EclectEcon

Austerity and Growth

One of the best summaries of the current argument raging in the economics profession is here. This table is pretty compelling:

The debt-to-GDP levels are given in the left-hand column. The next two columns show the annual economic growth rates estimated by Reinhart and Rogoff and then by the challenging economists from the University of Massachusetts. (They are Thomas Herndon, Michael Ash and Robert Pollin; Reinhart and Rogoff are both at Harvard.)

Debt/GDP	Annual economic growth, 1945-2009
	Reinhart/Rogoff	UMass economists
0-30%	4.1%	4.2%
30-60	2.8	3.1
60-90	2.8	3.2
90+	-0.1	2.2

The impact of a difference of 1% or 2% on economic performance 10 or 20 years from now is LARGE. This is an important issue, even using the revised numbers.

Facebook: I'm an Anomaly

I am on Facebook quite a bit. I love having been able to stay connected (and get reconnected) with childhood friends, former co-workers and colleagues, and with current and former students. I also love getting to know current acquaintances better, especially friends from the theatre and music.

But I think I'm an outlier (according to this piece in the NYTimes). I note three things from that article and graph:

1. Not so many old(er) people are on Facebook. And if they are, my guess is that they have a few family, neighbour, and former co-worker friends, but not hundreds.
2. Take a look at the scatter plot below called "a detailed look at how people meet friends on Facebook".   There are a lot of connections made through summer camp, but there seem to be so few made through work that they don't even show up. 
3. Many of my newer FB friends are from the theatre, where we work intensely for a few months and then go our separate ways. These are probably what the graph refers to as one-time events (and analogous to summer camp?).

These results make sense for younger people. They see people at work everyday; there is less need to FB-friend them, too, to maintain contact with them. But when they change jobs, that's when FB-friending becomes important, sort of like summer camp: you enjoyed being with many of them, and you don't want to lose touch with them. FB is a great way to stay in contact. 

Wait 'til other "under-90"s join FB and begin to dominate it. 

Related articles

Social Media and Summer Camps

Subsidized Prices Lead to Shortages. Whoda Thunk It?

From The Washington Post via Daily Alert:

Egypt Running Out of Money for Subsidies - Abigail Hauslohner
Mini-tankers of illegal diesel fuel have become ubiquitous in Egypt. Egypt's rapidly expanding black market for fuel, foodstuffs, and other commodities may be the most tangible illustration of just how badly its economy is failing. The prices of basic goods, like fuel and flour, have been fixed for decades, with Egypt pouring roughly a quarter of its GDP into a bloated and deeply inefficient national subsidy system each year. After two years of political turmoil, the government is quickly running out of money to foot the bill, and the supply of subsidized goods is drying up.
    Cairo drivers say they spend up to four hours waiting in line ! at state-subsidized gas stations that are almost sure to go dry by the afternoon. "Sometimes they will only sell half of what they have, and then they'll take the other half and sell it on the black market," said taxi driver Rafaat Mahmoud. Since waiting in line also means losing money, Mahmoud does what many other Egyptians do: He pays 22% more to buy diesel on the black market.
    Economists say the government of President Morsi has only enough cash to fund the subsidies for a few months. But it lacks the political support needed to carry out the massive spending cuts that economists say are necessary to keep Egypt afloat and secure a $4.8 billion IMF loan. (Washington Post)

When prices are set below the equilibrium price, the quantity supplied declines and the quantity demanded increases, leading to shortages. This is basic stuff that politicians cannot overrule or legislate out of existence, no matter how much the voters might want them to.

Related articles

Egypt: Diesel Shortage Revives Black Market in Egypt

Egypt faces food crisis over wheat shortage

A paralysed city: The diesel fuel crisis

Size Matters: Addendum

In my previous post, I opined that "Size is important".

It is. I like having a bigger screen for my smartphone than is offered by Apple. The Note2 by Samsung is as large as I might want, though. It is not too big for most of my shirt pockets, but it is perhaps a bit too big to hold for long periods for reading or for taking self-portraits using the screen-side camera. 

Given these considerations, I would probably NOT be interested in this larger Samsung "Mega 6.3" [h/t MA]. I would love the larger screen, but that size might be too big for my shirt pockets (MA says I should buy shirts with bigger pockets then; in fact if I wore only cargo pants or sportcoats, a phone that big might not be a problem.). 

At the same time, keeping in mind the sizes of some of the early cellphones that many of us used back in the late 1980s and early 1990s, I see nothing wrong with using a phone that is larger. My Note2 is considerably smaller than my early Sony phone or any of the early Motorola phones. A current phone is large? That means the screen is more readable and easier to use.

