995, 75 percent of all agriculture subsidies have gone to the largest and wealthiest 10 percent of farms. Largely because of steadily loosened eligibility criteria — loosened at the collaborative behest of agriculture interests and the “caring class” (i.e., welfare workers) — food stamps are now used by 48 million Americans. The stamps buy less than they would were sugar quotas not raising the price of every edible thing, from ketchup to bread to yogurt, that contains sugar. But, then, big government always is most caring about the strong, the articulate and the organized.

*I called Coca-Cola about 25 years ago to ask why the taste of Coke was less rough/metallic, a taste I had come to enjoy, and asked if they had changed the formula. They said they hadn't changed the formula; all they had changed was the sweetener they use.

Measure-For-Measure [in Stratford] (not really a review)

Ms. Eclectic and I went to see Measure-for-Measure at the Tom Patterson Theatre in Stratford last night. It was a mixed experience.

We hadn't been to that theatre in many years, not since it was called "The Third Stage" and had general seating on plastic chairs. We bought some comparatively inexpensive seats from their website back in the winter. Never again will we buy such cheap seats without understanding the seating map.

We were seated beyond/behind the proscenium! We could still see most of the stage, but not all of it. And when you sit that far around (and nearly behind the back of) the stage, there are times when you miss some action and can barely hear the actors.

To make matters worse, we were seated amidst a high school class. That's a risk when you buy inexpensive tickets. In fact as we saw and heard them approach the theatre in a group from outside, I groaned and hoped they wouldn't be sitting near us. Ugh.

Their teacher was totally engrossed in the play, leaning far forward the entire time and making it even harder for us to see and hear the performance. And the students behind us insisted on whispering at times, despite our glares.

The play itself was brilliantly performed, staged, and directed. For the most part, the acting was superb and the staging simple but very effective. After the show, Ms. Eclectic asked me which actor I thought was best. It was an unanswerable question, we discovered, because there were so many good performances. All the leads and most of the supporting actors were just plain excellent. We were less-impressed with some of the over-the-top performances that go over so well with most audiences but just get in the way so far as we are concerned. In that respect we agreed with the Sun reviewer (see below).

But the point of this posting: From now on, no more cheap seats for us. We'll go less often rather than sit there.

Related articles

Unfortunately, our reviewer finds Martha Henry's production falls short

People Respond to Incentives: Ontario Teachers' Edition

For years teachers in Ontario were allowed to "bank" their sick days. The idea was that if someone wasn't sick one year, they could save those days for future years when they might suffer from a serious illness that would keep them off the job for an extended period of time.

Some teachers piled up very large numbers of sick days in their "bank", which led to problems when they tried to claim the days or compensation for them when they neared retirement.

Their latest contract with the Province of Ontario no longer allows teachers to bank sick days. The result? For some inexplicable reason, many teachers who were not sick much or at all earlier in the school year are suddenly becoming ill as the school term draws to a close. From the Trono Star,

Ontario school boards are scrambling to cover a record number of teachers taking time off, as they use sick days they no longer can bank until retirement.

The sudden need for substitute teachers in recent weeks has so outstripped supply — especially on Fridays and Mondays — that some elementary principals have asked librarians, special education and ESL teachers to scrap regular duties for a day to supervise classrooms.

Related articles

Teacher sick days alleged to have spiked under new contract rules

Ontario schools see spike in staff sick days

Urban Deer

We live in downtown London (Ontario), right at the fork of the Thames River. Several days ago one of our neighbours wrote that she had seen deer on the lawn of our condo building. This morning when I looked out the window, I saw two deer in the park right across the street. 

So grabbed my camera to take some photos. In this first one, unfortunately I had left the flash turned on and it reflected off the bedroom window. I've cropped and adjusted the photo a bit, but it still is not very clear.

By the time I got the flash turned off, the deer were moving back toward the river. I panicked a bit and didn't hold the camera steady for the next photo.

It is exciting to see the deer. The river habitat, even in downtown London, might be able to support them for quite some time. But I really doubt if this is the right place for them.

Regime Uncertainty as a Damper on Investment Rocky Mountain Economic Summit, 005

Another speaker at the July 12th Rocky Mountain Economic Summit in Jackson Hole will be William Dunkelberg, of the Global Interdependence Center. He has recently written

“We are to heal the damage done by a credit binge by making even more loans and encouraging ‘risk taking.’ The Fed has done all it can to encourage more borrowing, forcing interest rates as low as possible, flooding the banking system with liquidity, and accumulating a balance sheet of terrifying size. This cloud hangs over the economy, a wet blanket of uncertainty that prevents private sector participants from making bets on the future.

