Relative prices

by John Q on January 5, 2007

Obviously, I’m not the only one who gets annoyed by pieces pointing to purchases of consumer goods as evidence that rising inequality isn’t really a problem. As Henry says, this is a tired shtick that lots of us are sick of.

But, as an economist, it particularly annoys me when this claim is put forward by people who claim to understand markets. I’ve been going on about this for yearsand years.

The most important thing that happens in markets is that relative prices change. If prices change, but income and preferences don’t, what we expect is that people will consume more of the goods and services for which prices have fallen and less of those for which prices have risen. So, when Jeff Taylor tells us that

With price points dropping below the $1000 mark, high-end TVs are moving down-market fast with Wal-Mart leading the way.

we can all cheer this renewed verification of the Law of Demand. But, of course, this tells us precisely nothing about what’s happening to inequality.

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The Playstation Proof

by Henry Farrell on January 4, 2007

One of the more annoying libertarian shticks to us lefties is the “increasing poverty and inequality don’t matter because consumer spending is going Up! Up! UP! ! !” three card monte routine. I think it must surely have reached its apotheosis in this “failed November hack job on Edwards”:http://www.reason.com/news/show/116797.html by Jeff Taylor in _Reason Online_ which I didn’t see until Nick Gillespie linked to it today.

However, the slapstick of the Edwards misstep should not obscure the really big picture, the fatal flaw in his “Two Americas” spiel. Many thousands of Americans evidently have $600 to spend on a video game machine. What’s more, this Christmas is expected to usher in the year of the flat-panel. With price points dropping below the $1000 mark, high-end TVs are moving down-market fast with Wal-Mart leading the way. Contrary to the Edwards’ pitch that labor-hostile companies are leaving American workers destitute, somebody is making some money out there in America. More importantly, they are making it in many, many cases without a union card. This reality will very hard [sic] for union-funded Democrats like Edwards to ignore as the 2008 presidential campaign unfolds. Hewing to the union rules, clear evidence of prosperity, like perhaps a shortage of $600 game machines, will have to be swept out of the campaign.

It isn’t hard for me to believe that someone would make the hilariously cackleheaded argument that because “many thousands” can afford a Playstation 3, economic inequality is a non-issue; I see this kind of guff in the comment sections of blogs all the time. But it is rather surprising that it’s being published by a sometimes quite interesting website as a purportedly serious contribution to political debate.

(As an aside, Taylor also introduces us to the interesting sounding concept of ‘Pythonseque depravation one-upsmanship;’ a spelling error trifecta unless depravation is a portmanteau term indicating Taylor’s opinion of the moral qualities of those wicked enough to be poor. Someone really needs to be proofreading the contributions to Reason’s website a little better).

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Fire

by Jon Mandle on January 4, 2007

The Eastern Division of the American Philosophical Association had its annual meeting last week. This year it was in Washington, and for the second straight year I attended but went to exactly zero sessions – I was conducting interviews. But the real excitement was at 4:30 am on Saturday when the fire alarm went off in the hotel. I basically assumed somebody had pulled a switch in a drunken stupor, but my wife and I decided not to take the time to get our 6-year-old dressed, so we just wrapped her up in her sleeping bag and I carried her down the hall to the stairs. We definitely smelled something burning when we passed the seventh floor, and as we waited outside some people were saying that they had crawled through part of the hall on the seventh floor because the smoke was so thick. The rumor was that one woman was taken away by ambulance after breathing in smoke, but I didn’t see that.

After about an hour (I’m guessing – I didn’t have a watch), we were allowed to go into the ballroom where we waited for another hour before being allowed back into our rooms. On the ground floor, there was some water damage from the sprinklers on the seventh. On our way back to our room we peeked into the seventh floor where the smell of smoke was strong and several of the doors had been broken down. No word on how it started, but I’m sure grateful that the alarms and sprinklers worked.

Last spring I put up a post about Randy Cohen, the NY Times Magazine “ethicist”, and I quoted the following passage from his book: “real virtue lies not in heroically saving poor orphans from burning buildings but in steadfastly working for a world where orphans are not poor and buildings have decent fire codes.” Let’s hear it for decent fire codes.

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The Tipping Point

by Scott McLemee on January 4, 2007

warbler.jpg This YouTube video of our calico cat and a wind-up toy bird has had just over 9,000 hits. My wife initially put it up expecting that just a few friends would take a look. At some point, it went from a few dozen hits to several thousand. For the past couple of months, it has been poised to break the 10k barrier, but lost a lot of momentum somewhere along the way.

This is where you can help.

