Published on 24 Jun 2015
In this Everyday Economics video, Don Boudreaux addresses one of your viewer-submitted questions: “Is everyone better off if we buy local?”
In a modern economy, it’s hard to say that anything is truly “local.” Even an apple grown at a nearby farm isn’t a “local” good — everything from the fertilizer used to feed the trees to the wooden crates that carry the apples to market are likely made elsewhere. And, the profits the farmer makes from selling his apples are likely not spent locally — for instance, he may buy a tractor or supplies manufactured far away.
This video also takes a look at what would happen if you could direct your money locally. Would it benefit the local economy? How many businesses could survive solely on local business? What happens to specialization and productivity when we shrink markets? What about prices and variety of goods? Let’s take a look.
October 9, 2015
Are We Better Off if We Buy Local? (Everyday Economics 6/7)
Cyprus, the Crusades, and Commandaria
Paul Lewandowski on the quite distinctive wine of Cyprus and its place in history:
Cyprus was not just the home of Richard [the Lionheart]’s first victory; it was also the site of his marriage. His fiancé, Berengaria of Navarre, was the daughter of Sancho VI of Navarre. The marriage was a politically beneficial one. Some scholars believe that Richard and Berengaria were actually romantic lovers, since they had met many years prior, and Richard married Berengaria despite his betrothal to the Countess of Vexin. Regardless of the reason for the marriage however, Richard threw a party worthy of a king. Richard, who was unfamiliar with Cyprus, had the local wine variety served at his nuptials. Upon tasting the wine, legend has it the king proclaimed that it was, “The wine of kings and the king of wines.”
Wine in the middle ages was generally awful. The logistical difficulty of preserving wine meant that additives must be used to preserve the wine. This could include marble dust, lye-ash, or pitch. Of course, this made wine awful by today’s standards. To make it slightly palatable, the wine would sometimes be cut with honey, dried fruit, or even salt water. Wine in the middle ages was valuable not only because it could render the drinker intoxicated, but because it was also a source of potable water. Wine only began to improve when it became a commodity, a tradable good that competed with beer and tea. For someone used to a saltwater-and-pitch concoction, an authentic, Cypriot dessert wine must have tasted truly amazing. It comes as little surprise that after the crusader’s time in Cyprus, the island and its wine were deemed valuable.
Richard would go on to sell the island to the Knights Templar not long after departing for the Middle East. In 1192, the Templar Order resold the island to another nobleman. However, the Templars were so smitten with the local wine, they retained a feudal estate where wine could be produced. They named their estate La Grande Commanderie, which roughly translates to “the main command post.” The region soon became known as Commandaria. Wine production increased as the Knights Templar sought to fund their operations through the export of wine. The Templars also provided the wine to pilgrims journeying toward Jerusalem. Soon the wine assumed the name of the region, and Commandaria became famous throughout Europe. Its popularity remained high for centuries, as late as the 1870s, when the region was producing 230,000 liters of wine annually for export to Austria alone.
Commandaria is made from two strains of native Cypriot grapes: Xynisteri, a white grape, and Mavro, a red. Both are dried partially in the sun before fermentation and pressing. This concentrates the sugars, giving the wine its sweet character. Following fermentation, the wine is aged a minimum of two years in oak barrels, but high-end Commandaria is often aged longer. The result is a sweet dessert wine with honey, fruit, and toffee flavors. It is often fortified, but even unfortified Commandaria can exceed 15% alcohol by volume.
Commandaria is the world’s oldest continually cultivated wine. Descriptions of the wine and its unique manufacture appear in accounts as early as 800 BC. Some scholars claim the wine is over 3,000 years old. Its long history makes it the stuff of legend. It is supposedly the winner of the first recorded wine tasting in history, held in France in 1224. The Ottoman Sultan Selim II is said to have invaded Cyprus just to get the wine. Still another legend is that the grapes from Cyprus were exported to Portugal and were used in some of the earliest port wines. Before assuming the name Commandaria, it was known as “Mana” because it was considered a divine gift.
