EclectEcon

Greece Again, My Predictions

Based on articles like this, I predict Greece will default and will go off or be forced off the Euro.

When that happens, their new/(old?) currency will depreciate dramatically in comparison with the terms of trade they had under the Euro.

The Gubmnt will not be able to borrow except at very high interest rates, especially not until lenders have a better idea of what the current and future exchange rates will be. Forward markets will be fun, to say the very least.

Local businesses will actually (eventually) find that borrowing becomes slightly less costly because the international currency markets will allow better predictions (and hedging about) future currency movements.

Consumers in Greece will be nailed as imports become considerably more expensive.

Exporters will at first experience unsettled conditions as they and others try to figure out where the currency will move and how fast, but eventually exporters will benefit from the de facto devaluation of the Greek currency.

Other big gainers: tourists who visit Greece (my guess is that the devaluation will continue over the next year, so wait to book your holidays).

Other gainers: scammers and con artists preying on the econ-ignorant and naive tourists.

There will be considerable turmoil for several months, but eventually Greece will be forced to deal with its fiscal problems by itself as the EU, ECB, and IMF no longer bail them out. If they didn't want austerity under the Euro, they'll have it in spades after leaving the Euro. Meanwhile, they'll have to deal with their tax-evasion, pension, and cronyism problems internally.

At the same time, the Greek gubmnt will likely be forced to print more money and will monetize their debt, leading to even more inflation than they would otherwise experience. And given the left-leaning gubmnt in power, there is a strong likelihood of price controls, more currency controls, etc., a la Venezuela.

Greece will be tempted to have closer ties with Putin's Russia and possibly Iran. And threats of this realignment might lead the US to support some sort of propping up of Greece's economy.

Related articles

Greece Again, My Predictions

Greece, a Brief Explanation

Greece and Puerto Rico: Speculating on Bailouts

Greece, a Brief Explanation

My friend, co-author, and colleague, Jason Childs wrote this in a comment/reply on Facebook. I'm stealing it exercising copyright exemptions to reproduce it here:

Greece has been running massive deficits to pay for program spending in excess of their tax take. Their borrowing costs were really, really low after joining the Euro as everybody figured Germany had their back. The Greek economy has seen really low growth due to rigid labour markets, tonnes of regulation, cronyism, and outright corruption. Result - Greece is broke. The deal on offer right now involves (among other things) reductions in pension spending and reforms to the labour market regulations and privatization of poorly government run businesses - intended to make it more likely that the Greek government will be able to make future payments. The leftwing government of Greece has said it will close the budget gap by increasing corporate taxes instead (not great for job creation) and basically told the IMF, ECB, and EU to shut up and give them more money. Merkel (Germany) didn't take kindly to that (the Germans are getting grumpy with sending their tax dollars to Greece). Now the Greek PM has closed banks and stock markets to prevent everyone from trying to take all their savings out in Euro cash and destroying the banks. They vote on the conditions of the last offer from the trioka this weekend I believe. Looks likely that they will reject the deal. If that happens, Greece will default on many of its loans (particularly to the IMF) be unable to make pension payments in Euros (the Greek government basically doesn't have any), and will probably get kicked out (or leave just before getting kicked out) of the Euro.

If they accept the package, there will be lots of spending cuts which will hurt local demand in the short run,but will likely help in the long run. The hard work that they've refused to do so far (reining in corruption and cronyism) will still have to be done and will cause a lot of chaos and upset relatively rich people (who got rich by being cronies - including many government employees).

There's no easy way out for Greece as they refused to do the hard work done by Ireland and others early on in this mess. Yes, they've done some of spending cuts (austerity) but none of the real reforms that are likely to make things better because that would hurt vested interests. But you can't spend money you don't have forever without your creditors getting pissed off.

In short --- they're screwed.

Related articles

Greece and Puerto Rico: Speculating on Bailouts

How to Tell if an Avocado Is Ripe

From Buzzfeed, via Jack:

The secret is in the stem. More specifically, the color of the stem. If you peel away the nub covering the end of the avocado, the tone of the circle of skin beneath will tell you everything you need to know.

A green circle indicates that the avocado is underripe. If it’s dark brown, it’s overripe.

The color to look for is a yellowish tone, which will indicate that your avocado has reached ideal ripeness.

I don't much like having to sit through videos, but the picture at the end of this video might be helpful, showing the colours.

Greece and Puerto Rico: Speculating on Bailouts

When people are bad credit risks,

• banks stop lending to them, or
• they require collateral for the loans, collateral that hasn't already been used to secure other loans, or
• they require that borrowers induce someone else more credit-worthy to co-sign the loan.

So why have investment banks, hedge funds, etc. been willing to lend money to Greece and Puerto Rico (and California and Illinois, for that matter)? These entities have nothing to pledge as collateral for the loans, and so it must be related to co-signers or some expectation of a bailout (which is, de facto, what having a co-signer for a loan provides).

During the various Latin American debt crises of the early 1980s, I asked Grant Reuber, then COO of the Bank of Montreal (and former Dean of Social Sciences and Academic VP at UWO), about BoM's apparently perilous exposure to that debt. His response then was, "All they have to do is service the debt." What he meant was  that so long as the countries could make the interest payments on the debt, the Bank of Montreal and many others were perfectly happy to keep re-funding the debt.

The big debt crises arise when major lenders become concerned about whether

• the big borrowers will be able to continue to service their debt, and hence
• the big borrowers will be able to borrow more and borrow again to re-fund their debt.

