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Thursday, November 26, 2015

Miscellany: 11/26/15 Happy Thanksgiving!

Courtesy of babyboxofficecollectionreports
I love turkey with a passion; as a single person, it's not very economical, although I've been known to occasionally purchase one and eat turkey for the next 2 weeks: more typically, I'll buy an occasional turkey breast or packages of turkey legs/wings and throw them in a crockpot. Not this year (I'm in the middle of one of my strictest diets in years), although I've got some turkeyburgers in the freezer and will grill one for a meal today. I was especially fond of Dad's gas-grill smoked turkey and two of his typical side dishes, mashed rutabagas and turkey stuffing. Thanksgiving is, of course, more than food, although with siblings in 4 other states, reunions are difficult to coordinate. I'll usually tune into one of the holiday parades; football is another tradition.

UT/Texas A&M was a holiday tradition. [This ended when A&M left the Big 12 to join the SEC.] I, my brother and a nephew all earned degrees from UT, while now the third of 3 nephews is working on his degree at A&M (their dad started at A&M but followed my sister to Texas State, where another nephew has earned a degree). Usually we watched on TV, but I recall one of my brothers-in-law in the early 90's scored some tickets at Thanksgiving in Austin. UT did not field a good team at the time, the seats were in the middle of an Aggie section, and we got killed in the game. So we were cold and hungry when we left Austin; the folks weren't waiting for our return--we would have to eat leftovers. My brother-in-law Joe, for God knows what reason, wanted to stop for hot dogs on the hour-plus drive back to San Antonio. But worse was watching him douse ketchup on top of a steaming slice of turkey breast, instead of Dad's giblet gravy. To me, putting ketchup on turkey is a bigger faux pas than putting ketchup on a hot dog in Chicagoland. Worse yet, my 3 nieces take after their dad's obsession with ketchup. Me, I rarely buy ketchup and on the rare occasion I buy McDonald's shoestring fries, I like them as is, hot and lightly salted; I have never understood why people wanted to drown them in ketchup.


Quote of the Day
Say not, when I have leisure I will study; 
you may not have leisure.
The Mishnah

Tweet of the Day
Chart of the Day
via LFC
Image of the Day


It's like how I feel during an Obama speech, never mind a wrestling match...

Hump Day Protests and Other Progressive Bullshit



3 GOP Candidates Pardon a Turkey



Facebook Corner 

(FEE). "One of the dangers of talking with someone who disagrees with you, or sometimes even with someone who seems to agree with you, is that you talk past each other."
I don't doubt that there are unscrupulous vendors out there which exploit the ignorance of consumers, that some people who put things at yard sales may not realize the true market price of those items, that some new car buyers may not be skilled at haggling, etc. Among other things, the markets have a vested interest to serve their customers; it's not a sustainable business model to harm one's customers or to see one's market manipulated by fraud. It provides incentive for customer reassurance, e.g., warranties, independent audits, increased transparency, and/or arbitrage. For instance, instead of investigating new car costs, dealer overhead, markups, automaker incentives, etc., or have a dealer push a costly financing plan on me, I can use a car buying service and prearrange a loan from my credit union. A company has an incentive to protect its business reputation.

 And, of course, the libertarian insists on voluntary agreements and constraints against fraud. I don't think any libertarian is naive about theft of property, violated contracts, etc. We allow for arbitration of contractual disputes. We just think of regulation as an inefficient, ineffective, incompetent, typically counterproductive, morally hazardous, unaccountable government monopoly. So I have no problem with libertarians simplifying discussion. I think the author would better be served in addressing the economic illiteracy behind the Statist bureaucracy.

Noah Smith and Econ 101

Let me start off by saying that I am not an economist in training. I did well in my graduate macro and micro service courses for the MBA, but to be honest, there was no political context. I personally became more conservative/libertarian, not because of school or Reagan, but I started to become more skeptical of government intervention. I have not studied econometrics, read much economic research, I don't spend a lot of time reading Krugman and other popularizers; I'll occasionally go to Mankiw's blog, read Scott Sumner, Tyler Cowen, etc. But I do some independent reading on topics like externalities, price stickiness, etc. Donald Boudreaux often discusses more esoteric concepts like monopsony power. I've occasionally found myself blasted in free market blogs (by leftist trolls) for ignoring realities like imperfect information. (I tackled a similar question in today's FB segment.)

Noah Smith is another popularizer (Mankiw jokingly refers to him as his grandstudent). In a brutal job market for academic economists, he's landed a position as a professor of finance in some business school. I first read an essay of his that EconLib blurbed on Facebook, arguing that much of what is in an introductory economics course is actually wrong or grossly oversimplified and/or reflects a partisan perspective (Mankiw is a former economic advisor to Bush, has written the most popular intro textbook in the discipline). Smith argues that economics is more data-driven today, e.g., discussion of the minimum wage from a conceptual basis is wrong, i.e., the world is more complex, that, e.g.,  (unstated) Card and Krueger's dismissal of adversarial effects to increases in the minimum wage has to be taken into account. Smith argues effectively that students would be better served by understanding data analytical techniques such as those employed by Card and Krueger instead of sterile principles that don't apply to the complexities of modern economies. Smith may object to this summary of his piece, but I invite the reader and decide for himself if my statement is fair.

