BBC Earth Lab
Published on 14 Feb 2013James May imparts his knowledge to let us know that diamonds aren’t that rare after all.
James May’s Q&A:
With his own unique spin, James May asks and answers the oddball questions we’ve all wondered about from ‘What Exactly Is One Second?’ to ‘Is Invisibility Possible?’
December 26, 2017
What makes a diamond priceless? – James May’s Q&A (Ep 7) – Head Squeeze
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December 25, 2017
Repost – The market failure of Christmas
Not to encourage miserliness and general miserability at Christmastime, but here’s a realistic take on the deadweight loss of Christmas gift-giving:
In strict economic terms, the most efficient gift is cold, hard cash, but exchanging equivalent sums of money lacks festive spirit and so people take their chance on the high street. This is where the market fails. Buyers have sub-optimal information about your wants and less incentive than you to maximise utility. They cannot always be sure that you do not already have the gift they have in mind, nor do they know if someone else is planning to give you the same thing. And since the joy is in the giving, they might be more interested in eliciting a fleeting sense of amusement when the present is opened than in providing lasting satisfaction. This is where Billy Bass comes in.
But note the reason for this inefficient spending. Resources are misallocated because one person has to decide what someone else wants without having the knowledge or incentive to spend as carefully as they would if buying for themselves. The market failure of Christmas is therefore an example of what happens when other people spend money on our behalf. The best person to buy things for you is you. Your friends and family might make a decent stab at it. Distant bureaucrats who have never met us — and who are spending other people’s money — perhaps can’t.
So when you open your presents next week and find yourself with another garish tie or an awful bottle of perfume, consider this: If your loved ones don’t know you well enough to make spending choices for you, what chance does the government have?
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December 24, 2017
Post-Brexit Britain as “a Venezuela without the oil or the tropical climate”
Theodore Dalrymple on the possible downsides of a hard Brexit:
Important (for good or evil) as Brexit may be to the future of Britain, it is not without its importance for the European Union. Indeed, it was always essential for the Union that Britain’s departure should be an economic disaster for Britain: for if it were not, why have a union at all?
It was therefore entirely predictable that the Union should drive a hard bargain with Britain, even a bargain economically harmful to itself, provided only that it was worse for Britain: for the self-preservation of the European political class is at stake. In the European Union politics always trumps economics.
In Britain too, political considerations were uppermost in the minds of those who voted for Brexit. They saw in the European Union a Yugoslavia in the making, led by a megalomaniac class without effective checks or balances. But now they are increasingly apprehensive of the economic costs of Brexit.
And the economic auguries for Britain are indeed poor, though not only, or even principally, because of the European Union’s hostility. The fact is that Britain is unlikely to be able to take any advantage of life outside the European straitjacket because its own political class is itself in favour of straitjackets that are no better, and quite possibly worse than, the European ones. The present Prime Minister, Theresa May, is very much a statist, indistinguishable from European social democrats, and the leader of the opposition, Mr Corbyn, who might well be the next Prime Minister, is an unapologetic admirer of Hugo Chavez. It is hardly to be expected that foreign investors will place much trust or confidence in an isolated country whose next government might very well weaken property rights, impose capital controls and increase corporate taxation in favour of supposed social justice. It would not take very long to turn Britain into a northern Venezuela: a Venezuela without the oil or the tropical climate.
Moreover, Britain already has many weaknesses and few strengths. It has a huge and persistent trade imbalance, because it does not produce enough of what the world wants and cannot easily be made to do so; it has a large national debt, about the same size as that of France, but without a highly functioning infrastructure such as France’s to show for it; its household debt is among the highest in the world. For many years, its economic policy might as well have been presided over by Mr Madoff; its social policy has been to smash up all forms of social solidarity or support for the vulnerable that do not pass through the state. The destruction of the little platoons has been very thorough: most large ‘charities’ in Britain are now dependent on government rather than on private funding, and hence are in effect departments of state.
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December 22, 2017
Remy: Bitcoin Billionaire
ReasonTV
Published on 21 Dec 2017Remy rides crypto to the moon.
—–
Written and performed by Remy. Produced by Austin and Meredith Bragg. Music tracks mastered by Ben Karlstrom. Music by J-Beats Productions.