October 8, 2015
“[P]harmaceutical companies … make out like bandits from the existence of the patent system”
The current US patent system is set up to create and maintain — for a limited time — monopolies that can be exploited by pharmaceutical companies:
The Wall Street Journal has a puzzling piece complaining about how the pharmaceutical companies seem to make out like bandits from the existence of the patent system. What puzzles is that the entire point and purpose of the patent system, in an economic sense, is so that inventors of things can make out like bandits. The background problem is that of public goods, something I’ll explain in a moment. That problem leads us to thinking that a pure free market in things which are public goods isn’t going to work as well as something a little different. So, we design something a little different. And the point and purpose of our design is so that people who innovate can make vast mountains of cash out of having done so.
It’s then more than a bit odd to point out that our system enables people who innovate to make vast mountains of cash.
[…]
Which brings us to the subtlety of those pricing decisions. With drugs, pharmaceuticals, close enough the cost of manufacturing a dose is zero. All of the costs go in the original research, the clinical testing (the lion’s share) and getting it through the FDA. Profit is therefore determined, since marginal production costs are zero (they’re not, accurately, but close enough for this comparison), by gross revenue. And we want to maximise the incentive for people to innovate, that’s the very reason we’ve got this patent system in the first place, and thus we would rather like the pharma companies to be maximising revenue.
And thus, from this economic point of view, we should be quite happy with people raising their prices. Demand does fall as they do so, yes, but as long as gross revenue increases, the price rises more than compensating for the fall in unit demand, then we should be happy with the way the system is working. Gross revenue is being maximised, profits are being maximised, incentives to innovate are being maximised. That’s what we want our system to do after all.
Far from being worried about this price gouging we should be welcoming it. Because, obviously, someone making bajillions out of having innovated a drug to cure a disease increases the incentives for many other people to go and invest bajillions of their own to cure other diseases. Far from complaining about it we should be celebrating the system working.
Science as horse racing
In Wired, Sarah Zhang handicaps the horses in this year’s highly competitive Nobel Sweepstakes:
Nobel prize speculation, gossip, and betting pools kick off every fall around the time Thomson Reuters releases its predictions for science’s most prestigious prize. This year, one prediction was unusual: a genome-editing tool so hyped that it even got on the cover of WIRED.
(No, seriously, how often does molecular biology get to occupy the same space as Star Wars or Rashida Jones?)
The tool, Crispr/Cas9, is essentially a pair of molecular scissors for editing DNA, so precise and easy to use that it has taken biology by storm. Hundreds if not thousands of labs now use Crispr/Cas9 to do everything from making super-muscled pigs to snipping HIV genes out of infected cells to creating transgenic monkeys for neuroscience research. But the Nobel prediction stands out for two reasons: First, the highly-cited paper describing Crispr/Cas9 came out a mere three years ago, a blip in the timescale of science. Second, the technique is currently at the heart of a bitter patent fight.
Thomson Reuters bases its predictions on how often key papers get cited by other scientists. Here, the paper in question has as its authors Jennifer Doudna, a molecular biologist at UC Berkeley, and Emmanuelle Charpentier, a microbiologist now at the Max Planck Institute for Infection Biology. Missing is Feng Zhang (no relation to this writer), a molecular biologist at the Broad Institute and MIT, who actually owns the patents for CRISPR/Cas9 and says that he came up with the idea independently. So let’s say Thomson Reuters gets it right. Could the patent for a discovery go to one scientist, and the Nobel prize for the discovery to someone else?
The two groups — or their patent lawyers, really — are in fact fighting over credit for CRISPR/Cas9. At stake are millions of dollars already poured into rival companies that have licensed patents from the two different groups.
But putting aside all the lawyers and all the money for a moment, obsessing over finding the one true origin of Crispr/Cas9 gets science all wrong. Casting the narrative as Doudna versus Zhang or Berkeley versus MIT is a misapprehension of history, creativity, and innovation. Discovery comes not from a singular stroke of genius, but an incremental body of research. “I’m not a great believer in the flash-of-genius theory. If you are a historian —” says Mario Biagioli, who is in fact a historian of science at UC Davis — “you quickly will realize exactly how many times there are independent discoveries of the same thing.” The dispute over credit for CRISPR/Cas9 is not the result of exceptional coincidence and disagreement. In fact, it illuminates how science always works.