Three or four years ago, I'd have been willing to consider taking a flyer on some short-term Greek debt. I figured something would work out for repayment of the Greek gubmnt debt. I might have done ok if I had -- then. During the last year or two, I wouldn't have paid more than ten cents on the dollar (so to speak) for Greek bonds.

Nevertheless, during the past year, why have people been buying the Greek (and other) debt? In general it must be because they expect someone to bail them out, whether it be the IMF, the ECB, or the US gubmnt. In other words, buyers of the debt of these debt-ridden political entities are speculating that somehow those entities will be bailed out.

And so, in the end, who is being bailed out? In far too many instances it is the lenders, not the borrowers, who are being bailed out. It is the owners of the bonds who get bailed out if some other entities pony up the money to repay the debt. The present situation is not unlike the farm "crisis" of last decade in which farmers were ostensibly being bailed out, but it was really their creditors who were the beneficiaries of the bail-outs (at least in large measure, usually [There -- did I hedge that assertion enough?]).

In the case of Greece, that isn't likely to happen. They have already made it clear that lenders must provide concessions (i.e. seek less than full repayment of their loans). Similar noises are being made by Puerto Rico. When a borrow seeks "concessions", they are in fact negotiating what to do about impending bankruptcy.

At this point, Puerto Rico (and California and Illinois) can probably count on US gubmnt aid, which means that buyers of their debt can probably count on being bailed out. But one wonders how long this situation can persist.

 

Related articles

Student Debt and the Value of Higher Education

Legalizing Marijuana: The Supply Curve Shifted Farther to the Right than the Demand Curve

After Colorado legalized possession, sale, etc. of marijuana, it was clear that both the supply curve and the demand curve would shift to the right.

But which would shift farther? Would the influx of visitors, coupled with increased purchases by domestic buyers lead to such a massive increase in demand that prices would rise? Or would the relatively easy production lead to a large increase in supply, causing the price to drop?

It turns out supply increased more than demand, despite "marijuana tourism" (see this).

[P]rices are declining faster than some had expected, while the number of people visiting the stores has increased. ...

Since last June, the average price of an 1/8th ounce of recreational cannabis has dropped from $50-$70 to $30-$45 currently; an ounce now sells for between $250 and $300 on average compared to $300-$400 last year. [emphasis in the original] More competition and expansion of grow facilities contributed to this price decline ...

According to the note, sales increased by 98 percent year-over-year in April....

Meanwhile, the popularity of legal weed has sparked a fast-growing industry that ... compares to Silicon Valley.

Puerto Gyro

In honour of today's twin announcements of likely financial defaults by Greece and Puerto Rico, Ms Eclectic and I have decided to get take-out gyros from a food truck.

#carbsbedamned

Do What You Love --- But Accept the Reality of it

Brilliant advice from Margaret Wente:

“Do what you love,” we urge our children, as if there’s a dream job out there just for them. But “do what you love” is probably the worst career advice in the world. It implants the notion that doing what you love can produce a sustainable livelihood – which isn’t always the case, alas. It also sends the message that if you don’t wind up doing what you love, then you’re a flop. That’s how you get freelance writers who are still living in a basement apartment at age 35 and wondering why things haven’t worked out the way they were supposed to.

Sometimes you have to compromise in life, but we don’t want to break this crushing news to our children. Personally, I’ve met far too many young adults who graduate from university with plans to work in development/save the world/find a career in environmental sustainability. There’s nothing wrong with these noble aspirations. What’s amazing is that no adults have ever levelled with them.

Reality will bite soon enough, of course. The idea that your job should be your passion is a misguided romantic notion that only the upper-middle-class can afford to entertain. In fact, most people wind up in areas that nobody ever talks about. “Insurance is a very interesting field,” Mr. Laurie assured me. “But no one says ‘I want to go into insurance.’ ” ...

I’m afraid they could be in for a hard landing.

It sounds curmudgeonly to say things like this. But when you read some of the stories in Wente's article and when you know so many people who have experienced these things in person (as many of us do when we work with younger people), it seems important that this advice be given now and then.

Some of us have been lucky. I love economics and I love teaching, so I got to do what I love. I have a number of friends who love computer work and gaming who have found lucrative employment doing those things.

At the same time, I have loads of other friends who haven't been so lucky and who seem uneagre to face their own reality. Sometimes the things people love just don't pay very well, if at all.

For some reason, I'm reminded of the t-shirt that people on rec.theatre used to laugh about back in the old days of usenet:

So, you're an actor!

Which restaurant?

 

Are the Clocks Going to be Set Forward or Backward on Tuesday Night?

Yes, the clocks are going to be reset Tuesday night to realign our clocks with sun time. This reset, which occurs now and then, according to this article, is called a "leap second".

But will the clocks be set ahead by one second? or will they be set back by one second?

The CBC headline reads,

Leap seconds: Why our clocks are being set ever-so-slightly ahead

But the subheadline and the article imply the clocks will be set back by one second:

Leap second being added around the world on June 30

and from the article,

Just before midnight Greenwich mean time on June 30, official timekeeping bodies around the world will add a single second — the so-called leap second — to the clock.

While the time-shift seems too infinitesimal to matter to the average person, there are very good reasons for it.

A leap second is an extra second that is added to an agreed-upon day every few years in order to keep Co-ordinated Universal Time (or UTC, the modern replacement for Greenwich mean time), the world standard for regulating clocks, in sync with Mean Solar Time, which marks the passage of time based on the sun's position in the sky.

It means that the last minute UTC of June 30 will actually be 61 seconds long.