Lyrics:
I was broke, unemployed, I was starting to slouch
I was sleeping in the basement on my momma’s new couch
That’s when I heard it all, a chance to skirt it all a money like my last girl
Completely virtual…Got the top graphics cards, got a power supply
a microprocesser, a motherboard, a towering drive
I put the RAM in the RAM slot, drive in the larger bay
topped it off, two fans
Like a Chargers game!Price spike to $30!? I missed out, I fear
crudely assemble a rig like a BP engineer
My friends and family smile and smirk and all make fun of me
But I’m-a make them eat their words because I’m gonna be aBitcoin Billionaire
Spending money like I don’t care
Mining coin in my underwear
I’m gonna be a Bitcoin BillionaireSelecting software and reading the notes
I’m picking out my favorite miners like a Penn State coach
Pick me a digital wallet for holding all my amounts
read up on the all the ways to open lots of accounts I feel like Tom Brady,I got a fear of inflation
But this is crypto, baby — central bank decentralization
The script I flipped it, laptop encrypted
My life was rotten now all my cotton’s Egypt-edNow even on my vacation I’m crypto-supplying
They call me gentrification the way I’m block-modifying
Friends asking “what’s the best part of your newfound treasury?”
I say “reminding you how you told me I’d never be a…Bitcoin Billionaire
Spending money like I don’t care
Flash drives in their underwear
Now that I’m a Bitcoin BillionaireThe cash was never-ending, yo
upscale and fun and rowdy
I was spending like a 7 on a
scale from 1 to SaudiCall it mad bankin’, all night and all weekend
My rig is Al Franken:
(grabs what it can while you sleepin’)Just try outspending me and you’ll see I’m on a mission
I drop more Satoshis than a clumsy Japanese obstetrician
But I ain’t open to splits, don’t care if it’s best or not
Opposing forks like a Chinese restaurantI went from geek to chic, from basic to ASIC
I went from basement-squatting to yachting from basin to basin
Went from no friends and depression to peer-to-peer legendBitcoin Billionaire
Spending money like I don’t care
Then one day there was a solar flare…I was a Bitcoin Billionaire
Spending money like I don’t care
Now I just pawned my underwear
Used to be a Bitcoin Billionaire.
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Learning To Be Yourself With Buddy The Elf
Foundation for Economic Education
Published on 7 Dec 2017The classic holiday film Elf offers a lot more than a good time and a bunch of laughs. It teaches you how to get the most out of your life by finding your comparative advantage – the intersection between what you’re good at and what people need.
After watching this video, download our free ebook “Your Life, Your Work” to learn more about how to find your own comparative advantage and build a life you’re excited about.
Get it here: https://info.fee.org/your-life-your-work
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QotD: Economic lessons from Christmas toy shortages
Toy marketing on this elite level — Canada should be proud! — creates enraged parents. Hatchimals disappeared from stores altogether many weeks ago, and the high prices commanded in the resale market have created an industry of colorful social-media abuse. Hatchimal hoarders (who can now command C$120-$140 on eBay for one egg) are alleged to be greedy monsters, ruining Christmas for single moms — that is, by making the toy available at a premium at a time when toy stores and the makers of the product are no longer any help. (If the toy had never been invented, or were otherwise unavailable at any price, there would be no cause for complaint.)
What we have here is the familiar operation of a strong human superstition: the belief in an illusory “just price” for a product. It is the same superstition that makes some music and sports fans angry at scalpers. But it is exacerbated in the Christmas-shopping milieu by the innate predicament of the parent, always an emotional hostage to their offspring.
The complainers know perfectly well their kids will survive if they have to wait a couple of months for a Hatchimal. They know they could buy many equally good (and equally ephemeral) toys for half what they might pay a Hatchimal hoarder. They probably even know, if I can play the obtuse childless know-it-all for a second, that an authoritative, confident parent could explain the situation to a child, and make them live with the explanation.
Parents always want Christmas to be just so, but in the people who are castigating Hatchimal resellers, you can hear the hints of desperation, maybe even bad conscience. The problem, angry moms and dads, is not the hoarders. They just saw the real problem coming, and it is you.
Colby Cosh, “How the Hatchimals Christmas craze got me to own up to my irrational baseball complex”, National Post, 2016-12-16.
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December 21, 2017
QotD: Milton Friedman’s four types of spending
Economist Milton Friedman famously divided spending into four types:
- I’m spending my own money on myself, in which case, I want to get the best combination of price and quality. This is the sort of spending that middle-aged women do on expensive handbags.
- I’m spending my own money on someone else, in which case I mostly care about price. This is why you get so many books you never read as gifts.
