Quotulatiousness

November 2, 2011

Going to university isn’t enough: you need to take the right program

Filed under: Economics, Education, USA — Tags: , — Nicholas @ 12:04

Alex Tabarrok points out that the widely reported student debt problem is made much worse because students are taking courses that don’t lead to higher-paying jobs:

Over the past 25 years the total number of students in college has increased by about 50 percent. But the number of students graduating with degrees in science, technology, engineering and math (the so-called STEM fields) has remained more or less constant. Moreover, many of today’s STEM graduates are foreign born and are taking their knowledge and skills back to their native countries.

Consider computer technology. In 2009 the U.S. graduated 37,994 students with bachelor’s degrees in computer and information science. This is not bad, but we graduated more students with computer science degrees 25 years ago! The story is the same in other technology fields such as chemical engineering, math and statistics. Few fields have changed as much in recent years as microbiology, but in 2009 we graduated just 2,480 students with bachelor’s degrees in microbiology — about the same number as 25 years ago. Who will solve the problem of antibiotic resistance?

If students aren’t studying science, technology, engineering and math, what are they studying?

In 2009 the U.S. graduated 89,140 students in the visual and performing arts, more than in computer science, math and chemical engineering combined and more than double the number of visual and performing arts graduates in 1985.

It’s still true that students who graduate from university will tend to have higher lifetime earnings than their peers who do not get degrees, but there’s a huge difference between the expected earnings from an engineering degree than from a “studies” degree.

Disagreeing with Pete Townshend

Filed under: Economics, Media — Tags: , , , , — Nicholas @ 09:03

Felix Cohen has an interesting article up at the Guardian‘s “Comment is free” section:

When I was originally sent some quotes from Pete Townshend’s John Peel lecture on Apple — which he refers to as a digital vampire — and music piracy, I was ready to fundamentally disagree with the thrust of his argument, but having taken the time to read it and parse it I’m surprised at how much sense there is. Regrettably, though, he also commits some fairly serious and unforgiveable misunderstandings of Apple and Amazon as companies, the internet and, perhaps least forgivable, the nature of creativity and the auteur as arbiter of what’s acceptable for public consumption.

[. . .]

Because I also believe that the commercial success you and your peers achieved was a brief, Burgess Shale-like period in popular culture, where the dearth of real social recommendation meant that people like John Peel, and now, sadly, Simon Cowell, imposed their tastes on swaths of youth. Peel (Cowell considerably less so) was an amazing, charismatic, much missed man who was able to tap into the zeitgeist and promote acts who wouldn’t have a chance without him. But he had his tastes and dislikes like anyone, and that’s the downfall of auteur theory; you don’t get to see outside of someone else’s perspective.

[. . .]

And, like the creatures in the Burgess Shale, we can look back and say: this brief flowering of bizarre and fantastical cultural expression was only made possible by its environment. This was what popular culture looked like when the only people who could make a real living were the top 0.0001%, while everyone else toiled in garages, college music rooms and village halls, trying everything in their power to break through. And, sadly, it ended up anodyne, populist and, well, The X Factor.

[. . .]

I’m not sorry that the period where you were able to be wined and dined by vast, terrifyingly wasteful record labels because you were paying for all of their A&R failures is over. To return to my prehistoric metaphor, the Cambrian period ended with a mass extinction event, but the period that followed allowed for the establishment of the species we see today. We should hope that creative popular culture follows a similar pattern, and that new artists and musicians will be able to be successful, widely heard, nurtured by crowd-supported services such as PledgeMusic rather than bloated A&R corporations; companies with a more human attitude to what they do and who they are doing it for.

QotD: The evolution of the public sector

Filed under: Bureaucracy, Economics, Education, Quotations, USA — Tags: , — Nicholas @ 00:03

The public-sector workplace has become a kind of artificial Eden, whose fortunate inhabitants enjoy solid pay and 1950s-style job security and retirement benefits, all of it paid for by their less-fortunate private-sector peers. Some on the left have convinced themselves that this “success” can lay the foundation for a broader middle-class revival. But if a bloated public sector were the blueprint for a thriving middle-class society, then the whole world would be beating a path to Greece’s door.

