The Economic Way of Thinking

The Work Of Elinor and Vincent Ostrom

Over at EconTalk, Russ Roberts has a splendid interview with Pete Boettke on the work of Elinor and Vincent Ostrom. 

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. 

Assorted Links

(1) I often ask students in Public Choice what would happen to policy if the franchise were extended to those under age 18.  Here's an Economist magazine article discussing why the franchise should be extended to prisoners.

(2) Are you a lurker?  I've been posting more Facebook updates to avoid being considered that kind of Facebooker! (HT: Anemone)

(3) My dog is the Nomar Garciaparra of labs.  That is, she has ticks like you wouldn't believe.  We're seriously considering giving this new collar, which was discussed in the Wall Street Journal's "Personal Journal" section today, a try. 

(4) One way of measuring the return on publicly funded stadiums. 

(5) Frank Jacobs discusses the excellent site, "Strange Maps" over at the Freakonomics blog. 

Onward And Upward

In one of the few notes I ever received from one of "my" professors, Jim Buchanan, he ended it by writing, "Onward and upward!" 

I know the following graph, which tracks average marginal tax rates over time, was NOT what Professor Buchanan had in mind when writing the above words to me:

HT: Greg Mankiw

Reefer Madness

In a recent exchange (see the comments), Dave and Pete discuss the probability of marijuana being legalized.  Dave first said he put the probability at less than 0.5 of marijuana being legalized in the next six years, and he then raised the probability to an even 0.5 after this news broke. 

As I read their exchange, I was tempted to bet Dave a nickel that marijuana won't be legalized in that time frame.  Even though I'm generally an optimist (I'm a Cubs fan after all!), I have little faith in America's puritanical impulse coming around to tolerate weed being legally smoked, and I have a hard time imagining reform overcoming the entrenched police force lobbies, who generally oppose marijuana legalization.

If you believe the Gallup polls, though, perhaps I should give a little more credit to Americans on the issue of marijuana legalization.  According to the most recent Gallup poll, Americans are higher than they've ever been when it comes to supporting marijuana legalization.  Here's a chart that accompanies the above story:

The Bots-Zim Contrast Sharpens

Botswana held elections--their 10th round of elections since independence--without incident.  The widely popular ruling party, the Botswana Democratic Party (BDP), maintained control of the government; they have been in control of government since Seretse Khama's rein in the independence period.  More here.

Meanwhile, things are continuing to fall apart in Zimbabwe.  (HT: Bob Subrick). 

For those interested, here's an old paper of mine (the final version came out in Constitutional Political Economy) with Subrick that discusses the relationship between politics and development in Botswana.  The story we tell is that the BDP has remained legitimate by respecting traditional institutions, providing essential public goods, and avoiding excessive military spending in the early years of independence.

This Is Your Democracy

I couldn't have said it any better: Bob Higgs on hatred as the basis of party politics.

Gimme Gitmo?

Many of our readers have probably seen the Jeff Daniels commercials promoting business investment in Michigan.  For a while cable news networks and business channels were saturated with the Michigan ads.  Many of the Michiganders I roll with scoffed at the ads and asked the practical question (in Yooper dialect), "At what cost are dem der ads being run?"  My peeps hated the way Michigan was being presented and couldn't believe this was the best idea Michigan's governor, Jennifer Granholm, could come up with for attracting business to Michigan.

The financial crisis of 2008 and the collapse of the US auto market has forced Michigan officials and Granholm to consider making deeper budgets cuts.  It's also forced Granholm to become more entrepreneurial about the state budget and think big about alternative uses of public resources.  In Standish, MI, for example, a prison is set to close on October 1st.  Rather than leave it vacant, officials are working with the federal government to bring jobs to MI by bringing Guantanamo detainees to town.  Many locals in Standish are strongly opposed to the idea out of principle; others worry that a federal prison, which has different job requirements, won't employ the Standish prison guards displaced by the closure.

WHAT WOULD YOU SACRIFICE FOR THE HEALTHCARE PLAN?

Forget for a moment whether or not the proposed plan would work.  Let's just consider financing the plan.  Would those in favor be willing to give up the budgets for the Department of Education, the Department of Agriculture, the Department of Labor, and so on -- shut them down -- and redirect those dollars to healthcare?

You see, it's not only a question of healthcare at what cost, but healthcare at whose cost? If bureaus such as these would have to be sacrificed, then at least some of "the" costs would become clear to the plan's supporters and their constituents.  Healthcare over education?  Healthcare over food and the farming tradition?  Healthcare over our great American labor force?  

Instead, the incentives within the political process encourage the costs to be dispersed in the form of higher taxes.  And that takes on the appearance of only shifting expenditures from the private to the public sector.  The "same money" will still be spent, we will be told, but on other (and more visible) projects.  The unseen will remain just that -- unacknowledged and ignored.  Countless entrepreneurial projects, and with them jobs, will be delayed, stifled, or abandoned, but how can we accurately measure that?  How can we convince non-economists, let alone politicians, that "the cost" of the emerging healthcare plan is much more systemic and complex than most of us could only imagine?  And even if we could do so in some vague sense, would that persuade them to reconsider the tradeoff?

