Economics and Alaska
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I'd wondered what the survival rate was
Brendan I. Koerner addresses the question, "Do Jet Stowaways Ever Survive?" in today's Slate.
"Source criticism" of the Lord of the Rings
Mark Shea traces the components of the Lord of the Rings back to their original sources, here: "The Lord of the Rings: A Source-Criticism Analysis". I learned about this from ProfessorBainbridge.com: "ProfessorBainbridge.com".
NAFTA and Mexico
Tyler Cowen at Marginal Revolution notes that the 10th Anniversary of the North American Free Trade Area (NAFTA) is coming up, and marks the anniversary with a posting on the benefits of the agreement for Mexico, here: "10th anniversary for NAFTA".
World trade negotiations since Cancun
Peter Gallagher summarized developments in Doha Round world trade negotiations since the failure of the Cancun talks in this December 9 blog posting: "Limp in October, too late in December ". The Doha Round is important since it is aimed at world wide relaxation of trade restrictions - as opposed to the partial and fragmented approach represented by regional agreements like the Central American Free Trade Area). Gallagher's column doesn't address efforts to create these regional agreements.
Gallagher sees the U.S. and Europe missing an opportunity for exercising leadership to get talks back on track in October.
The leadership of the G-21 group of developing country agricultural exporters (Brazil, Egypt, Argentina, South Africa ... although perhaps not India) were obviously shocked by the early termination of the Cancún meeting and were undoubtedly ready to re-engage on agriculture. They thought they had been close to a win at Cancún when the talks went belly-up over investment etc.
Despite behind-the-scenes pressure from Cairns Group members including Australia, however, neither the EU nor the USA was willing to 'take charge' of the talks after the collapse by offering a new way forward on key problem areas such as agricultural subsidies or industrial tariffs. Both USTR Zoellick and EU Commissioner Lamy retired to lick their wounds over the failure of their pre-Cancún strategizing and to shield themselves from the inevitable recriminations..."
Weakness in the current recovery
Paul Krugman points out that, while the economy has grown considerably recently, incomes from wages and salaries have lagged behind. When GDP grew at 8.2% in the third quarter, wage and salary income only grew by 0.8%. Job growth has also, so far, lagged behind "the roughly 150,000 jobs needed to keep up with a growing working-age population." Krugman's column in today's New York Times is here: "Our So-Called Boom".
Blinder, Yellen and Stiglitz
Yale Economist William Nordhaus reviews The Fabulous Decade: Macroeconomic Lessons from the 1990s by Alan S. Blinder and Janet L. Yellen, and The Roaring Nineties: A New History of the World's Most Prosperous Decade by Joseph E. Stiglitz in the New York Review of Books, here: "The Story of a Bubble". Both books are histories of Clinton era economic policy and performance.
I learned about this from Brad DeLong's web site. DeLong quotes from the article and provides some commentary, here: "The 1990s Boom". DeLong, in turn, learned about the article from Paul Kedrosky, here: "Economist vs. Economist: Dissecting the Roaring 90's".
Balance of Payments
Ed Lotterman introduces the concept of the "balance of payments," relates it to 19th Century U.S. growth, WWI finance, and the determinants of the Great Depression, and finally draws an implication for current U.S. policy - all in one newspaper column, here: "Real World Economics: Leaders need background in trade realities".
Trade protection can cost jobs
Daniel Drezner posts on a Chicago Tribune story about job losses in the U.S. hard candy industry caused by U.S. sugar import restrictions: "Protectionism never tasted so sour". The key point in the story: high U.S. sugar prices, associated with tariffs and quotas that keep U.S. sugar prices above world levels, are forcing U.S. hard candy producers to "outsource" production overseas.
But the story of the Mexican candy cane isn't your typical tale of American manufacturers chasing lower wages. It's more about the cost of sugar than the cost of labor...
In Chicago, for example, Brach's Confections plans to shut its plant in 2004, forcing about 1,000 workers out of their jobs. The Chicago area, the center of the U.S. confection business, has lost an estimated 3,000 candy-related jobs since 1998..."