Our entitlement system, meanwhile, is designed to redistribute wealth. But this redistribution doesn’t go from the idle rich to the working poor; it goes from young to old, working-age savings to retiree consumption, middle-class parents to empty-nest seniors. The Congressional Budget Office’s new report on income inequality points out that growing Medicare costs are part of the reason upper-income retirees receive a larger share of federal spending than they did 30 years ago, while working-age households with children receive “a much smaller and declining share of transfers.” Absent reforms, this mismatch will only grow more pronounced: by the 2030s, Medicare recipients will receive $3 in benefits for every dollar they paid in.

Then there’s the public education system, theoretically the nation’s most important socioeconomic equalizer. Yet even though government spending on K-to-12 education has more than doubled since the 1970s, test scores have flatlined and the United States has fallen behind its developed-world rivals. Meanwhile, federal spending on higher education has been undercut by steadily inflating tuitions, in what increasingly looks like an academic answer to the housing bubble. (If the Occupy Wall Street dream of student loan forgiveness were fulfilled, this cycle would probably just continue.)

The story of the last three decades, in other words, is not the story of a benevolent government starved of funds by selfish rich people and fanatical Republicans. It’s a story of a public sector that has consistently done less with more, and a liberalism that has often defended the interests of narrow constituencies — public-employee unions, affluent seniors, the education bureaucracy — rather than the broader middle class.

Ross Douthat, “What Tax Dollars Can’t Buy”, New York Times, 2011-10-30

November 1, 2011

Niall Ferguson on the West’s “killer applications”

Filed under: Economics, History, Liberty — Tags: , , — Nicholas @ 13:08

Niall Ferguson points to several key institutional innovations that were key to the rise of the West, compared to the rest of the world:

The West first surged ahead of the Rest after about 1500 thanks to a series of institutional innovations that I call the “killer applications”:

1. Competition. Europe was politically fragmented into multiple monarchies and republics, which were in turn internally divided into competing corporate entities, among them the ancestors of modern business corporations.

2. The Scientific Revolution. All the major 17th-century breakthroughs in mathematics, astronomy, physics, chemistry, and biology happened in Western Europe.

3. The Rule of Law and Representative Government. An optimal system of social and political order emerged in the English-speaking world, based on private-property rights and the representation of property owners in elected legislatures.

4. Modern Medicine. Nearly all the major 19th- and 20th-century breakthroughs in health care were made by Western Europeans and North Americans.

5. The Consumer Society. The Industrial Revolution took place where there was both a supply of productivity-enhancing technologies and a demand for more, better, and cheaper goods, beginning with cotton garments.

6. The Work Ethic. Westerners were the first people in the world to combine more extensive and intensive labor with higher savings rates, permitting sustained capital accumulation.

For hundreds of years, these killer apps were essentially monopolized by Europeans and their cousins who settled in North America and Australasia. They are the best explanation for what economic historians call “the great divergence”: the astonishing gap that arose between Western standards of living and those in the rest of the world.

Alberta’s policy to help small breweries has unintended consquences

Filed under: Cancon, Economics, Government — Tags: , , — Nicholas @ 08:20

When governments try to rig markets to achieve certain goals, they often end up getting results they didn’t foresee:

The Alberta Gaming and Liquor Commission presumably had good intentions in mind when it brewed up a policy to lend a helping hand to small breweries. Namely, beer companies qualify for substantially reduced beer tax rates on the first 200,000 hectolitres sold in Alberta. The explicit aim was to help small players compete against industry leviathans such as Molson and Labatt. And, implicitly, the tax break would entice craft breweries to set up shop in the province.

However, eight years after the reduced beer tax rates—estimated by one analyst to total about $200 million in savings—were first implemented, little in the Alberta beer business has worked out the way the AGLC envisioned. Only five small breweries have opened for business in Alberta since the policy was implemented. And in that time Alberta has, in fact, become a market characterized by discount beer. And at least one of the breweries taking advantage of the AGLC policy doesn’t even brew in the province, let alone Canada.

[. . .]

Alberta’s small brewer system would appear to be yet another case of the law of unintended consequences—especially when a government agency tinkers with the free market economy. From a dearth of craft brewers to a helping hand for American jobs, the AGLC’s beer tax policy is enough to drive a teetotalling Albertan to drink.