The koans of Zim Tzu, Broncos edition
Ted Glover comes back to us from the most recent press conference of Vikings coach Mike Zimmer and after the appropriate cleansings, meditations, and ritual incantations, distills the wisdom of Zim Tzu for us:
Mike Zimmer, the Vikings head coach and Chief Philosopher In Charge, doesn’t genuflect or toss out false praise after a close, hard fought game that the Vikings lost. No sir, because pats on the back are for the weak and needy, and Mike Zimmer is anything but that. But he does pass out knowledge bombs like a B-52 carpet bombs, if you know what you’re looking for,* and that’s where Zim Tzu comes in. What is Zim Tzu, you ask? Zim Tzu is Mike Zimmer’s calling card,** aside from his football acumen.
*I have no idea what I’m looking for
**I have no idea what the metaphor ‘calling card’ means, it just sounded good when I wrote it
It’s a philosophy*, a way of life**, and one must understand the nuances of the spoken word to get behind what he’s really trying to say.***
*Really, this is just a press conference with me inventing stupid things he never said
**Seriously, if this gives you some true meaning of life or answers some mystical question you’ve pondered for years, you are very susceptible to being brainwashed by a cult. Please seek professional help. Immediately. Like put this down and go see a therapist now kind of immediately
***No idea what he’s really trying to say. This is more farcical than Donald Trump’s hair.
As always, we take excerpts from Mike Zimmer’s weekly press conference and interpret his words into their final, crystallized true meaning.* What the coach actually said will be in quotes, and the Zim Tzu translation immediately follows.
*Seriously, if this were a book, you would find it in the ‘fiction’ section, because it’s all made up. Or in the ‘toilet humor’ category, between ‘dirty Irish limericks’ and ‘fart jokes.’ Wait, this starts with a Z. So it would be last. Where it belongs.
What Zim Tzu said: After watching the tape, I kind of really feel a lot like I did yesterday after the ballgame. Disappointed that we didn’t start better. I think we have some resiliency and some tough guys and some fight. Probably didn’t play good enough to win; too many mistakes against a team like that. We’re never going to have moral victories around here. Questions?
What Zim Tzu meant: FFFFFFFFFFFFFFFFFFUUUUUUUUUUUUUUUUUUUUUUUCCCCCKKKKKKKK…we could’ve won that game. Moral victories suck. Winning at Denver would’ve been pretty cool, not gonna lie.
Q: Did they blitz more than you anticipated after recording seven sacks?
What Zim Tzu said: They blitzed a little bit more, yeah. We had a couple mental errors, we had a couple guys get beat, so it was a combination of things. I thought Teddy did a good job of getting the ball out, but there was a couple of time where we weren’t able to adjust the protection because of some of the movement things that we had going on.
What Zim Tzu meant: No more than the Germans blitzed Poland or France back in the day…YES THEY BLITZED MORE BECAUSE IT WORKED. If we would have pulled our heads out of our asses maybe we could’ve stopped it, but sometimes it felt they had 22 or 23 guys at the line of scrimmage. I’m just glad that Teddy wasn’t murdered. He was almost murdered.
Europe: The First Crusade – IV: Men of Iron – Extra History
Published on 29 Aug 2015
Having sworn their oaths to Emperor Alexius Comnenus, the Crusaders finally sailed across the Bosphorus River to Turkey. When they disembarked, however, there were no Turkish armies waiting for them. Unopposed, they marched to Nicaea, the capitol of the Sultanate of Rum, and laid siege to it. At last word reached the sultan, Kilij Arslan, who rode back to save his city (and his family) only to realize that this army of crusaders was much larger and better organized than the People’s Crusade which had come before. They had not yet realized, however, that the city of Nicaea was being secretly resupplied by ships arriving by night from Lake Askania. Once they did, the Byzantines transported their own ships overland to blockade the lake and launch a coordinated assault with the crusaders to force the city to surrender. The crusaders marched towards Jerusalem, but along the way, the Turks launched a surprise assault on Bohemond’s army. He ordered his knights to form a shield wall around the priests and civilians traveling with them, and they held for hours under a burning sun until reinforcements from the other crusading armies arrived. They rallied, defeated the Turks, and resumed their march.
