RE: The Median Voter Theorem and Adoption Law
Bryan, Why probably? John Samples Cato Institute -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]]On Behalf Of Bryan Caplan Sent: Tuesday, January 08, 2002 11:44 AM To: [EMAIL PROTECTED] Subject: Re: The Median Voter Theorem and Adoption Law Fred Foldvary wrote: --- Bryan Caplan [EMAIL PROTECTED] wrote: I'm highly dissatisfied with interest group explanations. Simple reason: Most of the policies traditionally blamed on interest groups are in fact *popular*. Adoption laws seem like a case where existing policies are not popular, though perhaps I'm wrong on that count. Cato's Policy Analysis 420 (Dec 12, 2001) studied voter initiatives and found that tax-and-expediture limitations passed by voters are more restrictive than such legislation by representatives, and they cause per-capita state spending to decrease. At least in this respect, the interests of the voters do not seem to coincide with the legislation by the reps. There is a huge and probably higher quality academic literature on this point. John Matsusaka for example finds that the effect of initiatives is pro-government before 1950 and anti-government after, or something to that effect. Also, it does not seem to me that if they knew about it, most voters would approve of agriculture subsidies and price supports. Why would the median voter want a higher price for sugar and subsidies for the owners of sugar beet farms? When I was a kid I remember my mom explaining why farm programs were a good idea while she was buying produce. I haven't seen polls on this exact point, but I strongly suspect a majority wants what we have. Why? They're interventionists across the board, why would they be any different here? -- Prof. Bryan Caplan Department of Economics George Mason University http://www.bcaplan.com [EMAIL PROTECTED] He was thinking that Prince Andrei was in error and did not see the true light, and that he, Pierre, ought to come to his aid, to enlighten and uplift him. But no sooner had he thought out what he should say and how to say it than he foresaw that Prince Andrei, with one word, a single argument, would discredit all his teachings, and he was afraid to begin, afraid to expose to possible ridicule what he cherished and held sacred. Leo Tolstoy, *War and Peace*
RE: books
"An eye for an eye and the whole world is blind" -Gandhi It strikes me that Gandhi was not a very good game theorist. John Samples Cato Institute
RE: Signaling
A marketing professional in book publishing adds: Maybe having friends, especially famous (in their fields) ones, sells books. A 1999 study of consumer behavior in buying books listed blurbs as the 7th most important factor in deciding to buy a book. (Number 4 was recommended by someone I know.) John -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]]On Behalf Of Bryan Caplan Sent: Monday, October 15, 2001 3:14 PM To: [EMAIL PROTECTED] Subject: Re: Signaling jsamples wrote: Book blurbs are those small endorsements of a book that appear on the jacket or in ads. They seem to be a way to sell the book to prospective purchasers by signaling that the book is worth more (or at least as much) as its cost. But how could blurbs do that? They are mostly written by friends of the author. If potential customers know that, they will quickly realize that the blurbers have strong reasons to lie to them about the book. After all, if a blurber says her friend's book is mediocre, she will pay a heavy price in interpersonal relations. The real signal, I'd say, is WHO writes your blurbs. If they are nobodies, then readers can infer that no one better would say anything nice about the book. The better your names, the the better you can expect the book to be. After all, smart and famous people don't hand their friendship out for free. In addition, many blurbs provide information about subject matter, not just praise. If 5 political science professors write your blurbs, that helps prospective readers decide if your book is up their alley. -- Prof. Bryan Caplan Department of Economics George Mason University http://www.bcaplan.com [EMAIL PROTECTED] Familiar as the voice of the mind is to each, the highest merit we ascribe to Moses, Plato, and Milton is, that they set at naught books and traditions, and spoke not what men but what *they* thought. A man should learn to detect and watch that gleam of light which flashes across his mind from within, more than the lustre of the firmament of bards and sages. --Ralph Waldo Emerson, Self-Reliance