Relevant here are some of Irwin's comments on sugar restrictions (and what we're getting for this sacrifice of candy jobs):
Drezner points to relaxed sugar restrictions in the new Central American Free Trade Agreement (CAFTA). Robert Tagorda links to Reuters stories which elaborate and discuss the domestic sugar producers' response and sources of influence: "Big Sugar".
Why are a small number of sugar producers able to get Americans to incur $900 million in expenses in order to transfer an additional one billion to them? Tagorda links to Josh Chafetz, who explains one theory: "THE COSTS OF PROTECTIONISM"
Chris Mooney, writing in the magazine Legal Affairs, traces the history of statutory sunset provisions, here: "A Short History of Sunsets".
Mooney says the modern debate over sunset provisions began in the late sixties with a proposal by political scientist Theodore Lowi to incorporate sunsets into laws creating new federal agencies. The idea was subsequently taken up by the government reform proponents in the 1970s. The hope was that sunset provisions would force people who favored programs and agencies to periodically bear the burden of proof of re-justification.
The sunset movement had more success in getting sunset provisions at the state than the federal level. However, sunset provisions did not generally have the results that had been expected by their proponents:
The threat of termination forced government bodies to analyze the effectiveness of their regulations, but agencies defended their turf fiercely against the sunset process. The more established the agency, the more powerful its inertia. Proving Lowi's original insight, special interests with an investment in the status quo worked to save the lives of benefactor agencies. Few state government bodies were actually sunsetted out of existence, and legislators viewed sunset reviews as one of their most demanding and least rewarding tasks.
The results of the sunset process were, consequently, dismal...."
Those interested in the history of sunset provisions might also be interested in this history of legislative riders: "Riders from Hell ".
I learned about the sunset article from Tyler Cowen at Marginal Revolution: "Against sunset laws".
King Island is a remote island in the northern Bering Sea. There used to be an Inupiat Eskimo village on it, Ukivok. Ukivok was perched precariously on a cliff overlooking the ocean. Ukivok was abandoned almost 40 years ago, but this picture from 1978 (some years after the village was abandoned) suggests what it was like:
Rie Munoz and her husband Juan went to King Island as teachers in 1951, apparently spending nine months. She's posted Juan's photos of life on the Island, here: "King Island".
During the winter the 150-200 residents of King Island were cut off from the rest of the world by sea ice. The year that Rie and her husband were on the island the last ship for the winter arrived, but was unable to drop off supplies and the priest for the Christmas celebration, because of the weather. The islanders carried a light boat made of walrus skin (an oomiak - see Juan's pictures) over the center of the island to the more protected side, in order to bring the priest and supplies in. Rie and Juneau author Jean Rogers later wrote and illustrated the story for a childrens' book: King Island Christmas. Subsequently the book was used as the basis for a musical play. The story behind the play may be found here: "How King Island Came to Be".
On Sunday the Juneau Empire carried an Associated Press story by Rachel D'Oro on an Oregon State University project to do archeological work on the island, and to collect oral history from people who used to live there: "Research team to study one of Alaska's ghost villages". How did people live on this island? Why did they leave? D'Oro says,
A century ago, about 200 people dwelled in walrus-skin homes tacked to the face of the cliffs. They hunted walrus, seal and seabirds and collected berries and plants. Every summer, they traveled by kayak and skin boat to the mainland 40 miles to the east, camping near Nome, where they sold ivory carvings.
Starting in the 1950s, fewer people returned to King Island. The 1960 U.S. Census counted only 49 residents. The 1970 census found none. King Island is among 16 federally recognized Native villages that were deserted or used as seasonal camps.
Today, many former King Island residents and their descendants live in Nome.
Kingston said several factors contributed to the demise of King Island. Pregnant women were choosing to stay in Nome, where there were doctors. Many of the men were drafted into the military during World War II. In the late 1940s and 1950s, tuberculosis killed some people and hospitalized others. And ultimately, as with other Alaska villages vacated in modern times, paying jobs were available in more accessible towns."
Medicare vote bribe accusation
Timothy Noah at Slate has been following the accusations that offers were made to bribe at least one congressman to vote for the recent Medicare legislation. His latest column (with a convenient set of links to earlier columns) is here: "Now It's a Scandal. New evidence that a House GOP leader offered a bribe.".