The Future for Apple

Jack sent me this article from Forbes, dissing Apple pretty seriously. Its title is,

7 Reasons Apple is More Doomed Than You Think

I have little knowledge in this area, so take the rest of this in that vein. As you know, I'm upset with Apple because they didn't have the good sense to come out with a smartphone the size of the Galaxy S3 (or the rumoured slightly larger S4). And I have seen nothing in the rumour mill indicating that they will move in that direction soon.

They will... eventually. But by then, Apple will be playing catch-up to Samsung and HTC. I still haven't adjusted to my Samsung Note2 and Android, but size is important!

So knowing that's my only take on Apple (other than the fact that I recently bought a MacBook Pro instead of and Window-based machine), you may not want to pay too much attention to these forecasts. 

I looked at the price of Apple stock earlier today. It was about $403US, up $5 for the day, but down about 28% from its peak. My guess (forecast or prediction is really too strong, despite my having used "forecasts" in the previous paragraph) is that in two years Apple stock will sell for $210 and in five years it will sell for $125. 

If I had any confidence in these guesses, I would short the socks off Apple. But given my lack of confidence in these guesses, and given my generally strong risk aversion, I'll settle for just making the guesses public.

Turn Off Your Cellphone?

I hate listening to other people's phone conversations. Too many people seem to think it is okay to have cellphone conversations anytime, anywhere; and they generally seem to think they need to speak more loudly into a cellphone than in person. Ugh.

But what's wrong with texting and checking your email on a flight? Not much unless it distracts you in case of emergencies. Here's an insider's report:

Turning off our electronic devices: How necessary is it, really?
Flight attendants everywhere will hate me for this, but ... having your electronic device on below 10,000 feet is not an immediate danger to the flight. How do I know? Pilots are the worst offenders of this rule. Not on purpose, of course, but when we're flying all day, sometimes we forget to turn our phones off. I've received a phone call everywhere from the takeoff roll to 18,000 feet over the Rockies and the airplane has never had an adverse reaction.

That said, it's still important for you to listen to the flight attendants and follow their instructions to turn off your electrical devices. It is their job to enforce the rules, no matter how dumb they are. If you want to give someone an attitude or an earful, please direct your worst to the hypocritical politicians who do not comply with the rule while on their private jets.

I've heard phones go off or text signals as planes are landing. As with the pilot who wrote that statement above, it's never been a problem. 

Paradise by the Dashboard Light

I recently saw a television commercial for some car (I honestly don't remember the brand) in which a young-ish couple is driving down the road, singing along with the song "Paradise by the Dashboard Light" [the classic hit by Meat Loaf]. 

At one point the woman starts to caress the man's thigh. And as the two are singing along, suddenly we see their two kids in the back seat going "Yuk" "ew" etc.

"Paradise by the Dashboard Light" is an absolutely hilarious, eight+  minute send up of teenage love, sex, and romance in the 1950s. Parking the car by the lake, describing petting and teen sex as "getting to second base" etc., made even funnier with the play-by-play done by Phil Rizzuto.

But what demographic group are they targeting with this ad? Seniors who remember what it was like back in the 50s and 60s? Or people who were teens in 1978 when the song came out? Or young families of today who might remember their own parents' antics and songs? 

 

This Youtube version has the lyrics but horrible spelling, which just adds to the humour.

Grammar Test

While we are doing tests, here is one of the toughest grammar tests I have ever taken (h/t MA). I got 9/12 right. One was a silly mistake, one I probably should have gotten right with more thought, and one (#11) is still baffling me. 

It has questions about grammar, about parts of speech, about Latin word origins, and word usage. My mother and grandmothers probably would have had perfect scores on it, but not me.

Short-Term Memory Test

Some time ago, Jack sent me this message and link. It's a short-term memory test having to do with pictures of people -- when and whether you saw each picture.

I did okay (which is reassuring), but then I didn't wait between the parts nearly as long as they say you should, so maybe my results aren't valid. This is a hard test. Try to remember which photos you have seen in which part of the test. Good luck....

Short Term Memory Test

You'll be shown 12 photos in the first part,  You'll be shown another 12 photos in the second part, You'll be shown 48 photos in the third part and asked if you saw them in the first part,  the second part - or never saw them at all. When you have finished the third part, your results will be given to you. Click here to begin. .... My scores were reported like this: Recognition score ( if you saw it ) Your score: 100% Average score: 92% This is a measure of your ability to remember the photos you've seen, regardless of the part in which you saw them. From all 24 photos shown in Parts 1 & 2, you recognised: 24 photo(s).     Temporal memory score  ( when you saw it ) Your score: 79% Average score: 68% This is a measure of how often you recognised a photo and matched it to the correct part, instead of just remembering which ones you'd seen. From all the photos you recognised, you matched: 19 photo(s) to the correct part.

