Gov. Paterson has declared NY to be in a state of Emergency!

The reason?

A total of 75 people have died from swine flu (in a state of 18 million).

In contrast, 1,429 people died on NY roads in 2005.

What is Paterson’s purpose other than freak people out?

Watering the Germans

From the BBC

A group of rich Germans has launched a petition calling for the government to make wealthy people pay higher taxes.

The group say they have more money than they need, and the extra revenue could fund economic and social programmes to aid Germany’s economic recovery.

This is just insane. Why don’t they invest or donate their money if they really want to help recovery?

Seems like they’re overestimating the “G” aspect in the Keynesian C + I + G + X − M = Y(GDP) formula.

Agrarian Myth

This freakonomics post links to a photo essay from the Telegraph about how tourism and skiing in the Alps has changed (for the worse) the old landscape of agriculture, hard labor and religion.

Why do we care so much about the “agrarian myth”? Do we really think farmers of old had so much better time than we do? Is tourism and leisure really worse than hard labor?

Not only would those farmers probably not agree with the agrarian myth, those who use it to make some sort of moral argument are usually doing so hypocritically. Maybe the photographer should give up his lens in favor of a plough if he thinks farming is so great. I’ll bet he finds that this life is difficult and (for the farmers who sold off their land to tourism industry) less financially valuable.

Why are we supposed to be morally horrified at the fact that people are richer today and therefore have more time to drink beer and go skiing (though hopefully not at the same time) than during subsistence farming days?

Krugman wrong about resources

Bob Murphy blogs about Paul Krugman’s claim “that if the current recession is just a reflection of the need to reallocate resources, then why didn’t unemployment go way up during the housing boom?”

So if Austrian Business Cycle Theory is right, booms of credit promote resource reallocation. But, like Bob, I don’t think Krugman’s point holds any water. All of this was being done on cheap credit, remember, so you don’t really have to reallocate capital to housing sector. As for employment, who says that new jobs in construction and related industries was being drawn from the unemployed sector?

It seems to me that, besides for the people already in construction, we were getting a lot of immigrant labor and ‘teenagers’ growing up into the construction field. The boom doesn’t have to be preceded by unemployment, just shift resources away from potentially sustainable ones (at an opportunity cost of economic stability) to unstable ones.

NYC still fat

A research survey designed to study the effectiveness of publishing calorie counts in New York city restaurants reveals that forcing restaurants to disclose calorie content:

It found that about half the customers noticed the calorie counts, which were prominently posted on menu boards. About 28 percent of those who noticed them said the information had influenced their ordering, and 9 out of 10 of those said they had made healthier choices as a result.

But when the researchers checked receipts afterward, they found that people had, in fact, ordered slightly more calories than the typical customer had before the labeling law went into effect, in July 2008.

These are fascinating results. People are generally conscious of the change, think they are responding in a positive direction, but actually doing the opposite. I’d be interested to see how people are making more unhealthier choices.

I’d be willing to bet that they are switching to foods that they perceive as being healthier, but actually contain more calories. This could be a result from an information asymmetry. The calorie counts are usually the ‘bare minimum’ of what fast food joints offer, without the fixings, sides and drinks. Perhaps people are switching to lower calorie foods, but getting more of the high caloric ‘frills.’

If we don’t assume rationality, another explanation is that people are unobservant and ignorant about what they’re putting in their mouths.

This also calls into doubt the ability for regulation to achieve the desired affects and highlights the important of price signals, especially because we’re in a recession. People are looking for the cheapest food these days and so will respond to price signals much more strongly than health signals.

HT2 Jeffrey Miron


Anticipating disaster

Robin Hanson speculates on whether and how much we should insure against and try to prevent disasters.

I think Nassim Taleb (author of the Black Swan) and Daniel Kahneman (prospect theory) would say that the disasters that we are most likely insure ourselves for are the ones that are the least likely to happen, and could leave us even more vulnerable to the real black swans (which we can’t predict anyway).