October 31, 2011

QotD: Economics is not a “hard science”

Filed under: Economics, Quotations, Science — Tags: , , , — Nicholas @ 13:20

The problem at base is that economics is not a branch of mathematics or statistics, no matter how much economists wish it was. Never forget that the economics equations you see, the pretty graphs and charts, are just educated guesses that are wrong more often than not — economists love the gloss of the hard sciences, but the truth is that the field is firmly placed among the philosophical and sociological disciplines. Economics is a study of human behavior more than anything else, with all the uncertainties and confusion that entails.

“Monty”, “DOOM: I like that Doom Doom Pow”, Ace of Spades H.Q., 2011-10-31

October 29, 2011

More on Malthus

Filed under: Books, Economics, History, Media — Tags: , , , — Nicholas @ 10:57

Tim Harford poses and answers some common questions about the much-talked-about 7-billionth birth:

There will be 7bn of us come Halloween? You’re kidding.

Someone at the UNPFA has a sense of humour, it seems. This is a terrifying prospect to some and cheery for others, while most of us find it irrelevant. Halloween seems appropriate.

This is a statistical projection, and statistical projections don’t have a sense of humour.

But they do have margins of error. The UNPFA doesn’t even know whether the seven billionth person will be born in 2011. Even the UK is currently relying on 10-year old census data. There are places in the world where the data are decades old and we’re just guessing at the population. Still, such celebrations — if they are celebrations — do pass the time.

[. . .]

So Malthus was wrong?

Even Robert Malthus realised that there was such a thing as birth control. His more excitable successors, such as Paul Ehrlich, author in 1968 of The Population Bomb, have been fairly thoroughly rebutted by subsequent events. Dan Gardner, author of the fascinating Future Babble, summarises Ehrlich’s three scenarios for the 1980s as “everybody dies” (starvation-triggered nuclear war), “every third human dies” (starvation-triggered virus) and in the optimistic scenario “a billion people still die of starvation”.

October 28, 2011

Peter Foster suggests a rewritten plot for the Atlas Shrugged movie

Filed under: Economics, Liberty, Media — Tags: , , , — Nicholas @ 12:38

Peter Foster reviews the Atlas Shrugged movie:

The movie is set in today’s not-too-distant future, but has kept Dagny in railroads and Hank in metals by positing a massive oil crisis due to the implosion of the Middle East. The Dow at 4,000 we can believe, but oil at $37.50 a gallon? At that price, a Chevy Volt might actually not be such a bad deal. Domestic oil is once again king (despite being utterly unaffordable) but is being carried by train. Whatever happened to pipelines?

None of this makes much sense. Perhaps the plot should have been left as a future-of-the-past, like, say, Sky Captain and the World of Tomorrow, or it should have been thoroughly reformulated to reflect statism’s new threats. How’s this for a rewrite? Dagny now runs a pipeline company trying to build a huge new system for a form of oil previously uneconomic but now made available by wonderful advances in capitalist technology. Let’s say this oil is located in Alberta and her line is to go to the U.S. refineries of the Gulf Coast, to replace imports from dictatorships.

Hank is still in the steel industry but his new wonder metal is now to be used to build a cheaper, stronger and safer type of pipe. However, he is opposed not by other steel or pipe makers, but by a pack of meretricious, politically-savvy environmental NGOs. These organizations are fronted by naive chanting muddle heads, who have no idea where their rich lifestyles originate, and backed by capitalist foundations (the irony!) that have been hijacked by socialists, and by CEOs either too cowardly or stupid to say no (or by those who seek to take advantage of government handouts to produce throwback technologies). These NGOs claim that the oil is “dirty” and destroying the climate and that Hank Rearden’s new and better steel in unsafe, and threatens aquifers and environmentally sensitive areas. Their hysterical claims are eagerly swallowed by a gullible liberal media. Meanwhile politicians, despite high unemployment, are prepared to sacrifice tens of thousands of jobs because they, too, are cowed by the ENGOs, and in any case attracted by the unparalleled power prospects of aspiring to control the weather.

I know this is all a bit far fetched, but we are talking a movie plot here.

October 27, 2011

Postponing retirement: late Boomers and Gen X’ers face reality

Filed under: Cancon, Economics — Tags: , , — Nicholas @ 00:04

Jonathan Chevreau shows that those of us getting a bit closer to retirement will have to wait longer than the previous generation before retiring:

The “double whammy” of falling stock prices and low interest rates has impacted members of DC pensions and RRSPs, who must cover the deficit through reduced personal spending and/or deferred retirement.

