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Scott S. Said It

I’m always bemused when white American liberals regard libertarians as “conservatives.” It shows you where their priorities are. Apparently those liberals view economic issues like campaign finance reform, Dodd-Frank and net neutrality as being more important than hundreds of thousands of unfairly imprisoned blacks and Hispanics, or minorities getting shut out of jobs by occupational licensing laws, or millions of poor people being shut out of the US by our immigration laws. I suspect that there are lots of black and brown people all over the world that have different priorities. Perhaps that partly explains the racial make-up of Sanders’ crowds.


Rest in Peace Harry

Long-time reader (the only one perhaps!), commentator and friend, Harry Wood, passed away yesterday at his home in Quakertown, PA. The site with be much quieter without him. Harry was supremely well-read, worldly, patient and interesting – one of the those fellas they write books about, I’d do it if I had the talent. He has a wonderful family who despite having only met me a couple of times stay in regular contact, and I hold them in high regard.

May the grass be green and luscious wherever you may be Harry, and should you find yourself in the middle of the fairway, I hope you strike a solid drawing three-iron to within feet of the cup. And should you find yourself in the rough, well, there is no rough where you are, only a “second cut.”

I wonder how, in the long-run, people will respond to this. On the one hand, the favorite trope of many is that markets fail, particularly insurance markets, because of the asymmetric information problem. On the other hand, there are always going to be huge concerns about privacy when it comes to the many solutions like this one to the problem.

Asymmtric Info

More to say, as always.

Was perusing river volume data the other day and was very well surprised to learn that the Colorado River, perhaps the most important river in the West, does not rank even among the twenty largest American rivers in terms of annual volume flowing through it.

On p. 359 of Cadillac Desert:

Another drawback was that the reservoir would drown an Indian Reservation and the town of Covelo — population two thousand — but that sort of thing had been done many times before. (The Corps had included the flooding of the reservation in its benefit-cost analysis, but had it down as a benefit because the Indians would get a nicer town somewhere else)

Beware the man behind the curtain wielding “economic-isty” tools.

From another passage in Cadillac Desert (p 351, I updated the dollar figures to today), on a dud-project known as the Peripheral Canal:

“the correct figure, for capital costs only and accepting official estimates, is certainly in excess of $3 billion.” Three billion dollars in 1959 is over $24 billion today. What state would vote for a $24 billion bond issue today? Not one. Pat Brown knew that very well. That was why he decided to say that the project would cost $1.75 billion – just over half of what he knew, or should have known, the estimate should have been.”

Not that any such thing would be done with High Speed Rail estimates today.

From p.349 of Cadillac Desert:

“I loved building things,” he blurted in an unguarded moment of candor. “I wanted to build that goddamned water project. I was absolutely determined I was going to pass this California Water Project. I wanted this to be a monument to me.“

That was former California Governor Pat Brown, father of Jerry.

Swamps of Despair

From a speech given by Normal Borlaug many years ago:

The most conservative man in traditional agriculture is the scientist, and sometimes I am not proud to be one of them. This is most discouraging. The scientist is a privileged person, the man who should lead us out of the wilderness of the static, underproductive agriculture, and yet by his apathy and failure to exercise his unique vision, he keeps us in the swamps of despair.

The scientist fears change because he is in a relatively privileged position in his own society. If there is no breakthrough in yield, he will not be criticized. But if he makes a recommendation and something goes wrong, he may lose his job.

  1. Stiglitz on wealth, recessions and inequality. I don’t know why I continue to be frustrated by the ability to predict conclusions from the author and titles alone. Here is his, ” the adverse effects of austerity appear much greater than suggested by the standard national income accounts.” By the way, this may in fact be right, but part of the frustration is the choice of research questions, even if the project is done honestly and fairly, is as biased a process as the research process itself is. Would you ever imagine someone examining something that may make the effects of austerity to look less “awful” than suggested by the standard approaches? Also, he makes a point ahout rents in the abstract – but don’t all rents, even if unearned, have to come from value and productivity improvements somewhere?

  2. Related: Gabaix et al model that the trend in inequality increases at the top is driven by the rise of superstar entrepreneurs and managers. That would seem to be to my benefit.
  3. A really interesting theory on how optimal corporate social responsibility policies may emerge. I am not sure I believe it, but I tend to want to believe it. Here is part of the abstract:
    ” Because firms can capture part of the rent created by allowing socially responsible employees to
    correct social ills, in some settings they find it optimal to lobby for inefficient rules and then capture the surplus associated with
    being “good citizens” in the face of bad regulation.  In equilibrium, this means CSR can either increase or decrease social welfare,
    depending on the costs of political capture.
  4. Do some anti-competitive regulations NOT raise alcohol prices?
  5. A rebuttal to a Friedman classic?
  6. Is officer quality lower under an All Volunteer Force military?
  7. Governments increase spending in response to increasing tax increases. Now, about that proposal for a “revenue-neutral” global warming program …
  8. Hey, here’s a paper that I would not have predicted the outcome based on what folks think of the ideology of the author. Definitely upgrade this finding – that anti-discrimination laws do not seem to make it harder to hire the senior disabled. That made my day, and also surprised me.
  9. The term “optimal taxation” makes me cringe.
  10. What happened when the state of Utah moved away from a Defined Benefit Public Pension Program? Many employees simply defaulted into one of the two new options. The paper does not go into other outcomes. My theory about all of this is that public employment is _____.

Have a nice week. I’m off to watch a 21 year win the third golf major of the year.

From an incredible biography about one of the people I genuinely admire and call a hero:

On May 6, 1942, a new Federal agency opened for business. The War Manpower Commission had to balance the competing labor needs of agriculture, industry and the armed forces. It was a tricky business because all were vital, all had priority and all needed manpower. Borlaug was among the first it classified as “Essential to the War Effort?”

What may sound like an honor was more like hostage taking. The Feds now ran his life, freezing his salary and forcing him to stay affixed to his desk until otherwise instructed. His plight was far from unique; during those years Washington determined what millions did with their days. It was an un-American age … national survival was at stake.

Eighteen months later the competition for labor was lessening, and in May 1944 the War Manpower Commission officially freed anyone 30 years and older from employment restrictions.


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