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Does Studying Economics Make People More Conservative?

For Lisa:

An Introductory Economics student asks Greg Mankiw, “Does Econ Make People More Conservative?”

The student asks:

My school offers two main elective history courses for seniors: Government and Economics. Due to scheduling limitations, not many kids are able to take both. I’ve noticed something interesting as the year has progressed. The students who are taking the government course are increasingly endorsing leftist ideologies while the economics students are becoming increasingly right wing. For instance, my school’s paper recently ran an editorial that ‘complained’ that too many of Lawrenceville’s finest were going into investment banking, and not into seemingly ‘socially beneficial’ careers. What is your view on government intervention on economic equality and the like? Do all economics students show republican (or right of center) tendencies?

To my surprise, Mankiw actually says “I believe the answer is, to some degree, yes“, and he outlines three reasons:

First, in some cases, students start off with utopian views of public policy, where a benevolent government can fix all problems. One of the first lessons of economics is that life is full of tradeoffs. That insight, completely absorbed, makes many utopian visions less attractive. Once you recognize, for example, that there is a tradeoff between equality and efficiency, as economist Arthur Okun famously noted, many public policy decisions become harder.

Second, some of the striking insights of economics make one more respectful of the market as a mechanism for coordinating a society. Because market participants are motivated by self-interest, a person might naturally be suspect of market-based societies. But after learning about the gains from trade, the invisible hand, and the efficiency of market equilibrium, one starts to approach the market with a degree of admiration and, indeed, awe.

Third, the study of actual public policy makes students recognize that political reality often deviates from their idealistic hopes. Much income redistribution, for example, is aimed not toward the needy but toward those with political clout.

And of course:

Nonetheless, studying economics does not by itself determine one’s political ideology. I know good economists who are distinctly right of center and good economists who are distinctly left of center. In my department at Harvard, I would guess that Democrats outnumber Republicans among the faculty (although there is surely more political balance in the economics department than in most other departments at the university).

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Irony of Ironies

Let’s say you’re responsible for building a fence across the US-Mexico border. Why do you do it? Well, maybe you’re concerned about maintaining national security and demanding that all people within the borders obey the law. Maybe you want to prevent “the jobs of hard-working Americans from going to illegals”? Regardless of your reasons, you’d assume that the fence-building operation is a strictly anti-immigrant one — after all, the purpose is to keep those illegals on the other side.

Lo’ and behold, a Border Fence Firm Snared for Hiring Illegal Workers.

And what does the lawyer, have to say? NPR news quotes:

Golden State Fence’s attorney, Richard Hirsch, admits his client broke the law. But he says the case proves that construction companies need a guest-worker program.

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The Sushi Seal of Approval

Tired of going to crappy Japanese places? Well, worry no longer. The Japanese government plans to award official seals of approval to overseas restaurants serving Japanese food that they deem of sufficient quality and authenticity (ie not Asian fusion, not a Korean/Japanese restaurant, not places that are actually Chinese or Filipino but say they serve Japanese, etc.)

From the Washington Post:

A fast-growing list of gastronomic indignities — from sham sake in Paris to shoddy sashimi in Bangkok — has prompted Japanese authorities to launch a counterattack in defense of this nation’s celebrated food culture. With restaurants around the globe describing themselves as Japanese while actually serving food that is Asian fusion, or just plain bad, the government here announced a plan this month to offer official seals of approval to overseas eateries deemed to be “pure Japanese.”

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Meljean Brook

I have a friend (we met on an internet discussion board, I promise — it’s not as strange as it sounds) who is now a published author. She writes … material that probably isn’t for everyone (think fantasy romance — ie vampires, angels, etc), but she is a very talented writer and a hilarious blogger and if you’ve ever wanted to try out that genre or if you’re looking for something new, try a book by Meljean Brook.

You can see her in the current issue of Publisher’s Weekly.

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Are the Eldest Siblings the Smartest?