QotD: The religious life of the early Roman Empire
The policy of the emperors and the senate, as far as it concerned religion, was happily seconded by the reflections of the enlightened, and by the habits of the superstitious, part of their subjects. The various modes of worship, which prevailed in the Roman world, were all considered by the people, as equally true; by the philosopher, as equally false; and by the magistrate, as equally useful. And thus toleration produced not only mutual indulgence, but even religious concord.
The superstition of the people was not imbittered by any mixture of theological rancor; nor was it confined by the chains of any speculative system. The devout polytheist, though fondly attached to his national rites, admitted with implicit faith the different religions of the earth. Fear, gratitude, and curiosity, a dream or an omen, a singular disorder, or a distant journey, perpetually disposed him to multiply the articles of his belief, and to enlarge the list of his protectors. The thin texture of the Pagan mythology was interwoven with various but not discordant materials. As soon as it was allowed that sages and heroes, who had lived or who had died for the benefit of their country, were exalted to a state of power and immortality, it was universally confessed, that they deserved, if not the adoration, at least the reverence, of all mankind. The deities of a thousand groves and a thousand streams possessed, in peace, their local and respective influence; nor could the Romans who deprecated the wrath of the Tiber, deride the Egyptian who presented his offering to the beneficent genius of the Nile. The visible powers of nature, the planets, and the elements were the same throughout the universe. The invisible governors of the moral world were inevitably cast in a similar mould of fiction and allegory. Every virtue, and even vice, acquired its divine representative; every art and profession its patron, whose attributes, in the most distant ages and countries, were uniformly derived from the character of their peculiar votaries. A republic of gods of such opposite tempers and interests required, in every system, the moderating hand of a supreme magistrate, who, by the progress of knowledge and flattery, was gradually invested with the sublime perfections of an Eternal Parent, and an Omnipotent Monarch. Such was the mild spirit of antiquity, that the nations were less attentive to the difference, than to the resemblance, of their religious worship. The Greek, the Roman, and the Barbarian, as they met before their respective altars, easily persuaded themselves, that under various names, and with various ceremonies, they adored the same deities. The elegant mythology of Homer gave a beautiful, and almost a regular form, to the polytheism of the ancient world.
The philosophers of Greece deduced their morals from the nature of man, rather than from that of God. They meditated, however, on the Divine Nature, as a very curious and important speculation; and in the profound inquiry, they displayed the strength and weakness of the human understanding. Of the four most celebrated schools, the Stoics and the Platonists endeavored to reconcile the jarring interests of reason and piety. They have left us the most sublime proofs of the existence and perfections of the first cause; but, as it was impossible for them to conceive the creation of matter, the workman in the Stoic philosophy was not sufficiently distinguished from the work; whilst, on the contrary, the spiritual God of Plato and his disciples resembled an idea, rather than a substance. The opinions of the Academics and Epicureans were of a less religious cast; but whilst the modest science of the former induced them to doubt, the positive ignorance of the latter urged them to deny, the providence of a Supreme Ruler. The spirit of inquiry, prompted by emulation, and supported by freedom, had divided the public teachers of philosophy into a variety of contending sects; but the ingenious youth, who, from every part, resorted to Athens, and the other seats of learning in the Roman empire, were alike instructed in every school to reject and to despise the religion of the multitude. How, indeed, was it possible that a philosopher should accept, as divine truths, the idle tales of the poets, and the incoherent traditions of antiquity; or that he should adore, as gods, those imperfect beings whom he must have despised, as men? Against such unworthy adversaries, Cicero condescended to employ the arms of reason and eloquence; but the satire of Lucian was a much more adequate, as well as more efficacious, weapon. We may be well assured, that a writer, conversant with the world, would never have ventured to expose the gods of his country to public ridicule, had they not already been the objects of secret contempt among the polished and enlightened orders of society.
Edward Gibbon, “Chapter II: The Internal Prosperity In The Age Of The Antonines — Part I”, History of the Decline and Fall of the Roman Empire, 1782.