R. Jeffrey Smith also has a report in today's Washington Post, here: "GOP's Pressing Question on Medicare Vote. Did Some Go Too Far To Change a No to a Yes? ".
What to give for Christmas
Tyler Cowen's advice is based on the most up to date scientific results: "What are the best Christmas gifts?".
What's wrong with transparency?
Lawrence Solum explains "transparency" in this week's Legal Theory Lexicon: "Legal Theory Lexicon: Transparency". He explores, in a balanced way, the idea of transparency in politics, markets, and law. Because he is balanced, he explores both sides of the issue - and there are two sides of the issue. I just want to pull out one quote, because its something I've often thought as well. Transparency in government may be a good thing in general, but:
As my wife says, "Men are easily distracted."
The Economist reports on research by Margo Wilson and Martin Daly at McMaster University in Canada suggesting that the extent to which men discount future income compared to current income can be manipulated by showing them pictures of pretty women: "Hey, big spender. Men lose their fiscal prudence in the presence of attractive women".
Economists and psychologists have been exploring the notion of discounting the future for some time now. For most people, money today is worth more than the same amount in the future. But how about twice that in a few weeks' time? Or three times as much in a half year? It is already well-known that men discount the future more steeply than women and that certain types of people—addicts, for instance—discount more steeply than others. But it has mostly been taken for granted that the way a person discounts is a stable personality trait, and an arbitrary one....
The Economics of Christmas Lights
Virginia Postrel on the economics of Christmas lights, in this Reason Online column: "Light Unto the Wealth of Nations. How Christmas displays illuminate a strong economy ".
Lynne Kiesling posted twice on water privatization earlier this month.
The first post ("Water Privatization I: Ownership and Operation") looks at the issues of "owning, building and operating water systems" (particularly issues of natural monopoly in infrastructure and common property in the resource in the ground).
The second ("Water Privatization II: Pricing Promotes Efficiency and Conservation") looks at the benefits of using prices to ration this scarce resource.
The "Starbucks vs Subway" discussion
Professor Bainbridge asks "why are Subway stores owned by franchisees, while Starbucks stores are owned by the corporation", and applies transactions cost analysis to the problem, here: "The Starbucks v. Subway Puzzle" (Dec 15).
Other bloggers picked up and commented on the post. Bainbridge links to the commentary, here: "Starbucks v. Subway: A Roundup" (Dec 17).
Are OMB's new "peer review" proposals meant to gum up the regulatory works?
The Office of Management and Budget has proposed new guidelines for "peer review" of the science underlying proposed regulations. I posted on December 5, linking to a post by Tyler Cowen and the proposed guidelines, here: "Peer review of the science underlying regulations".
Kevin Drum posts on the topic today, linking to a Dan Kohn story on the proposed guidelines in the Baltimore Sun, here: " "PEER" REVIEW....More on the Bush administration's new "peer review" proposals in the Baltimore Sun today". The Sun's story focuses on criticism of the proposed guidelines:
But a new Bush administration proposal to increase peer review for many scientific studies has alarmed public health and environmental groups, as well as many scientists.
They call it a back-door attempt to stifle new health and environmental regulations by burying them under mountains of discussion and analysis. Critics contend the process is also designed to produce conclusions slanted toward industry..."
It helps to have a Senator on the Appropriations Committee
A spate of news stories about Alaska's senior senator show the potential value to a state, when one of its Senators chairs the Appropriations Committee. Ted Stevens has been senator from Alaska since 1968, and Chair of the Senate Appropriations Committee since 1997. The stories come in two types: some point to Stevens' success in bringing federal dollars to Alaska, others point to Stevens' personal relationships with Alaska business figures.
Money for Alaska
Mike Doogan's column in the Anchorage Daily News on December 9 illustrates the first type of story: "Cash cow not likely to run dry".
A new report by the University of Alaska's Institute for Social and Economic Research suggests that when Stevens is forced to give up his chairmanship at the end of next year, the amount of Stevens money could drop dramatically.
There is plenty of reason to worry. Federal spending is the single most important element of Alaska's economy. The new study says that federal spending is high -- more than $11,700 per person -- and that it supports about one-third of all jobs in Alaska.