Wouldn't setting the clock ahead subtract a second from our time? And wouldn't adding a second require that the clocks be set back, not forward, by one second?

My take on this is that to get 61 seconds into that minute, when the clock hits midnight, it will have to be set back one second so that it will strike midnight again one second later.

I confess to having some confusion, and the aphorism, "spring forward, fall back" doesn't help here.

CBC: our tax dollars at work. The other media seem to understand this (see links below).

Update: CBC has changed the headline to read "back" now.

Related articles

June 30 getting an extra second; NASA explains why

NASA Explains Why June 30 Will be 1 Second Longer

June 30 to be one second longer - NASA

Leap second on June 30 will be 'mini-Y2K'

I Need Help for My Upcoming Colonoscopy

Yes, I am scheduled to have another colonoscopy. Here's the help I need:

What should I write on my butt cheeks as a message for the physician?

One grand has suggested "Kiss this". Another possibility might be "Will you respect me in the morning?" But likely neither of these will do. Both are too long.

Please keep in mind that I will probably have to write this myself (Ms Eclectic has made it very clear that she will not help), so it will have to be short, and it will have to be easy to write sideways using a mirror.

Maybe I'll put a message on a post-it and tape it on my butt cheek. How about "Open Here"? or "Lift Tab to Open"?

And, no, I will not be posting photos.

Maybe I'll take a voice recorder with me to  protect myself from this.

This Is What Freedom of Religion Should Mean

I love this statement, quoted in part by Steve Horwitz on Facebook with his introductory sentence:

Hey other traditionalist religious groups, this is how you do it in a pluralist liberal democracy (it's also why I'd never be an Orthodox Jew, but...):

"“In response to the decisions announced today by the United States Supreme Court with reference to the issue of legal recognition of same sex marriage, we reiterate the historical position of the Jewish faith, enunciated unequivocally in our Bible, Talmud and Codes, which forbids homosexual relationships and condemns the institutionalization of such relationships as marriages. Our religion is emphatic in defining marriage as a relationship between a man and a woman. Our beliefs in this regard are unalterable. At the same time, we note that Judaism teaches respect for others and we condemn discrimination against individuals.

We are grateful that we live in a democratic society, in which all religions are free to express their opinions about social issues and to advocate vigorously for those opinions. The reason we opt to express our viewpoint in a public forum is because we believe that our Divine system of law not only dictates our beliefs and behaviors, but also represents a system of universal morality, and therefore can stake a claim in the national discourse. That morality, expressed in what has broadly been labeled Judeo-Christian ethics, has long had a place in American law and jurisprudence.

We also recognize that no religion has the right to dictate its beliefs to the entire body politic and we do not expect that secular law will always align with our viewpoint. Ultimately, decisions on social policy remain with the democratic process, and today the process has spoken and we accord the process and its result the utmost respect." [EE: emphasis added]

Now let's hope the processes they have given so much respect to give that respect back and allow them to have, in their words "appropriate accommodations and exemptions for institutions and individuals who abide by religious teachings that limit their ability to support same-sex relationships."

I do have some difficulties with the last paragraph, however. If a religious organization had discrimination against blacks or Jews as one of its tenets, on the one hand I would argue the state should dominate; on the other I would favour freedom of association. And that leaves me in a state of limbo. I expect the same might well be true in the case of religions that discriminate against LGBTs, or religious orders that admit only one sex into membership, etc.

Hostage Negotiation? Don't Bother If I'm the Hostage

Apparently the US will no longer prosecute families who negotiate with hostage takers to retrieve a hostage. [see this]

I have given my family instructions that they should keep their money and not negotiate with any hostage-taker-kidnappers. I'm old; I've had a good life; and I'd rather they have the money to enjoy the rest of their lives. In fact, if I were a hostage, I'd be obnoxious, maybe try to escape, and even seriously consider suicide to keep my family from paying a ransom.

I detest the practice of rewarding hostage-taker-kidnappers. After all, people respond to incentives. Paying a ransom creates an incentive for people to kidnap.

I understand why families pay ransoms. If it were a family member of mine, I would do whatever I could to retrieve them. And since kidnapper/terrorists know families will feel this way, they don't hesitate to kidnap people.

I had a friend who worked in Afghanistan a decade ago for an aid agency. The entire time he was there, he was accompanied by armed guards. When I asked him about it, he emphasized that the major threat to him and to his co-workers was not that the Taliban would kill them; rather, it was that terrorists would kidnap them and hold them for ransom.

For more on the US efforts to retrieve hostages, see this heart-breaking story.

If kidnapper/terrorists believe families will not pay off (either because they are poor or because they fear gubmnt prosecution if they do), they will be less likely to kidnap someone. This announcement of a change in US policy makes it slightly (?) more likely, in some probabilistic sense, that the relatives of hostages will pay off the kidnappers, which is why this de facto policy was not made public for so long.

So here's a strategy: If hostage-taker-kidnappers are less likely to kidnap (take hostages) for whom ransoms are less likely to be paid [go ahead behead me. I'll laugh at you!], then if I announce that my family have all agreed that we're not paying ransoms for each other, we'll be less likely to be kidnapped.

If you were a hostage-taker-kidnapper, would you think "I won't pay" is a credible threat? Probably not. But there's a chance it is a credible, and so you might go after someone else.

And I expect this is what underlay the former US policy.

July 4

If I were in England, I would go to Golder's Green on July 4th.... to buy bagels from Carmelli's. ... and just to be there just in case.

Addendum: to be clear, I'd be there to sit in the street or something to block/impede the anti-semites, not to be a part of their hate.