If you do a survey of students at an elite college, you’ll likely see a strong overrepresentation by those who are the eldest sibling in their family.

Does that mean that the eldest siblings are the smarter ones? As much as I wish that were true (I am an eldest son), this post from EconLog points out why this is faulty logic:

If you regress real income on birth order, you get the same pattern as my wife’s law school class. The first-born averages $1900 more than the second-born, who averages $1900 more than the third-born, and so on. However, if you regress real income on birth order AND family size, you get a totally different picture. Birth order makes essentially no difference (in fact, the sign reverses), but average income falls by about $2400/child in your family. First-born only child? You’ll make more than average. First child in a big family? You’ll do no better than the fifth-born child – maybe a little worse!

Does this show that big families hurt incomes? Possibly, but the simpler story is more plausible: Poor people have more kids, and kids of poor people tend to be poor themselves.

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Lex Luthor and Joker in Top 10 Favorite Villains

So says the Big Bad Read poll. Magneto just missed the cutoff at #11.

The Top 20:
1. Lord Voldemort, Harry Potter (J.K. Rowling)
2. Sauron, The Lord of the Rings (J.R.R. Tolkien)
3. Mrs. Coulter, His Dark Materials (Philip Pullman)
4. Lex Luthor, Superman (DC Comics)
5. The Joker, Batman (DC Comics)
6. Count Olaf, A Series of Unfortunate Events (Lemony Snicket)
7. The Other Mother, Coraline (Neil Gaiman)
8. The White Witch, The Lion, The Witch and the Wardrobe (C.S. Lewis)
9. Dracula, Dracula (Bram Stoker)
10. Artemis Fowl, Artemis Fowl (Eoin Colfer)
11. Magneto, X-Men (Marvel Comics)
12. Prof. Moriarty, Sherlock Holmes (Arthur Conan Doyle)
13. Zaphod Beeblebrox, Hitchhiker’s Guide to the Galaxy (Douglas Adams)
14. Capt. Hook, Peter Pan (J.M. Barrie)
15. Napoleon the Pig, Animal Farm (George Orwell)
16. Heathcliff, Wuthering Heights (Emily Bronte)
17. Miss Trunchbull, Matilda (Roald Dahl)
18. Cruella de Vil, 101 Dalmations (Dodie Smith)
19. The Wicked Witch of the West, The Wonderful Wizard of Oz (L. Frank Baum)
20. The Grinch, How the Grinch Stole Christmas (Dr. Seuss)

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Little Fighter 2

This is the most addictive game ever. Cute little bitmaps. With ninja powers. Duking it out — up to 8-character deathmatch. FREEWARE. It doesn’t get much better (or worse, if you shouldn’t be wasting time) than this.

LITTLE FIGHTER 2

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Are Movie Stars Worth It?

Another correlation doesn’t equate to causation bit: are big movie stars worth employing for a movie’s bottom line?There’s no doubt that the big stars make a ton, something studied in a field called “superstar economics” which was first coined by Sherman Rosen, a UChicago economist who argued that in a world that is increasingly dependent on technology, those who are mediocre workers are seeing their salaries go down while those who are exceptional and superb, or superstars, are seeing their salaries skyrocket. This New York Times article elaborates on the effect in the music industry:

In a study about ticket prices for concerts, the Princeton economist Alan B. Krueger found that between 1983 and 2003 . . . the share of concert revenue taken by the top 5 percent of artists increased to 84 percent, from 62 percent.

But, just because superstars make a lot more doesn’t mean its worth it to employ them — after all, is Brad Pitt really worth his asking price?

On average, movies that have big names starring in them make more money at the box office than movies that do not.

But is it really the stars’ presence that does this? Is it more that big-name stars just tend to be cast in movies that were already going to be big?

