Quotulatiousness

June 8, 2010

Questions of basic economics

Filed under: Economics, Education, Government, Politics, USA — Tags: , — Nicholas @ 17:25

Daniel Klein surveyed nearly 5,000 voting-age Americans on their basic comprehension of the political trade-offs on economic issues. He also asked them to identify themselves on the political spectrum. There were some interesting correlations:

Consider one of the economic propositions in the December 2008 poll: “Restrictions on housing development make housing less affordable.” People were asked if they: 1) strongly agree; 2) somewhat agree; 3) somewhat disagree; 4) strongly disagree; 5) are not sure.

Basic economics acknowledges that whatever redeeming features a restriction may have, it increases the cost of production and exchange, making goods and services less affordable. There may be exceptions to the general case, but they would be atypical.

Therefore, we counted as incorrect responses of “somewhat disagree” and “strongly disagree.” This treatment gives leeway for those who think the question is ambiguous or half right and half wrong. They would likely answer “not sure,” which we do not count as incorrect.

In this case, percentage of conservatives answering incorrectly was 22.3%, very conservatives 17.6% and libertarians 15.7%. But the percentage of progressive/very liberals answering incorrectly was 67.6% and liberals 60.1%. The pattern was not an anomaly.

[. . .]

The other questions were: 1) Mandatory licensing of professional services increases the prices of those services (unenlightened answer: disagree). 2) Overall, the standard of living is higher today than it was 30 years ago (unenlightened answer: disagree). 3) Rent control leads to housing shortages (unenlightened answer: disagree). 4) A company with the largest market share is a monopoly (unenlightened answer: agree). 5) Third World workers working for American companies overseas are being exploited (unenlightened answer: agree). 6) Free trade leads to unemployment (unenlightened answer: agree). 7) Minimum wage laws raise unemployment (unenlightened answer: disagree).

H/T to Ghost of a Flea.

Are we ready for “a serious debate about returning to the gold standard”?

Filed under: Cancon, Economics, Government — Tags: , , , , — Nicholas @ 13:02

The more I read of Maxime Bernier’s thoughts, the more I wonder how long it’ll be before he’s drummed out of Stephen Harper’s party: he’s far too sensible. Here, for example, he outlines what it is that central banks do to your money, and why it’s a bad deal for ordinary Canadians:

All this guessing about setting rates has nothing to do with capitalism and free markets; it has more to do with central planning and government control of the money supply. In a monetary free market, the interest rate would be determined by the demand for credit and the supply of savings, just like any other price in the economy.

Government control over money has serious consequences that few people seem to be aware of.

One of them is that central banks are continually increasing the quantity of money that is circulating in the economy. In Canada for example, if we use the strictest definition of money supply, it has increased by 6 to 14% annually during the past dozen years. The situation is about the same everywhere.

The effects of constantly creating new money out of thin air have been a debasement of our money and a dramatic increase in prices. The reason why overall prices go up is not because businesses are greedy, or because wages go up, or because the price of oil goes up. Ultimately, only the central bank is responsible for creating the conditions for prices to rise by printing more and more money.

With all this, it’s surprising that he has (so far) managed to stay in the Conservative party, which doesn’t appear to actually believe in anything much anymore . . . other than the need to stay in power.

Update, 9 June: His speech (from which the article linked above was drawn) gets positive reviews.

QotD: Remaking Gulliver’s Travels

Filed under: Humour, Media, Quotations — Tags: , — Nicholas @ 11:56

The reimagined Gulliver’s Travels is probably going to be bad. But at least we’re in for an entertaining time when Swift inevitably rises from the grave to seek revenge on everyone involved.

“Gulliver”, “Jack Black meets Jonathan Swift?”, The Economist, 2010-06-05

Consumer debt doesn’t follow the script

Filed under: Economics, Media, USA — Tags: , , , — Nicholas @ 07:49

Or, in a demonstration of individual rationality, doesn’t follow the script where consumers sacrifice themselves and go even deeper in debt to spark further economic recovery:

While some pundits out there might have you believe that the US economic recovery remains solidly on track, Friday’s May jobs report threw a spanner into those notions, and the latest reading on consumer credit offers little evidence that the crucial consumer intends to share with Uncle Sam the burden of bolstering the economy.

The Federal Reserve’s report on April consumer credit today shows total credit outstanding rose a little less than $1 billion, following a revised $5.4 billion drop in March; March credit was originally reported up $2 billion.

Within the details, the item that jumps out most is the decrease in revolving credit, which fell at a 12% annual rate and declined for the 19th straight month. Revolving credit outstanding has fallen 14%, or roughly $138 billion, since autumn of 2008. Non-revolving is roughly flat since late ‘08.

It would help if the pundits would settle on one of the two diametrically opposed roles that consumers are “supposed to” assume. At an individual level, consumers are being lashed for their profligate spending and borrowing habits, and excoriated for their unprecedented levels of personal debt. This is bad, the pundits say (and I don’t disagree): individuals and families should not be taking on so much debt and efforts to reduce outstanding debt are praised. However, consumers as a group are expected to spend, spend, spend in order to help pull the retail sector back into healthy growth.

So if they do the right thing as individuals, they’re doing the wrong thing for the economy as a whole? Perhaps the emphasis on consumer-led recovery is mistaken, especially given the levels of debt that consumers have already taken on.

Attention drivers: Ohio police can now just “estimate” your speed

Filed under: Law, Liberty, USA — Tags: , , , — Nicholas @ 07:33

. . . and then write you a ticket based on their estimate, no further proof needed:

Police don’t need radar to cite you for speeding.

The Ohio Supreme Court ruled this morning that an officer trained to estimate speed by sight doesn’t need an electronic gauge to catch speeders.

The 5-1 ruling was a defeat for 27-year-old Akron-area motorist Mark W. Jenney and speeders across the state. Jenney had challenged a visual speed estimate by a Copley police officer, but a trial court and the 9th District Court of Appeals upheld his conviction.

So, Ohio drivers, expect to see your state assess a lot more speeding tickets (a nice form of revenue for the depleted state coffers), now that the police have been given carte blanche. There’s little reason for them not to treat this as a newly imposed tax on drivers: no evidence is required, other than the officer’s estimate, and the court clearly isn’t too worried about the legal implications of this.

As Eric Moretti says:

Hey “Supreme Court Justices” why don’t you guys get this part of what laws are supposed to do through your thick skulls. It’s safe to say that officers might be trained to identify speeds, and they might even be great at it — but it blasts the notion of burden of proof being on the state out of the water. You didn’t just blast it out, you nuked that fish to dry land. There is no factual evidence when officers have the ability to do this, “I think you were going 120 mph.”

Where is the public recourse for police officers who abuse their abilities? We have to take an officer’s (the state) word that we committed a crime? Did you guys even go to law school?

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