Compared to the 1983 recovery when GDP grew 8 percent, this has been a very weak recovery, not even reaching trend growth. The Fed is committed to purchase $1 trillion in government back[ed] assets while the CBO projects the deficit to be only $650 billion. Just how this will help is becoming less and less clear.”

Putting this together with the previous post, one possibility is that because of the "wet blanket of uncertainty", investors are loathe to invest in real capital, likely because of the regime risk. As a result they keep putting their lendable funds into financial assets even though they expect negative real returns. 

My attendance at the summit is supported by several sponsors, including the Department of Economics at The University of Regina.

Related articles

Rocky Mountain Economic Summit, 004: Negative Interest Rates???

Rocky Mountain Economic Summit, 001

What Would You Ask a Federal Reserve Bank President? Rocky Mountain Economic Summit, 003

Rocky Mountain Economic Summit, 002

Austerity and Growth

Rocky Mountain Economic Summit, 004: Negative Interest Rates???

One of the speakers at the Rocky Mountain Economic Summit on July 12th will be David Kotok, chief investment officer of Cumberland Advisors and vice chair of the central banking series at the Global Interdependence Center. He recently commented on negative interest rates:

There seems to be a debate at the European Central Bank (ECB). The issue is whether or not the ECB should impose a negative interest rate. Negative interest rates are the ultimate in market distortions. They employ only a stick and no carrot. Their use tends to progress from disincentive through penalty to punishment.

Of course, depending on inflationary expectations, we probably have negative real interest rates in North America now and have had them for some time [if people expect the rate of inflation to be greater than the rate of interest, that means they actually expect to lose purchasing power with their investments; but losing a little is still better than losing a lot, which is what they'd do if they just held cash.]. 

What puzzles me is why so many people lend at negative real interest rates. Are there so few good investment opportunities offering better expected rates of return?

The glib explanation is that the marginal product of capital is expected to be very, very low (i.e. people don't think there are [m]any good investment opportunities out there). 

But why is that? Is it uncertainty about the political future? Uncertainty about global stability? Or are there other explanations?

My attendance at the summit is supported by several sponsors, including the Department of Economics at The University of Regina.

 

A Penny on Our Grave Marker

Ms. Eclectic and I have pre-planned and pre-paid for our funerals and burials, including the grave marker. 

In keeping with my moniker, "Godfather of the Ban the Penny Movement", we had a cut-out made at the bottom of a column of hearts and glued a penny there.

The penny is from 1982, the year we were married (thank you Karen L and Nick K and others for providing us with several 1982 pennies!)

Related articles

Eliminating one-cent and two-cent coins in Ireland

Eliminating one-cent and two-cent coins in Ireland

Former colleague Brian Ferguson sent me this link from the Irish Times several months ago. He wondered whether EclectEcon's influence [see the links here] has gone global. 

Prices in shops should be rounded up or down in an effort to do away one and two cent coins, a report recommends today.

... The Central Bank found that one and two cent coins are not actively used by consumers and are expensive to mint. In many countries, including the Netherlands and Finland, low denomination coins have effectively been removed from circulation through the use of the rounding rule. [EE: also Canada, Australia, and New Zealand]

With this rule, goods and services are still priced in multiples of one or two cent but are rounded up at the till. For expample [sic] a bill of €56.21 is rounded down to €56.20 while a bill of €56.23 is rounded up to €56.25.

The NPP says a pilot should be run in a mid-sized Irish town to investigate consumer and merchant reaction to the use of a rounding rule in Ireland. Bray, Co Wicklow, and Drogheda and Dundalk in Co Louth are in the running to be chosen to pilot the scheme.

Do a pilot study? why? They've done the reading and the research, and eliminating the low-value coins is a plan whose time has come. Just do it. The entire Euro block should do it. 

If they have some doubts, they should hire EclectEcon as a special consultant!

Brian also wondered if there is any symbolic meaning in the photo that accompanied the article. It is from a mint in Athens, Greece:

For my testimony before the Senate Finance Committee, see this. 

Addendum: For considerable precedent in many other countries, see this section at Wikipaedia.

Related articles

Plan could see one and two cent coins phased out

Rounding up? That makes cents!

European Commission outlines options for future of 1 and 2 euro cent coins

Historical Maps of Europe and the Mediterranean Region

My Facebook (and early blogging) friend, Tom Palmer (no relation) posted a link to the animated version of this site, but I much prefer going to the index and perusing the maps year by year. 