According to a spending watchdog called the Tax Foundation, in the federal government's 2002 fiscal year, the average Alaskan received $1.91 in federal spending for every $1 in income taxes paid.
"This 'bang-per-buck'," the university study says, "is nearly twice the national average..." "
above the per capita national average in 2002
...From 1997 to 2002 (when Senator Stevens was chair), project grants per capita going to Alaska increased from about 225% to over 500% above the national average... Much of this increase in funding to Alaska is for the Indian Health Services Management Development Program. When we excluded the funding for this particular project from the calculations, the per capita project grant funding to Alaska increased from about 225% above the national average in 1997 to over 300% above the national average in 2002..."
This Anchorage Daily News story by Liz Ruskin describes Stevens use of legislative riders: "Stevens' way of lawmaking draws fans, critics. RIDERS: Spending bills make Alaska senator a formidable power.". A second story by Ruskin, from yesterday's Daily News, suggests that the use of riders may have backfired this year, contributing to the failure to pass an important appropriations bill: "Alaska funds may die with spending bill NO GO: Stevens says votes aren't there for $820 billion measure.".
A new theme
Recently some articles have begun to point to Stevens' involvement (and his family's involvement) in business ventures with persons who stand to gain from actions Stevens takes as Appropriations Committee Chair.
Liz Ruskin covered Stevens' relationship with Anchorage real estate developer John Rubini in this August Anchorage Daily News story: "Financial wizard works magic for Stevens. RUBINI: Investing with property developer has turned the senator's financial fortunes around". I posted an excerpt from this story in August, here: "Business and Politics".
Today's Los Angeles Times has an extremely detailed story by Chuck Neubauer and Richard T. Cooper along the same lines: "Senator's Way to Wealth Was Paved With Favors".
But outside the halls of the U.S. Senate, which is a world of personal wealth so rarified some call it "the Millionaires' Club," Sen. Ted Stevens (R-Alaska) had struggled financially.
Then, in 1997, he got serious about making money. And in almost no time, he too was a millionaire - thanks to investments with businessmen who received government contracts or other benefits with his help.
Added together, Stevens' new partnerships and investments provide a step-by-step guide to building a personal fortune - if you happen to be one of the country's most influential senators..."
The story, the Times reported, was the result of a six-month investigation into the Alaska Republican and illustrates "how lax ethics rules allow members of Congress and their families to profit from personal business dealings with special interests."
As the Anchorage Daily News reported in August, Stevens struggled financially for years, but became rich by investing with Anchorage real estate developer John Rubini, who turned Stevens' $50,000 investment in 1997 into an asset worth at least $750,000.
Both newspapers reported that while Rubini was multiplying Stevens' wealth, Stevens was helping Rubini secure a $450 million Defense Department contract to build and own housing on Elmendorf Air Force Base.
But the Times story provided new details about the Stevens family finances:..."
P.P.S The Juneau Empire repeated the L.A. Times story yesterday. Joel Gay reports Stevens' response in the Anchorage Daily News today: "Stevens calls investments ethical. RESPONSE: Senator asserts "I've never sought money from public office". Stevens' replied to the allegations before a press conference in Alaska. His argument is that, after 35 years in the Senate, he has had such a pervasive influence in the state that it would be difficult for him to invest in Alaska without doing business with someone affected by his actions.
"When (West Virginia Sen.) Jay Rockefeller votes on the floor of the Senate, he can't help but have some conflict with anything he votes on ... because he has such an enormous fortune. But that doesn't mean it's a conflict that violates the Senate ethics rules, or should even be something that we would worry about, in my opinion. And I didn't worry about my investment with John Rubini."
Stevens scoffed at some of the Times' assertions, such as supporting oil drilling in the Arctic National Wildlife Refuge as a favor for the tenant of the building he owns a small portion of. He supports ANWR drilling because it's right for Alaska, he said, not because it was right for ASRC.
"How can you get a person to represent this state who has no interest in the state for the future?" he asked. "They draw too thin a line on conflict of interest. That's why we have the disclosure, so people can see it and we can have stories like this and you can examine it yourself." "
Sometimes it's not easy to be an economist
Alex Tabarrok reports on the difficulty of ignoring sunk costs: "Behaving like an economist". (Revised 12-16-03)
Sorry for the lack of posts during the last week. I was in Anchorage on business and it was hard to find time to post. I'm back in Juneau now and I should start posting soon.