Geriatric Alcohol Abuse

I gladly admit to experiencing geriatric alcophilia*.

Until the past ten years or so, I drank very little alcohol. Over the past decade, though, I have become increasingly enamoured of my tipples. What is more, I have actually become something of a snob about scotch whiskies to the extent that I know a bit about some and a lot about the few I like.

It seems that "geriatric alcohol abuse" has become a noted and studied problem, (see this, but I cannot find an ungated version). Here is the abstract:

Alcohol use disorder in the geriatric population is a growing public health problem that is likely to continueto increase as the baby boomer generation ages. Primary care providers play a critical role in the recognitionand management of these disorders. This concise review will focus on the prevalence, risk factors, screening, and clinical management of geriatric alcohol use disorder from a primary care perspective.

Once old people retire, they have less to do and less to worry about. It is very easy to sit around and have a few drinks. There was a famous person in a town where I once lived who was past retirement age, and the prevalent story there was that the couple got drunk every night and then had shouting matches. I have no idea if it's true, but I understand the drinking part.

I don't think I abuse alcohol. I talk about scotch a lot, but I average only about 3 fl oz per day. Of course,  that's 3 fl oz more than I used to drink.

The thing is, I like it and I look forward to it. Also, it's a part of the togetherness that Ms Eclectic and I share. And I expect that happens with many members of the <90 demographic cohort.

*Note: alcophilia denotes a fondness for alcohol. I am indebted to my older friend, Jack, for this term.

 

Coase and Raisins

My restatement of the Coase Theorem:

• If legal entitlements are well-defined, clear, and fairly easy to enforce, and
• If transaction costs are comparatively low, then
• Scarce resources will move to their most highly valued use.

It's something of a definition of sufficient conditions for economic efficiency.

If I have something, whether it is a painting, a car, my labour services, the right to make noise, or whatever,  and if you want it, then:

if these two basic conditions of the Coase Theorem are satisfied, then whichever of us values that thing or service the most will end up with it, where value is determined by willingness and ability to pay.

But we need to have well-defined and easily enforced legal entitlements (or property rights) for this to work. Much of economic policy comes about because one or both of these conditions is not satisfied. Examples might include pollution control, traffic laws, and national defence. Raisins probably are not a good example (nor is milk, or chicken or pork or other agricultural commodity).

Horne involves a challenge to the forcible appropriation of large quantities of raisins by the federal government. The forced transfer is part of a 1937 program that requires raisin producers, in some years, to turn over a large portion of their raisin crop to the government so as to artificially reduce the amount of raisins on the market, and thereby increase the price. Essentially, the scheme is a government-enforced cartel under which producers restrict output for the market so as to inflate prices. The Hornes claim that the appropriation of their raisins amounts to a taking that requires “just compensation” under the Fifth Amendment.

This case, like so many, is a fight over legal entitlements. Once the legal entitlements are made clear, then people can make decisions that are more likely to be efficient (with the understanding that a gubmnt-enforced cartel is, in and of itself, extremely unlikely to be efficiency-promoting).

*As all my former students know, the Coase Theorem is named for the famous economist, Professor Theorem.

If ISIS Isn't Evil, Who Is?

I have a bet with Salim Mansur. I bet that Justin Trudeau will become the Prime Minister after (and resulting from) Canada's next federal election.

Several sources are reporting Justin Trudeau's statements about ISIS. Here are excerpts from one:

The sickness and depravity of the Islamic State terrorists knows no bounds. This much should be obvious to everyone. But apparently it isn't to Justin Trudeau. The Liberal leader says that if he's elected, he'll soften how Canada deals with the terror group.

On Tuesday, two major stories about ISIS made headlines in Canada. The first, from Reuters: "ISIS blows up ancient tombs in Palmyra, 2,000-year-old heritage site in Syria."

Palmyra is a city ISIS seized back in May. They blew up the tombs because they considered them sacrilegious -- not consistent with their perverse radical views.

The second story -- much more shocking -- was summarized by Postmedia Network as follows: "The Islamic State has once again displayed the depths of its brutality by releasing a video showing the executions of prisoners by drowning in a cage, wearing exploding necklaces and being locked in a car and shot with a rocket."

So what did Trudeau have to say about this? ...

The Liberal leader appeared on CBC's Power and Politics Tuesday evening and his comments on the Islamic State were nothing short of reckless.

Trudeau told host Terry Milewski: "We'd move away from the CF-18 (bombing) mission."

Milewski later asked: "But if you don't want to bomb a group as ghastly as ISIS, when would you ever support real military action, as opposed to just training?"

Trudeau went on to essentially say he prefers talk over action: "I truly believe that Canada has a tremendous role to play on the world stage -- including with our military -- but also around development and diplomacy."...

This is both bad policy and bad politics. Bad policy because ISIS has mentioned Canada as one of their targets a number of times and has effectively drawn Canadian youth into its death cult.

It's no longer something that doesn't impact us. Like it or not, we're involved. Trudeau wants Canadians to believe diplomacy will work instead of the current mission.

Diplomacy with the Islamic State? Diplomacy with the group that puts prisoners in a cage then drowns and explodes them? His comments are at best naive and at worst dangerous.

Josh Donaldson Certainly Should Be an AL Starter at the All-Star Game

He just made an amazing catch in today's game, diving into about the 3rd row of the crowd to catch a pop foul. Check out these images from this site:

 

 

 

 

 

Furthermore, his OPS is more than 50 points higher than that of Moustakas, and his Range Factor on defense is nearly 50 points higher than that of Moustakas.

