Russ is wrong on rights

I don't know squat about economics. Especially not in comparison to someone like Russ Roberts, who's an econ professor at GMU. But I think he got this wrong in his latest entry on gouging:

By what right (asks the critic) can a gas station owner or the oil company charge so much more?

Right has nothing to do with it.

Whoops. I think right has everything to do with it. Property rights are what permit the gas station owner, or the oil company to charge whatever price that they want. Imagine I had a cherished family heirloom. I'm not willing to sell it except for ridiculous sums of money. Am I gouging? No, I'm exercising my property rights. So are the gas stations and oil companies.

Until you pay a mutually agreed price, it's not your gas. You have no right to it.

Missed an option....

I think this guy doesn't understand logic as much as he thinks. I can come up with at least a couple of different options that he left out:

• God does not always use natural or man-made catastrophes to punish people for moral failings. I don't know if Katrina was the wrath of God. But it's clear that God does not punish every moral failing with a natural disaster. Every human being on the face of the planet has experienced moral failing, yet the vast majority of us survived Katrina. Indeed, most of us survive any natural disaster. It seems pretty evident to me that it's a bad assumption that God always uses natural disasters to punish moral failings.
  
  
• Maybe God did use a natural disaster to destroy Bourbon St. Despite being relatively unscathed Bourbon St. is still in significant trouble. How many customers has it served in the last several days? How long do you think it will be before any of it's services are reopened? Even if this isn't physical destruction, the effects are the same.

The Social Institution of Marriage

This is a compelling argument. It definately moves me off of my "on the fence" stance w.r.t. what marriage means in a society.

The editors of the Nation, for instance, support gay marriage but do not usually defend the sanctity of contracts. This apparent paradox evaporates when we realize that the dissolution of marriage breaks the family into successively smaller units that are less able to sustain themselves without state assistance.

The basic idea here is that by dissolving marriage, it puts a greater dependancy on the state. Or put another way, if you want to create and support a large central government, one way to accomplish that is to dissolve any meaning behind marriage. The resulting society will be much more dependant on the state for resolution of even trivial disputes. Disputes that are less intrusively resolved in an organic marriage.

The modern claim that there need not be and should not be any social or legal preference among sexual or childrearing contexts is, by definition, the abolition of marriage as an institution. This will be a disaster for the cause of limited government. Disputes that could be settled by custom will have to be settled in court. Support that could be provided by a stable family must be provided by taxpayers. Standards of good conduct that could be enforced informally must be enforced by law.

This is a very interesting premise that the author (Jennifer Roback Morse) does a good job of explaining. I highly recommend reading the whole thing.

My vote for the most insiteful comment:

An appreciation of voluntary cooperation between men and women, young and old, weak and strong, so natural to libertarians and economists, is completely absent from this statist worldview.

This is why it is no accident that the advocates of sexual laissez-faire are the most vociferous opponents of economic laissez-faire.

Ideal Parents?

Jane Galt has an article on gay adoption. One of the comments made is this:

This is not in any way to say that gay adoption is a bad idea; the gay couples I know who have adopted are all ideal parents.

I'm so on the fence on this issue of gay marriage and gay adoption. On the one hand I don't undertand any reason why it ought to be wrong. But it still strikes me that it is. And, as a Christian, I believe in the veracity of a bible that says it is.

But ignoring the moral platitudes, how can gay parents be ideal parents? I've commentted on this before. How can two gay men be ideal parents for (e.g.) a heterosexual girl? Where is the role model that the child has in her life? Or where is the appropriate role model for the heterosexual son of a lesbian couple?

That being said, I'm sure that the exercise of effective parenting skills is not endemic to heterosexual parents. But I think it's a far stretch to say that a gay couple can be an "ideal" parent. Ideally, children have role models in their lives and it strikes me that gay couples are very likely to be less than ideal.

Economics and Parenting Cross Paths

Marginal Revolution has an entry about tantrums. The basic idea is that the tantrum is a status symbol. If you are able to have a tantrum, it means that you are in a higher social status than the rest of us.

CEOs throw more tantrums than mailboys. Similarly movie stars, sports stars, and politicians throw more tantrums than ordinary people in those industries. Also famous for their tantrums: spoiled young wives, bigshot patriarchs, elite travelers, and toddlers.

The last entrant may seem surprising, but...

Parents mostly serve toddlers, not the other way around.

What does this mean? It means that Foster Cline and Jim Fay are right. But it also means that they're more than just astute parents; they're astute economists. If you want to change the behavior of the toddlers, change the incentive structure.