Pearl Harbor remembered
Pearl Harbor veteran Gilbert Goodwin shared his memories with social studies classes at the Dennis-Yarmouth Regional High School this past week. Marc Perry reports for the Cape Cod Times: "Pearl Harbor: Anguish lingers".
"You're in shock," Gilbert Goodwin said, describing that morning for a group of high school students in Yarmouth. "You tell yourself, 'My country doesn't let us get attacked like this.'"
It's the first time he has publicly told the whole story. The story of what happened to him at Pearl Harbor. The entire attack as he fought it, saw 23 shipmates die in it, and survived it...
When the bombs started falling, he said, he ran to a battle station way up on the port side of the bridge.
He was angry, he said, his voice quickening. Angry at the higher-ups for letting this happen, angry at the Japanese, angry at his ammunition runner who lay down paralyzed with fear.
He went to get the ammo himself. The box was locked. He broke the padlock, loaded the bullets and starting firing into the air.
"I can't say to you that I shot down any planes," Goodwin said. "The history books say we shot them down. But with everyone firing, you can't see, you don't know."
The firing continued, the shrapnel pouring down. Finally, it was quiet. They stayed at the guns all night.
Goodwin ended by reminding the students that he was their age when all this happened.
"I basically wanted to talk to you because you're 18 and you don't know what your destiny is," he said. "You hope it will be wonderful.
"But life isn't easy. Life is not easy." "
Medicare bill arm twisting
Robert Tagorda relays an anecdote about freshman congressman Tom Feeney's pre-vote conversation with the President: "A Round of Applause for Congressman Tom Feeney".
Over at Slate, Timothy Noah has been trying to find out if someone (and if so, who) might have tried to bribe Representative Nick Smith for his vote on the Medicare bill: (1) "Who Tried To Bribe Rep. Smith? Stop protecting him, Congressman.", and (2) "Nick Smith Recants. Did the pressure get to him?", (3) "Why Smith Can't Recant. They've got him on tape.".
When it is "contingency planning," and when is it "fraud"
Scheherazade at Stay of Execution has been reporting from a conference on bankruptcy law this week. In this post she reports on the ethical dilemma facing a company planning for bankruptcy, but continuing to accept unsecured credit: "Fraud".
Peer reivew of the science underlying regulations
The Office of Management and Budget (OMB) is proposing guidelines for peer review of the science underlying federal rulemaking. The proposed guidelines were published in the Federal Register on September 15, and a comment period runs until December 15. The proposed guidelines may be found here: Federal Guidelines. (68 FR 54023; 9/15/03)
Tyler Cowen has some cogent comments on how reviewer incentives could undercut the intent of these guidelines, here: "Peer review for new regulations?".
Steel tariffs lifted
The Bush Administration lifted its special steel tariffs today. William Branigin reports in the Washington Post, here: "Bush Administration Lifts Steel Tariffs". Jonathan Weisman surveys reactions in this story from tomorrow's Post: "Bush Rescinds Tariffs on Steel. Trade War Averted; Industry Angry". The Economist reports here: "Scrapped"
This AP story from tomorrow's New York Times ("Bush Steel Tariffs Move Avoids Trade War") spends time on the politics of the decision. The reaction of a number of Democratic candidates was interesting:
Gephardt said that ``rather than bow to the pressure of our trading partners,'' Bush should have negotiated further with the WTO. Dean said the tariff repeal ``is just another example of this administration playing politics with peoples' lives.'' "
In fact, what the W.T.O. accomplished when it forced the Bush White House into a rare 180-degree turn was exactly what its American champions envisioned and its opponents warned about during the first big globalization debates of the 1990's. Acting as the final arbiter of the world's trade rules, it reversed the politics of protectionism, making sure that nations that protect their markets — in the name of saving jobs — are forced to pay a steep price."