RE: Airlines
I did forget to mention the loan guarantees. I believe they are in there, Bill, as part of the $15 billion. A lot of what the feds do now is guarantee loans; the aggregate numbers are quite striking. A young scholar in Yale's polisci department wrote a book on this a couple years ago. I need to take a look at that. The airlines case seems pretty tough to me in some ways. A lot of my colleagues here support the feds compensating the airlines for having closed the airports for four days. All other losses would be normal business risk. Yet, I note that most investment banks have departments doing country risk analysis and predicting the risk of events like expropriation and lesser interventions like closing the airports. Should we assume that investors in domestic companies don't take account of that risk? If they do, the share price prior to September 11 reflected that risk and the government subsidy after September 11 is simply a windfall to the owners of the airlines. It's also hard to argue, I think, that the government had a more accurate view of the risk of flying after September 11 than the insurers did for the usual reasons one prefers private choice over collective choice in risk assessment. The clear implication of that,however, is that the airlines should and would have been shut down until some private firm was willing to offer $1.5 billion in insurance for each flight (they did return to the market last week but after the government bailout so we don't know what would have happened without the Congressional action). Another implication of this would be that by intervening and obstensibly reducing the costs of the events of September 11 (bankruptcies, reduced economic activity and so on), the feds have made it marginally more likely that something like September 11 will happen again. John Samples Cato Institute -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]]On Behalf Of William Dickens Sent: Wednesday, September 26, 2001 3:53 PM To: [EMAIL PROTECTED] Subject: RE: Airlines Hi John, Is this all there was to the bailout? At least at one point there was talk of loan guarantees. Did they not make it into the final package? - - Bill [EMAIL PROTECTED] 09/26/01 02:37PM As I understand it, the government intervened to provide insurance for the airlines. Prior to September 11, each plane was insured for $1.5 billion. After September 11, insurance companies were willing to offer only about one-third of that sum for each plane. The market for risk would have shut down the airlines had the government not provided the insurance. Some part of the $15 billion bailout is that insurance (which the government is still providing for next couple of weeks or so). The insurance companies now say annual premiums for airlines will go up in the range of $1.5 to 3 billion. Leaders of some of the companies are now arguing that the federal government should pay part of those premiums. Just after September 11, airline executives estimated that the government shutdown of airports cost them $300 million each day for four days. They initially requested $24 billion in public assistance and settled for $15 billion. The National Journal reported that even K Street types were astonished by their chutzpah. John Samples Cato Institute
RE: More Guns, Less Crime?
-Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]]On Behalf Of I agree with you--I don't believe that public health bureaucrats will necessarily be more impartial. The point of Ropeik's article was that, initially, the EPA and the automobile industry each wasted millions of dollars funding studies that the other side would not accept as valid (precisely because, as you write, the automobile companies didn't trust the EPA bureaucrats' impartiality, and vice versa).So they agreed to jointly fund the Health Effects Institute to perform the studies. Neither side could then claim that the studies were skewed by ideological motivations. For this strategy to succeed, don't we have to assume that there are no principal-agent problems, that both funders could monitor the work and thus be tied to the results? How likely is the absence of principal-agent problems? John Samples Cato Institute
RE: More Guns, Less Crime?