Hammers

I've written in other places on the stupidity of municipal broadband. Russ Roberts has taken his shot. My favorite part:

If you only have a hammer, everything looks like a nail. Spending money is the hammer of politics.

Repeal the "Death" Tax? Phooey!

I'm not a big fan of political correctness. I don't like the idea of simply changing the name of something in order to give it a better spin. The problem with people who suffer from an ailment isn't in the name of the thing they suffer. It's the ailment itself. Telling someone that they're handicapped instead of crippled is not going to change their ailment. All that's going to happen is that the negative connotations of the old name will eventually transfer to the new name. Hence we now have "handicapable". I don't know what the next iteration will be, but I'm sure that it's coming.

So it's with a bit of trepidation that I criticize the name of something. But I personally can't stand the name "Death Tax". The people who make the argument that you're taxing death are as wrong headed as can be, and they've chosen a name that tries to convey something that isn't real. It's no more respectful to the dead to take their money than it is to leave it alone. The dead don't care anymore about their money: they're dead. The estate tax does NOT tax the dead. It taxes the living who inherit the estates.

But, unlike other taxes, it's acutely destructive. Other taxes, while being destructive, are much slower. A person who gives up 20% of their annual income loses a lot of money over their lifetime. But that destruction takes place only a little bit at a time. The estate tax, however, happens all at once: when a person dies. This has the impact of destroying, in one fell swoop, the thing that a lifetime had built up.

The effect of this destruction is most evident when you talk about how the estate tax impacts farmers. Farmers are small business owners. This particular small business requires an enormous amount of capital be effective. Land, machinery, storage facilities, processing facilities, etc. As a consequence, most of the wealth built into a farm is not in the form of liquid assets. When a farmer dies, the inheritors of that farm are suddenly subject to a huge tax burden. Most of the time, the inheritors do not have the cash assets to pay the tax. The only mechanism available is usually to change the non-liquid assets into cash by liquidating the assets. One person buys the land, someone else buys the equipment, etc. The resulting cash is then used to pay the tax. Even if the inheritors wanted to keep the business running, they usually can't.

The result of the tax is that a farm, which had been built up over a lifetime, is destroyed by tax policy. The estate tax is the easiest example of how tax policy destroys private property. If the government just took a bulldozer and razed 45% of the farm, we'd all be rightfully enraged with the government. We'd be calling for reforms and restrictions on the power of the government. Estate taxes do the exact same thing as bulldozering 45% of a farm, and we should be equally outraged and calling for restrictions on the power of the government, and an abolishment of such a destructive policy.

Unfortunately, farms are not the only private property destroyed by tax policy. And the estate tax is not the only tax policy that destroys private property. All taxation destroys private property. It's just that with the estate tax it's much easier to see the destruction. And lest you get too cozy with the destruction of private property, much rides on strong private property rights.

Does it pay to be a flirt?

According to CNN the answer is no. Unfortunately, that article doesn't give enough information to identify whether it's true or not. The only data cited in the article is this:

The respondents who said they never engaged in such activity earned an average of three promotions, versus two for the group that had employed sexuality. Those who said they never used sexuality were, on average, in the $75,000-$100,000 income range; the other group fell, on average, into the next range, $50,000 to $75,000.

That's way less than enough information to come up to this conclusion:

Women who cross their legs provocatively, wear short skirts or massage a man's shoulders at work get fewer pay raises and promotions

The appropropiate comparison isn't between women who flirt and women who don't flirt. You need to know how well the women who flirted would do if they didn't flirt. And you need to know how well the women who didn't flirt would do if they did. In other words, they haven't controlled for a variable. The explanation of the data may very well be that the women who didn't flirt didn't need to in order to advance their careers and the women who did flirt needed to.

Of course, I don't think that this type of behavior is appropriate at the office, but from the data presented, I don't think the conclusion can be drawn that it's ineffective. My problem is with the methodology of this study. I think they missed something. Or (hopefully) it was misreported.

My personal opinion is that it's likely that the conclusion of the story is true. If I'm a male manager concerned about profits, then I would think that a woman who feels the need to use sexual behavior is signaling her incompetance. In other words, if she uses this type of behavior it means she thinks its the only way to advance herself. In other words, she believes that her skills alone are insufficient to advance her careeer. On the other hand, she may be so convinced of sexism in the workplace. She may very well believe that her skills are sufficient, but that there's a glass ceiling for women and the only way to break it is to use sex. Personally, I don't know.

What I'm convinced of is that the article really sucks. There's not nearly enough information in it to even suggest the conclusion much less conclude it.