 

 

Related articles

Josh Donaldson Certainly Should Be an AL Starter at the All-Star Game

Six Truths about Life after Graduation

Sarcastic, but with just enough grains of truth to make them sound pithy (via Clickhole, so also with a grain or more of salt):

Get ready for a harsh dose of reality.

1. There is no job fairy giving out jobs; there’s a job troll, and you have to kill him to get hired: Sorry, new grads, but nobody is just going to hand you a job. You have to seek out the troll’s cave and bash in his skull if you want to get employed.

2. Graduate fuzz will sprout all over your body: Don’t be freaked out by the white, peach-like hairs covering your skin. They’re a normal part of entering the real world.

3. If you show your diploma at a bank, they’ll give you $1,000: Remember, all college graduates can collect their weekly stipend of $1,000 from any bank just by flashing their degree.

4. Instead of reading textbooks, you gain knowledge by slaughtering birds and examining their entrails: Nobody is going to package information in nice, neat little study guides. If you want to learn something, you have to interpret the viscera of seabirds.

5. Life isn’t graded on a curve. When your boss asks how much opportunity you’d like, say, “Eight opportunity”: If you want to be noticed in an office, you have to work hard and ask for the maximum amount of opportunity. Don’t take it easy and just ask for two or three opportunity.

6. Your college years aren’t the best years of your life. Your 40s are the best years of your life:

High-fly Wi-Fi

I have never used wifi on an airplane. I can imagine that I might want to use it sometime in the future, but it is expensive and not all that easy to use. This paragraph probably captures the reality very nicely:

In-flight WiFi is basically the worst. To get online at all, you usually have to run the gauntlet of a complicated transaction page, typing in your credit card number or performing some kind of log-in. Then you have to fork over three or four coffees' worth of money just so that you can get speeds that rival your parents' dial-up Internet.

Confederate Flags and NASCAR

This is all a very rough impression, but I have long had the impression that NASCAR is dominated by crackers with southern accents, many of whom would be happy to fly a confederate flag. I may be wrong, and I acknowledge this is just an impression.

How many confederate flags used to be sold at NASCAR events? How many will be sold in the future?

And finally, let me ask: What is the racial makeup of people working in NASCAR? I googled the question, but wasn't happy with or informed by any of the links that emerged.

Update: My friend Chris posted this link on Facebook in response to this post. Some relevant snips:

"As our industry works collectively to ensure that all fans are welcome at our races, NASCAR will continue our long-standing policy to disallow the use of the Confederate Flag symbol in any official NASCAR capacity. While NASCAR recognizes that freedom of expression is an inherent right of all citizens, we will continue to strive for an inclusive environment at our events.” ...

This is not the first time NASCAR has stood up in protest of the Confederate Flag in recent years. Bubba Watson, a two-time winner of the U.S. Masters, was set to drive the famous 'Dukes of Hazard' General Lee at Phoenix in early 2012.

But because of the large Confederate Flag on the Dodge Charger's roof, the plans were trashed with NASCAR saying then, "The image of the Confederate flag is not something that should play an official role in our sport as we continue to reach out to new fans and make NASCAR more inclusive."

 And see what Josh wrote in the comments:

Among the top 15 drivers in the NASCAR points standings, there are only two southerners (Dale Earnhardt, Jr. (NC) and Denny Hamlin (born in FL, but grew up in VA)). There is one Cuban-American (Aric Almirola). California - 3 Wisconsin - 2 Michigan - 1 Washington - 1 Connecticut - 1 New Jersey - 1 Missouri - 2 Nevada - 1 North Carolina - 1 Virginia - 1 Florida - 1

Feels Like? What a misleading term for The Weather Network to Use

A few years ago in Canada, The Weather Network decided to stop reporting the Humidex under that name. Instead, they call it "Feels like", which seems in keeping with the general drift toward touchy-feely-ness of the times.

But from what I can tell, it is just the frickn humidex, showing a formulaic combination of humidity and temperature. [see this in Wikipaedia].

The humidex formula is as follows:^[3]

The humidity adjustment effectively amounts to one Fahrenheit degree for every millibar by which the partial pressure of water in the atmosphere exceeds 10 millibars.

Yeah, ok. Whatever. I spent a few minutes trying to figure this stuff out (superficially, of course) when this morning I see that the current temperature in London, Ontario, is 22C* but according to The Weather Network [TWN]**, it feels like 30C.

No way this feels like 30C. There is a good, strong wind, and if anything it "feels like" 18C.

So I went to the Environment Canada website. That site tells me the current temperature is 22C, with a humidex reading of 30C. That makes more sense. After all, the "feels like" that TWN uses is just Environment Canada's humidex, so far as I can tell. The humidex name makes it clear that humidity is involved and that it is a computed index number. "Feels like" misleadingly tells us what we should expect the weather to feel like.

I'd hate to go out today, expecting "feels like" 30C and dressed for that, only to find that it actually feels like 18C or even cooler in the shade.

But, as is in keeping with their condescending paternal/maternal-isms, TWN gives us a number with a name that is far less informative than "Humidex".

Note that the same thing happens in the winter when temperature and wind are combined to give us "wind chill" which (to the best of my ability to discern) omits humidity from its calculation. The term "wind chill" at least tells that the wind and temperature are involved, unlike "feels like", for (as everyone on the prairies alleges) a dry cold doesn't feel as cold as a more humid cold.

Part of the problem is trying to devise an index number that is useful to many people. We see this in economics all the time: GDP, CPI, etc. are all indices that try to measure, combine, and reflect useful information, just as "humidex" and "wind chill" do that with temperature, humidity, and wind chill.

