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)?

2. Tyler Cowen talks about the saliva market in South Africa. Apparently, its very competitive.

3. Brazil plans on restricting sugar cane production to prevent deforestation of the Amazon. I guess biofuels aren’t as ecofriendly and environmentalists would like to think. However, I don’t understand why Brazil doesn’t just subsidies rather than legislating more bans. If the costs farmers had to pay where closer to their natural costs, farmers would cut back on their own.

4. Open Economics blogs asks “What is Socialism in 2009?” and is Obama really a socialist? The answer of course is ‘no.’  But, then again, modern liberals are not classical liberals and capitalism was originally a derogatory term, so we’ll see if they left comes to accept the term and try to redefine it for themselves.

5. Toro’s Running of the Bulls blog tackles the large question of market rationality.  It’s a great post, but I think he misstates Jeffery Friedman’s point though. Friedman is trying to point out in the case of the crisis, irrational exuberance came out of government incentives, not market forces. People acted stupidly, but not necessarily irrationally, under the traditional assumptions of what rationality means: they where simply reacting in a predictable way based on the available information. The information turned out to be wrong, but that’s not the fault of 99.9% of investors.

I’m not sure if Hanson is continuing our discussion in this post in Overcoming Bias today, but he reaffirms this position, extending it pretty much all of nature:

Yes, nature would be saved if we destroy ourselves without destroying nature in the process, but hopefully we’ll avoid this scenario.  We might also somehow coordinate to prevent competitive growth.  For example, we might empower a world government to protect nature, prevent innovation, or prevent population growth.  But I honestly see little prospect of this.  We now live in a very competitive world, and even governments mainly just redirect competition, toward controlling those governments.

I find it a little odd that he would say this. It contains elements of truth… at what point will governments stop promoting ecological conservationism at the cost of economic competitiveness?

But I think he misses another element. I don’t think it will escape the attention of capitalist that they rely on the earth for natural resources and that technological advanced will decrease, not increase, our reliance and impact on nature and not the other way around.

People have been falsely predicting that we’ve reached the earth’s carrying capacity for centuries, and they’ve all been wrong. This is not because of government incentives (well, not totally) but because of market forces.

I think Hanson’s assumption of continuing population growth is also incorrect. As economic competition produces wealth throughout the globe, population levels will steady out without having to approach the earth’s physical limits. Add the technology of lessening out eco footprints and I don’t think there’s anything to worry about.

Hanson is being alarmist – some will say economic growth needs to happen anyway, so government interventions are just delaying, and worsening, the inevitable, while others will say that we need to stop “progress” to protect the natural rights of mother earth.

As an economist, I find it odd that Hanson would imply that population will keep growing but technology will reach a limit.

I find it much more likely that, in astronomical time, the human population will dwindle out into nothing because we no longer feel the drive to reproduce than we’ll reach the physical carrying capacity of the entire universe.

Clyde Prestowitz makes his case for higher tariffs by slaying a strawman (”Obama can help free trade with tariffs,” Sept. 10).  According to Mr Prestowitz, the case for free trade relies on the validity of “the assumptions that the markets are perfectly competitive, that exchange rates are not manipulated, that there are no economies of scale, that there is no cross-border investment or cross-border transfers of technology, and that there are no government subsidies or export requirements.”

Bordeaux is hinting at a larger point here, I think. Neo-classical models of free trade do indeed rely on these assumption, but even though these assumptions are demonstratively inaccurate doesn’t mean that free trade doesn’t work and that slapping on high tariffs are a good idea.

This is a sort of composition fallacy. He concludes that an economic principle is incorrect based on some of assumptions being incorrect. Just because a common model is flawed, doesn’t mean the principle doesn’t work it practice – it may just mean we don’t yet understand why it works.

They’re using one tried and true way to build a successful blog: stack it with econ and poli science professors from top universities and nobel laureates.

Thinkmarket blog has a list of the contributers.

Daron Acemoglu (MIT)
Viral V. Acharya (NYU) and Matthew Richardson (NYU)
Amar Bhide (Columbia U.)
David Colander (Middlebury College)
Steven Gjerstad (Chapman U.) and Vernon L. Smith (2002 Nobel laureate)
Michael Goldberg (U. of New Hampshire)
Juliusz Jablecki (Polish Central Bank) and Mateusz Machaj (Wroclaw U.)
Katerina Juselius (U. of Copenhagen)
Thomas Lux (U. of Kiel)
Joseph E. Stiglitz (2001 Nobel laureate)
John B. Taylor (Stanford U.)
Peter J. Wallison (American Enterprise Inst.)
Lawrence J. White (NYU)

Any top-tiered econ professors are more than welcome to contribute a post or two to our blog as well.

While nature shows and nature lovers often give lip service to the wonders of natural selection, in fact they mainly love the particular species alive now.  When nature adapts to recent changes, nature lovers mostly disapprove.  Most folks react similarly when economic competition creates winners and losers; they say they approve of the competition that led to our current wealth, but they disapprove when new winners, e.g., Walmart or Borders, displace old losers, e.g., small stores.

Hanson’s general point is well taken – competition in the natural world produces new winners and these new winners may not satisfy our aesthetic values. Hanson seems to think we should just over this.

Ecology is not so simple though. Human development is changing the environment on a different order of magnitude than evolution works. Species that are well suited to human changes may actually do longer term harm to the environment than local (in time and space) successful adaptations may suggest.

For example, a bird species may nest well in tall buildings and so their numbers grow, straining the resources of the local fish stocks. These downstream affects may adversely affect ecosystems, causing other species to die off – including the original birds. Population explosions that represent temporary success are not necessarily stable. We may only be seeing the upswing of a population bubble that will dramatically burst. Or maybe we’ll see a slow decline in environmental integrity that affects our own fitness.

As an economist, I’m surprised Robin Hanson isn’t considering the long term affects of over-enthusiastic growth.

Hanson wants to draw a parallel between our capitalist systems and other ecosystems. And while many exist – it’s based on the same principles after all – he forgets that animal societies lack institutions that keep capitalism running by protecting property rights (which prevents the type of over-exploitation that invasive species are famous for).