The Economic Way of Thinking

Is Osama bin Laden Dead? (And, Does bin Laden Matter?)

While surfing around InTrade to make sense out of when Tiger Woods will return to the PGA (odds are even that he'll return before April 30th of '10), I couldn't help but check on the Osama bin Laden "captured or neutralised" bet.  Here's the "captured by March '10" chart: 

A price of 5 is basically telling us there's a 5 percent chance of him being caught/neutralised.  When the range of time extends to June and September, the odds of him being caught/neutralized rise, which is no surprise.  The odds are not only higher when you go out in time, however, they are a lot higher!  The September '10 price, for instance, is around 15 (compared to 5 for March).

Great North Woods Conspiracy Theories

It's back to work this morning, so this post will conclude my series of hunting-related posts for 2009.  I, once again, struck out on getting a deer.  Nonetheless, it was a good time had by all members of my hunting party. 

Since our EWOT categories include "Conspiracies," here are a few conspiracy theories related to the Great North Woods that I encountered during my time at home:

(1) The Michigan wolf population is adversely affecting deer numbers.  According to Michigan's Department of Natural Resources, the severity of winter remains the biggest determinant of the deer herd; wolves play a fairly minimal role.  That said, I did see two sets of deer bones scattered around the woods this year.  (I had only seen two other sets in all of my time outdoors until this hunting season). 

(2) The crew I travel with in the UP insist that cougars roam the woods of Michigan.  Here's an old WSJ story about the cougar conspiracy that suggests otherwise.  

(3) As people with a natural libertarian streak, my hunting buddies also have tremendous skepticism of Michigan's Department of Natural Resources.  Each year the DNR provides an estimate of the deer herd and projects fairly rosy scenarios for the deer harvest.  My boys insist that the estimates are consistently higher than reality because high estimates help the DNR get more money from the state and encourage tourism to Michigan.  Does this sound like an appropriate public choice model of the DNR? 

(4) There were no Bigfoot sightings. 

More Kohl On The Fire

Why in the world should the U.S. Senate examine text messaging rates?  Not only is this another violation of liberty and the rule of law; there is no economic basis to alter the pricing structure.  Excerpt:

6/16/09

WASHINGTON - U.S. Senator Herb Kohl examined today the state of competition in the cell phone industry and the causes of rising text message prices during a Congressional hearing in the Senate Judiciary Antitrust, Competition Policy and Consumer Rights subcommittee.  This hearing follows a sharp increase in the price of text messaging and will examine whether this is evidence of lack of competition in a market which has become more concentrated.  Four national carriers control over 90% of the cell phone market.  AT&T and Verizon combine to have a market share of  60%, and consumers’ choices have become more limited following multiple mergers. American consumers now pay more for wireless phone service than most other developed nations, an average of $506 per year in 2007.

Hogwash?

I love a good conspiracy theory as much as anyone.  For years, I believed the "grassy knoll" explanation of Kennedy's assassination.  The flag being blown on the moon also left me singing, "If you believe they put a man on the moon..."  And, I still cling to the theory that someone wants the Chicago Cubs to never win the World Series.

Some conspiracy theories are crazier than others, however.  The "controlled demolition" of the twin towers theory, for example, is absurd.  So, too, is the idea that the government is hiding the cure to cancer from us.

That brings me to my questions for readers: What are we to make of this recent conspiracy theory about the swine flu?  And, what conspiracy theory do you find most plausible?      

Coffee Shop Economics

Everybody's an economist.  The other day I overheard this at a coffee shop in Wisconsin:

"Yah, we can't produce ethanol at the current price.  Farmers need a price above three bucks a gallon before they can make a profit, you see.  Above three bucks, they make a profit.  Below three bucks, like it is today at one ninety six, they just can't do it.  That's why the gas companies are keeping the price below two bucks a gallon, to squeeze the ethanol producers and farmers out of the market."

"Dem sonbitches!"

Always a conspiracy.  It makes the rough-and-tumble market process easier to explain.  I kept my mouth shut, but I could've told them it has something to do with the price of oil falling from a high of over $100 a barrel to just breaking below $40 a barrel recently.

Gasoline Prices Continue to Fall

An anecdotal observation from so many people:  "Gas prices go up more quickly than they fall.  It happens every time."  (How many times have I heard this?)   "They're trying to keep us addicted. We will feel assured of a while.  Make new plans and commitments.  Once locked in, they'll jack up the prices again."

Well, this time the fall has been quick and also significant. If they're trying to keep us hooked, that emerges in the global market for oil and oil futures.  But do our conspiracy theorists know that the U.S. contribution to the global market is somewhere around an 8% share. So those who want to keep us "addicted" to gasoline must be all those outside contributers.  OPEC, I suppose. Or is it?

Look at the commodity futures market.  I suppose those in power are also trying to keep us addicted to the S&P 500 stocks, corn, wheat, beans, copper, lead, aluminum, zinc, gold, silver, and cattle feed.

I guess the conspiracy die-hards will now claim "That all makes sense to me." It gets tiring.