But my complaint here is not with the index. Rather it is with the term, "feels like".

*TWN, according my friends in Saskatchewan, means Toronto Weather Network, just as TSN means Toronto Sports Network. They have the sense that these networks focus far too much attention on Trono and not enough on the west.

** For new visitors to EclectEcon, a reminder that C=Canadian; F=Foreign

Apologies to TWN if I am mistaken. I doubt if I am, though.

25 Best Places to Retire? Consider Health Care and Relationships

I recently ran across this article listing the 25 best places to retire in the US. I don't golf, and so some of these places don't interest me. And I really wonder about the criteria and the weights attached to each of them. The article pays too much attention to venues for activities and the arts and not enough attention to the quality and scope of health care.

One of the towns listed is Northfield, Minnesota. I lived in Northfield for 4 years. I can see why it might be considered a decent place to retire. The town's motto is "Cows, Contentment, and Colleges", or at least it was when I was a student there back in the early 1960s. It's a lovely small town with two excellent liberal arts colleges that are vibrant and exciting. But it's pretty small, with comparatively few choices for shopping and restaurants; and it gets mighty cold in the winter.

Another city listed is Traverse City, Michigan. I can see why this place is listed, too. In fact most cities along the west coast of Michigan would be great places to retire.... in the summer. But many of them also get tonnes of lake-effect snow in the winter. Some of my friends summer in Michigan and winter in the south or southwest US.

I see that Tyler, Texas, is listed among the top 25. As I said, I don't golf (anymore), and that seems to be a big selling point for Tyler. But then I don't see why just about any place around Houston, San Antonio, Austin, Dallas, etc. would not be worth considering. Taxes are low, housing prices are low, and there are plenty of options for shopping and dining. Summers aren't fun in the heat and humidity, though.

Five years ago, Ms Eclectic and I realized that small town living was great for us then but would not be what we wanted in retirement. We wanted more convenient shopping and dining options, we wanted access to better health care facilities, and we wanted to be closer to our children and grandchildren. That was when we made the decision to leave the wonderful small town and the friends we had made in Clinton, Ontario, and move back to London, Ontario.

Be realistic with your retirement plans. Older people tend to need/want more and better health care. Also family and friends are important.

These two criteria seem to get short shrift in that article. My advice to people looking into retirement plans is to make sure you consider, even attach strong weights to, (1) health care services and (2) relationships. We did and we are delighted that we made the decision to return to London.

Something that helped us understand the importance of these two criteria was the book, You Could Live a Long Time - Are You Ready? by Lyndsay Green. I highly recommend it. Also, see the links here and here.

 

Related articles

Carleton College and Value Added

What is Happening with Page Views at EclectEcon?

I'm concerned. Starting about 4 days ago, the number of page views here at EclectEcon sky-rocketed even though the number of visits doesn't seem to have changed much:

Does anyone have any idea what happened or what is going on?

Take THAT Kansas City!

Two weeks ago, the baseball world was outraged that so many players from the Kansas City Royals were millions of votes ahead in the voting for the All-Star game.

Well, I just voted 105 times (35 times from each of my 3 email addresses). And there wasn't a single player from Kansas City on my ballots.

And it turns out that Trono 3B Josh Donaldson is now within only 33K votes of being the #1 3B player on the ballot. He has a good chance of being voted in. The other BJ who should be voted onto the team is Russell Martin at Catcher.

Feedback on Gun Control and John Lott

After I posted this piece late last night, there were numerous comments and discussion points raised here on the blog, in email, and on Facebook. As I wrote on Facebook after the Charleston SC shootings, I wonder if churches, synagogues, schools, etc. should post signs like these:

Note to all crackers: more than a few members of our congregation have conceal-carry licenses. How do you rate your chances?

Here are some further thoughts:

Addendum: Even if John Lott receives no direct support from pro-gun lobbyists, I would be very surprised if he does not receive at least indirect support from them via those who do provide financial support for his work. But that wasn't the point I was trying to make with my previous post. The important point is that most of his work has stood up to near-rabid criticism.

Nearly 10 years ago, I lobbied long and hard for UWO to hire John Lott, but was unable to persuade my colleagues that he would be a valuable, interesting, stimulating colleague. He is a challenging person. I told him at the time, I knew that if he were hired by UWO, I would have to work harder than I had worked in a long time.

When I was President of the Canadian Law and Economics Association, I tried to persuade others that John Lott would be an interesting keynote speaker for one of our annual sessions. Again, I was unsuccessful. My vague recollection is that the general feeling was that he would be too controversial. My reaction was that if he's wrong, show it. Let's encourage more research in the area.

Keep in mind that I had been pro-gun-control most of my life. John Lott's work made me re-think my views on guns and gun control. And at the very least his work challenges the pollyanna-isms and nirvana fallacies of "Gee, wouldn't it be nice if the bad guys had no guns."

If You Favour Gun Control....

Please, if you favour gun control, read some of the work by John Lott.

I favoured gun control until I began reading his studies. Recently I posted something about this on Facebook, making the point that now, given the extent of gun ownership in the US, Lott's points and his evidence make good sense. States with conceal-carry permits have less gun violence and fewer gun deaths than states that do not allow conceal-carry permits.

After I posted this, a Facebook friend posted a series of accusations and ad hominems about John Lott. Let's get a few things straight:

• Yes, John Lott was dishonest in using sock puppets to praise his work.
• Yes, John Lott receives support from the pro-gun lobbyists, but most of that support came as a result of his academic research, after his initial results were published.

