Wednesday, October 24, 2007

Vocabulary Lesson

OK class here's today's vocabulary lesson. I want to know if the following two words are equivalent:
"witch" and "which"
It's been a few years since English 101 and 102 so I'm not quite sure anymore.
Any guess on where I encountered such a thing?

Potholes and Gased Up Schools

The Waco Trib advocates the passage of Proposition 12 which would allow the Texas Transportation Commission to issue $5 billion in general obligation bonds for highway improvement. Most of use who regularly drive Texas roads would agree that improvement are badly needed in many locations.

However, here is one of the state's filthiest little secrets: according to chapter 162, section 503 of the Texas Tax Code, one-fourth of the tax collected on gasoline "shall be deposited to the credit of the available school fund." So a quarter of gasoline taxes are going into the school system, primarily for the purpose of school buses.

The rational behind gasoline taxes is to fund roads. It tends to work fairly well (not great, but good enough although I have major questions about the system as a whole). You buy gas, you pay the tax which then goes to fund roads. So there is a direct connection between the amount of driving and the construction and maintenance of roads. It doesn't work half bad, until of course you sever part of that connection by diverting a substantial chunk of that tax revenue for other purposes, no matter how high minded the cause.

Recreating the connection between gas taxation and road funding would be a nice first step in improving Texas roads. If you want to increase school funding, look elsewhere.

Tuesday, October 23, 2007

Up in Smoke

Given the wildfires in California, it is worthwhile to take a look at U.S. Forest Service Fire Policy. Here is a good summary of that policy. You can also access the complete paper there, which is well worth reading.

The U.S. Forest Service fire suppression policy is a one size fits all policy, but forests vary by regions. Some forests need to have vegetation burnt back in order to thrive and some trees will only release seeds when exposed to intense heat.

On top of that, disposing of the underbrush, either by burning or physical removal, creates an environment where fires are much easier to control.

The primary way to facilitate a more rational fire policy is to move toward more local control of forest lands. Then maybe policies that fit the particular forest will be adopted and more controlled burning will be allowed.

Monday, October 22, 2007

Utility Function

I had my Intro class write down their utility functions this morning. A utility function is a bundle of goods and/or services from which you derive satisfaction. It is written as U=f(A, B, C...) or Utility is a function of A,B,C, etc. The best utility function a student provided just for the sheer variety of products is:

U=f(whiskey, beer, snuff, cheddar cheese)

I keep picturing this person sitting around with a dip of snuff, a beer in one hand and a chunk of cheese in the other.

Friday, October 19, 2007

This Morning's Krugman

I'm never quite sure what to make of Paul Krugman. He's a bright man who used to do (maybe he still does) good economic research. I disagree with his political conclusions at least 80 percent of the time, but as an economist I don't see how he comes to some conclusions. Take this morning's column.

He discusses the downfall of the Republican Party and the flow of corporate donations away from the Republicans and toward the Democrats. I get the impression that he believes this is happening because Corporate America is tired of the Bush administration's "amateurishness." Has Krugman never heard of rent seeking? Businesses see that Democrats are in power and have the potential to increase their majorities in the House and Senate and win the White House. If you're rent seeking, seeking economic favors from those in a political position to grant such favors, why would you support a party that is out of power?

He ends the column by discussing a Hillary Clinton event sponsored by Monsanto and Krugman sees a potential conflict of interest here. He fears that the next Democratic president, instead of being another F.D.R., will be another Grover Cleveland. If only! I wish there was a serious Republican candidate like Cleveland. Here's a nice article on Cleveland.

Thursday, October 18, 2007

Sad News

Laissez Faire Books is going out of business. LFB may have been my favorite place to buy books. Unfortunately, a niche book seller such as LFB could no longer remain competitive.

Long live LFB! You will be missed.

The NFL and Hip-Hop Culture

Jason Whitlock has an excellent column everyone should check out. He points out that the Indianapolis Colts have a 47 percent non-black roster while the New England Patriots have a 43 percent non-black roster. He lays the blame on the infusion of hip-hop culture into the NFL.

Just contrast such gentlemen as Gale Sayers, Mike Singletary, Kellen Winslow, Warren Moon, and Walter Payton with numb skulls as T.O., Pacman Jones, Larry Johnson, Travis Henry, Ray Lewis, and Chad Johnson. Whitlock claims that the NFL owners are trying to distance themselves from such nonsense because it's hurting business. The Patriots and Colts don't put up with such garbage and they're the leagues best teams far and away.

Excellent and thought provoking column.