October 7, 2015
The enigma of the Trans-Pacific Partnership
We don’t know what’s in it, so it could be a multi-national version of “we have to pass it to find out what’s in it”. Megan McArdle manages to raise one cheer for the agreement:
I’ve spent the morning reading about the Trans-Pacific Partnership. I went in prepared to deliver a column full of details, winners and losers, strong opinions about the good provisions and the bad. But what really comes to mind is a dismal thought: “Is this the best we can do?”
Oh, yes, I know the statistics. Forty percent of the world’s economy. Thousands of tariffs falling. I know the opposition points too, about giveaways to business, intellectual property rules, outsourcing jobs. No one is talking about the larger story, though, which is that the biggest trade news in a decade involves a regional deal of relatively limited impact.
It was not always thus. When I was a fledgling journalist, a wee slip of a thing, we economics writers looked to major global trade negotiations to advance the cause of freer markets, and not incidentally, the material progress of mankind. We looked down on regional side-deals because they were such weak tea compared with the robust brew of a global agreement. Regional deals distorted the flow of trade, encouraging people not to exploit comparative advantage and production capabilities, but rather to seek the best combination of tariff rules from among competing regional frameworks. I have heard arguments that such deals, by distorting trade and weakening the pressure to make global deals, were actually worse than doing nothing. Indeed, I may have made such arguments.
You don’t hear those arguments any more, and that’s because we free-traders have largely given up on global trade agreements. The Doha round of World Trade Organization talks collapsed in the face of European agricultural protectionism and intransigence among countries with large numbers of subsistence farmers. Nativism, protectionism, nationalism seem to be rising as a political force in many countries. Global trade volumes are looking anemic. In this climate, regional agreements seem attractive, in much the same way that the remaining bar patrons assume a winsome glow around closing time.
How have things come to such an unpretty pass?
Argentina’s colonial history
Ralph Peters on the history of Argentina during the colonial era:
In the 19th century in the Western hemisphere, two states fought a protracted series of wars to subdue their frontiers, the United States and Argentina. Others, such as Chile or Canada, saw lesser violence, but the great wars of conquest were directed from Washington and Buenos Aires.
And the Argentine conquest appears to have been the crueler.
Settlers in the Spanish territory that became Argentina faced Indian threats from the beginning, but as the population swelled and expanded its territorial claims, the violence grew more frequent and extreme, with Indian raids on settlers similar to those experienced on the American frontier. Finally, in 1833, Juan Manuel de Rosas — a man of great vision and spectacular brutality who would rule Argentina as dictator — launched his “Desert Campaign,” which pushed back the frontier to Patagonia. Still, Indian raids continued, on and off, as did minor punitive expeditions, until the 1870s saw the years-long campaign, the “Conquest of the Desert,” that finally mastered all of Patagonia — which would become Argentina’s agricultural heartland, facilitating a turn-of-the-century economic boom.
Those wars saw a long list of massacres, atrocities, forced removals and the treatment of Argentina’s aboriginal peoples as animals, rather than humans.
When the Pope told Americans not to judge the past by today’s standards, we thought of our “Trail of Tears,” or of the last, murderous drives to contain our Indians on bleak reservations. But the Pope saw mounted troops in Argentine uniforms hunting down natives like game animals.
A Deeper Look at Tradeable Allowances
Published on 18 Mar 2015
Since the passage of the Clean Air Act, SO2 emissions have decreased by 35%. Part of this is due to tradable allowances, which created a market solution to the external costs of SO2 emissions. In this video, we look at the lessons of tradable allowances for SO2 and see if a similar market-based solution could work to decrease other pollutants, such as CO2.
Drummers
Everyone who knows musicians has heard at least a few drummer jokes. Open Culture attempts to put a bit of science into the casual abuse drummers have been subjected to over the years:
An old musician’s joke goes “there are three kinds of drummers in the world — those who can count and those who can’t.” But perhaps there is an even more global divide. Perhaps there are three kinds of people in the world — those who can drum and those who can’t. Perhaps, as the promotional video above from GE suggests, drummers have fundamentally different brains than the rest of us. Today we highlight the scientific research into drummers’ brains, an expanding area of neuroscience and psychology that disproves a host of dumb drummer jokes.