But most importantly, his research had stood up (I use the past-perfect tense because I have not followed recent developments).

Here is what I wrote about Lott (and the false accusations against him by Steve Levitt and that are unfairly repeated by too many people) many years ago:

Lott v. Levitt

August 17, 2006 — eclectecon

When I first heard about the defamation suit John Lott launched against Steve Levitt, I wondered if maybe Lott was acting a bit crazy. Now that I’ve read this (courtesy of Tyler Cowen) I wonder if Levitt was perhaps a bit more than injudicious (my take on the article is apparently different from that of the first commenter at Marginal Revolution). I realize there is a sizable gap between “more than injudicious” and “defamation”, but where does this fall? And the debates continue — be sure to see all the comments at Marginal Revolution. It sure looks as if there is considerable animosity between the two economists and between their supporters/champions.

Lott’s lawsuit hangs on two seemingly simple but academically fraught statements: the research was not replicated and the special issue of the journal was not peer refereed. …

In May 2005, an economist in Texas challenged Levitt’s characterization of Lott’s research and pointed out that Lott had guest-edited the October 2001 special issue of The Journal of Law and Economics, published by the University of Chicago Press. As a whole, the ten articles in the journal backed Lott’s conclusions. According to the lawsuit, Levitt e-mailed back: “It was not a peer refereed edition of the Journal. For $15,000 he was able to buy an issue and put in only work that supported him. My best friend was the editor and was outraged the press let Lott do this.” …

Lott contends that “‘replicate’ has an objective and factual meaning in scholarship”—it means that other researchers using the same data in the same way will get the same results. Thus, he says, Levitt’s use of the term amounts to “alleging that Lott falsified his results.” Levitt’s lawyers reply that Freakonomics is written in “everyday language” and is aimed at the general reader.

“Peer refereed” (or “peer reviewed”) refers to the standard practice at scholarly journals of sending a potential article to several other scholars to vet and approve before the work is published. To uphold academic impartiality, the writer does not know the peers’ names. In an e-mail to me, Lott said, “If you were to look at a physical copy of the journal you would see that all of the papers thank anonymous referees for refereeing their papers.” (As for whether he was able to “buy an issue,” Lott says in the suit that he “raised funds for” publishing the special issue.)

The “best friend” editor whom Levitt mentioned in his e-mail was Austan Goolsbee. “I was the lead editor at the time that special issue was printed, but not when it was prepared,” Goolsbee says. The journal collected papers delivered at a conference sponsored by the American Enterprise Institute and the Center for Law, Economics and Public Policy at Yale Law School.

“In one sense,” Goolsbee says, symposium papers are peer reviewed “in that the articles sometimes go out” for critiquing. “But Steve Levitt is quite right that the standards are infinitely lower on a conference volume. The acceptance rate for papers at The Journal of Law and Economics is something like 8 to 10 percent. This issue had something like ten papers and like most conference articles, none [I believe] were rejected. That’s a one-in-a-billion event that you would get all of those papers in.”

At least two contributors, however, told me that their papers were indeed reviewed. Bruce Benson of Florida State University says he made “significant revisions” in the article he coauthored to address criticism from two referees. “I was surprised when I heard that Levitt made this claim because I actually had guessed that he was one of the anonymous reviewers of my paper. . . . Apparently this was not the case.”

T. Nicolaus Tideman of Virginia Tech, coauthor of another article in the journal, saw his paper at first rejected by a referee, but he rewrote it and then it was accepted. Tideman said the article analyzed Lott’s More Guns, Less Crime data in two different ways and the data held up both times.

Also see this.

I knew John Lott back then. He is very smart and back then was very careful with his research. Further, I am not aware of any good research that has refuted his initial findings. And the replications also have not been refuted so far as I know.

As I said at the outset, given that there are guns in the US, I'd be more comfortable being in places where someone from the NRA has a gun than being in a so-called "gun-free" zone.

Note: I have fired a gun twice in my life (when I was a boy scout in my early teens). I am not a gun owner. I probably should not post this, but I disclose it possibly to influence my creds.

I have friends who have guns and who have concealed-carry permits. I am confident they continue to train and practice. But more importantly I am confident I would stand a better chance in a potential terrorist attempted mass shooting if they are around than if there are no gun owners present.

We don't often read about the attempts at mass killings that are thwarted because the shooters are deterred or shot by legal gun owners. The MSM [main-stream media] doesn't report these events, but the gun-lobby-fringe does, of course.

Mostly I urge you to read the work with an open mind. Some of it does seem to push too hard (so far as I am concerned). But it is compelling.

Update: I had and have no specific evidence that John Lott received funding from pro-gun lobbyists. In fact I have no idea about his financial backers. I thought I remembered that he did, but he denies it, writing to me,

If you have evidence that I receive support from pro-gun lobbyists, please provide some evidence of that.  Have I lost jobs because of my research?  Yes (one example, http://www.foxnews.com/opinion/2011/02/01/scary-encounter-chicagos-mayor-richard-daley.html).  Have I been offered chances to do consulting on gun cases?  Yes, but I have always turned them down.  If you have some evidence for your claim, provide it.

 

Canada's Senate

According to this source, there are presently 20 vacancies in Canada's Senate, an appointed body:

Standings in the Senate

Conservative Party 50 Liberal Party 29 Independent 6 Vacant seats 20 TOTAL 105

So here's a guess about what will happen with the senate over the next six months. It is a conditional guess.

