It’s Pareto optimal if you break the water pitcher

The New York Times:

Brian Canlis, a co-owner of his family-named restaurant, is also a client. He said he was fond of Mr. Price, but was more discomfited by his actions. Mr. Canlis is already worried about how to deal with Seattle’s new minimum wage, which rose to $11 an hour in April and is scheduled to reach $15 an hour for small businesses within five years. The pay raise at Gravity, Mr. Canlis told Mr. Price, “makes it harder for the rest of us.” Mr. Price winced. “It pains me to hear Brian Canlis say that,” he said later. “The last thing I would ever want to do is make a client feel uncomfortable.” But any plan that has the potential, as Mr. Price has put it, to “set the world on fire,” is bound to make some people squirm. Leah Brajcich, who oversees sales at Gravity, fielded complaints from several customers who accused her boss of communist or socialist sympathies that would drive up their own employees’ wages and others who felt it was a public relations stunt.

The Wealth of Nations

We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate. To violate this combination is everywhere a most unpopular action, and a sort of reproach to a master among his neighbours and equals.

There was a truly unprecedented riot in Singapore’s Little India neighborhood last night. (Video report from the BBC, Channel News Asia, Al Jazeera’s good report.) Our family just moved house, out to the wilds of Bukit Batok (a lovely apartment, actually, next to the Bukit Gombak MRT). Up till October, though, we were living right up the road from the spot where it took place, like 700m away; we would have been able to hear the yelling no question, and the bus exploding with what I imagine would have been rather startling ease. The riot started when a private bus, driven by a Singaporean, struck and killed an Indian worker while backing up. The bus driver was injured in the riot, and the bus itself destroyed completely. There is video of the windshield being smashed, and later footage of the bus completely aflame, suddenly punctuated by the gas tank bursting. Ambulances and, later, police cars (?!?!?! there aren’t enough interrobangs to express my feelings about typing this sentence) were also turned over and torched. A number of policemen were injured in the riot, as were some rioters, but the police never fired on the crowd, and got things under control within two hours, and happily no one else died. The cops were able to get there in a hurry because the Tanglin Police Post (bigger than a station, and more important) is about 500m away. They’ve had a big photo on one of their recruiting ads for ages, on a banner on the side of the building, that shows a bunch of ethnically diverse police officers armed with riot gear and huge plastic shields. I used to think, whenever I rode past in the taxi, so exhausted from work and in terrible pain, at the end of a thirty minute drive, with my head fallen to one side and my cheekbone pressed flat on the glass like skinless chicken breast against the cold plastic in the butcher’s section, “well, they ain’t never going to get the chance to do that.”
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So, you’re a controller for a municipal trolley system with a perfect safety record. You’ve just been alerted that one of your tracks, serving a community of 5000 people has suffered unexpected damage which could cause a trolley car accident involving fatalities among philosophers. You have no budget allowance for this, so the only way of fixing the line is to abandon planned maintenance of another line, serving 1000 people, which would then have to be closed until more funds become available. Presumably, in these circumstances, most people will decide to fix the more important line.

Now, we change the situation. You no longer control the funds for the other line, which are within the jurisdiction of your colleague the Fat Controller, so named for obvious reasons. If you draw management attention to his obesity problem, HR will force him to take leave until he can get his weight within acceptable limits. You will then be given temporary control over his line and the associated budget, which you can divert to fixing the more important line.

What should you do?

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bq. And so, in yet another triumph, the market mechanism has allocated a scarce resource, viz., the turkey, to its most efficient use, viz., being turned into artificial shit. What makes this the most efficient use of the scarce resource? Why, simply that it goes to the user who will pay the highest price for it.

“More here from Cosma”:http://cscs.umich.edu/~crshalizi/weblog/841.html.

A little while ago, my son pointed me to a news item in a periodical called The Onion, reporting Republican opposition to an Obama proposal to protect the earth against destruction by asteroid impact. The usual libertarian arguments were advanced, pointing out that everyone would be forced to pay for this protection, thereby undermining the incentive to act for themselves.

At the time, I was suspicious that this might be some sort of satirical gag[1]. But now I see the proposal being discussed, and rejected, at the very serious Volokh blog (H/T Paul Krugman and Matt Yglesias).

So, based on my extensive agnotological studies, let me make some predictions about some of the scientific claims we are likely to see advanced (by the same people, but at different times), once the debate over Obama’s socialist plan hots up.
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I congratulate journalist Megan McArdle for having the good fortune to encounter such a talkative fellow passenger on the D.C. bus the other day.

Yesterday, I rode the bus for the first time from the stop near my house, and ended up chatting with a lifelong neighborhood resident who has just moved to Arizona, and was back visiting family. We talked about the vagaries of the city bus system, and then after a pause, he said, “You know, you may have heard us talking about you people, how we don’t want you here. A lot of people are saying you all are taking the city from us. Way I feel is, you don’t own a city.” He paused and looked around the admittedly somewhat seedy street corner. “Besides, look what we did with it. We had it for forty years, and look what we did with it!”

He’s a little off, because I think black control of Washington D.C. officially occurred only in 1975 when Parliament’s “Chocolate City” was released.

Lemme horn in on Quiggin territory here. I just flew home to Singapore from New York and read about a third of Justin Fox’s The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street [amazon] on the flight. (You can view my takeoff here.) Verdict: it’s good! Chapter 1 contains a lively portrait of Irving Fisher. He was, I have learned, a boldly quantitative economic pioneer who pronounced in print just before the crash of ’29 “stock prices have reached what looks like a permanently high plateau.” He lost his personal fortune in the Great Depression. (So he’s a nice emblem for Fox’s book – quants come to practical grief when reality neglects to live up to ideal model standards.)

For his doctoral thesis [completed in 1893] he devised the most sophisticated mathematical treatment yet of economic equilibrium, and he also designed and built a contraption of interconnected water-filled cisterns that he described as “the physical analogue of the ideal economic market.” Many decades later, economist Paul Samuelson judged this work to be “the greatest doctoral dissertation in economics ever writter.” It launched Fisher into a leading role among the world’s still-sparse ranks of mathematical economists. (10)

I want to hear more about his bold, pre-20th Century design for a compucistern system. [click to continue…]

We aren’t up to Part II of Cohen’s Rescuing Justice and Equality, but I’m going to jump the gun. There’s this bit about something from Amartya Sen – ‘his celebrated Prude/Lewd example’ – which I had never heard tell of. I’ll quote Cohen’s narration of the case:

There exists a pornographic book that might be read by one or other, or neither (but not both), of Prude and Lewd.

Let’s pause to admire that sentence. I think that is a great first sentence for a novel, or at least a Donald Barthelme story. (But I’m getting ahead of the story.) [click to continue…]