Lazy Economists

Posted on January 10, 2012 | Comments Off on Lazy Economists

Comedy gold. Best line: “If it doesn’t fit in your model, assume it away. Idiot.” Click here if the embedded video doesn’t work.

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Posted in Economics, General Foolishness

Regulation of the Day 205: Singing the National Anthem

Posted on January 10, 2012 | Comments Off on Regulation of the Day 205: Singing the National Anthem

Francis Scott Key wrote the national anthem in 1814. He set his lyrics to an old English drinking song with an intentionally difficult melody. The range spans roughly an octave and a half, which is a challenge for any singer. Revelers in pubs would challenge each other to sing the melody without screwing it up; punishments for mistakes would often involve beer.

Even professional singers can’t always get through “The Star-Spangled Banner” unscathed, as Christina Aguilera found out at last year’s Super Bowl.

We’ll never know what Key would have thought of contemporary singers’ habit of improvising and embellishing his song with their own touches. But we do know that Indiana state Sen. Vaneta Baker, an Evansville Republican, is not a fan.

Sen. Baker introduced a bill that would require singers “to sign a contract agreeing to follow the guidelines and would set a possible $25 fine for violators.” It only affects performances at the state’s public schools and universities, as well as private schools that receive state funds. If her bill passes, it would not affect this year’s Super Bowl, which will be played in Indianapolis.

Singing out of key does not violate the terms of the contract. Not singing it “the way that we normally have it sung or heard throughout most of our state and our country” would. The bill would let schools set their own standards. But they will also be required to keep archives of every national anthem performance going back at least two years.

Given the amount of paperwork schools already have to deal with, this is just a bad idea. Surely Sen. Baker has better things to worry about in these troubled economic times.

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Posted in Nanny State, Regulation of the Day

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Regulation of the Day 204: How to Buy Liquor

Posted on January 9, 2012 | 4 comments

UPDATE: Welcome, Reason Hit & Run readers! More Regulations of the Day are here.

Self-checkout lanes have been popping up in grocery stores across the country over the last several years. Some people worry that without the adult supervision of a cashier, underage kids might be able to illegally buy alcohol at these self-checkout lanes. California state Rep. Fiona Ma even introduced a bill that took effect on January 1 that prohibits Californians of any age from using self-checkout lanes to purchase alcoholic beverages.

Has this been a huge problem in the past? Two independent studies have been done to find out. A 2009 UCLA study, cited by Rep. Ma to support her bill, found that underagers failed in 80.5 percent of their attempts. A separate study done by researchers at San Diego State, found that young hooligans had a 90.6 percent failure rate.

So yes, kids can buy booze at self-checkout lanes. But it’s probably less successful than other methods. As Joe Eskenazi put it in SF Weekly’s blog, “The best way to get alcohol remains to rely on a fake ID, theft, or someone’s skeezy 23-year-old cousin.”

Of course, there is another factor in play here, and likely Rep. Ma’s real motivation. That factor is rent-seeking. Many grocery cashier jobs are unionized. The more people use self-checkout lanes, the less they use the cashiers. Unions don’t appreciate the competition, so they work with lawmakers like Rep. Ma to legislate their preferences over consumers’.

According to Maplight.org, labor interests donated $150,450 to Rep. Ma’s campaign fund in 2009-10. They are by far her largest contributors.

This is an example of what economist Bruce Yandle calls a Baptist-and-bootlegger problem. Back in the old days, many Baptist preachers favored Prohibition because they believed drinking was morally wrong. Bootleggers favored Prohibition, too. Black market profits are far higher than in legal markets. So the bootleggers would manipulate the Baptists into favoring a bad policy by using the language of morality.

Fast-forward to today. Almost nobody wants increased underage drinking. And unions don’t want competition. So the bootleggers make up a story about how automated checkout lanes are causing runaway underage drinking. Social conservatives jump on board, wanting to strike a blow for morality. The bill gets passed, the Baptists feel good, and the bootleggers financially benefit. So do legislators.

Consumers, of course, are left out of this coalition.

4 Comments

Posted in Economics, Public Choice, Regulation of the Day

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The Dying Duopoly

Posted on January 9, 2012 | Comments Off on The Dying Duopoly

Nick Gillespie and Matt Welch point out that duopolies rarely endure because they tend to abuse their customers. That creates an opening for competitors to enter the market.

Political markets are different than economic ones, but duopolies still have many of the same qualities — particularly regarding customer abuse. That’s why I was pleased to see a writeup in this morning’s Politico that the percentage of political independents is at an all-time high in a long-running Gallup poll. A full 40 percent of Americans have now opted out of the Republican-Democrat duopoly.

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Posted in Elections, Political Animals, The Partisan Mind

Obama,Cheney Surprisingly Similar on Civil Liberties

Posted on January 6, 2012 | Comments Off on Obama,Cheney Surprisingly Similar on Civil Liberties

Great column from Steve Chapman:

Back in 2007, when Barack Obama was running for president, a mildly surprising bit of news emerged: He and Dick Cheney were eighth cousins. Today, though, it appears that report was wrong. Judging from Obama’s record in office, the two are practically brothers.

As a candidate, Obama criticized the last administration for holding Americans as enemy combatants without trial. He faulted it for wiretapping citizens without a warrant. He rejected the Republican claim that the president has the “inherent power” to go to war without congressional consent. He depicted George W. Bush and his vice president as a menace to constitutional limits and personal freedom.

But look at him now. Last week, Obama signed a bill letting him detain U.S. citizens in military custody without convicting them of anything — not for a month or a year, but potentially forever.