Some things that impress me from the historical perspective:

• The Roman Empire lasted a long time.
• Cultural and historical identities usually persist much longer than geographic borders.
• At the same time, talk about Balkanization: Look at what is now modern-day Germany.
• Various empires come and go, but it often takes awhile. For instance, consider this map from 1600. Look at the sizes of the Lithuanian-Poland and the Ottoman Empires. Then look at the maps from a century or two before then. Those were massive, long-lasting empires, and they pretty much have disappeared.

Fascinating stuff.

Seat Savers

Especially effective, I imagine, for public park benches. Maybe in airports? Anywhere there is general seating?  Here [h/t Jack]

Time to Denounce Jihad

Is "jihad" a basic part of Islam? And if it is, does it mean butchering non-Muslims as has happened not just in the past week but with far too many terror attacks? If so, it is time for everyone, Muslims and non-Muslims alike, to denounce jihad. 

Consider this recent piece from HuffPost [h/t Jack]. I have no idea whether the writer [Tarek Fatah] is on or off the mark, but it rings true. Regardless, it certainly is time to denounce explicitly jihad as he describes it.

While ordinary Britons and non-Muslims around the world are bewildered by these never-ending acts of terrorism, the response of the leaders of the Islamic community is the tired old cliche -- Islam is a religion of peace, and jihad is simply an "inner struggle."

The fact these terrorists are motivated by one powerful belief -- the doctrine of armed jihad against the "kuffar" (non-Muslims) -- is disingenuously denied by Islamic clerics and leaders.

Yesterday, instead of calling on Muslims to shelve the doctrine of armed jihad, predictably, the Muslim Council of Britain (MCB) issued a quick press release claiming the "barbaric" attack has "no basis in Islam."

Not true, MCB. As a Muslim, I can say without fear, the latest terror attack has a basis in Islam and it's time for us Muslims to dig our heads out of the sand. [emphasis added] 

... This was an opportunity for the Muslim leadership to confess they have failed and that the time has come to admit that jihadis cannot be fought without fighting the doctrine of jihad.

... [W]e keep hearing the propaganda that "Jihad" has nothing to do with warfare. Here is what the "Shorter Encyclopedia of Islam" has to say about Jihad:

"DJIHAD(A), holy war. The spread of Islam by arms is a religious duty upon Muslims in general. It narrowly escaped being a sixth 'rukn,' or fundamental duty."

The only Muslim group that has come to this conclusion are Ahmadi Muslims, whose founder Mirza Ghulam Ahmad in the nineteenth century had the wisdom to declare:

"I have brought a commandment for you people; it is that henceforth 'jihad by sword' [armed jihad] is forbidden ... Now jihad for the sake of religion is prohibited."

For uttering these words, Mirza Ghulam Ahmad was deemed to have blasphemed and was declared an apostate by the orthodoxy in Islam...

 

Protect Yourself Against Product Misrepresentation: Become a Knowledgeable, Experienced Consumer!

I like scotch. I am a somewhat knowledgeable and quite experienced scotch consumer.

I really doubt if someone could pass off cheap stuff to me even if they put it in a bottle that once held expensive stuff. And I'm quite sure they would not be able to pass off rubbing alcohol with food colouring as scotch of any kind.

But that's because I am an experienced consumer of scotch. This is clearly not only a personal benefit, but a social benefit: so long as there are knowledgeable, experienced Scotch drinkers like Ms Eclectic and me, then bars and pubs will be unlikely to try stunts like these.

State investigators say at least one bar in New Jersey was mixing food dye with rubbing alcohol and serving it as scotch.

That’s one of the details released Thursday about an investigation dubbed “Operation Swill.” Twenty-nine bars and restaurants in the state are accused of putting cheap booze in premium brand liquor bottles and selling it to patrons who thought they were buying the good stuff.

Maybe they could pass off Grant's as Johnny Walker, and I wouldn't know the difference. But quite frankly I wouldn't care because I'm not that fond of either. But let 'em try to pass off Islay Mist as Lagavulin, and I'll be suspicious.

So I figure we are doing the rest of society a favour by being so knowledgeable and experienced, right? Right?

How Far Out of Touch with the Real World Are Academic Economists?

Academic economists make their way by demonstrating their mathematical prowess in top-ranked journals. Anyone who denies this is a fool or a knave.

And here is a similar, more fleshed-out condemnation of what we do, this time from Dani Rodrik titled, "What Use Are Economists?". The conclusion:

There is one other thing that the public should know about economists: It is cleverness, not wisdom, that advances academic economists’ careers. Professors at the top universities distinguish themselves today not by being right about the real world, but by devising imaginative theoretical twists or developing novel evidence. If these skills also render them perceptive observers of real societies and provide them with sound judgment, it is hardly by design.