 

The Premium I Place on Entertainment Value

I never reward entertaining answers on exams with extra points, but I sure do enjoy the break they provide from the monotony of grading.  Here are two of my favorite answers from my Public Choice exam:

"Oh s*%t.  I'm out of time."

"Who is John Galt?"

Finally, here's a swine flu/H1N1 question I asked and an excerpt from the most entertaining answer I read:

Question: "In clear and concise language, explain the market failure arguments for why government--maybe even a world government--needs to be involved in the swine flu pandemic.  After explaining clearly the role for government in this crisis, now explain how the market could 'solve' the swine flu problem." 

Answer: "Well, I suppose if the flu got bad enough, entrepreneurs would set up little bubble communities.  They would regulate who could enter and exit the communities.  You would pay higher prices to go to the best communities.  Their success would depend on them being effective in keeping the flu out.  Any flu cases at all would be really bad for business...It's kind of like what that one lecturer was saying about the porn industry--STDs and AIDS are bad for business, so the industry takes extra steps to be clean." 

Promises, Promises

One of my best Economics students, Lauren Fuller, is learning a basic principle of political economy the hard way: when dealing with the devil, assume the rules are always flexible and subject to change.  Here's the Macon Telegraph story describing the promise that has been broken by Georgia legislators.

In a letter to her public officials that she showed me, Lauren acknowledges the rationale for dropping valedictorian scholarships: they supposedly overlap with HOPE scholarship support.  As a good pre-law student, she then makes note of the inconsistency in this rationale: while cutting valedictorian scholarships, the state of Georgia is doubling the North Georgia Military Scholarship.  This scholarship, of course, overlaps with North Georgia ROTC grants, but the state has expressed no concern about the overlap there. 

Keep fighting the good fight, Lauren.  You're learning a good lesson in political economy and also preparing yourself for your first semester of "Contracts." 

Would Experiencing War Make Policy More Anti-War?

One of my favorite front-men, Billie Joe Armstrong, thinks so in this Rolling Stone magazine interview from 2007.  According to Armstrong, "There's no draft — that's why none of the kids give a shit. They'd rather watch videos on YouTube." 

While talking with Bruce Yandle at dinner the other night, he talked about former Illinois politician, Paul H. Douglas (of Cobb-Douglas fame).  According to Bruce, Douglas was such a principled man that he went off to fight in the Pacific at the age of 50.  It was Douglas's belief that if politicians were to send the troops into war, they should be willing to walk arm in arm with the troops as well. 

Re-reading the old Armstrong interview and talking with Yandle got me thinking: Would forcing our politicians to internalize the costs of their decisions produce better policy?  If so, besides sending some of our politicians off to Iraq, how would we go about internalizing some of their other bad decisions? 

Come on Elaine

One of our more controversial Macon City Council members, Elaine Lucas, is at it again.  This time she's seeking to name Barack Obama an honorary member of Macon City Council!

I try not to think about the time, energy, and taxpayer dollars being wasted on this issue.  Instead, when I see government of any level tied up with the trivial, I try to recall a wonderful Jim Bennett comment during my first year of grad school at GMU (I'm paraphrasing): "The most important contributing factor to the Clinton boom of the 1990s was...Monica Lewinsky.  Think of all of the harmful legislation not created during the Starr investigation and Clinton impeachment proceedings." 

Weeks later, I remember Doc Bennett also making the argument that the Capitol building should be randomly relocated to a new place in the US every two years.

EWOT Quote Of The Moment

The logic of the situation within democratic political processes is to concentrate benefits on the well-organized and well-informed few who gain the most and disperse the costs on the unorganized and ill-informed mass who have little to gain individually (p. 269).

Economists in Government: Heroes or Villains?

Here are four quotes from economists about economists:  

“…the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood.  Indeed the world is ruled by little else.  Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.” (John Maynard Keynes, The General Theory, 1936) 

“…as pseudo-scientists, they [economists] don’t follow the traditions of stating the truth or being analytical but instead just want to influence the outcome, particularly government ones.”  (Alfred Malabre, Lost Prophets, 1995) 

“the role of the economist [at the CEA] is a stop gap—keep them [other policymaking agencies] from doing something completely dumb, just completely dumb.”  (Robert Tollison in William Allen, “Economics, Economists, and Economic Policy,” HOPE 1977) 

Economists in government are “advocates of efficiency.” (Robert Nelson, “The Economics Profession and the Making of Public Policy, JEL 1987) 

I like the Tollison quote a lot.  Thinking about the relationship between economists in government and government policy sure seems like a fruitful line of research these days.  In fact, I’ve been rereading Herb Stein essays that discuss his time in the Nixon administration.   

The quotes come from one of my most recent papers (with Skip Mounts and Bill Boyes), "The Influence of Economists on Public Attitudes Towards Government" (not the final version but close enough).  The piece appeared in the Fall 2008 issue of The American Economist.