Besides, it seems like time finally to do my first CT post of 2007, and it was either this or something about the late Seymour Martin Lipset‘s place in the history of the Shermanite faction following its departure from the Workers Party. A tough decision. But I find that the video does not actually decrease my will to go on, so here it is.

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Ashes to ashes

by Kieran Healy on January 3, 2007

I have little interest in cricket, but — like snooker — it is enjoyable to watch because of its psychological element: you get to see grown men crushed psychologically without any violation of the Geneva Conventions. Though at the moment Australia are pushing it pretty close to a Human Rights Violation with England. Shane Warne got 71, this from the second-to-last man in the batting lineup. In the process he said to Paul Collingwood, “You got an MBE, right? For scoring seven at the Oval?” And now England are in. Over to Tom Fordyce and the BBC online commentary:

*1433: Eng 0-0* Right England – let’s see what you can do after that onslaught. …

*1439: Eng 4-0* McGrath opens the Aussie bowling for the last ever time in a Test. Writing those words has provided me with a small crumb of comfort. He beats Cook twice outside off, but the Essex tyro then cuts him tastily for four.

*1439: WICKET – Cook ct Gilchrist b Lee 4, Eng 4-1.* Oh no…

Chin up, Tom. It’ll all be over soon.

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A Ninja Pays Half My Rent

by Kieran Healy on January 3, 2007

Title says it all, really.

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Independent People

by Chris Bertram on January 2, 2007

I finished Halldor Laxness’s “Independent People”:http://www.amazon.com/exec/obidos/ASIN/1860467768/junius-20 a few weeks ago. It took me a very long time to read. Usually this is a sign that I’m not getting on with a book, but not in this case. Rather, Laxness’s prose is so rich, his descriptions are so compelling and his observations so unsettling, that I found it hard to read more than a few pages at a time without taking a break. Certainly it is the best book I’ve read all year, and maybe over the last five or so.

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New Year’s resolutions

by Ingrid Robeyns on January 2, 2007

Happy 2007! I wonder whether some marketing company did a survey of the top-5 of new year’s resolutions. Doing more excerise, stop smoking, losing weight, working less, spending more time with friends, perhaps? Apart from my resolution to finally get my act together and start writing the book that I’ve been wanting to write for the last 4 years, all my resolutions belong to the category of the ordinary and boring (alright, perhaps the book-resolution belongs to that category too).

Did you make any less boring good resolutions for 2007 ?

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Paint some music

by Eszter Hargittai on January 1, 2007

Since people seemed to enjoy this site, I thought the following might be of interest as well: Visual Acoustics.

Careful, the site resizes your browser, which has always been annoying, but is especially annoying in the age of browser tabs. You can get your window back in its original size, the site still works just fine.

[thanks]

Lentil soup for the New Year

by Eszter Hargittai on December 31, 2006

Apologies as this is too late for most of our readers outside of the Americas, but hopefully still in time for some. Below the fold is my blog entry from exactly four years ago. All the best for 2007!

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Das Leben der Anderen

by Chris Bertram on December 31, 2006

I’ve just finished watching “Das Leben der Anderen”:http://www.imdb.com/title/tt0405094/, which I was given on DVD for Christmas. It was a bit of a struggle, linguistically, and I missed a fair bit of dialogue, but it is a very powerful film which I strongly recommend. The setting is East Berlin in 1984 and the plot concerns the Stasi surveillance of a playwright and his lover. I won’t post more in the way of spoilers but I’ll just say that the movie gives a very strong impression of what it must be like to live in a police state and of the corrupting effects of dictatorship on watchers and those they watch. I had “a bit of a disagreement with Tyler Cowen”:http://www.marginalrevolution.com/marginalrevolution/2006/11/east_germany_ci.html recently about the former GDR, when he took issue with me for saying:

bq. the real problem with East Germany was not its comparative level of economic development or the level of health care its citizens could receive (rather good, actually). It was the fact that it was a police state where people were denied the basic liberties.

I have to say that’s an opinion that has been reinforced by the film: a (far) worse choice of fruit and vegetables is as nothing to the corrosive effects on the soul of a political tyranny. The film also constitutes a very concrete rebuttal of Volokh guest blogger Fernando Tesón’s “strange polemic against political art”:http://volokh.com/posts/1166215181.shtml . Art can contribute to political understanding by making vivid to people what a state of affairs is like in a way that no mere enumeration of facts can. The level of surveillance that citizens of the GDR were subject to is shocking, but it takes art to depict the effect of such a system on their inner lives.