Krugman's original attack on Cato et al. was remarkably anti-liberal (in the classical sense or specifically in the sense of supporting a marketplace in ideas). Krugman's underlying assumption (which, I think, Bill Dickens shares to some extent) was that there are two kinds of intellectuals writing about policy: objective scientists and biased ideologues. Krugman put himself in the former category. It so happened that everyone on the right went into the latter category. The purblind arrogance and self-righteousness of the distinction was astonishing, even by Washington standards. What made it anti-liberal was Krugman's assertion that the "ideologues" served no public purpose, that they should not exist. Keep that in mind the next time someone tells you that "liberals" are inclusive and appreciate diversity. Now to Bill Dickens's points: "Brookings is unique in having a large fraction of its budget come from income from its endowment. We are truly beholden to no one. Although we receive government contracts, corporate and individual donations, and foundation money, no source is essential. A far more valuable asset to us than any funding source is our reputation for independent research." Brookings may be independent, but endowment income is not the cause. Consider three examples of institutions that have independent incomes and are heavily partisan: the Century Foundation, the Rockefeller Foundation, and the Ford Foundation. There are many more throughout the political spectrum. (As an aside, it makes sense that endowment income produces shirking, not independence. Not true in Brookings's case but otherwise robust, I think). "Another thing. Although Brookings is sometimes called a "liberal" think tank, that label ignores a fair amount of diversity in our make-up. The last two presidents appointed at Brookings were Republicans, and the head of the foreign policy program now is a Republican. There are several Republican Senior Fellows including a former Republican congressman. Several members of the staff who have Democratic leanings have, none the less, served in Republican administrations (heck, I was invited to serve as a Senior Economist to Bush's (the last one) CEA twice)." This confuses diversity in partisanship with diversity in ideology. The world of think tanks and foundations is filled with liberal Republicans added to this or that to provide "balance." So this argument on its own proves nothing. However, I happen to think Dickens is partially correct here. The fact that Bob Crandall and Pietro Nivola have neither been punished nor fired for their views suggests that Brookings does tolerate a degree of diversity. Jim Reichley also worked at Brookings for years, and Jim is about as conservative as anyone I know. Still, Brookings has heavy partisans like E.J. Dionne on board now. Brookings was also quite liberal more or less up and down the line back in the days when the country was quite left. Why have they become more moderate? I once heard Charlie Schultz remark that he went into government twice (with LBJ and Carter) and when he left both times, inflation and unemployment had risen. Reality set in. In Brookings's case, the lessons learned were translated through the economics profession. Or at least that is my theory. "Further, the Brookings charter gives a very minimum of ideological guidance. Some people on this list might consider the institution's purpose of improving the operation of government ideological, but that's pretty broad guidance compared to the much narrower and less inclusive guidance in the charters of organizations like Cato, Heritage and AEI." On this point, see above: objective scientists versus biased ideologues. Funny how only organizations on the right are "much narrower and less inclusive." The whole discussion of guns and social research raises deep and interesting questions. I am rather skeptical that any organization that produces writing and research on public issues will be neutral about values or politics. Brookings's good government/vital center/establishmentarianism is a political position too, one that is all the more effective because it says it's not a political position at all. I think the more interesting question is how we make public judgments about research and writing on political issues. Duncan McRae once argued for a kind of review process for policy work similarly to scholarly review. That may be a high standard. However, I do think there is something like a review process in the policy community (which includes part of the university world). Of course, it's also possible that there is a review process where the final reviewers are members of Congress or other policymakers. John Samples Cato Institute
RE: Airline firms
This is interesting. What is the source of the monopoly power over the slots? How are the slots allocated? Second, absent that monopoly power and given the effects of competition, wouldn't we expect to see re-regulation of the industry to end the "anarchy" of the market? Perhaps even a Department of Aviation to go with the Department of Agriculture? John Samples Cato Institute -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]]On Behalf Of William Dickens Sent: Wednesday, January 17, 2001 8:36 AM To: [EMAIL PROTECTED] Subject: Re: Airline firms Since deregulation, start-ups come and go. Big airlines seem to survive on the basis of the monopoly power they derive from their terminal slots at major airports. Otherwise airlines might be the classic case of a declining cost industry with few barriers to entry making it impossible for anyone to stay in business for long since competition will tend to drive prices down to marginal cost total cost ... -- Bill Dickens
RE: USPS hires FED EX