One study by Arthur S. De Vany found that, when controlling for factors like budget, rating, the number of theaters the film opened in, and whether a given movie is a sequel or not, that:

Looking across a sample of more than 2,000 movies exhibited between 1985 and 1996, they found that only seven actors and actresses — Tom Hanks, Michelle Pfeiffer, Sandra Bullock, Jodie Foster, Jim Carrey, Barbra Streisand and Robin Williams — had a positive impact on the box office, mostly in the first few weeks of a film’s release. In the same study, two directors, Steven Spielberg and Oliver Stone also pushed up a movie’s revenue. But Winona Ryder, Sharon Stone and Val Kilmer were associated with a smaller box-office revenue. No other star had any statistically significant impact at all.

Thus, turning the original causality relationship (that stars make a movie) on its head.

This begs the question: if the returns to hiring stars are so low, why bother? Why hasn’t capitalism figured this out? One suggestion by Jehoshua Eliashberg, a Wharton professor:

“Movie industry executives keep this perception that stardom is a formula for success, but they don’t measure it . . . They resist using analytical methods for all sorts of reasons, from being uncomfortable with numbers to the argument that this is a creative industry and not a business.”

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Make Me Popular

Ever feel like a total loser because your friends get called all the time on their cell phones — while no one has (or even wants) yours?Well, be distraught no more! The technological solution for every socially inadequate person has just arrived. Introducing, the Popularity Dialer — a revolutionary new service designed to call your number at a pre-determined time so that you can feel hip and wanted — even if you’re not.

It’s ALMOST as good as having someone real call you, and in this new-modern-era world, who needs real contact, right?

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My Physics Professor is Rather Quirky

First semester, I had a physics class with Professor Melissa Franklin (the first female physicist to receive tenure at Harvard) who taught a class on Life at Low Reynold’s Number, or essentially life on the micro-scale as low Reynold’s number describes what happens when your mass is small in scale relative to viscosity (ie imagine trying to swim in a vat of tar and that gives you somewhat of an approximation of what your cells and bacteria experience). She was a very quirky professor, prone to making jokes about her terrible French accent and was very laid back — it helped that our class was a very small size, and while the class could be a little disorganized, the interesting subject material and the fact that the class was so small let her get to know us and made the class a lot of fun.

Well, courtesy of this link that Eric provided for me, I discovered just how quirky she is. While I had known she had been a successful high-energy physicist, I had no idea that:

The story behind this seems to be that particle theorist John Ellis and experimentalist Melissa Franklin were playing darts one evening at CERN in 1977, and a bet was made that would require Ellis to insert the word “penguin” somehow into his next research paper if he lost. He did lose, and was having a lot of trouble working out how he would do this. Finally, ‘the answer came to him when one evening, leaving CERN, he dropped by to visit some friends where he smoked an illegal substance’. While working on his paper later that night ‘in a moment of revelation he saw that the diagrams looked like penguins’.

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Scientist Photos

From In the Pipeline, a very amusing (and also very true) request on behalf of all scientists to all professional photographers responsible for taking photos of scientists:

After seeing a recent in-house promotional brochure, I’d like to issue a brief request on behalf of my fellow researchers. This is addressed to all professional photographers: please, no more colored spotlights.

I know that you see this as a deficiency, but scientists do not work with purple radiance coming from the walls behind them. Not if we can help it, we don’t, and if we notice that sort of thing going on, we head for the exits. In the same manner, our instruments do not, regrettably, emit orange glows that light our faces up from beneath, not for the most part, and if they start doing that we generally don’t bend closer so as to emphasize the thoughtful contours of our faces. When we hold up Erlenmeyer flasks to eye level to see the future of research in them, which we try not to do too often because we usually don’t want to know, rarely is this accompanied by an eerie red light coming from the general direction of our pockets. It’s a bad sign when that happens, actually.

I know that your photos have lots more zing and pop the way you do them. And I’m sorry, for you and for the art department, that our labs are all well lit (with boring old fluorescent lights, yet), and that we all wear plain white lab coats (which tend to take over the picture), and that our instrument housings are mostly beige and blue and white. It would be a lot easier on you guys if these things weren’t so.

