30 Jobs “Created or Saved” in Phantom Congressional Districts

ABC News broke the story this week of an executive administration that, ambitious to appear in control of the economy during this steep recession, reported patently false stimulus-related employment information. The Recovery Board, a task force created to track the $787 billion in federal stimulus spending, published on its website data for jobs “created or saved” in congressional districts that don’t even exist!

In one example, the stimulus tracking website reported that 30 jobs have been “created or saved” in Arizona’s 15th congressional district. Arizona only has eight congressional districts.

Late Monday, officials with the Recovery Board created to track the stimulus spending, said the mistakes in crediting nonexistent congressional districts were caused by human error. “We report what the recipients submit to us,” said Ed Pound, Communications Director for the Board. Pound told ABC News the board receives declarations from the recipients – state governments, federal agencies and universities – of stimulus money about what program is being funded.

Has the government ever heard of research assistants? Fresh college grads willing to do menial tasks (like research and fact-checking) for a small pittance are in no short supply in Washington DC. Hiring a small staff of people to double-check the validity of reported numbers would be a minor cost for the Recovery Board, but it would save them the embarrassment of looking either shady and deceptive or downright incompetent.

X-posted at OpenMarket.org.

CEI’s Hans Bader has more on the story.

Filed under: Economics, Politics, bureaucrats is stupid

Trade-offs

I’m at work reading through the grant requests for stimulus money for the federal broadband internet plan, and it’s driving me insane. Companies and state telcos are asking for millions and millions to roll out fiber and gigabit services to places like rural Iowa and Mississippi.

Listen, there are trade-offs that come with living in Nowheresville, Midwest. Iowa =/= San Francisco. In exchange for less congestion, fresh air, sprawling backyards, less crime, good midwestern sensibilities, etc., you don’t get state-of-the-art broadband. There just aren’t enough people (“demand”) to support it. In fact, there’s a whole host of things you don’t get in rural America: Whole Foods and other upscale grocers, good ethnic dining, gay culture, couture fashion, iPhones, high costs-of-living, the crazier kinds of democrats, the list goes on and on.

I mean, the very fact that there are still people living in Mason City, Iowa means that there are people who are happy to watch their television programs over their cable connections, rather than via internet streaming. Believe it or not, there are a lot of people in rural areas who just aren’t that worked up over their internet speeds. Policy-oriented technophiles ought to stop trying to turn the country’s boondocks into Tokyo.

If WiMax or Vios is so freakin’ important to consumers – and I mean consumers, not the network companies that stand to profit by using tax dollars to roll out heavily-subsidized networks that wouldn’t otherwise be supported in these locations – then move to an urban center already.

Filed under: Economics, Tech Biz, government is stupid

Starbucks Ban Laptops?

That’s the question posed by CNET, as apparently several NYC coffee shop owners are restricting the time they allow their patrons to squat on their wifi networks, sans-beverage:

Some coffee shop owners in New York even cover up electric outlets, so that the enterprising, the impoverished students, the merely very lonely or the merely very brazen cannot boot up, sip java, and take up valuable table space all day. Which leads one to wonder just how painful it would be if Starbucks took their lead and banned laptops throughout its vast network.

So, should Starbucks follow suit and place limits on the amount of time customers can hook up to their wifi? My answer is an emphatic “heck no!” Give me your geeky, your parched. If I owned a coffee shop in a neighborhood where my competitors were kicking people out, I’d add more outlets, more seating, and more drink options at various price points to encourage all-day websurfers to approach the counter again. $6.50 for a coffee, with free refills all day? The customers spend their money upfront and stick around for as long as they like. $1 sodas or iced teas? That’s a ridiculously good deal when making a decision at the margin. Food-and-drink specials? Whatever gets a customer to spend their money and have a good experience at my coffeeshop. There’s no need for  some snooty barista to shoo them away once their drink is gone.

There’s an obvious market demand for “free” wi-fi (by “free” I of course mean at the point of use – obviously the costs are hidden in the price of drinks and food). Any enterprising business owner would seek to meet that demand, especially when his or her competitors turn a blind eye to it.