In other words, trying to prevent disaster (for example, one that would cost a significant portion of GDP) we would spend trillions on and then miss the real problem completely. We simple suck at predicting these sorts of things.

And, if we did get lucky and manage to prevent disaster (the example Taleb uses are laws that could have prevented 9/11) we would never know disaster had been avoided in our version of the multiverse, and all people would see is needless expense.

Enforcing Blackmail contracts

Bob Murphy says this regarding the recent Letterman Blackmail ‘scandal.’

as Walter Block argued with great flair, in general the police shouldn’t punish blackmailers. Yes, you are arguably a moral degenerate, a huge jerk, etc. etc. if you blackmail someone, but why is it a crime?

… if some producer happens to know that David Letterman is building his own special Top Ten List (you know I had to work in some cheesy pun in this post), and if that producer has the legal right to blog about it, talk about it, even to write a book about it, then how in the world is it a crime for him to give Letterman the option of buying his silence?

The way I see it, the only true crime involved with blackmail per se, would be if Letterman paid the guy $2 million, and then the guy went ahead and spread the gossip anyway. Of course, the crime there would be violating the deal, not the offer a deal in the first place.

If its the government’s job to enforce contracts (even private, secret contracts) but the government makes those contracts illegal, than it makes it more likely that a blackmail agreement would blow up in the way that Bob describes.

This is probably why Letterman didn’t pay the blackmailer… there’s no guarantee that he would have kept his silence. If there was a court that would enforce these agreements, however, than both parties could have been happy.

I’m sure this issue is too sticky to change, though.

Farmers Market Pessimism

In a freakonomomics post from James McWilliams, he’s pessimistic about local farmer’s markets. He claims that they don’t actually lower carbon footprints and that the local and personal touch may not be a good thing. For one, it may be avoiding the true purpose of the farmer’s market: to buy food. We may be paying more than we have to for this local touch, rather than an impersonal, retail style produce store.

I think McWilliams misses a key point in favor of farmers markets, though. You can buy obscure produce that you just can’t find in most supermarkets.

In addition, the centrality of the market, competition is more direct and should theoretically help lower prices. Anecdotally, from my own experience as a consumer and seller in a farmer’s market, most customers don’t feel bad walking away from your booth without trying anything… even after you offer a free sample.

I like farmers markets and the competition they provide for grocery store produce isles, though not for any particular love for locally grown produce.

Friday Quick Links

1. The Minneapolis Fed has always been the most conservative of the branches and now they’ve hired a new chairman that has some interesting ideas (from WSJ blog). HT2 – Tyler Cowen

2. You’ve heard (and perhaps disagreed with) the concept of subsidizing alternative energies… but what about taxing them? Jeffery Miron reports that solar panel importers are facing $70 mill in new tariffs. I suspect this may be part of the ‘buy american’ campaign. I wonder what the environmental left has to say about it.

3. Bob Murphy links to a hilarious video from Jon Stewart about the alleged super-majority of Senate democrats. Why can’t they pass anything? I don’t agree with many of Stewarts supporting points of public option for health care, but still a good video.

4. Dave Prychitko tells us about supply and demand. The Dems arguments for a public option to keep costs down and raise consumership just don’t work, if supply and demand curves are right. I’ve made the same arguments for public option for college education.

Why Tweet?

Tyler Cowen writes:

In my portrait Twitter consists mainly of social benefits yet it offers few private gains for many generators of the content.  So why do so many people do it?  Maybe it tricks our instincts for sociability or connection.

We can use the information generated by Twitter in interesting ways. What’s not so clear is what the Tweeters get out of it.

There are no financial costs to using the service, but it does have to compete with other social networking sites (so there is an obvious opportunity cost) and time costs to using the service.

In terms of evolutionary adaptation, what are the benefits of using twitter to improve fitness (what are the proximal psychological causes)?