EclectEcon

I didn't take it. I don't know who did, or I would be happy to give credit. Jack sent it to me, and I thought it was fascinating.

Despite how worked-up I get sometimes over the policy proposals of arrogant left-wing elitist interventionists, I have managed to control my language on this blog pretty well:


Created by OnePlusYou

According that website, I have cussed less than 94% of the blogs that have taken the test. Compare that with Rondi who, by comparison, swears like a trooper.

I figure the comments must affect the count. Why else would MR have a score of 6.6%? And there must be something wrong with the cuss counter if Phil got a zero.

From the National Post [h/t to Jack]:

Sex for pay is such a sober exercise that there are Web sites where escorts are reviewed like restaurants. The reviews usually focus less on the sex act and more on attitude, punctuality, conversation and even cuddling. ...

Most of the johns describe themselves as businessmen who regard hiring a sexual partner as a practical means of avoiding the time-wasting, emotionally precarious and often futile practice of working the bars in the vague hope of hooking up. In place of sloppy pick up lines, leaden conversation, booze-greased couplings and regret filled departures, they order up sex like Chinese food. The money assures the act is scheduled to the hour and, most importantly, that both parties are willing and enthusiastic. I know of one man who actually included weekly escort visits as a line item in his retirement plan. It sure beats lawn bowling fees.

When I left a comment at Bill Polley's blog yesterday and then posted more about the Solow growth model, I didn't expect to set off a barrage of discussion, but here's more fuel for the fire.

First, let me make clear (I would hope this would be unnecessary for Bill and Gabriel) that I have had correspondence with both Bill (anyone who takes up curling must be a good guy) and Gabriel off and on over the the past year or three, and I have enjoyed every bit of it. Mike I've known for off and on for over a decade and I have great respect for his intelligence and knowledge. Gavin's blog is a superb resource that helps highlight the insights that Adam Smith's work continues to provide.

Second, the basics of economic growth are extremely important: consumption uses scarce resources that cannot then be available for producing capital goods; saving allows investment, which means more will be available for consumption in the future. We all (I hope) teach something like this in our intro courses when we show that saving today shifts the production possibilities frontier outward for the future.

With those points made, I have two basic responses to Gabriel, Bill, Gavin (who also questions the teaching of the Solow growth model), Mike (who quite obviously did not take a course in law and economics from me) and anyone else who might have entered the fray.

1. Learning the Solow growth model just so I can learn more complex growth models that have little, if any, more relevance for the real world makes no sense to me. I remember all the papers of the late 60s and early 70s about "optimal growth", "turnpike theorems", etc., and they not only seemed pointless then, but I wonder if society would have been better off using them as mulch for people's roses.

2. More seriously, too many policy makers of the 60s and 70s used the Solow growth model (and its progeny) to justify throwing capital at developing countries, saying, "All they need is more capital to get above the minimum threshhold..." and of course the capital was rarely, if ever, used productively in those situations.

The best growth model, if you can call it that, I have seen says to create institutions that provide freedom of contract and let markets work smoothly (for example, see the work by Tim Harford and "Doing Business", which, a la the econ/law literature, emphasizes the importance of reducing transaction costs). We don't need the mathematical growth models; in fact, I wonder if they have a negative social product (other than the sorting mechanisms I mentioned in my original posting).

Recently I posed this question at Bill Polley's blog. I was serious and not trying to be flip. When I was a student, the Harrod-Domar growth models never made a lick of sense to me, and the Solow model seemed sterile and useless. Bill replied,

Same reason we teach the Ricardian model of comparative advantage.

Even though it oversimplifies reality to nearly the point of absurdity, it contains many useful insights that are vital to understanding more sophisticated models and policy discussions.

It introduces a way of organizing one's thinking about the topic at hand. (Growth accounting, in Solow's case... a very important concept.)

It is a touchstone in the literature for an entire field. One cannot be considered to be educated in that field without an understanding of it.

It can be augmented and extended fairly easily to obtain more interesting and potentially useful results.

Despite all that, we know that it is a bit too simple to be the only tool in our arsenal. Indeed, to use it as the only tool in our arsenal would be dangerous.

Would not each of these statement apply to the Ricardian model as well as the Solow model?

Maybe. And Bill sure knows more about this stuff than I do, so he's probably right.

But when I look at countries that have grown rapidly and countries that haven't grown rapidly, it seems to me that things like prices and interest rates, along with institutions, property rights, transaction costs, and entrepreneurship are much more important than exogenous technical change.

Yes the models are are a good exercise. Yes the models are a great seive for filtering the students and putting them through the hoops. But I really don't think the models are worth spending much (any?) time on.

Recently a colleague asked me if I teach anything about growth in my intro course. I replied that I teach nothing explicit about growth theories, but I do teach the Coase theorem and the importance of property rights and transaction costs in understanding exchange and growth.

In contrast, Ricardian comparative advantage lies at the heart of exchange; some would argue it is the only argument we have in favour of free trade. It is indeed based on heroic assumptions, but in many instances these assumptions do not detract from the usefulness of the concept. And at least comparative advantage depends on such basic concepts as opportunity costs and relative prices.