Wednesday, October 17, 2007

Absurdity in Waco

John Stossel has a column mentioning the 4 year old "sex offender" in Waco as well as other instances of the same nonsense. Chris Rock has it right: "If my father hadn't harassed my mother I wouldn't be here!"

At least no quasi-prominent Waco resident was busted for urinating on a bar. But wait, someone was!

Monday, October 15, 2007

Good Economic Developments in the Middle East

Finally, here's some good long term economic developments in the Middle East. Several countries are becoming less oil dependent and opening up their economies. As the article says, this is certainly not a cure all for any part of the Middle East, but it's nice to see.

Discover Your Inner Economist

Tyler Cowan's new book Discover Your Inner Economist is absolutely terrific. I don't understand why it has gotten such terrible reviews at Then again, if I like something most everyone else hates it (TV: Alias; Music: Dream Theater, Stuck Mojo; Comedy: Carlos Mencia).

This book is not about pure, theoretical economics. It is largely a work of applied economics focusing on such areas as how to become a cultural billionaire, tipping, charity, how and where to find great ethnic food restaurants, using incentives to get kids to wash the dishes, and many other topics most economists don't go near.

For a good look at some economic theory that is packaged in an easy to digest form, try Henry Hazlitt's classic Economics in One Lesson. A good economics course for the layman would be reading Hazlitt's book for theory and then Cowen's for fun and neat applications.

Friday, October 12, 2007

Why? Why? Why?

I don't know what to think of this. Why would they give Al Gore a Nobel Peace Prize? Ole Danbolt Mjoes, the head of the committee says "A peace prize is never a criticism of anything. A peace prize is a positive message and support to all those champions of peace in the world." Oh so Gore winning is not a criticism of Bush? Just like Jimmy Carter winning in 2002 wasn't a knock on Bush? Glad he cleared that up!

I'm not getting too worked up over this though. Ever since Yasser Arafat won the stupid thing back in 1994 the value of the Nobel Peace Prize has been going down faster than the potential of Britney Spears' children.

It's a shame that a prize that once went to the great Norman Borlaug has become such a disgrace.

On the plus side of things this morning, isn't it cool how I finally figured out how to embed links so I don't have those long website links exposed, making The Misanthropic Economist look like crap?

Tuesday, October 9, 2007

Late Morning Reading

1) David Brooks has a really nice column on the lifestyle patterns of today's 20-somethings. I see some of myself in it, but the reason I fit some of his descriptions differ from the reasons he gives. (You'll need a free log-in to The New York Times to access it.) Thanks to Arnold Kling.

I'm interested to see how Brooks' views compare to Robert Epstein's in his new book The Case Against Adolescence. I recently purchased the book and can't wait to read it. I would guess that Epstein would include parts of what Brooks calls the "Odyssey Years" in adolescence, but without reading the book I can't be sure.

2) A recap of the Cowboys' improbable win last night. What concerns me more than Romo's pics is Owens' hands. He dropped one hitch route by looking up field too soon, the 2 point conversion was ripped out of his hands, and he couldn't cradle the ball in with 13 seconds left in the game. None of these mistakes cost the Boys in the end, but any of them could have. I haven't seen a line on next week's game, but I would take New England as a 7 point favorite if for no other reason than Randy Moss has just killed the Cowboys.

Tuesday, October 2, 2007

The Nuclear Option

Here is a good article my Waco economist Ray Perryman on nuclear power and the potential for a plant near Bay City.

To quote C. Montgomery Burns, nuclear power plant owner on The Simpsons, this article is "Excellent."

Monday, October 1, 2007

Ethanol Networks

The boom in ethanol production has not been followed by a boom in transportation networks to move the stuff.

The energy bill of 2005 mandated that ethanol consumption double over the next 7 years and provided incentives (tax breaks and subsidies) to increase production. However, too few realized that specialized rail cars, pipelines and trailers are required to transport ethanol. So as ethanol production boomed, the development of an ethanol transportation network didn't develop along side it.

Perhaps the incentives are to blame. The price signals regarding ethanol are artificially inflated by government action. Because ethanol production is subsidized, that's what people do. Since the subsidy may not be there tomorrow, you'd better produce while the gettings good. This is classic short term thinking.

Whereas an ethanol producer who is in it for the long run will make sure that specialized factors of production (transportation networks in this case) required in distribution are there, the short run incentives created by the subsidies puts such concerns on the back burner. Consequently, there is a glut of ethanol on the market and the price has dropped. This is a perfect example of the often perverse incentives created by government intervention.

Where is Henry Hazlitt when we need him?