Maybe it is just a step towards a more efficient delivery system. The agreement allows FedEx to do what it excels at (getting packages from one hub to another swiftly), and allows USPS to do what it does best (daily postal delivery - the last mile to your door). Absent competition, how do we know tht USPS does anything particularly well, save for preseving their monopoly through political activity? Is anyone else concerned about what would happen to the quality of mail delivery "if this restriction were eliminated"? FedEx, and companies like it, are not good at delivering parcels to rural areas far away from their hubs, and they are not good at this because the work does not pay. I like getting mail delivered to my door on a daily basis and am not at all sure I need five companies competing for that work. Imagine the postal monopoly were eliminated. Imagine that one effect of that would be much higher postal costs for people living in rural areas. This implies that people living in rural areas are receiving a (unknown) subsidy because of the monopoly. The question then must be asked: why do people living in rural areas (or people who "like getting mail delivered to my door on a daily basis") have a right to force others to pay the costs of that preference? Don't we as a society always want to internalize costs to consumers absent the well-known public good conditions? John Samples Cato Institute
RE: Query on Media
This morning's papers also brought this: "A survey of more than 35,000 Florida Panhandle registered voters conducted by the Republican Leadership Council found that 2,380 Bush supporters didn't vote in this election, citing the errant call." A straight extrapolation from this would suggest Bush lost over 17,000 voters in the Panhandle to the early call or about 6% of his overall total. I too find it hard to believe that ten minutes could make such a difference or that any effect of the early call would be skewed exclusively to potential Republican voters. I suspect we will find out more in the months to come. John Samples Cato Institute Washington, DC -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]]On Behalf Of William Dickens Sent: Friday, November 17, 2000 2:18 PM To: [EMAIL PROTECTED] Subject: Re: Query on Media Has anyone seen more of this analysis or any of the data? Unfortunately, more than a few Florida votes were also affected. An examination of past Republican presidential votes by county in Florida from 1988 to 2000 shows that while total votes declined, the Republican voting rate in the western panhandle was significantly suppressed relative to the non-Republican vote. The 4 percent greater reduction in Republican votes averages about 1,000 votes per county, 10,000 Republican votes for all 10 counties in the western Panhandle. This holds true even after accounting for the average differences in voting rates across counties as well as the changes in voting rates from one election to another. This conservative estimate of 10,000 votes is more than the any additional votes that Gore might pick up from the manual recounts in counties like Palm Beach, Boward, and Dade. I brought this up at lunch at Brookings today and the response from Tom Mann was incredulity. He claims that the polls were only open for another 10 minutes after the early call and wants to know how Lott thinks that it could have had that big an effect. -- Bill Dickens
RE: Teacher's income
So, are professors really underpaid? In general I think that when one hears complaints about people being underpaid it is because their earnings are low compared to what other people with similar credentials are being paid. In my experience most people don't think in terms of markets setting salaries. They think in terms of employers deciding what to pay and they think that employers can pretty much pay whatever they want. Pay is viewed as unfair if it doesn't reward the things that are supposed to be rewarded according to norms (talent, education, and experience). Economists have very different views of the reasons why people are paid for these things having to do with their scarcity and the cost of acquiring the characteristic. Our view would have little to do with fairness. On one level, I think many claims about "fairness" are just whining. I also think a society does less well than it might by rewarding whining. On a more exalted level, we have no consensus on the meaning and proper application of concepts like fairness or merit. We have a reasonable and objective way of determining a person's value to society. We have no such way to determine the fairness of their wages or general situation. The political process? I deny we can distinguish "fair outcomes" from "dead weight rent seeking." 2) Public schools do seem to set wages in a way which is typical of a price leader (quality adjusted pay is lower than the private sector unless there is a union). What is the evidence for this? Are there public schools without teachers unions? I find it hard to believe that this is true once parochial schools are included. Are there studies of wages in nonunion public schools and comparable private schools? Are professors underpaid? If one thinks that there is chronic excess supply this hardly seems arguable. The argument against this view is that there is also an oversupply of aspiring NBA players, but that doesn't mean that current NBA players aren't being paid the value of their marginal revenue product. Those who aspire may not be able to perform at the level of the incumbents. The NBA example would be relevant to my original post if the stars of one era were granted permanent employment. We would thus be enjoying the efforts of Bill Russell and Wilt Chamberlin (until he