This post really bothered me, It did not shake my belief in the law of supply and demand, the law of comparative advantage, etc. But I know enough to be skeptical of the economic models and the limitations of empirical research and the very notion that your typical college student is capable or should be taught the intricacies of research design and evaluation is dubious. I have no doubt that leftist economists could use this backdoor opportunity to promote a political agenda. For example, a wage floor (minimum wage) necessarily filters available workers. Nearly 98% of jobs pay above minimum wage--the minimum wage does not impact them directly. There are all sorts of reasons employers may not lay off workers due to a raise in minimum wage; for example, there are training costs, other forms of compensation or work schedules can be adjusted, performance/hiring criteria are raised, or the company absorbs the hit in the short term for competitive reasons. But the fact remains that in a competitive market there is an arbitrage opportunity to an employer if other employers offer below-market opportunities. Of course, it's difficult to judge a counterfactual--what happens when inexperienced/unskilled workers are legally prohibited from working at a lower wage. I have mentioned before I used to clear about a buck a day from daily delivery of 90 papers as a high school student. I would have gladly taken an hourly wage, below minimum wage, of $1.50 an hour for, say, 15-20 hours a week. But the bottom line is that costs matter; the fact is that only a certain number of minimum wage jobs are funded and you need to explain in your model why more workers don't work for minimum wage.

I have to admit I was one of the ones who sent Donald Boudreaux an email, asking him to weigh in on the Smith post. He never acknowledged my email, but he did mention a few people have similarly requested such in a post entitled, contrary to Smith, 'Most of What You Learn in Econ 101 is Right". He references a couple of earlier posts (see below) but, acknowledging uneven quality of Econ 101 classes across universities, he makes these points worth pondering:
But a well-taught principles course ... is one that teaches, and teaches well, at least ten vital foundational lessons: (1) the world is full of both desirable and undesirable unintended consequences – consequences that are largely invisible but that even a course in ‘mere’ principles of economics gives us great vision that enables us to “see,” (2) intentions are not results; (3) our world is unavoidably one of trade-offs and not “solutions,” (4) market-determined prices (4a) are not arbitrary, (4b) connect millions of strangers to each other in productive ways that almost none of these strangers are aware of, and (4c) cannot, save under the rarest of unrealistic circumstances, be controlled by government without causing consequences quite the opposite of those that are ostensibly desired, (5) productive and sustainable complex economic order emerges without design or intention, (6) individuals respond to incentives, (7) individuals, and not collectives, choose and act, (8) wealth is not fixed in amount (and it is not money), (9) government officials are no smarter or better-motivated than are people operating in the private sector, and (10) the economy is inconceivably more complex than someone with a poor understanding of economics realizes – so complex that the promises of social engineers are revealed to be fantastic delusions.
In his first cited principles post, and I don't intend to oversimplify here, Don explains his post was motivated by a soundbite to the effect heaven save us from Econ 101 students who don't realize their limited knowledge of economics and lack the necessary insights from more advanced courses to understand reality is more complex. For example, progressives argue that large-scale employers of low-income workers can abuse their market (i.e.,monopsony) power at the expense of workers to drive down wages, thus justifying intervention by the State.  Basically Don argues here that principles of economics serve a useful purpose not unlike how Newton's laws are useful, even if twentieth-century physics have superceded them a nuanced manner. Political whores generally have no clue what is meant by (e.g.,) monopsony power and simply believe that policy can give lower-income workers an overdue raise--completely detached from any understanding of economics. We need clear economic principles, not flawed populist fallacies behind State policies.

In his follow-up post, Don points out the hubris of these advanced economists who arbitrarily decide which factors, known or unknown, seen or unseen, to factor into their models (say, trying to explain impacts of the increase in minimum wage).  He basically argues that somehow an econometric/mathematical model lends an undue sense of confidence in subsequent results. The truly insightful economist is one who is humble enough to realize the limitations of his knowledge and relies on coherent, intuitive principles to guide his research.

Choose Life: The Beauty and Wonder of Family





Political Cartoon
RE. IL Dem politicians; courtesy of the original artist via IPI
Musical Interlude: Christmas Hits

Roy Orbison, "Pretty Paper"



Andrew Jackson: Character vs. Policy


Andrew Jackson: The First Imperial President
Why is Andrew Jackson remembered as president of high regard given his political and personal conduct? #LearnLibertyClassic
Posted by Learn Liberty on Thursday, November 26, 2015
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