Update: The original article in USA Today is not much better. But it does have an interesting quote:

"Our story is really a feminist story, because we argue that there are negative consequences for women who use sexuality in the workplace," Brief says.

This strikes me as research with an agenda, but I'd like to read the entire paper before I decided that was true.

Income vs Expenses and Imports vs Exports

Russel Roberts of Cafe Hayek comments on CAFTA. In his comments, he mentions:

they falsely argue that the benefits of the agreement and the increase in exports to Central America and all the jobs that will be created. In this Alice-In-Wonderland world of pseudo-economics, exports are good and imports are bad... Presidents will find it hard to make the case for opening our borders unilaterally to foreign products—the educational well has been poisoned by all the previous mercantilist rhetoric that has argued that exports are good and imports are bad.

This reminded me of a commercial on the radio that I'd heard on the way to work this morning. In it, a state republican congressman was arguing for lower taxes (with which I agree) on the grounds that it would bring more business to our state resulting in more jobs. His argument basically was that a higher tax rate in this state, relative to the tax rates of neighboring states, encourages jobs to be created in those states. I must be starting to think like an economist because I was immediately puzzled by why I should care about whether or not a business comes to North or South Carolina. If I really want to work for the business in South Carolina, it's not hard. I just get a job and then move there. That's how I moved to North Carolina in the first place. Why should I care where that business locates itself. All I should care about is whether or not I want to work there for the salary that they offer me.

Which brings me to Professor Roberts comments about imports and exports. Imports are stuff that we as a nation buy. Exports are stuff that we as a nation sell. As an individual I also buy and sell stuff. Does the assumption that imports=bad and exports=good also apply to me as an indvidual? If so, then I should avoid imports, and try and increase exports. And in certain cases, I do avoid imports. For example, I don't import lawn mowing service. I do that myself. I earn roughly $25/week doing this by not having to pay someone else to do it. But I can't buy everything from myself and it's pointless to even try. The result is that I have trade defecits all over the place. I have an unbelievable trade defecit with the grocery store. I import all of their stuff and never export anything to them. Similarly my employer imports my services from me and I spend a tiny fraction of my salary on their products. This is an incredibly lopsided trade deficit for them in exactly the same way that I have a lopsided trade defecit with the grocery store.

Is this any cause for concern? Heck no! By buying my groceries I receive more benefit than just getting the groceries: I don't have to produce them. As I'm not very good at growing things (for example: my lawn), I get to take advantage of someone else's prodigious green thumb. Similarly, my employer doesn't have to learn certain technology skills; they simply hire me with my skills.

Imports aren't bad. Imports are good. Imports allow us to focus on the things that we do well, and let someone else who's figured out a better way to do things do them so that we can free up our labor efforts to focus on something that we do well. Exports aren't bad. Exports are good. They force us to create value for others when we work.

Neither imports nor exports are bad. Trade is good. Trade restrictions are bad.

Capital Freedom

This is a very good blog. Concise, intuitive, logical, and surprising (she comes up with conclusions that I didn't expect). I wish I could write like that. I wish I could think like that.

Equality in sports...

As someone who lives in NASCAR country, I've never been a big fan of Robbie Gordon. My children know this enough to be able to repeat my complaint. My 4 year old will, during a race, announce the following to whomever listens: "Robbie Gordon is a hothead". That being said, most of NASCAR is full of hotheads. I guess in a system where your own winning matters more than anything, you're not likely to see a lot of empathy or understanding for someone else's point of view. Too much empathy can have a negative impact on your ability to force someone else to lose.

But still, Robbie Gordon strikes me as even more hotheaded than average. And his latest complaint about today's Indianapolis 500 just seems really dumb to me. Basically, he's saying that Danica Patrick, a 100 lb woman, has an unfair advantage over the men in that sport who average 200 lbs. Doesn't an unempathetic hothead have an advantage over an empathetic competitor in NASCAR? Why is one advantage fair and the other not?

Personally, at 5'8" it doesn't matter how smooth my jump shot is, nor how well I can handle the ball. In a basketball game, I have a huge disadvantage against a 6'4" person with the same level of skills. Basketball is a tall person's game. Racing is to the swiftest. And that puts a premium on weight. Robbie Gordon should just get over it. And so should anyone else who happens to think that their particular advantages are fair, but someone else's advantage is not.

3 Little Words

It is impressive to me the difference that only 3 words can make on an entire essay. I read this article and was entirely on board for the entire thing up until the last 3 words.

I think that Adam Smith was onto something, but he miscalculated the origins of our deference.