 

Les Miserables (or is it "Less Miss"?)

I saw Les Mis on stage a number of years ago in Toronto, and didn't much care for it. I pretty much agreed with this review of that production. An excerpt:

The wife said she thought the singer who played the mother was pretty good, but I thought her voice was weak and over-amplified. I said, "The only good thing about her was that she died, so we don't have to listen to her again." Imagine my shock when she came back in the second act as a ghost. I'd've choked on my popcorn if they'd've let me have any at my seat.

 It was also pretty funny during the show, when them smart-alec university students thought they knew what was good for us workers while we didn't know or care what they was talking about. I figure the real reason the workers didn't join the students at the barricades, though, is that they was singing stupid songs. The outcome would've been a lot different if Sigmund Romberg had written the rally songs: "Give me some men, who are stout-hearted men, who will fight for the right they adore..." Now that's the sort of thing to really rally the troups!

And after reading this review (which I thoroughly enjoyed), I doubt if I'll see the movie either. An excerpt:

And then there's the second French revolution, and Cosette falls in love with rich student/slumming revolutionary Marius (Eddie Redmayne), and Javert still hovers in the background, obsessed with bringing Valjean to what the officer believes is justice. One of the nefarious powers of "Les Misérables" the movie is its ability to reduce Victor Hugo's novel, considered one of the great achievements in world literature, to a hacky melodrama that even a young D.W. Griffith might have found overly precious.

Oh, the performances: Jackman and Hathaway are both playing to the back balcony, rather than to the camera lens that's just inches away. Jackman over-articulates, over-gesticulates and pretty much over-everythings. Worse still are those moments where, rather than singing all his dialogue, he has to transition from speech to song within the same line. ("We're leaving now, PACK YOUR THIIIIIIINGS!") Even his "Bring Him Home" paled next to the version performed by that actor who came to Dallas 20 years ago, raising nary a hair on the back of my neck.

Hathaway, meanwhile, takes every opportunity to suck all the oxygen out of "I Dreamed a Dream," the number that is this show's "And I Am Telling You I'm Not Going." Earlier in the film, Fantine sells some of her back teeth to a shady dentist who promises to leave her "enough to bite." Clearly, he also left her enough to gnash. It's a ghastly, eyelid-fluttering, self-serving, sympathy-begging performance; Oscar voters are guaranteed to eat it up.

I must say, though, that there's a chance I'll watch it some day, despite these reviews. My granddaughters love it, and one of them won a singing contest performing "On My Own" from Les Mis, which is a big plus for us.

Maybe It Is Time to Reread "The Great Gatsby"

If I have ever read The Great Gatsby, I do not remember it. Contrary to the general stats in this article, I was not ever required to read it for any course in high school or university. I may have seen the movie with Redford and Farrow at some point, but I do not remember much of it if I did. Obviously it was all pretty forgettable for me.

But having read this review, it is pretty clear to me that I had no idea what was going on in the book/movie. 

This is just more evidence for me that I need to read reviews and summaries before I watch movies and before reading many of the books that are "significant" or "meaningful". Wikipaedia entries are great for this sort of thing.

Another option, of course, is to ignore them all.

On Adding Years to One's Life

MA sent me this link to a NormBlog posting. Here it is, in full:

Adding on years

Here's a guy, on the letters page of the Times, who has the right idea (£):

Sir, I was excited to read... that eating mackerel will add two years to my life, because I'm a collector of added years. I added ten years when I stopped smoking, two when I gave up white sugar, three when I began eating bran for breakfast, six when I began going to the gym.

Anthony Calder-Smith - for he it is - hopes these added years will run consecutively rather than concurrently. I have a different worry. My ten added years for giving up smoking way way back - when do I get them? Or have I already had them?

Hilarious, the thought that all those added years might run concurrently rather than consecutively! Maybe that's what enables all those athletes to give 120%?  I just thought they were innumerate buffoons, but maybe they are right and I'm just being snobby about numeracy.

Music for Meteors

We will be in Houston during the Lyrid Meteor Shower on April 21-22, visiting my son Adam Smith Palmer and family. He has suggested (probably not seriously) that they might hold a large, loud backyard party (no lamps or lanterns, please) at 4am to watch the meteors.

I have offered to provide music for the occasion. 