But that’s how it is. And when you get right down to it, you’re actually us a disservice by trying to pretend that there’s all sorts of dramatic stuff going on, that discoveries are happening every single minute of the day and that they’re accompanied by dawn-of-a-new-era lighting and sound effects. We’d rather that people didn’t get those ideas, because the really big discoveries aren’t like that at all. It doesn’t make for much of a cover shot, but if one of us ever does manage to change the world, it’ll start with a puzzled glance at a computer screen, or a raised eyebrow while looking at a piece of paper. Instead of getting noisier, everything will get a lot quieter. And if there are any purple spotlights to be seen, we won’t even notice them. . .

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How Sad…

58% of the US adult population never reads another book after high school.

42% of college graduates never read another book after college.

80% of US families did not buy or read a book last year.

70% of US adults have not been in a bookstore in the last five years.

57% of new books are not read to completion.
Jerrold Jenkins.

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How Inflation Brought Down a Government

I think this is a great piece on how not being smart with your own money supply can cause untold pain and suffering not only to the people that you’ve just seignoraged into poverty, but to yourself — when said people revolt and break away and turn you over to NATO forces. I’ve also underlined, bolded, and italicized a sentence which explains exactly what 9 digit inflation (in a single month) actually means.

Inflation Nation
Steve H. Hanke is a professor of Applied Economics at the Johns Hopkins University in Baltimore.
On Sunday, voters in Montenegro turned out in record numbers and gave a collective “thumbs down” to their republic’s loose union with Serbia. Although the final curtain has not yet been drawn on this Balkan drama, when it is, what remains of the former Yugoslavia will disappear, and, after 88 years, Montenegro will once again be independent.

Montenegro’s drive for independence is as much a story about money as it is about Balkan politics. Unfortunately, the money side of the story has tumbled down what George Orwell called a “memory hole.”

So what’s the story? From 1971 through 1991, Yugoslavia’s annualized inflation rate was 76%. Only Zaire and Brazil topped that dreadful performance. But things got worse — much worse. In early 1991, the federal government of Prime Minister Ante Markovic discovered that, late in 1990, the Serbian parliament, which was controlled by Slobodan Milosevic, had secretly ordered the Serbian National Bank (a regional central bank) to issue $1.4 billion in credits to Slobo’s friends. That illegal plunder equaled more than half of all the new money the National Bank of Yugoslavia had planned to create in 1991. Besides lining the pockets of a good many Serbian communists, it sabotaged the Markovic government’s teetering plans for economic reform. It also fanned the flames of nationalism in Yugoslavia and hardened the resolve of the leaders in Croatia and Slovenia to break away from the Socialist Federal Republic of Yugoslavia.

Without the Croats and Slovenes to fleece, Milosevic turned on his “own” people. Starting in 1992 and lasting 24 months, what was left of Yugoslavia endured the second-highest and second-longest hyperinflation in world history, peaking in January 1994 when prices increased by 313,000,000% in one month. In all, there were 14 maxi-devaluations during the hyperinflation, with each of the final three exceeding 99.9%, completely wiping out the dinar’s value in November ’93, December ’93 and January ’94.

Only Hungary, in 1946, recorded a higher rate, and only the Soviet Union suffered hyperinflation longer, for 26 months in the early 1920s. Even Weimar Germany’s much-recounted hyperinflation of 1922-23 was far less virulent than the repeated decimation of the Yugoslav dinar. For a sense of its impact on the local population, imagine the value of your bank accounts in dollars and then move the decimal point 22 places to the left. Then try to buy something.