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Let me get this straight

by Kieran Healy on December 29, 2006

So Nouri al-Maliki pardoned Saddam Hussein to promote national healing and move on, Gerald Ford is making one last appearance at the Apollo theater, and James Brown will shortly be buried at Arlington cemetery, his long reign of terror having come to an end at last. No, that’s not right. I’ll try again.

While I puzzle it out, go read “Josh Marshall”:http://www.talkingpointsmemo.com/archives/011729.php pre-emptively cutting through the bullshit that will pile up around the gallows this weekend:

bq. Convention dictates that we precede any discussion of this execution with the obligatory nod to Saddam’s treachery, bloodthirsty rule and tyranny. But enough of the cowardly chatter. This thing is a sham, of a piece with the whole corrupt, disastrous sham that the war and occupation have been. Bush administration officials are the ones who leak the news about the time of the execution. … This whole endeavor, from the very start, has been about taking tawdry, cheap acts and dressing them up in a papier-mache grandeur — phony victory celebrations, ersatz democratization, reconstruction headed up by toadies, con artists and grifters. … for its prime promoters and cheerleaders and now-dwindling body of defenders, the war and all its ideological and literary trappings have always been an exercise in moral-historical dress-up for a crew of folks whose times aren’t grand enough to live up to their own self-regard and whose imaginations are great enough to make up the difference. This is just more play-acting. … This is what we’re reduced to, what the president has reduced us to. This is the best we can do. Hang Saddam Hussein because there’s nothing else this president can get right. What do you figure this farce will look like 10, 30 or 50 years down the road? A signal of American power or weakness?

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Friday fun or frustration

by Eszter Hargittai on December 29, 2006

Time sink

If you haven’t seen the Grow Cube before then you are lucky and I do apologize for bringing it to your attention. I realize that it’s been around for a while, but some may have missed it. [No thanks to Marc Rittle for the link.]

If you don’t have hours to kill then a search for grow cube solution on your favorite search engine should do the trick. But I doubt you’ll appreciate it if you don’t spend at least a bit of time trying to figure out the solution on your own. No comment as to how much time.

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Answers on NYTimes.com

by Eszter Hargittai on December 29, 2006

Answers.com has got to be one of my most visited sites. (Yahoo! Answers is another, but I’ll save that for later.) It is the site that Google uses for definitions and I use it often for spell checks.* I guess I find it easier to type a word in the search bar, press return and then click on the “definition” link in the upper right corner of the search results page than to designate Answers as my search engine of choice and type in the word there. This may be, because subsequent use of the search bar would then require another click to switch back to another engine.

In any case, today after I finished reading an article (this one) on the NYTimes site, I noticed the following below the piece:

Tips
To find reference information about the words used in this article, hold down the ALT key and click on any word, phrase or name. A new window will open with a dictionary definition or encyclopedia entry.

So I placed my cursor on a word, pressed the ALT key and clicked with my mouse. Voila. A window popped up with information from Answers about the word. (I have a pop-up blocker and this still came up so it’s of a different variety. You are also given the option of having it come up in a separate tab or window in the browser.) Cool feature.

Alternatively, of course there is always the option of using the ConQuery extension on Firefox and adding the relevant Answers plugin from MyCroft. ConQuery is certainly my preferred way for locating addresses on Google Maps without having to retype them. But I like these little pop-up windows since they’re smaller, come up quickly and are easy to close.

[*] I have found that simply relying on the number of search results for a term is not a good indicator of correct spelling given the number of misspelled words out there.

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Sensitivity analysis

by John Q on December 27, 2006

One of the points on which economists generally agree on is that sensitivity analysis is a good thing. Broadly speaking, this means varying the (putatively) crucial parameters of a model and seeing what happens. If the results change a lot, the parameter justifies a closer look.

In the case of the Stern Review of the economics of global warming, sensitivity analysis quickly revelas that the crucial parameter is the pure rate of time preference. This is the extent to which we choose to discount future costs and benefits simply because they are in the future and (if they are far enough in the future) happening to different people and not ourselves. If like Stern, you choose a value near zero (just enough to account for the possibility that there will be no one around in the future, or at least no one in a position to care about our current choices on global warming), you reach the conclusion that immediate action to fix global warming is justified. If, like most of Stern’s critics you choose a rate of pure time preference like 3 per cent, implying that the welfare of people 90 years (roughly three generations) in the future counts for about one-sixteenth as much as the welfare of people alive today, you conclude that we should leave the problem to future generations.

So, responses to a Stern Review provide another kind of sensitivity analysis. If you don’t care (much) about future generations, you shouldn’t do anything (much) about global warming.

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