Here are some of the suggestions so far (please post other suggestions in the comments):

• Catch a Falling Star and Put It in Your Pocket - Perry Como
• Twinkle, Twinkle Little Star
• Don't Let the Stars Get in Your Eyes
• Star Light, Star Bright
• Stardust - Hoagy Carmichael
• Swinging on a Star
• others? 

and maybe at the end of the party (as the sun rises), The Animals version of The House of the Rising Sun.

Addendum: An internet acquaintance sent me these suggestions as well. I especially like "Starry, Starry Night".

Stars fell on Alabama

Stars in your eyes

A handful of stars

Follow a star

I saw stars

It was written in the stars

Lost in the stars

Serenade to the stars

Shakedown to the stars

The stars will remember

Starry starry night

You're the only star in my blue heaven

Excellent Advice for Living

Bryan Caplan of EconLog offers the following advice for enjoying life.  A lot of the advice is to enjoy what we have but also to find and enjoy a common ground with friends and acquaintances (and to select them carefully). Here is a brief summary edited from his post:

1. Amicably divorce your society.  Don't get angry at the strangers who surround you, just accept the fact that you're not right for each other.

2. Stop paying attention to things that aggravate you unless (a) they concretely affect your life AND (b) you can realistically do something about them.  Start by ceasing to follow national and world news.

3. Pay less frequent attention to things that aggravate you even if they do concretely affect your life and you can realistically do something about them. ...

4. Emotionally distance yourself from people you personally know who aggravate you.  Don't purge anyone - that causes more trouble than it saves.  Just accept the fact that you aren't going to change them....

5. Abandon your First World Problems mentality.  Consciously compare your income to Haitian poverty [etc.]...

6. Now that you have emptied your life of frustration, you are ready to fill it with joy.  Start doing things that make you happy even - nay, especially - if most people in your ex-society disrespect them....  

7. Actively try to make more friends with people who share your likes.  In the Internet age, this is shockingly easy....  

8. Find a career you really enjoy.  Ask yourself, "Will I take daily pride in this work?" and "Are the kind of people I want to befriend statistically over-represented in this line of work?"...  

9. If you're single, stop dating outside of your sub-sub-culture. ... 

10. Now that your own life is in order, you are emotionally ready to quixotically visit your ex-society.  ... Bend over backwards to be friendly.  Take pride in your quixotic quest.  Then go home ... and relax.

Coda: Many perpetually aggravated people tell me they "just can't" adopt my advice.  Perhaps they're right to think that they can't follow my advice 100%.  But so what?  Anyone can adopt my advice at the margin.  Why not spend one extra hour a day in your Bubble and see what happens?

Caplan's advice has much in common with the Serenity Prayer, which begins

God, give me grace to accept with serenity

the things that cannot be changed,

Courage to change the things

which should be changed,

and the Wisdom to distinguish

the one from the other.

but it goes further along the lines of social choices. Caplan places strong emphasis on choosing one's friends and contacts carefully so that you enjoy life. He also urges us to reduce meaningless conflict. The "Bubble" he refers to is a selection process one can go through to enjoy life. To read more, follow the links in his piece. It seems likely genuinely good advice.

Update: David Henderson has more on the topic here.

More Evidence of How Unnecessary AntiTrust Cases Often Are: Microsoft

Remember those massive antitrust cases against Microsoft? Think of all the scarce resources devoted to prosecuting Microsoft and used by Microsoft to defend itself. I opposed those cases for two reasons:

1. Microsoft dominated only when their products were better than others. I switched to Word because WordPerfect for Windows was horrible. I switched to Internet Explorer (and then FireFox, Chrome, and Safari) as they got better than Netscape and Mosaic (?).
2. Competition is very powerful. Apple is making huge inroads into the PC market. Google is dominating Microsoft in many areas. And operating systems for tablets and smartphones are leaving Microsoft in an unenviable position of trying to catch up.

Also, see Winners, Losers, and Microsoft by Stan Liebowitz.

According to Motley Fool (though not in these words), these two points are important for understanding the future for Microsoft, its strengths and its weaknesses.

The rise of tablets and smartphones has shaken up the once dominant “Wintel” PC paradigm. In an attempt to re-establish its supremacy, Microsoft (NASDAQ: MSFT) designed Windows 8 to be a hybrid operating system, useful on a variety of platforms.

But Windows 8 adoption has been poor -- consumers seem baffled by the changes. Meanwhile, Windows tablets are selling poorly, and Windows Phone remains in fourth place. Can Microsoft turn things around, or should the company cut and run?

Windows 8 has failed

Microsoft released Windows 8 last October. The new version of Windows was the biggest redesign of the operating system since Windows 95. Unfortunately, consumers seem baffled by the changes, and Microsoft’s hardware partners have been public in their disappointment.