The Highest Cost Producer

Starting with an article at Marginal Revolution, I read the earlier referenced article, and ended up reading this guy's article, which contained this comment:

Now what needs to be brought into the picture here is that the federal government is not like a big corporation. Governments don't go out of business. Governments don't experience unexpected new competition for their customers. Corporations can't just generate new revenues by taking a vote. And of course corporate managers are supposed to have a different attitude vis-à-vis their employees than elected representatives have vis-à-vis their constituents.

I'm struck by how the author of the comment thinks that all of these things actually support leaving social security as it is. Meanwhile, I see them as an argument for changing social security. Of course, I start from a basic distrust of any government program, mainly because they usually result in the highest costs of production.

Governments not going out of business and not experiencing new competition means that there's no incentive for a government to improve. Corporations not being able to generate new revenues by taking a vote means that they have to come by their revenues by efficiently making things that people actually want. And corporate managers view of their employees is generally better than the governments view of its constituents. Employees are the engine that makes production and profit possible. Citizens are the suckers from whom taxes are forcibly extracted. In other words there is more stability in entrusting investments to a diversity of corporations than entrusting it to a governments guaranteed inefficiency.

How are this guy's points at all useful to support the Social Security status quo?

The Yuk-Factor

This is an interesting quiz (thanks to MarginalRevolution for the pointer). I took it and got the following scores:

Your Moralising Quotient is: 0.40.
Your Interference Factor is: 0.00.
Your Universalising Factor is: 1.00.

Take it yourself and then come back here.

Ok. So you're back. Here's the thing that I wanted to comment on. After the quiz, they gave you some of what they're trying to get to and their rationale for the quiz. This I found interesting:

Nevertheless, it is probably right that we are suspicious of moral judgements which are rooted in the "yuk-factor". Steve Pinker, in The Blank Slate, puts it like this: "The difference between a defensible moral position and an atavistic gut feeling is that with the former we can give reasons why our conviction is valid. We can explain why torture and murder and rape are wrong, or why we should oppose discrimination and injustice. On the other hand, no good reasons can be produced to show why homosexuality should be suppressed or why the races should be segregated. And the good reasons for a moral position are not pulled out of thin air: they always have to do with what makes people better off or worse off, and are grounded in the logic that we have to treat other people in the way that we demand they treat us."

I find it interesting, because I think you could put forth the argument that says that everything, including those things listed, all fall back on some feeling of "Yuk, that's bad." CS Lewis made this argument in "Mere Christianity" when he tried to define the "Law of Human Nature". Even if we say that "harm is caused", on what basis of reason do we say that harm is inherently wrong? Don't we just feel that it's wrong? Perhaps it leads to uncomfortable consequences if pursued, but what makes uncomfortable any more inherently wrong than comfortable? They rely on the golden rule; what makes it any more inherently right than it's opposite?

Ultimately, I fall on the side of "there is unverisal right and wrong", which is demonstrated in my score. Our "feeling" of something being wrong, is part of our innate ability to sense those universal truths. That feeling is no less of a sense (IMHO) than the sense of touch or smell. And as such, I have little doubt that we can be confused by what we're sensing, and that we can perceive things individually that others cannot. That means that responding to that sense is no more or less rational than responding to something smelling bad or responding to being poked by someone else. It doesn't matter that no one else smelled that thing or felt the poke; responding to it is rational. In the same way, responding to the sense of "yuk, that's wrong" can be seen as equally rational.

In fact, it *should* be seen as rational. One of the lessons of Christianity is that much of the evil in the world is a result of our sense of wrong being dulled by sin. In other words, its the fact that we have irrationally ignored that sense that has lead to more wrong and more evil.

Count me on the side of the "Yuk-Factor".

When I'm wrong...

...I'm way wrong. Yet another blogger with substantially the same comment that I had.

Totally Free Market Employment?

Is it possible to be employed in a market that is completely free? I wonder about this because I read that Duke Energy (a local company) is merging with Cinergy. Initially I wondered, "Would I want to work for Duke? They're clearly a growing concern." And then I thought that I wouldn't because they are in a far too regulated market. I'd like to be focused on doing a job so good that customer satisfaction is what drives my profits. Of course, I'm after the profits, but I want to get there by being really good at what customers want. And in the energy market, where there are locally granted monopolies, the thing that motivates the organization isn't customer focus. I thought to myself, "Man am I glad I work for a company more governed by the free market. At least we're more responsive to our customers."

Except, I work for a bank. We're super regulated, too. And I witness this stuff every day when we've got internal auditors and corporate information security running around telling us to stop doing something that's beneficial to the customer and instead focus on something that makes our services more expensive for the customer. And they're doing it because they've got pressure from the above referenced regulators.