Filed under: Economics, Tech Biz, Economics, public wifi, Starbucks

Liberaltariansim and Women

This cosmopolitan word that suggests a new alliance between leftists and libertarians has been floating around the libertarian blogosphere for the last few months (or since we all realized that the Democrats were going to clean up in the 2008 elections). Robin Hanson recently suggested that the reason this alliance won’t work is because the standard libetarian “heroes” more closely resemble those of conservatives rather than those of liberals:

Libertarians support low taxes because individuals should be free to choose how their money is spent, rather than being forced to accept collective choices.  Conservatives support low taxes so that those who have worked hard for their money can show off the fruits of their labor and earn full respect for it.

Libertarians support gay marriage because individuals should be free to have whatever consenting relations they want.  Liberals support gay marriage because they want us all to officially respect gays as much as straights; gay activists have earned their group more respect.

It seems to me that libertarian self-made heroes are more similar to conservative community pillars than to liberal subgroup activists.  Self-made men are mostly not made in the bedroom; their glory shows more in their income than in their subgroup identity.

An interesting theory, to be sure, but it raised a question for me: what about the heroines of libertariansim?

Isn’t the libertarian movement already dominated by men? The “self-made man” archetype seems pretty ingrained, across cultures even, and isn’t going away any time soon. In fact, I can’t think of many male American heroes who weren’t of the self-made ilk. And while the modern leftist movement may share roots with the  feminist movement, women have pretty much caught up to men in the most salient aspects of equality* (yes, I know, we’re not at “perfect equality,” but we’ve come a damn long way in the last century. Think of it like a logarithmic curve; we’re past the steep ”knee of the curve” and are now on the gradual incline towards greater equality).

The libertariat would do well to attract more women, and “Liberaltarianism” is the perfect way to do this (confession: I’m a former liberal-turned-libertarian woman, so I’m either biased, or I have insight). Associating with stuffy church-y conservatives, philosophically-radical anarchocapitalists, or back-woods Ron Paul-tards isn’t going to score any points with modern, educated women. On the other hand, carrying the banner for free speech, religious freedom, gay rights (there’s definitely an over-representation of gay men in the movement), etc. while also carrying the message that the free market is the greatest humanitarian tool we have for helping the poor seems like a viable PR strategy.

Women are more educated than ever before. They are perfectly capable of understanding basic economic principles like the gains from trade, shortages and surpluses, and dead-weight losses. A compassionate woman who believes in free speech and individual liberty, and who is also educated enough to understand the role that market mechanisms play in wealth creation could be the new face of libertariansim. This is what “compassionate conservatism” should have been in the first place: fiscally conservative and socially tolerant.

Imagine if Hilary Clinton adhered to the economic theory of the Chicago school. She could have bitch-slapped (no pun intended) Barack Obama back to Chicago early in the primaries, and still beat the geezer-ly McCain on social issues. Oh, if only…

*Let’s not forget that here in the west, we’re leagues ahead of women in other parts of the world: we’re not stoned to death for being accused adultery, we can support ourselves if we need to leave a bad or abusive marriage, and we, uh, still have our clitorises.

Filed under: Economics, Politics, conservatism, liberalism, liberaltariansm, libertariansim

An Open Letter to the Economist

SIR – Over the last several months, each issue has dutifully contained the most up-to-date news and developments in the global financial crisis and its fallout. However, I’ve noticed that each story seems to follow the same form:

1. “Global markets slide into recession”
2. “Falling home prices/rising unemployment/dried-up credit is hurting ordinary consumers.”
3. “The bankers on Wall Street prospered – or did they?”
4. “Massive government intervention was unavoidable”
5. “It was clear that something had to be done, but it’s not clear we did the right thing.”

You realize that your publication is called The Economist, right? Far be it from me to tell you how to do your jobs, but did you ever consider trying to figure out what the right course of action would be? Have you thought of offering alternative economic policy proposals? You are supposedly the experts. That’s strongly implied by the title of your magazine. It isn’t Journalists Writing About Political Economy. You don’t even have to take one side or the other – it would be acceptable to provide multiple analyses that reach different conclusions using various assumptions (although, one can argue that if you’re willing to throw your undivided support behind a presidential candidate, it’s not too much to expect you to express support for a single policy).

Look, I don’t mean to be harsh. I love your magazine, really. And that t-shirt you sent me when I subscribed, the “Think Responsibly” one? – it’s nice. And yes, I know that economics is a discipline where hindsight is 20-20 and foresight is legally blind. All I’m saying is that I’m a little tired of your so-called experts declining to offer up any concrete analysis or solutions for getting out of the most severe recession we’ve seen in decades. I was with you when you tepidly supported – without any real rhyme or reason given - the massive bailout of Wall Street. I figured your team of professionals would have more expert knowledge than I received with my bachelor’s degree in economics. But since then, you’ve become the print equivalent of a cable news channel, conflating mere “coverage” with “informative analysis.”