There are two ways to keep industries competitive in the long run without resort to antitrust laws that are often ineffective (and frequently downright anti-competitive themselves!):

1. Promote free trade. Don't let fat-cat monopolists use trade barriers to enhance their monopoly power.
2. Promote easy entry into industries. Don't let the fat cat incumbents bribe politicians into making rules/laws that inhibit competition from new entrants.

And always remember the sad truth that most antitrust policy can be summarized this way:

1. You must compete.
2. You must not win.

One Reason I Moved Toward Libertarianism

Don Boudreaux at Cafe Hayek nails it. I was young, a borderline socialist, certainly a wannabe elitist interventionist. And then I realized that giving more power to politicians and their appointees  not only could but would lead to implementation of policies I abhor. I began to back off my more interventionist views. But Boudreaux says it all so well:

If you are a modern “Progressive” and cannot abide the notion of conservatives, Christian or otherwise, having a say in who you sleep with and who you may marry, when and why you may get an abortion, what sorts of scientific research and artistic projects should be funded, what school curricula should and shouldn’t include, or when and why Uncle Sam goes on world-policing ventures, then why do you wish to expand the scope of government authority?  Doing so in a society with a wide franchise, such as the U.S., inevitably invites those rubes to intrude their antediluvian superstitions and dogmas onto you and onto all that you hold dear and sacred.

Indeed, much of politics seems like a battle between opponents vying for the right to control other people. But there is more there; the above is just an excerpt. Here is his conclusion:

The more expansive is the scope of government authority, the more my life is subject to commands issued in part under the influence of people who read Us magazine.
Scary.

Read the whole thing. It's not all that long. 

Has EclectEcon Been Barred from Ireland?

Not exactly. But the Teachers' Union of Ireland has unanimously passed a motion urging their members not to work with scholars who have Israeli affiliation. And that includes EclectEcon. From Engage:

A motion, calling for all members of the union to end work with Israeli counterparts, was passed unanimously at the TUI annual conference in Galway on Thursday.

The union called on the Irish Congress of Trade Unions to increase its campaign for boycott, divestment and sanctions against “the apartheid state of Israel until it lifts its illegal siege of Gaza and its illegal occupation of the West Bank”.

The passed motion requests TUI members to “cease all cultural and academic collaboration with Israel, including the exchange of scientists, students and academic personalities, as well as all cooperation in research programmes”.

The motion doesn’t bother to maintain the fiction of the “institutional boycott”.  This is a boycott of scholars and students on the basis of their nationality.  This is a boycott of a significant proportion of the world’s Jewish academics and students for reasons which are nothing to do with anything that those academics have said or done.  Nobody but Israelis are to be boycotted.

This is disgusting, outrageous, an affront to academic freedom, and anti-semitic. They do not go after China for its occupation of Tibet; they do not go after North Korea for its human rights violations; they do not go after Saudi Arabia and its neighbours for their treatment of women; etc., etc. Nor do they go after scholars from those countries.

Instead they single out Israel, a democracy, a country which has had to fight three wars to ensure its existence - a country which must continue to take measures to protect itself from formal declarations that they should be annihilated. And what is more, they go after scholars affiliated with Israel. 

Long-time readers of EclectEcon will know my position. I am so upset by such views and single-country stances, that quite a few years ago I sought and obtained affiliation with two different Israeli academic institutions: Haifa and Bar-Ilan. As my email signature reads,

Member, Int'l Advisory Board for Academic Freedom, Bar-Ilan Univ
Affiliated Professor, University of Haifa

Related articles

Irish academics' union votes to "cease all cultural and academic collaboration with Israel"

Teachers Union of Ireland unanimously calls for Academic Boycott of Israel

Germ Sites

With reports of new outbreaks of Avian Flu, this might be useful information (actually it is anyway). The 11 most common places that people are likely to pick up germs and viruses [h/t Jack] are listed here.

1. Handrails. I try not to use them, but nowadays I walk down stairs with my hand poised over the rail just as a precaution.
2. Elevator buttons. I use a knuckle instead of a fingertip. 
3. Grocery cart handles. 
4. Restaurant menus.
5. Money from cash registers (I once had a minor bout of something resulting from handling money in a foreign country and not washing my hands right afterward).
6. Light switches. Again I use knuckles or arms whenever possible in public places. 
7. Salt and pepper shakers in restaurants.
8. Salad bars. These places are scary, even with sneeze shields. I expect buffets in general can pose problems. 
9. ATMs. Maybe I'll start with the knuckles here, too, if possible.
10. Exercise equipment. No worries there! ;-)
11. Water fountain handles. I love the ones with a press bar.