- I’m spending someone else’s money on myself, in which case … WEEEEE! This is the kind of spending that employees do on expense accounts. (Though not, of course, myself. I mean a generic employee with less moral fiber than I have).
- I’m spending someone else’s money on someone else, in which case … ah, who cares?
Megan McArdle, “Republicans Should Save These 3 Unpopular Parts of Obamacare”, Bloomberg View, 2017-01-05.
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December 18, 2017
QotD: The perils of well-meaning regulation
Because the rich and powerful run the government, the poor and other powerless have been regularly hurt by governmental regulation – even by such sweet-sounding regulations as evening closing of shops (making it hard for the working poor to have time to shop) or protections limiting the hours women could work (making it hard for them to hold supervisory jobs requiring one to come early and stay late) or building codes claiming to promote safety but instigated by building trade unions (making it hard to build inexpensive housing) or minimum wages (making it hard for blacks, immigrants, women, and nonmembers of craft unions to get paying jobs).
Dierdre McCloskey, Bourgeois Equality, 2016.
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December 15, 2017
QotD: Crony capitalism
First, we labor under a ubiquitous threat of being shackled by crony capitalists. [Adam] Smith wondered how internally stable a free market could be in the face of a tendency for its political infrastructure to decay into crony capitalism. (The phrase “crony capitalism” is not Smith’s. I use it to refer to various of Smith’s targets: mercantilists who lobby for tariffs and other trade barriers, monopolists who pay kings for a license to be free from competition altogether, and so on.) Partnerships between big business and big government lead to big subsidies, monopolistic licensing practices, and tariffs. These ways of compromising freedom have been and always will be touted as protecting the middle class, but their true purpose is (and almost always will be) to transfer wealth and power from ordinary citizens to well-connected elites.
David Schmidtz, “Adam Smith on Freedom” (published as Chapter 13 of Ryan Patrick Hanley’s Adam Smith: His Life, Thought, and Legacy, 2016).
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December 12, 2017
Kill the Mortgage Interest Deduction Now!
ReasonTV
Published on 11 Dec 2017Thankfully, one of the biggest scams in the American tax code is finally under attack in the House version of Republican tax reform.
It’s the mortgage-interest deduction, which lets homeowners deduct interest paid on mortgages of up to $1 million for two houses. Ever since owning a home has been a central tenet of the American Dream since the end of World War II and the rise of suburbia, it’s been a given that deducting mortgage interest from your taxes is as American as apple pie.
_____The House plan would limit filers to deducting interest on the first $500,000 of a mortgage on just one house, sending a blind panic through wealthy home owners, realtors, and the building trades, all of whom are terrified that a government subsidy is being yanked away from them.
But the real problem with the House bill is that it doesn’t go far enough. We should scrap the mortgage-interest deduction altogether and let housing prices reflect real market values.
The mortgage-interest deduction is typically justified by claiming that it lets people—especially vaguely defined “middle-class” people–afford homes. But it also increases the price of housing by making it artificially cheap to borrow, meaning homebuyers are willing to pay more. England, Canada, and Australia don’t let their taxpayers deduct their mortgage interest and they all have higher rates of homeownership than the United States.
The mortgage-interest deduction disproportionately benefits the wealthiest Americans, who soak up almost all the $70 billion a year it costs in foregone revenue each year. Reason Foundation’s director of economic research, Anthony Randazzo calculates that only 20 percent of tax filers claim the mortgage-interest deduction. That group by and large are part of six-figure households in a country where the median household income is $57,000.
Killing the mortgage-interest deduction might cause a one-time 7 percent drop in real estate prices, according to one estimate, with wealthy homeowners feeling most of the pain.
As a homeowner, that seems like a small price to pay to end a policy that distorts the real estate market, complicates the tax code, and benefits mostly wealthier Americans on the false promise that it makes home-owning affordable for the middle class.
The mortgage-interest deduction is just special interest pandering wrapped in a gooey story that equates “the American Dream” with having a mortgage. The tax code should be designed to raise the revenue necessary to pay for essential services, not to nudge and prod us into spending money on something the government decides is good for us.
Produced by Todd Krainin. Written and narrated by Nick Gillespie.
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December 9, 2017
The Trudeau sideshow in China
Colby Cosh on figuring out why Justin Trudeau’s trip to China didn’t end in the glory he and his handlers were clearly anticipating:
My favourite part of the fair has always been the sideshow. And when it comes to Justin Trudeau’s official visit to China, the sideshow definitely turned out to be the most interesting part of the proceedings. Interpreting the outcome of the visit involves a certain amount of old-fashioned Kremlinology, applied to both sides, but it seems fairly clear that Trudeau was gulled into providing Chinese leadership with some celebrity glamour in exchange for a big pile of nothing on Chinese-Canadian trade.