If the polls make it pretty clear over the next few months leading up to the next election that the conservatives will not only lose their majority but will also lose the ability to form a minority gubmnt, the conservatives and Stephen Harper will appoint quite a few people to fill those vacant positions.

And I want them to know that I am available. The mandatory retirement age for Senators is 75, so I wouldn't be serving for many years. But as the "Godfather of the Ban-the-Penny" movement, I think a senate appointment would be a fitting reward.

What's more, since I believe the best gubmnt is the one that does as little as possible, I would fit right in!

Heck I'd even set up a residence in PEI if required.

Chocky by John Wyndham

I am definitely not a fan of science fiction, and I have no idea why I decided to read Chocky by John Wyndham last week.

But you know what? I liked it. It was a warm tale, with caring parents and intriguing adventures for Matthew Gore, the 12-year-old "hero" of the book.

It's a fun read; it's a light read; and, when it's over and done with, it's a feel-good read.

And since I mostly read for pleasure and entertainment, I liked Chocky. I recommend it.

 

. .

No Shortages When Prices Are Free to Fluctuate A Good Egg-zample

The extreme reduction in the supply of eggs as a result of widespread incidences of avian flu did not cause any shortages of eggs, no queuing or waiting lines, no widespread accusations of cronyism. [see this from the NYTimes, which possibly confuses a reduction of the quantity demanded with a drop in demand but which otherwise is quite informative].

Here's the scenario as it unfolded:

• Lots of birds contracted avian flu and were killed.
• the supply of eggs shifted to the left (a reduction in supply)
• The short-term supply curve and the short-term demand curve are both pretty steep (price inelastic at relevant prices), and so the price of eggs more than doubled as a result of the reduction in supply.
• Over time, the higher price induced buyers to reconsider their purchasing habits, to look for substitutes. I.e., as with most products, the longer-term demand curve is more price elastic than is the short-term demand curve.
• As the demand curve rotated counter-clockwise (going from short-term to longer-term), the equilibrium price of eggs declined a bit (more than 13%, according to the article).

The real take-away from this experience is that the price system works. When the supply of eggs declined, the price system rationed the available eggs to those who valued them most, i.e. those who were most willing to pay higher prices.

Contrast what happened with eggs and egg prices in the US with what would have happened had this occurred in Venezuela or any other country where the gubmnt intervenes in price-setting. Even if the bureaucrats had wanted to use prices to help ration the eggs, they would have responded slowly and shortages would have developed at the artificially low prices.

The smooth functioning of the price system as it was used to allocate eggs should be held up as one of a multitude of examples of how markets work.

Pedantic addendum:

I always tell my students that it is meaningless to talk about "shortage". They must talk about a shortage at a certain price instead. The reason is that a shortage can be eliminated by letting the price rise enough to reduce the quantity demanded and increase the quantity supplied. That is exactly what happened in the market for eggs.

If the price of eggs had been fixed, there would have been shortages at the fixed price. But because the prices were free to fluctuate, there were no times when the quantity demanded exceeded the quantity supplied at the equilibrium price.

Related articles

Egg-o-nomics

Second Grade Economics Lesson

Timeline for getting new birds in avian flu facilities still up in the air

More about the Spiralizer [photos this time]

We love our new Spiralizer (I wrote about it here a few days ago). The only thing we've used it for so far is to make "noodles" with zucchini and then have "spaghetti". The result is fabulous tasting and low-carb!

 

Here's the Spiralizer, set up with a partially skinned zucchini (the spiralizer uses suction cups to anchor itself to the counter and only "armstrong" power).

 

 

Just turn the crank and "noodles" come out.

Also, the "core" emerges from the centre hole of the machine:

 

 

 

 

We used three zucchini for this meal, leaving these cores and pieces that I cut up to add to the "noodles".

 

 

Here's the bowlful of noodles we got from those three zucchini:

 

 

 

 

 

 

And here is what the noodles looked like as Ms Eclectic fried 'em up in butter and heated up the tomato-mushroom-sausage sauce that she had prepared earlier:

 

 

 

 

While they were cooking, Ms Eclectic cut the noodles a bit to make them more manageable.

 

 

 

And here are the bowls of noodles and sauce. Mine is on the right. I decided to have a bit less sauce than Ms Eclectic.

 

 

The noodles made with zucchini and then fried up in butter taste wonderful. I see no reason why they couldn't be enjoyed also with a jar of Ragu Italian sauce.

Next for us, though, will likely be trying the Spiralator with eggplant.

.

Related articles

Diet... again. #carbsbedamned

Spiralizer/Spiralator

More Wisdom from Bjørn Lomborg

Lomborg understands that in a world of scarcity, choices involve costs and that trade-offs must be made.

Pope Francis's concern for the poor is clear, so it is understandable that climate change is the topic of his forthcoming Encyclical — a Papal letter that is sent out to the world. Climate change will hit the most destitute people first and worst.

But the climate policies of today will do little for the poor. This doesn’t mean that we should ignore climate change. There are two compelling actions that should be part of the Pope’s prescription. Phasing out subsidies for fossil fuels would not only help the planet, it would free money to spend on education and health. And the rich world needs to increase investments in green energy research, to speed the day when renewable energy sources can outcompete fossil fuels

But we also need to recognize that the actions that would most help the world's poor are not climate policies. Ensuring freer trade, greater access to family planning, and nutritional interventions cost a fraction of expensive, inefficient climate policies. When helping the world's poorest is the goal, these are the investments that would truly make the biggest difference.

The above is what Lomborg posted on Facebook with this link to a recent op-ed piece he wrote.