died). My original point was that we cannot know in universities that those who aspire may not be able to perform at the level of the incumbents because the incumbents have locked in their jobs and prevent any and all competition. My other point was that the chronic excess supply of PhDs grew out of the original monopoly. Freed from competition, tenured professors continued to admit and credential many more PhDs than the market could handle. Had there been a functioning market for professors, the number of new PhDs would have roughly matched the number of new jobs. In such a functioning market, the wages of professors would also be somewhat lower than than now. Thus tenured professors are overpaid. The market for nurses and teachers is largely local because of career co-location decisions while the market for Profs is national. The local nature of the nurse and teacher markets makes monopsonistic coordination possible (the Personnel director I talked to didn't take seriously the notion that high wages for nurses in her city would attract more nurses "They're all married and they can't move." even while she was willing to allow that there would be an increase in supply from "burnt out" nurses reentering the field). -- Bill Dickens Even if we grant the monopsony argument, I don't see how it could apply to universities which number in the thousands and compete in a national market. Wouldn't a monopsony be highly unstable? On the other hand, the supply side is clearly fixed. All of this raises three questions for me: 1. How do professors maintain their cartel? I remember reading a few years ago about a professor at Columbia who refused to accept tenure when it was offered. I don't recall that he was punished in any way. Are sanctions aimed largely at buyers? 2. Tenure protects an older generation from competition from a younger cohort. How does this fit into larger evolutionary theories? 3. Why have so few people on this list bothered to defend tenure? John Samples Cato Institute Washington, DC
RE: Teacher's income
Armchairs, Here's a question that puzzles me every now and then. People from all walks of life tend to complain that their salaries are (injustly) low. Ok, why not complain, right? I too have often noticed this. I have concluded that such complaints should carry no weight whatsoever. Here's why. Imagine that someone believes they are underpaid. If their belief is correct, they could seek another job and receive a higher salary. In my experience, the people who complain do not seek other jobs (or they do so unsuccessfully). I conclude their belief about being underpaid is false. Put another way, the complainers evaluate themselves according to their (self ascribed) "merit". Labor markets, on the other hand, evaluate them according to their value to others. Which evaluation should we trust? Someone who is the judge in their own case or an institution that assimilates the judgments of many individuals who have practical concerns in mind? Labor market policies should be based on value, not merit. But when I think of professors, particularly university faculty and --if you push me harder-- economics faculty, I just get wonder: Are they really being underpaid as they often complain? .. So, are professors really underpaid? (if such statement makes any sense at all). In general, we have good reason to believe that tenured colleague professors are overpaid. The labor market for college professors is cartelized by the practice of tenure. No holder of tenure ever has to compete for his or her position against an alternative. That's the micro side. The macro side of things has a lot to do with demography. The rapid expansion of universities in the 60s and 70s led to faculties being "tenured up" by about 1975. Programs continued to produce PhDs in large numbers thereafter. Predictably, political science - the field I am most familiar with - saw hundreds of applicants for many positions in the 80s and 90s. Had tenure not existed, this supply of new PhDs would have bid down the salaries of PhDs hired in the 60s and 70s. Long before that happened I suspect the number of new PhDs would have been reduced to roughly the number of new positions open. I am not certain about nontenured college professors. Their market seems pretty sticky to me. However, they are at least hypothetically open to competition. John Samples Washington, DC
RE: Xerox machines and book prices
I never understood the appeal of on-demand publishing for new titles. Getting a manuscript ready to become a book involves a lot of labor while the paper, printing, and binding account for less than twenty percent of total costs. The first copy of a scholarly book thus costs $30,000 and the second copy perhaps $5. Publishers spread their editing costs over the whole run which still implies a high price for the book if the run equals, say, 250. You can see actual market prices (i.e. san subsidy) for scholarly books in the catalogs of commercial publishers; $130-150 is the range. On demand printing makes virtually no difference for new titles. Out of print titles are different. Fixed costs are covered; the primary costs is manufacturing which in very small runs (say, 25-50) is about $15 per unit. In general, I would guess that the book industry probably loses money as a whole at times. Scholarly book publishing as a whole always loses money. John Samples Washington, DC -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]]On Behalf Of michael gilson de lemos Sent: Monday, September 11, 2000 8:45 PM To: [EMAIL PROTECTED] Subject: Re: Xerox machines and book prices Hmmm. What about on-demand publishing, which is JIT, controlled set-up costs and dependent on photocopying technology? Best Regards, MG