He came to China with hopes for progress on a future trade deal that would involve China accepting new labour, gender, and environment standards. But he collided with the newly aggressive Xi Jinping doctrine — a change in the official Chinese mood that insists on the country’s superpower status. China-watchers know that over the past year, in a process that culminated at the 19th Chinese Communist Party Congress in October, China has become more explicit, and more chauvinist, in claiming to pursue an independent, indigenous alternative model of economic and social progress.
[…]
Western commentators on China have, for a long time, had an implicit vision of a re-emerging bipolar world, with China in the old place of Russia as an ideological challenger to Western democracies. Xi is taking them at their word. China’s aspirations are no longer to follow or imitate the West, but to out-compete it on its own terms, without any of the untidy, politically dis-unifying elements of Western life — independent universities, newspapers that aren’t trash, multiple political parties, and the like.
Given this background, Trudeau arguably arrived in China at exactly the wrong moment. Formal talks on a China-Canada free trade agreement would have been the first ever between China and a G7 country. It turned out that there was more value for Xi in slapping the hand of friendship. The Global Times, an organ of the party’s People’s Daily newspaper network, published a cranky English-language editorial in the midst of Trudeau’s visit.
The editorial attacked the “superiority and narcissism” of Canadian newspapers, as an alternative to jabbing the prime ministerial guest in the eye personally. But it is easy enough to read between the lines. “Trade between China and Canada is mutually beneficial, more significant than the ideology upon which the latter’s media has been focusing,” wrote the tabloid’s editor, Hu Xijin. “When Canada imports a pair of shoes from China, will Canada ask how much democracy and human rights are reflected in those shoes?”
If Trudeau had been hoping to wipe away memories of his embarrassing stunt at the TPP negotiations by a Pierre-Trudeau-like Chinese breakthrough, the Chinese government clearly saw him coming a few thousand miles away and ensured that no such PR coup would be allowed.
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December 8, 2017
QotD: Why mid-20th century Americans ate what they did – 7
Entertaining was mandatory [in the 1950s]. Because people didn’t go to restaurants so much, they spent time having people over, or eating at someone else’s house. If someone had you over, you had to have them over. This meant people had to have “company dinners” they could make, or at least a stock of canapés they could throw together for a cocktail party, even if they weren’t very good at it. Cue the weird focus on prettying everything up, more than occasionally to the detriment of the food itself: if you can’t make it good, you can at least make it pretty, to show people you made an effort.
Megan McArdle, “Friday Food Post: The Economics Behind Grandma’s Tuna Casseroles”, Bloomberg View, 2015-10-30.
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December 7, 2017
Lawrence Solomon makes his pitch for “most hated by the bike mafia”
This was published last week, but I didn’t see it until it was linked from Instapundit:
Today the bicycle is a mixed bag, usually with more negatives than positives. In many cities, bike lanes now consume more road space than they free up, they add to pollution as well as reducing it, they hurt neighbourhoods and business districts alike, and they have become a drain on the public purse. The bicycle today — or rather the infrastructure that now supports it — exemplifies “inappropriate technology,” a good idea gone wrong through unsustainable, willy-nilly top-down planning.
London, where former mayor Boris Johnston began a “cycling revolution,” shows where the road to ruin can lead. Although criticism of biking remains largely taboo among the city’s elite, a bike backlash is underway, with many blaming the city’s worsening congestion on the proliferation of bike lanes. While bikes have the luxury of zipping through traffic using dedicated lanes that are vastly underused most of the day — these include what Transport for London (TfL) calls “cycle superhighways” — cars have been squeezed into narrowed spaces that slow traffic to a crawl.
As a City of London report acknowledged last year, “The most significant impact on the City’s road network in the last 12 months has been the construction and subsequent operation of TfL’s cycle super highway … areas of traffic congestion can frequently be found on those roads.” As Lord Nigel Lawson put it in a parliamentary debate on bicycles, cycle lanes have done more damage to London than “almost anything since the Blitz.”