So it got me wondering. Is there any job I could take that's in a totally free market? Probably not, because no matter what job you do, you're regulated in how much you must pay people even if they're willing to work for less (minimum wage). What would a job in a completely free market look like? I don't even know what that job would look like, how do I know I'd want it?

Not alone...

In previous post, I lamented the feeling that I was alone in the beliefs that I espoused. Well I've since been proven wrong many times over. But here's a wonderful entry by the coyote blogger. Have I mentioned that I'm really starting to like this guy's stuff?

Ewww... taxes.

I'm really beginning to like Coyote Blog. Here's an example of why:

Many people have worked hard to pay off their mortgage, thinking they could settle down into their retirement in a paid off house. Unfortunately, they may find that their home has increased in value so much that their property taxes at retirement are actually much higher than their original payment on the house. Take the case of a couple who bought their house in an urban area for $25,000 and find its now worth $375,000 forty years later (this is an average urban price increase over the last 40 years). For simplicity, we will assume the effective tax rate has stayed at $1.50 per $100 for these forty years (though its more likely to have gone up). In 1965, they paid $375 a year in taxes. Today, they have to pay $5,625. In other words, their property taxes today are over 22.5% a year of the original price they paid for the house. Now, this is all fine if the couple strove to work up the corporate ladder and get promotions and grow their income proportionately. But what if they didn't want to? What if they just wanted to buy that house, pay it off, and live modestly selling driftwood sculptures at farmers markets, or whatever. The answer is, because of property taxes, they can't. Likely they will have to sell this house, give up the urban life they wanted, and either move to an urban dump they can afford the property taxes on, or they move out to the country... It is ironic that a tax initially invented for populist reasons to cut back on wealth accumulation hurts the lower income brackets and those trying to step off of the capitalist treadmill the most. In fact, it was the poor in the Great Depression who typically lobbied for laws to put moratoriums on property tax collections.

In other words, property taxes contribute to materialism. The only way to keep your lifestyle is to make sure that you're climbing the financial ladder. Thrift and simplicity won't scale in this environment.

Taxes, Bad!

Let's eat!

This is an interesting article. (Which came by way of Marginal Revolution. The part that I find most interesting is this quote:

The latest study had another surprising finding: People who are modestly overweight but not obese have a lower risk of death than people of normal weight. Indeed, the fewer deaths from being modestly overweight partially canceled out the deaths from obesity.

Whoa! Does that mean that the BMI scales are wrong? Does that mean that people who work are to get their BMI index down to w/in "normal" are actually lowering their overall health? For me to hit the upper limit of BMI requires that I lose approximately 20 lbs. I can't wait to tell my wife that it would be detrimental to my health if I did that!

Katherine Flegal, a CDC scientist who led work on the study while a visiting scholar at the UC Berkeley's Center for Weight and Health, said she hoped the findings don't take away from the importance of focusing on obesity as a public health problem.

"Our numbers suggest that weight-related mortality is not as great as previously thought," she said. "But our study just looks at part of the picture. We didn't look at issues such as quality of life. These results shouldn't be overinterpreted to mean that we can all rest easy."

Aw, crap!

FIGHT!

There's a battle royale between the two heavy weights that power Econlog. On the one side is Arnold Kling who favors behaviorism. On the other side is Bryan Caplan who believes that behaviorism is dead.

As someone who tends to think that actions speak louder than words, I tend to fall on the bahviorist side. At the same time, you can't discount the words of people to color their behavior. Unfortunately, I don't really understand the argument in the language of the two fighters. The third party commentary, however, is where I started to get a better understanding.

It comes down to this: do we believe what people actually do or do we believe what they say about what they do? And the example paradox is happiness research as related to salaries. There's lots of research that says that people who earn $50,000 per year are not much happier than those who earn $20,000 per year. Which means that the additional $30,000 doesn't provide much happiness. This is good news for a Christian. However, it conflicts with the fact that even though people say that the additional money doesn't provide much additional happiness, they universally seek it. If we're to believe what they say (that it won't provide much additional happiness) then why do they pursue it as if they think it will? Aren't they either lying or deluded? And if those are the only two choices, how much trust can you place on what people say in comparison to what they do?

That is, of course, the behaviorist argument. It's the only one that I understand. I'd like to present the other side, but I don't really understand it enough to present it. That being said, if the behaviorist argument is that you can *only* use behavior, then I'm not convinced. If the non-behaviorist argument tries to integrate what is said as data to color what is done, then I'd fall in the non-behaviorist camp. However, I'd need to understand what the rules are when words and actions conflict.

Just a question from an economics wannabe.