Grow a backbone.

Respectfully submitted 2/14/09.

A/N: Yes, I really sent this. Also, happy Valentine’s Day, readers!

Filed under: Economics, Politics, bailout, credit crisis, journalism, recession, The Economist

Idea vs. Execution

Techdirt’s article on marketplace losers who litigate compares the economic value of an idea vs. the business execution, citing Facebook’s recent settlement with ConnectU, a failed social networking site which accused Mark Zuckerburg of stealing their idea.

Well, we keep seeing scenarios where winners innovate, but losers litigate. That’s because the market “losers” claim that they had the “idea” that allowed the winners to innovate and succeed in the market. But, of course, that overvalues the idea and greatly undervalues the actual execution. Anyone who’s built a successful business recognizes that it’s the process and execution that leads to success — not the idea. But, with courts all too often rewarding the losers, it’s simply too lucrative for marketplace losers not to sue… Imagine being handed millions for failing in the marketplace? Why wouldn’t you litigate? But, if you believe in basic free market capitalism, you should recognize how this is rewarding exactly the wrong behavior. It punishes those who best served the market, and rewards those who couldn’t serve the market.

How do we determine the economic value of a business idea in the first place? Or of intellectual property in general? Should there be protections in the form of copyrights for the original “idea people?” Could not having such protections in place inhibit innovation – by making it riskier and hence less attractive?

I’m open to arguments from all sides regarding IP.

Filed under: Economics, Tech Biz, intellectual property

Quoting Milton Friedman

I’ve been re-watching Friedman’s 1980 PBS series “Free to Choose,” and came across this little gem last night:

I take it you think we don’t have socialism. I would say to you that 35* percent of every corporation in this country is owned by the U.S. Government. That’s the corporate income tax, that means out of every dollar of profit the corporation makes, 35 cents goes to the U.S. Government. The actual tax is far higher than that because you tax that doubly when it comes to the individual. The extent to which corporations control their investment decisions has been increasingly reduced. The government is dictating what they spend their investment funds on in the name of pollution control, in the name of other things. It’s a myth to suppose that there is some kind of a big corporate power over here. There was a time when corporations were more influential than they are now, but at the moment I think they’re a beleaguered minority rather than a dominant majority.

*at the time of the show’s taping, the corporate tax rate was actually 46%.

Filed under: Economics, Economics, free to choose, Milton Friedman, taxes

Current Reads

Steven Landsburg’s More Sex is Safer Sex: The Unconventional Wisdom of Economics. Everytime I pick up a well-written “pop-econ” book, I’m reminded why I fell in love with this subject: unconventional wisdom, indeed. For example, the book’s title is explained in chapter 1, where Landsburg argues that incentivizing relatively chaste (and likely, HIV-negative) people to become more promiscuous would be beneficial for society. The more uninfected people who enter the “dating” (sex) pool, the greater everybody’s chances of selecting an uninfected partner. But that’s not all, the benefits are double: if a normally chaste person is unfortunate enough to take home an infected partner and contract a virus, he or she will be less likely to spread the disease on to future partners (as opposed to a more promiscuous person). The chapter goes on to explain how this outcome may be acheived through various incentive programs.

Obviously, this argument abstracts out several important factors that come into selecting a “date.” For example, promiscuity can be an indicator/result of attractiveness or desirability, whereas chastity may result from a lack of dating options. An attractive, promiscuous person’s options won’t necessarily become anymore limited if a chaste, unattractive person enters the dating competition. Likewise, an undesirable person who joins the dating pool isn’t guaranteed a partner.

Other interesting tidbits:

• Beautiful women don’t marry any “better” than average women. (Is the structure of the “marriage auction market” to blame?)
• Assuming that people who engage in criminal behavior are generally attracted to high-risk, high-payoff activities, a more effective way to reduce crime would be to increase the rate of convictions, rather than increasing the severity of the punishment (the MSU administration should be paying attention to this).
• Parents of boys are less likely to divorce than parents of girls (apparently, my parents’ divorce was my fault). The exact reason isn’t known, and many theories are explored in the chapter. One theory that I enjoyed pondering was the notion that girls without fathers have low self-esteem and become promiscuous, while boys without fathers have low self-esteem and become socially withdrawn. Fathers help boys pass down their genes more than they help girls.
• Based on pure cost-benefit analysis (and some exaggerated estimates of the damages done by computer virises), society would be better off executing a convicted computer hacker than a murderer.