As a consequence of the idling traffic, pollution levels have risen, contributing to what is now deemed a toxic stew. Ironically, cyclists are especially harmed, and not just because the bike lanes they speed upon are adjacent to tailpipes. According to a study by the London School of Medicine, cyclists have 2.3 times more inhaled soot than walkers because “cyclists breathe more deeply and at a quicker rate than pedestrians while in closer proximity to exhaust fumes … Our data strongly suggest that personal exposure to black carbon should be considered when planning cycling routes.” Cyclists have begun wearing facemasks as a consequence. A recent headline in The Independent helpfully featured “5 best anti-pollution masks for cycling.” Neighbourhoods endure extra pollution, too, with frustrated autos cutting through residential districts to avoid bike-bred congestion.
Health and safety costs aside — per kilometre travelled, cyclist fatalities are eight times that of motorists — the direct economic burden associated with cycling megaprojects is staggering. Paris, which boasts of its plan to become the “cycling capital of the world,” is in the midst of a 150-million-euro cycling scheme. Melbourne has a $100-million plan. Amsterdam — a flat, compact city well suited to cycling — is spending 120 million euros on 9,000 new bicycle parking spots alone. Where cold weather reigns for much of the year, as is the case in many of Canada’s cities, the cost-benefit case for cycling infrastructure is eviscerated further.
An answer might be dedicated bicycle-only routes, but the usual problem arises: the cost of the land necessary to build and maintain the routes will almost always be far higher than municipalities can afford to pay, and the benefits accrue more to upper-income users while the costs fall on the whole population. That’s just what we need: another way to transfer wealth from the poor to the rich.
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QotD: Why mid-20th century Americans ate what they did – 6
Look at the sources of our immigrants. Immigration is still the major way that countries get new foods (if you don’t believe me, go out for Mexican food in any European country and report back). With the notable exception of the Italians, in the 19th century, most immigrants were from places with short growing seasons and bland cuisines, heavy on the cream and carbohydrates. After we restricted immigration in the 1920s, that’s what we were left with until immigrants started coming again in the 1960s. Of course, Louisiana had good French food, California and Texas had a Mexican influence, but by and large what we ate in 1960 was about what you’d expect from a German/English/Irish/Eastern European culinary heritage, adapted for modern convenience foods. And people liked it for the same reason I like jello salad: It’s what they were used to.
Megan McArdle, “Friday Food Post: The Economics Behind Grandma’s Tuna Casseroles”, Bloomberg View, 2015-10-30.
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December 6, 2017
QotD: Why mid-20th century Americans ate what they did – 5
There were a lot of bad cooks around. These days, people who don’t like to cook, or aren’t good at it, mostly don’t. They can serve a rich variety of prepared foods, and enjoy takeout and restaurants. Why would you labor over something you hate, when someone else will sell you something better for only slightly more than it would cost you to make something bad?
In 1950, the answer was “because we’re not made of money.” A restaurant meal was a special treat, not a nightly event, and prepared foods were not so widely available, in part because women tended not to work, but also because food processing technology was so advanced. So women had to cook whether they liked it or not. Many of them didn’t like it, so they looked for ways to reduce the labor involved. And it’s far from obvious that what they did with those shortcuts was worse than what they would have done without them. Think of the kind of casserole a bad cook might have made without canned soup and frozen vegetables. She’d probably have boiled the vegetables, because that’s the easiest way to prepare them, and boiled them to death, because she wasn’t too fussy about timing. (Out of season, those vegetables would have been limited to a few hearty root vegetables.) If there was a sauce, it probably would have been horrible. Let’s not even start on what she might have done with the meat. Canned soup and frozen vegetables start sounding pretty good.
That was the baseline most people were working off. They were not comparing what they ate to what they might have gotten at a good restaurant; they were comparing it to what they would have gotten without the shortcuts, because, to reiterate, most of them rarely ate at a good restaurant.
Modern food writing has an enormous selection bias. The median cookbook reader is a much better cook, and much more interested in food, than the median audience of recipes from decades past. The bad cooks, the indifferent cooks, the folks with the cast iron palates and Teflon stomachs, are all off doing something else. And since good cooks tend to raise good cooks, the median food writer waxing lyrical about Grandma’s homemade beef stew doesn’t realize just how many bad cooks were around. Or that recipes needed to be written for them, because however limited their talents or interest, they still had to put a meal on the table every night. A lot of terribly mediocre recipes are floating around from the era, and that’s exactly what most of the terribly mediocre cooks were looking for.
Megan McArdle, “Friday Food Post: The Economics Behind Grandma’s Tuna Casseroles”, Bloomberg View, 2015-10-30.
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