The article concludes with this fairly sensible advice:

Makes you nervous, doesn't it? Relax. It takes just a little common sense and attention to protect yourself from public germs. Here are ways to keep germs at bay:

Handwashing. Always wash your hands before cooking, eating, or inserting your contact lenses. Wash your hands after cooking, using the toilet, petting an animal, handling garbage, blowing your nose, or coughing or sneezing into your hand. It doesn't matter if you wash with regular or antibacterial soap as long as you do a thorough job. 

Use hand sanitizer. Alcohol-based sanitizers that require no water are among the greatest health inventions of recent times. They're efficient at killing germs, whenever and wherever you encounter them, without the need of water or towels. 

Keep hands away from your face. No matter how many times you wash them, if you are in public, your hands will pick up germs. Germs will quickly enter your body if you rub your eyes or nose, stroke your chin, or touch your lips. [EE: This is a tough one for me]

Avoid the communal candy bowl or cookie jar. Given that only 67 percent of people who say they wash their hands actually do, and that only a third of those people use soap, you can imagine what's lurking in there. 

 

Related articles

Hand Washing Steps

Kids Health

Paul Krugman Explains Why Crow Tastes So Good

Let's face it. Not many people are good prognosticators. In fact most of us do not even bother trying to imagine what the world will be like in 20 years. But in this article, Paul Krugman explains why most economits' predictions are wrong. My explanation for why most economists' predictions are wrong includes the following:

• Many of our predictions are not wrong. The basic supply and demand models work very well most of the time.
• Our macro models, dealing with inflation and unemployment, are generally quite poor. 
• It's hard to predict what politicians are going to do.
• Rational expectations and adaptation: if we predict prices are going to go down a year from now, and people believe us (ha!), they'll sell now, and prices will go down now, not a year from now.

Here are some predictions Paul Krugman made back in 1998:

* Productivity will drop sharply this year. Nineteen ninety-seven, which was a very good year for worker productivity, has led many pundits to conclude that the great technology-led boom has begun. They are wrong. Last year will prove to have been a blip, just like 1992.

* Inflation will be back. Wages are rising at almost 5 percent annually, and the underlying growth of productivity is probably only 1.5 percent or less. Sooner or later, companies will have to start raising prices. In 1999 inflation will probably be more than 3 percent; with only moderate bad luck--say, a drop in the dollar--it could easily top 4 percent. Sell bonds!

* Within two or three years, the current mood of American triumphalism--our belief that we have pulled economically and technologically ahead of the rest of the world--will evaporate. All it will take is a few technological setbacks or a mild recession here while Europe or Japan recovers a bit.

* The growth of the Internet will slow drastically, as the flaw in "Metcalfe's law"--which states that the number of potential connections in a network is proportional to the square of the number of participants--becomes apparent: most people have nothing to say to each other! By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's.

* As the rate of technological change in computing slows, the number of jobs for IT specialists will decelerate, then actually turn down; ten years from now, the phrase information economy will sound silly.

* Sometime in the next 20 years, maybe sooner, there will be another '70s-style raw-material crunch: a disruption of oil supplies, a sharp run-up in agricultural prices, or both. And suddenly people will remember that we are still living in the material world and that natural resources matter.

The lesson to be learned? Economists are not much good at predicting the future .... and if we were, we'd do it rather than write about it.

Scarcity, Economics, and Medical Care

One of the first things we do in introductory economics courses is try to make the point that because humans seem generally to have unlimited wants but because there are limited productive inputs, we are condemned to live with scarcity. Like it or not, we cannot have all we want of everything. We must make choices somehow.

This fact of human existence is crucial for understanding the problems we will increasingly face in the realm of medical care. As we move toward increased use of gubmnt programmes to provide the care, not everyone will be able to receive all the care they might want. This problem of scarcity will most often be stated as a problem of not being able to afford the medical care, but it really stems from a problem of scarcity: when customers don't have to pay directly, they want more than they would otherwise, and getting all the productive inputs to provide all that care (i.e. attracting them from alternative uses) is extremely costly, involving painful trade-offs. 

So we have to have a mechanism for deciding who gets the medical care. We must have some sort of rationing scheme. Some people might urge the use of the market to make this decision. Others might urge the use of co-pays and limits on some types of insurance to decide. Others openly recommend letting doctors, committees, and bureaucrats decide (aka death panels?).  But we have to acknowledge that not everyone will ever get all they want. Choices must be made somehow.

You may not like that reality. You might think people should behave differently. But the sad fact is that scarcity necessitates our making such choices. There is no way around it.