“Drummers,” writes Jordan Taylor Sloan at Mic, “can actually be smarter than their less rhythmically-focused bandmates.” This according to the findings of a Swedish study (Karolinska Institutet in Stockholm) which shows “a link between intelligence, good timing and the part of the brain used for problem-solving.” As Gary Cleland puts it in The Telegraph, drummers “might actually be natural intellectuals.”
Neuroscientist David Eagleman, a renaissance researcher The New Yorker calls “a man obsessed with time,” found this out in an experiment he conducted with various professional drummers at Brian Eno’s studio. It was Eno who theorized that drummers have a unique mental makeup, and it turns out “Eno was right: drummers do have different brains from the rest.” Eagleman’s test showed “a huge statistical difference between the drummers’ timing and that of test subjects.” Says Eagleman, “Now we know that there is something anatomically different about them.” Their ability to keep time gives them an intuitive understanding of the rhythmic patterns they perceive all around them.
QotD: The long, long history of slavery
What about slavery? Slavery certainly has its place among the horrors of humanity. But our “educators” today, along with the media, present a highly edited segment of the history of slavery. Those who have been through our schools and colleges, or who have seen our movies or television miniseries, may well come away thinking that slavery means white people enslaving black people. But slavery was a worldwide curse for thousands of years, as far back as recorded history goes.
Over all that expanse of time and space, it is very unlikely that most slaves, or most slave owners, were either black or white. Slavery was common among the vast populations in Asia. Slavery was also common among the Polynesians, and the indigenous peoples of the Western Hemisphere enslaved other indigenous peoples before anyone on this side of the Atlantic had ever seen a European.
More whites were brought as slaves to North Africa than blacks brought as slaves to the United States or to the 13 colonies from which it was formed. White slaves were still being bought and sold in the Ottoman Empire, decades after blacks were freed in the United States.
Thomas Sowell, “Indoctrination by Grievance-Mongers: Anti-American educational elites need a dose of reality”, National Review, 2014-10-15.
October 6, 2015
Jay Currie trolls the readers at Dr. Dawg’s blog
Jay Currie has a bit of fun at the expense of poor folks suffering from sudden-onset Harper Derangement Syndrome:
Oh Dear the “yokels” and the “unwashed”, being thoroughly unenlightened, are failing in their duty to follow the lead of their betters and have noticed that there may be a few issues with mass Muslim immigration. Disgusting.
Worse, that spiv Harper doesn’t even have the grace and breeding to use dogwhistles in herding his flock. The dreadful man is throwing raw meat to the rubes and, to no one’s great surprise those Ill-educated reactionaries and rednecks are eating it up. There is, I fear, a very real danger that the 80% of bigoted Canadians (90% in the idiot reaches of Quebec) will take this opportunity to try to undo forty years of enlightened immigration and refugee policy by voting for those revolting CPC candidates.
The Wal-Mart classes are restless.Time to clutch the pink pearls and person the checkpoints surrounding the nicer, leafier, bastions of tolerance in Canada’s more sophisticated urban centers. Lock down the common rooms and charcuterie bars, disguise your Prius and avoid being seen with your Said (or books of any sort really): the proles are on the move.
[…]
The beast Harper looked vulnerable at the beginning of this campaign. After all, no one we knew would think of voting for the thug. But Harper has a low, animal, cunning. He is unafraid of the great white blob. He has been seen at hockey rinks at 6 in the morning and obviously buys his suits in some dreadful mall. His wife has stayed at home with the children. He is, obviously, one of them. He does not need to dogwhistle – the blob knows its own.
So, beware. The unwashed, the yokels, the bigots and the rubes have been summoned. All we can hope for is that, once they have vented their fury on niqab wearers they will resume their slumber. The alternative is simply too awful to contemplate.
Bulgaria in World War 1 – The New Central Power I THE GREAT WAR – Special
Published on 5 Oct 2015
Thank you Plamen Ganev for helping with the research for this episode!
Bulgaria joined the ranks of the Central Powers in World War 1 in October 1915 and shortly after invaded neighbouring Serbia to support the German-Austro offensive on Belgrade. A lot of promises about territory were made towards Ferdinand I and especially the chance of getting back territories lost in the Balkan Wars was music to Bulgarian ears. Find out all about Bulgaria joining World War 1 in our special episode.