Read the whole thing.

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Posted in Political Animals, The Partisan Mind

Regulation Roundup

Posted on January 6, 2012 | Comments Off on Regulation Roundup

The latest goings-on in the world of regulation:

  • The 2012 Federal Register is already over 1,000 pages long. After four working days, it’s already up to 1,007 pages.
  • The 2011 Federal Register weighs in at 82,419 pages. That’s 328 pages per work day. Adjusting the count for skips, jumps, and blank pages would probably yield around 81,000 pages. That adjusted count should come out soon. The all-time record adjusted page count is 81,405 pages, set in 2010.
  • My colleague Wayne Crews has set up TenThousandCommandments.com, which has daily Federal Register updates and other nifty features. Wayne talked to me about the site in this podcast; there is also a 10KC Facebook page and a Twitter feed. The goal is to make it as easy as possible for the public to keep an eye on the regulatory state. Of course, agencies and OMB should already be doing this already. Since they aren’t, CEI is doing it for them.
  • Sam Patterson compares the size of the 2011 Federal Register to a lengthy reading list of classic books totaling about 7.3 million words. How do they compare? “[Y}ou’d have to read every single one of these books ten times over to achieve the same word count that was added to the Federal Register in a single year.”
    Also worth noting: in the publishing industry, a manuscript page has 250 words. Or at least it’s counted that way; every page is different. So a 200-page manuscript is considered a 50,000-word book. The average Federal Register page has about 1,000 words. Patterson used 900 words per page to err on the side of caution. Using his numbers, a paperback edition of the Federal Register would be about 292,000 pages instead of 81,000.
  • It’s not pornography, it’s the TSA: “’When Bruch reached into Russell’s groin area he ‘lifted up to feel,’ ‘ wrote 9th Circuit Judge Margaret McKeown in the opinion.”
  • Having solved all of Indiana’s other problems, state Rep. Randy Frye wants to criminalize novelty lighters.
  • Jim Gattuso and Diane Katz list the ten worst federal rules of 2011. There are some doozies.

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Posted in regulation

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Regulatory Capture

Posted on January 6, 2012 | Comments Off on Regulatory Capture

Businesses, especially larger ones, aren’t afraid of regulation. They often welcome it. They can use rules to stifle competitors, or can pad their profits by forcing consumers to pay higher prices. There’s a reason so many businesses have a Washington office. They’re trying to influence regulations and regulators alike.

This is called regulatory capture, and George Washington University’s Susan Dudley gives some examples in the video below. Click here if the embedded video below doesn’t work.

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Posted in Economics, Public Choice, regulation

Economic vs. Political Processes, or Why More Students Should Major in Economics

Posted on January 6, 2012 | Comments Off on Economic vs. Political Processes, or Why More Students Should Major in Economics

Gernot Wagner, in the Washington Post:

Markets, in fact, work all too well. They are an aggregator of wishes and desires, however misguided they may be.

This is actually a more accurate description of democracy — especially the misguided wishes bit. There is little, if anything aggregate about the market process. It is the process of individuals making exchanges with other individuals, each individually trying to meet their individual wants and individual needs.

The first thing I learned in undergrad macro is that all economics is micro. GDP and other indicators try to sum up the results of that process. But it all happens at the individual level.

Every customer at a grocery store gets an individually customized bundle of goods. Usually, no two are the same. But in a democracy, there are usually only two bundles of policy stances to choose from. And almost nobody agrees with the entire contents of one of the bundles. Nobody gets what they want. The successful politician picks his positions based on aggregate opinion, and ignores individual opinion.

But I quibble. The point of Wagner’s piece is to steer young people towards studying economics, and he makes a good case. He also offers some great advice, though it does contradict most of the policy prescriptions he puts forth:

Economists ought to be more humble in what we know and how we teach it.

Precisely. Humility is at the core of the economic way of thinking, and should form the basis of any humane political philosophy. It’s ok to admit that it’s impossible to consciously push an economy in a given direction without unintended consequences. And it’s not ok to tell other people you know what’s best for them.

(via Russ Roberts)

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Posted in Economics

Profits and Losses

Posted on January 5, 2012 | 5 comments

Here’s a letter I recently sent to the New York Times:

TO THE EDITOR:

Amar Bhidé argues that “governments should fully guarantee all bank deposits — and impose much tighter restrictions on risk-taking by banks.” (“Bring Back Boring Banks,” Jan. 4).

The lure of profit is why banks take on risk in the first place. But the specter of loss encourages them to be prudent about it. When governments remove losses from the equation, banks lose any incentive to keep their risk-taking in check. Someone else will pick up the tab if a plan doesn’t work, so why not take a chance? Hence the financial crisis.

Capitalism is a system of both profit and loss. Wishing losses away would have consequences quite different from Bhidé’s good intentions.

RYAN YOUNG
Washingon, Jan. 4, 2012
The writer is a fellow at the Competitive Enterprise Institute.

5 Comments

Posted in Bailouts, Economics

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CEI Podcast for January 5, 2012: The Iowa Caucuses

Posted on January 5, 2012 | Comments Off on CEI Podcast for January 5, 2012: The Iowa Caucuses

Have a listen here.

Associate Director of Technology Policy Studies and Iowa native Ryan Radia takes a look at how the different strains of Republican voters are deciding on their party’s presidential nominee. In the years to come, Radia believes that the GOP will need to reinvent itself ideologically if it is to remain politically relevant.

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Posted in CEI Podcast, Elections, Political Animals

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