We see this problem now with cancer patients in the US. From the Washington Post, 

Cancer clinics are turning away thousands of Medicare patients. Blame the sequester.

... Oncologists say the reduced funding, which took effect for Medicare on April 1, makes it impossible to administer expensive chemotherapy drugs while staying afloat financially.

Patients at these clinics would need to seek treatment elsewhere, such as at hospitals that might not have the capacity to accommodate them.

It may seem that the sequester and a cut in funding for medicaid/medicare have caused this problem, and I suppose in the short-run that's right. But in reality, the problem is a much greater quantity demanded at current prices (zero!) than is supplied. 

The problem is an old one that economists have presented endlessly: whenever the gubmnt sets a price of zero and tries to guarantee that everyone who wants something at that price can have it, then shortages emerge. And then, to try to fix the problem, the gubmnt must decide how to ration the product. 

In this case the rationing is left to medical facilities. And they, quite understandably, are choosing to decline to treat those patients for whom the costs of treatment are extremely high. 

Whether we want to acknowledge it or not, these are death panels. These are groups of people deciding who should or should not receive treatments. 

Getting Feedback

Whenever I have done my ordinary work (economic analysis, writing, research), I have asked for feedback from trusted individuals (and offered it in return for their work). The feedback almost always improves our work.

Now that I have become more involved in theatre, I can see the same thing applies in theatre. Getting feedback is a tremendous help. Directors provide considerable feedback for the actors, but it is especially difficult for them to do so if they are acting in the production and worrying about many other things as well.

The better productions in which I've been involved have brought in "play polishers" to provide feedback and critical reaction (e.g.: the recent production of Cabaret used at least two different play polishers at different times). It has been tremendously helpful, and I can only begin to imagine how it would have helped other productions. Indeed, several times I have had reviewers make comments that would have improved my own work (and in fact did, but alas only after the show had opened). Many of the points made by reviewers would often be made, pre-production, by play polishers.

Even if I never do another show the rest of my life, I hope others in the future will take the step of bringing in "play polishers" to provide pre-production feedback. 

Well, You Couldn't Prove It By Us

Sales of Scotch have been slipping. (see this, h/t MA). 

The number of bottles shifted worldwide fell 5% to 1.19bn...

To tell the truth, I think that in the calendar year 2012, we did our bit to help the Scotch industry. If sales fell, it was despite our efforts. One reason for the decline, of course, was the continuing economic uncertainty in Europe and elsewhere. But increased taxes also played a role.

Sales were hardest hit across the eurozone, as the economic crisis continues to hit luxury industries.

In France, the biggest importer of UK whisky, sales dropped 25% after the introduction of a new 15% whisky tax*. The fourth biggest market, Spain, also fell by 20%. It follows years of strong growth for the industry, which accounts for a quarter of the UK's food and drink export market.

At the same time, though, discerning drinkers have been spending more on Scotch.

[T]he value of the sales grew 1% to £4.27bn as discerning drinkers in the US and Asia turned to more expensive brands.

The biggest winner, according to the International Wine & Spirit Research group, was Johnnie Walker, which took top spot for sales in Asia, the Americas, the Middle East and Africa. Its sales grew 7.6% worldwide.

Johnny Walker?? JOHNNY WALKER??? Good grief. What are they moving up from? Bell's? Grant's? Wal-Mart brand?

Ms. Eclectic, after considerable experimentation, has pretty much settled on Balvennie as her Scotch of choice. There are also certain batches of Jura (the non-peaty batches) that suit her. 

My own preference has been for Lagavulin or Caol Ila, the smokey-peaty Scotches from the island of Islay. I've also enjoyed some blends from Islay, but they seem to come and go, whereas the single malts like Lagavulin and Caol Ila are fairly stable brands. [see this, and for my pilgrimage to Islay, see this].

*Note to all economics students: Yes, despite our apparent addictions, it makes sense that the the price elasticity of demand for Scotch is 1.67. There are lots of substitutes, including very decent Scotch-type whiskeys from Japan and Cape Breton Island, not to mention all the other whiskeys.

Global Warming "Scientists" Cooked Their Data

Every time I think maybe there really is something to the concerns about global warming, I find out that the people claiming that global warming is or will be serious cooked/fudged/lied about their data. Thank goodness for people like Ross McKitrick (a colleague when I visited Guelph a few years ago). His recent piece in the Financial Post highlights more highjinks:

In recent years there have been a number of cases in which high-profile papers from climate scientists turned out, on close inspection, to rely on unseemly tricks, fudges and/or misleading analyses. After they get uncovered in the blogosphere, the academic community rushes to circle the wagons and denounce any criticism as “denialism.” There’s denialism going on all right — on the part of scientists who don’t see that their continuing defence of these kinds of practices exacts a toll on the public credibility of their field.