I confess. I have not seen Fitna, the movie. Having read some reviews, I don't really care whether I see it. I doubt if it is a very good movie or a very bad movie. But I'd rather read blogs or watch CSI on television.

If you really want to see it, there are lots of sites hosting it even though threats from Muslim extremists caused LiveLeak to remove it from their site.

Nevertheless....

As when the Danish cartoons caused so much violence among Islamic extremists, I am once again appalled and deeply concerned about the clash between their perceptions of their religion and the heretofore sacrosanct western ideals of freedom of speech. I am equally appalled that Canada's embarrassment to the world, Louise Arbour, has once again spoken out against freedom of the press and in favour of appeasing terrorists. Here is a letter my friend Eva sent Ms. Arbour:

I have just read that you have condemned the movie, "Fitna".

Have you seen it? I doubt it. I have seen it because I took advantage of the opportunity to watch it during the short number of hours it was shown on a web-site. I knew that the time would be short and, of course, threats have been made to the lives of the people who posted the film on the internet and they have been obliged to withdraw the film.

If you had seen it, you would know that the film consists of exact extracts from the Koran. Yes, the verses are very bloody and full of hate, but Wilders didn't invent the verses. What he did was to show that there are powerful, murderous sectors of the Islamic world who take the inflammatory, incitement contained in the verses very literally indeed. The verses were accompanied by newsreel shots of the incitement being carried out in the real world, by Islamic militants, not by Mr Wilders. The newsreel shots were originally broadcast on AL Jazeera, the BBC and other media outlets. You didn't complain then, did you?

Aren't you addressing your moralistic fervour in the wrong direction? Aren't you blaming the messenger and not the originators of the worldwide hate, blood, gore and mayhem? Admit, you are terrified of the true violators of human rights and turn your anger to those who point it out. If you were truly concerned with human rights you would speak out against the atrocities committed in the name of Islamic extremism.

I have moved about a thousand times. Each time I have bought new shower curtains and new shower-curtain rings. You know what? Every single time, the number of rings in a standard package has exactly matched the number of holes in the shower curtain. Amazing co-ordination, wouldn't you say?

Please, please, don't tell me there's some gubmnt regulation requiring that there be a specified number of holes in a shower curtain and the same number in a package of shower rings.

Addendum: See this by Bryan Caplan, pointing out how responsive markets are to minorities' interests. Contrast his piece with the attacks on economic pluralism launched by the elitist, interventionist east-coast liberal establishments who concocted the excess capacity theorem and other travesties that are perilously related to life in the Soviet Union under communism.

I see the sitemeter for EclectEcon just passed half a million. That's the number of separate page views this blog has had since the hit counter was first installed, shortly after I began writing the blog back in November, 2004.

I can't tell for sure, but it looks as if the 500,000th visitor was someone searching the internet, either for the Nude Magic video or for the Nude Curling Calendar.

I have been urging the Cdn gubmnt to stop minting pennies for a long time. When former student, Scoop, saw this, he quickly penned the following press release:

UWO prof supports campaign to scrap the penny
31 March 2008

University of Western Ontario Economics Professor John Palmer today threw his support behind Winnipeg MP Pat Martin's Private Member's Bill to scrap the penny.

"We need to scrap the penny – it doesn't even have value as scrap metal. The simple fact is that prices and incomes are somewhere between 20 and 100 times what they were a century ago, and there is no reason to keep meaningless little coins like the penny and even the nickel around -- they won't buy much, if anything, anyway," Palmer said. "With so few of them used in transactions, and a copper and zinc mines' worth of pennies sitting stagnant in jars, it's time to relegate the penny to its proper place – the history books next to half-penny and the farthing. With the reality of today's economy, the dime is the new penny."

Palmer has been campaigning to get rid of the penny for over two decades. If the penny and the nickel were scrapped, he said it would be easy enough to round prices to the nearest decimal point – or dime.

"The minting of pennies and nickels takes up valuable resources – and mining and smelting of the metals, not to mention the greenhouse gas emissions generated creating and transporting these useless coins, are a burden on the environment," Palmer said. "I am pleased MP Martin has joined the ban the penny campaign – and I hope that all Canadian MPs will see the wisdom of his useful bill to scrap a useless coin."

My prediction, which will probably lose me several friends, is that the Trono (pronounced Trah-nah) Blue Jays will win 79 games this season. Here's hoping that's just pessimism on my part.

Harry Truman is reputed to have once said,

Somebody bring me a one-handed economist! I'm tired of hearing, "On the one hand this, on the other hand that..."

Tyr was a one-handed Norse god,

The t-rune ... is named after Tyr, and was identified with this god., the reconstructed Proto-Germanic name is Tîwaz. The rune is sometimes also referred to as Teiwaz, or spelling variants.

Judging from the rune portrayed in Wikipedia, one wonders if that's all Tyr was missing:

You know those virgins allegedly waiting for the suicide bombers? Here they are in a Google video.