"I respect the president's decision to accommodate the ill-conceived WTO ruling against the safeguard measure and avoid stiff retaliatory tariffs," said Rep. Phil English (R-Pa). "However, this entire process reveals just how badly broken the WTO dispute-resolution mechanism really is." "
Brad DeLong focuses on the evolution of administration spin on the tariffs since the WTO decision, in a series of posts: (a) "The Evolution of Bush Steel PR"; (b) "Why Oh Why Can't We Have a Better Press Corps? Part CCCCLXXVIII" ;(c) "Why Can't the Bush Administration Ever Tell the Truth?".
The administration claimed it lifted the tariffs because they had done their job: "President's Statement on Steel" (which also links to the actual proclamation). DeLong claims that the administration is not telling the truth about the reason the tariffs are being lifted. I think he is right. On the other hand, the administration's proclamation isn't scapegoating foreign nations or the WTO. A nice contrast to Reps. Gephardt and English (above).
For background: I pulled together some links on the tariffs and the WTO decision in September, when the appeal was decided. The post is here: "What a revolting development this is!".
Where to get the best gossip
Kevin Drum at CalPundit says, for the best information, go to people at the top of the hierarchy, or the bottom. Don't go to people in the middle: "WHO TO LISTEN TO....".
Some notes on public choice
Tyler Cowen links to and comments on two related papers on public choice, here: "What do public choice economists believe?".
The first paper, by Jac Heckelman and Robert Whaples, reports on a survey of the opinions and conclusions of economists and political scientists specializing in public choice analysis.
The second paper, by Jun Ma surveys critiques of William Niskanen's theory of bureaucracy. Niskanen built a theory of bureaucratic behavior on the assumption that bureaucracies behaved as if they tried to maximize their budgets. Ma reviews the theory, and surveys theoretical critiques and empirical evidence.
Does it take more energy to make a gallon of ethanol than you get by burning it?
And does it really cost taxpayers $30 to generate each $1 of Archer Daniel Midlands ethanol profits? Cecil Adams looks at ethanol here: "What's the true story on ethanol?". I learned about this from Lynne Kiesling: "THE STRAIGHT DOPE ON ETHANOL". John Powers critiques assumptions underlying Adam's post in the comments to Kiesling's blog.
What does it mean: "to turn the other cheek"
Donald Sensing draws out some unexpected implications of Jesus' teaching, "Do not resist an evil person. If someone strikes you on the right cheek, turn to him the other also," here: "On turning the other cheek".
Is abortion an appropriate remedy for a cleft palate?
Colin Blackstock reports in the Guardian: "Curate's court action over abortion "
An unnamed woman chose to abort the foetus after finding out it would be born with a cleft lip and palate - although the pregnancy was past 24 weeks. After this time an abortion can only be carried out if there is a risk of serious handicap..."
Tariffs on bras
The Progressive Policy Institute notes that tariffs on bras raised almost as much money for the federal government in September as tariffs on steel. The $150 million in bar tariff revenue each year are essentially a tax on U.S. citizens. "Bluntly put, for the government, bra tariffs amount to a tax of 50 cents per American breast." Here: "Bra Tariffs Are 17 Percent in the United States and 10 Percent in Bolivia".
Rubin's probabilistic thinking
Brad DeLong reviews Robert Rubin's new book, here: "Why Was Bob Rubin Such a Good Public Servant?". He approaches the book by looking for traits that made Rubin effective as a presidential economic advisor and Secretary of the Treasury. One of these is Rubin's "probabilistic" thinking:
Are computerized "touch-screen" voting machines tamper resistant?
Paul Krugman raises disturbing questions about computerized voting machines in his column in today's New York Times: "Hack the Vote". The machines depend on software, there may have been security breaches with the software that powers the machines of at least one firm, there are people out there with the skills and incentives to hack these machines.
How Scheherazade studied in law school
Scheherazade, at Stay of Execution describes her study methods in law school, here "Study Tips".
What's the appropriate level for punitive damages in a law suit?
Judge Posner describes an economic rationale for punitive damages in an 11 page Oct 21 decision. Alex Tabarrok has a link and brief commentary in this Marginal Revolution posting: "Don't let the bed bugs bite". (Owners of a hotel in downtown Chicago were sued for "willful and wanton conduct" by guests bitten by bedbugs in a $100/day room).