Cooking the data is simply not legitimate, and it looks as if that's what too many people in the global-warming non-skeptic camp have been doing.

Update:  Harold Brooks writes "McKitrick knows a great deal about cooking data. He was involved in cherry picking the 1% most sensitive artificial time series from an experiment and treating them as random selections. See http://deepclimate.org/2010/11/16/replication-and-due-diligence-wegman-style/ and Mashey's other analyses of Wegman, McIntyre, and McKitrick."

I wish I understood the nature of the debate better.

Baseball Statistics in the Booth

Today's NYTimes reports that increasingly baseball announcers are being asked to use and interpret analytical statistics during their broadcasts.

Statistical analysis has swept through baseball over the past decade, becoming part of the fabric of the game and an object of growing fascination to its fans.

It's about time.

Back in the days of internet newsgroups and rec.sport.baseball, those of us who used analytical statistics referred to announcers who wouldn't try to understand them as "mediots" for good reason. They would trot out cliches and useless measures over and over again. Meanwhile, we screamed at them through our computers. 

Then, when I had the chance to do radio play-by-play of (AA) London Tigers games and then both radio and television play-by-play of the independent league London Werewolves, I got my chance to change things a bit. I continually talked about and used "on base percentage" [OBP] and "slugging average" [SLG]. And I refused to discuss RBIs. I even had it written into my contract the last year that OBP and SLG had to be shown on the screen and that they would not show RBIs. Here's a story about my efforts back then.

Slowly I had an impact on some of my co-announcers and even on some of the players. The big change came, though, when Billy Bean of the Oakland Athletics began to employ some techniques using baseball analytical statistics, and Michael Lewis wrote about his success in Moneyball. 

It has still been a long road; old-school announcers resisted the change. But it is slowly occurring. This year I have seen some telecasts that show a batter's OPS [a good, simple indicator of both power and the ability to avoid making outs: OPS = OBP + SLG]. And it looks as if some are going even further:

As players, managers and front office executives embrace the esoteric statistics, teams increasingly want their radio announcers just as fluent in the language of WAR, VORP and B.A.B.I.P. (Those stand for wins above replacement, value over replacement player and batting average on balls in play, for those of you dusting off your radios as the season begins.)

The use of statistical analysis (as opposed to just relating numbers) in baseball has come to be known as "sabr-metrics" [sometimes spelled "sabermetrics"], after the group SABR [the Society for American Baseball Research]. I was a member of the group back then. 

Addendum: I was once asked on air by a visiting-team announcer what I thought were the most ridiculous statistics. I told him the Triple Crown stats: batting average, home runs, and runs-batted-in. I tried to explain that OBP and SLG capture and reflect the ability of a player much better, but we really didn't have enough time for me to go into lengthy discussions about it all. 

Doc Palmer in the broadcast booth at Labatt Park

 

Global Warming and Computer Models in Economics and Climate Science

Arnold Kling's take is nicely summarized:

Computer simulations give you exquisitely precise unreliable results. Those who run such simulations and call what they do “science” are deceiving themselves.

For more, see this.

A classic example of the problem involved The Club of Rome, which predicted the earth would run out of resources using models that didn't incorporate any price effects on either the demand or the supply side. 

And for a Lomborg summary of global warming, see this. Lomborg is not a denier. Here is his summary (from Facebook):

My cover story for The Sunday Times (the biggest UK broadsheet with 1m copies). 

Getting smarter with global warming:

"As I fly into a snow-bound Britain, I realise that you might be asking where global warming has gone as you shiver in the coldest March for 50 years and wonder what you will do if gas has to be rationed. I have been involved in the climate debate for more than a decade, but I am still amazed at how wrong we get it. Let us try to restart our thinking on global warming.

Yes, global warming is real and mostly man-made, but our policies have failed predictably and spectacularly.

I was one of the strongest critics of the Kyoto climate change treaty, back when it was considered gospel.

People were aghast when you criticised it then. Now Kyoto has no friends, and everyone remembers how they really did not believe in it.

If we want to avoid our current ambitions failing in the same way, if we want to get past Britain’s unworkable and inefficient Climate Change Act and the EU’s climate policies, we need to face up to some hard truths.

I am going to explain the things everyone ought to know about climate change. Then I will set out the ways in which our policies do not work and show you an approach that has a much better chance of fixing the climate."

The whole article is behind a paywall; however, you will recognize some of the figures from my testimony for Congress (http://lomborg.com/testimony).