Towers Watson has issued its first quarterly DC Retirement Age Index, which it describes as a pension freedom tracker. It tracks the performance of a balanced portfolio of a DC plan member who has contributed to the plan from age 40 to 60. At that point, an annuity would be purchased but its value and monthly payout would depend on the performance of the plan over those 20 years.

[. . .]

With recession threatening, ongoing market volatility and falling interest rates, Towers Watson expects the Pension Freedom Age could move up to 67, or two years after the traditional retirement age (when Old Age Security and full Canada Pension Plan benefits commence).

October 25, 2011

QotD: Tax policy

Filed under: Economics, Government, Quotations — Tags: , — Nicholas @ 10:00

One of the reasons I despise tax policy is that it so rarely turns on the utilitarian aspects of taxes and instead focuses on political and social issues (a tax “rewards” one group or “punishes” another). Liberals fret about how “progressive” a tax regime is because their main concern is that the wealthy pay more than the poor; conservatives fret about “punishing success” by taxing the creators and makers higher than the cheats and deadbeats. The problem is that the word “fair” is interpreted differently depending on where you stand in the ideological spectrum: to me, “fair” means that I pay the same tax rate for my place in this Republic as any other citizen; to a liberal, I suspect that “fair” involves overtones of social justice and victim-hood and so on. But regardless of where you come down on taxation, I think it is important that every person pay at least some amount of taxes, just to provide a reminder that government isn’t free — and that the more government you have, the more it costs.

“Monty”, “DOOM: I’m tore down, I’m almost level with the ground”, Ace of Spades HQ, 2011-10-25

October 24, 2011

The next financial bubble: student loans

Filed under: Economics, Education, Government — Tags: , — Nicholas @ 12:08

Coyote Blog explains why student loans are the next big financial bubble and why student loans are fundamentally different from ordinary loans:

When you mess with pricing signals and resource allocation, you get bubbles. And one could easily argue that OWS is as much about the student loan bubble bursting as about Wall Street.

I must say that I never had a ton of sympathy for home buyers who were supposedly “lured” into taking on loans they could not afford. The ultimate cost for most of them was the loss of a home that, if the credit had not been extended, they would never have had anyway. US law protects our other assets from home purchase failures, and while we have to sit in the credit penalty box for a while after mortgage default or bankruptcy, most people are able to recover in a few years.

Student loans are entirely different. In large part because the government is the largest lender via Sallie Mae, student loans cannot be discharged via bankruptcy. You can be 80 years old and still have your social security checks garnished to pay back your student loans. You can more easily discharge credit card debt run up buying lap dances in topless bars than you can student loans. There is absolutely no way to escape a mistake, which is all the more draconian given that most folks who are borrowing are in their early twenties or even their teens.

I can see it now, the pious folks in power trying to foist this bubble off on some nameless loan originators. Well, this is a problem we all caused. The government, as a long-standing policy, has pushed college and student lending. Private lenders have marketed these loans aggressively. Colleges have jacked costs up into the stratosphere, in large part because student loans disconnected consumers from the immediate true costs. And nearly everyone in any leadership position have pushed kids to go to college, irregardless of whether their course of study made even a lick of sense vis a vis their ability to earn back the costs later in the job market.

Government to freeze Canadian Forces at current size and sell off surplus properties

Filed under: Cancon, Economics, Military — Tags: , , , — Nicholas @ 09:38

David Pugliese reports on the federal government’s announced freeze-and-sell-off in the Department of National Defence:

The size of the regular Canadian Forces will be frozen at 68,000 people for the next several years and the military and Defence Department will look at selling off property and shutting down facilities as part of its belt-tightening, according to documents obtained by the Ottawa Citizen.

The new directive from Chief of the Defence Staff Gen. Walter Natynczyk and Deputy Minister Robert Fonberg outlines in broad terms how DND and the Canadian Forces plan to deal with a tighter fiscal situation between now and 2016.

A national plan will be developed for DND’s property holdings, putting emphasis on only keeping sites that support operations, the directive notes.

[. . .]