Yugoslavia’s monetary orgy finally came to an end when the Topcider mint ran out of capacity. The hyperinflation was transforming 500-billion-dinar bills into small change before the ink had dried. But Milosevic’s monetary mischief was nothing new. The old Serbian kings were notorious coin-clippers. As long ago as the early 14th century, King Milutin minted imitation Venetian silver coins at Novo Brdo and Prizren, located in what is now Kosovo. These fakes contained only seven-eighths as much silver as the real things. Venice banned the fakes, and, in his “Divine Comedy,” Dante denounced “the King of Rascia” as a counterfeiter.

In 1999, President Milo Djukanovic (now prime minister) decided he wanted Montenegro independent and out from under Serbia’s political yoke. I counseled that he play the currency card. Over the decades, the Yugoslav dinar had been completely discredited. For most Yugoslavs, the mighty deutsche mark was the unofficial coin of the realm. That was the reality. In addition, I repeated the great Austrian economist Ludwig von Mises’s argument that sound money “was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights.”

Mr. Djukanovic knew that the deutsche mark was his trump card, one that would pave the way for reestablishing Montenegro’s sovereignty. On Nov. 2, 1999, he boldly announced that Montenegro was dumping the Yugoslav dinar and officially adopting the deutsche mark as its national currency (the DM was subsequently replaced by the euro in January 2002). There were no International Monetary Fund bureaucrats to contend with (at the time, Yugoslavia had no formal relations with the IMF and Montenegro was part of the rump Yugoslavia). Civil servants from Washington had not yet located Podgorica, and the NGO invasions weren’t even a glimmer in any planner’s eye. Furthermore, the so-called experts in Brussels hadn’t yet issued their bizarre 2000 edict on the euro, which stated that “it should be made clear that any unilateral adoption of the single currency by means of ‘euroisation’ would run counter to the underlying economic reasoning of [the European Monetary Union].” Mr. Djukanovic had room to maneuver and coolly play his card. By doing so, the die was cast for Sunday’s election.

This appeared in the Wall Street Journal, May 24, 2006

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Who Does this Sound Like?

I think Mankiw (who writes an awesome blog by the way) captures what I think is most key about good leaders:

Leadership Change at Harvard
Consider this description of a great, visionary leader:

[He] is a voracious reader of science and history who questions subordinates relentlessly about their projects, she says. “If he respects you, he’ll argue with you. If not, he ignores you,” she says. “If he says, ‘That’s stupid,’ it means he cares” about a project, she adds.

When I read that passage in yesterday’s Wall Street Journal, I thought, “Yes, that captures the Larry Summers I know perfectly.”

It wasn’t written about Larry, however. It was written about Bill Gates. Apparently, the personality attributes that work well for an entrepreneur and CEO don’t work nearly as well for a university president.

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Lightning and Cell Phones Don’t Mix

Wow.. a little scary…

Mobile phone users warned of lightning strike risk

Fri Jun 23, 2006 5:11 AM IST

LONDON (Reuters) – People should not use mobile phones outdoors during thunderstorms because of the risk of being struck by lightning, doctors said on Friday.

They reported the case of a 15-year-old girl who was using her phone in a park when she was hit during a storm. Although she was revived, she suffered persistent health problems and was using a wheelchair a year after the accident.

“This rare phenomenon is a public health issue, and education is necessary to highlight the risk of using mobile phones outdoors during stormy weather to prevent future fatal consequences from lighting strike injuries,” said Swinda Esprit, a doctor at Northwick Park Hospital in England.

Esprit and other doctors at the hospital added in a letter to the British Medical Journal that usually when someone is struck by lightning, the high resistance of the skin conducts the flash over the body in what is known as a flashover.

But if a metal object, such as a phone, is in contact with the skin it disrupts the flashover and increases the odds of internal injuries and death.

The doctors added that three fatal cases of lightning striking people while using mobile phones have been reported in newspapers in China, South Korea and Malaysia.

“The Australian Lightning Protection Standard recommends that metallic objects, including cordless or mobile phones, should not be used (or carried) outdoors during a thunderstorm,” Esprit added.

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