In all, this is a fascinating book, and is definitely accessible to the non-economist.

Filed under: Bookz, Economics, books, Economics, pop-economics, sex, steven landsburg

Ignoring Comparitive Advantage

This question came up on Slashdot over the weekend:

“My niece just took the ACT and got a perfect score on the math section. 25 years ago, when I took the test, the kids who aced the math section were pretty special. Her score, combined with straight A’s so far in high school, suggest to me that she might be able to go to a top university (MIT?) based on her math aptitude. The rub is that she doesn’t like math or science, even though she finds them easy. She doesn’t want to be an engineer or scientist. I thought the folks here would be a great group to ask: What are some creative, not too nerdy professions that nonetheless require a talent for math, engineering, or science?”

My $0.02: economics, of course!

The question resonates with my own experience. When I was in high school, English class was always an easy A. I scored a perfect 36 on the Language/English section of the ACT exam, and while I also did well on the math and science sections, my scores certainly didn’t indicate that I was MIT material. Anyway, despite (apparently) being an articulate young adult, I’d never had any aspirations to put my 99th-percentile comparative advantage in language to use vocationally (and some of you who know me well enough know that these days I tend to think of myself as verbally stunted). I dread writing speeches, and I haven’t read a novel in years.

I entered college intending to pursue computer science, which I did for almost four years and was left unfulfilled (although it wasn’t all for naught; I got hella geek-points for my trouble). Following a short hiatus, I returned to school to study economics, a subject I’ve come to love with unmatched enthusiasm. Econ is both quantitative and analytical, without a doubt, although the most widely-recognized economists hold in common the ability to use words effectively to communicate their ideas – think Thomas Sowell, Milton Friedman, or Paul Krugman. (Might economics be a field that reconciles the “left brain/right brain” split?)

In the last few months, I’ve decided to jumpstart my long-neglected wordsmithing. I’ve brought my inner verbal ninja out of retirement and have started blogging, which I really enjoy. I’m generally a believer of the idea that we are who we are, we should exploit our natural talents, etc. However, today I’m at a bit of an impasse: I graduate in a mere four weeks, and though I want to pursue graduate study, I’ve ruled out getting a PhD in economics – too mathematical, esoteric even. I’ve actually been kicking around the idea of (gulp) law school, can you believe it?* Hey, aren’t economists among the top scorers on the LSAT?

Of course, adding $100k+ onto my personal debt load isn’t looking too appealing. What other careers would be appropriate for a reformed scientist-turned-economist who has rediscovered her comparative advantage in language? (And don’t say politician…)

*This in no way is an announcement of any plans to attend any type of graduate school.

Filed under: Economics, Science & Technology, comparative advantage, Econ, human capital, Science

Andrew Keen is wrong, wrong, wrong!

Culture-snob Andrew Keen is at it again. Earlier this week, he predicted that the trend towards more and more “free” stuff on the internet – software, social applications, media – is coming to an end with the approaching recession. As you may have guessed from the post title, I think he’s wrong.

His first and most obvious error: Keen assumes that people consider blogging, open-source coding, developing social networking websites as “labor” in the conventional sense. Might not people do these things because they consider them leisure activities? (Disclosure: I used to be a programmer – it’s kinda fun).

Keen’s analysis also falls short by ignoring the underlying economics of the situation. In a competitive labor market where many workers are competing for few jobs, firms look to hire the best people they can get for the wage they’re willing to pay. In the software industry, developing or contributing to open-source software is commonly how young programmers gain experience and build portfolios, and is a good way to advertise their skills and entice prospective employers. If more programmers must compete for fewer jobs, one would expect to see more, not less, open-source software in the future, as young coders scramble to augment their skill sets. Similarly, aspiring web designers, internet moguls, and youTube auteurs ought to be creating more web pages, social apps, and internet films. And up-and-coming journalists and writers would – you guessed it – write and blog more. It’s called “human capital,” Andy.

My human capital-accumulation plan: graduate school!

Filed under: Economics, Internet, andrew keen, human capital, Internet, labor economics, open-source