DND’s property holdings are massive, comprising of approximately half of all federally owned buildings. They include various bases across the country. In total DND has 21,000 buildings and 800 parcels of land covering 2.25 million hectares.

That portfolio also includes a large number of buildings with cultural and historical significance to local communities. There are 318 buildings that are considered as heritage structures, including the Cartier Drill Hall in Ottawa, La Citadelle in Quebec City and the Seaforth Armoury in Vancouver.

But the reference to dumping property has some wondering whether base closures could be coming.

October 22, 2011

This probably explains why the “typical” comic book reader is no longer a young teen

Filed under: Economics, Media — Tags: , , — Nicholas @ 11:30

It’s all in the economics of the comic book world:

Looking at the graph we can see that the relative price of a comic book stayed around a buck until 1970 or so, slowly ramping up to a buck fifty over the next 15 years. That’s a 50% increase. From 1985 to 2000 the price almost doubles (100%) getting neat three dollars. From 2000 to 2011, it’s around a 33% increase.

It’s a fact that costs increase over time, so I’m not saying prices could remain at a buck forever. But it is hard to see how young kids and teenagers can get into comic books, it’s simply too expensive. For $20 you get 5-7 books. Serious comic readers will pick up 10-20 books a week. A few years ago, when I was a more regular reader, I would the totals of other people routinely $30-50 a week. That’s $120-200 per MONTH. There can’t be many parents helping pay that much for a kid’s comic habit.

When my family came to Canada in 1967, one of the things I missed the most were British comics. Canadian American comics were very different from what I was used to, so I never really became much of a comic collector. I’d pick up the odd few, but it never was a “have to buy” item for me. I remember having to decide whether I wanted the immediate satisfaction of a chocolate bar or a can of pop, or the slightly longer-term satisfaction of a comic book. Immediate satisfaction won more of the time, and with my princely 25 cents per week allowance, there wasn’t a lot of satisfaction whichever way I decided to go.

October 21, 2011

Is the cost of living really rising?

Filed under: Economics, Food, History, Technology — Tags: , , , — Nicholas @ 12:55

October 20, 2011

Timer now started for how quickly Quebec forces Harper to override shipbuilding contract awards

Filed under: Cancon, Economics, Military, Politics — Tags: , , , , , , — Nicholas @ 12:08

The National Post editorial board has lots of nice things to say about the federal government’s attempt to take politics out of the huge shipbuilding contract process:

On Wednesday, the Tory government released its Solomonic decision regarding which shipyards will build $33-billion in new military and non-military vessels over the next two decades. The evaluation of bids for the largest government procurement contract since the Second World War was handled by senior bureaucrats, rather than cabinet ministers. Even the announcement of the winning contractors was made by Francois Guimont, the top civil servant from Public Works and Government Services, rather than his minister or the minister of National Defence, as would have been the case with past contracts of this magnitude.

Of course, that’s not to say there will be no political backlash from the decision. Irving Shipbuilding of Halifax will be given $25-billion to build new joint support ships, Canadian Surface Combatants — a sort of destroyer-frigate hybrid — and offshore patrol vessels capable of sailing off all three of Canada’s coasts — east, west and Arctic. Seaspan Marine of Vancouver will build science vessels for the Coast Guard and for the Fisheries department, plus icebreakers worth a total of $8-billion. That means Davie Shipyard in Levis, Que. was left without a major shipbuilding contract (though Davie is still eligible to bid on a further $2-billion contract to provide smaller government boats, such as Fisheries patrol vessels). It must have been tempting for the Tories to intervene in the contract-award process and toss Quebec a bigger bone. Their recent decision to expand the grasp of the official languages commissioner to several airlines, and their willingness to give new seats to Quebec in the House of Commons (despite the fact Quebec was not underrepresented there), just because Ontario, B.C. and Alberta were getting more, shows the Tories have become very concerned about their appeal to Quebec voters.

You can guarantee that many Quebec politicians will benefit for having yet another stick to beat the federal government with — this would be true in all scenarios except the one where the Quebec shipyard got both contracts. It would be an even better deal for the taxpayers (and perhaps even the Royal Canadian Navy) if the contracts hadn’t been restricted to Canadian shipyards: it wouldn’t fly politically, but it would almost certainly have been better bang for the billions of bucks.

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