Thursday, July 19, 2007

Bang for buck

The steam pipe explosion in Manhattan got me to thinking about the War on Terror.

Are we spending money on the right risks? The explosion yesterday was essentially an accidental "dirty bomb"-- blasting asbestos into the air instead of radiation.

I'm a firm believer that the best way to figure out what's important and what's not is to let the People decide. Create a free market, and let people spend money on what's important to them. But in the case of public infrastructure blowing up and killing people, or terrorists intentionally blowing things up, it's not clear how to do that.

Most people aren't very good at estimating risks. But there are experts who consider costs versus risks for a living; they work for insurance companies.

Should New York City spend more money inspecting steam pipes or inspecting people's bags in subways? I have no idea. But if I was King of New York, I'd buy insurance coverage for all man-made and natural disasters, and then let my insurance companies tell me how my policy decisions would affect my insurance premiums.

If I put my cynical hat on: this'll never happen. Politicians love to head directly to disaster sites, look tough, and talk tough about how they'll protect us from something like this happening in the future by blah blah blah. Then they can fund their pet projects and screw over the victims of the disaster (because I'd bet a dollar that the city has Sovereign Immunity in this case).

Monday, July 16, 2007

I may have to vote... Republican?!?!

More procrastination today. This time, watching Ron Paul at Google:

It's so nice to hear a candidate for president talking about principles, and concrete proposals for change. If he gets the Republican nomination (and nobody who knows anything about the nomination process thinks he will), then I think I'll have to vote for him, even though I have the following misgivings:

I think he's wrong about Global Warming (see his answer to a question at around minute 38 of the video). I think there is a true market failure when it comes to global environmental issues. I think it makes sense to try to quantify the imbalance we're causing in carbon emissions, and then impose some kind of carbon tax, with the money going directly towards research, development, and/or deployment of carbon sequestration technologies. That said, I have almost zero faith that our current political system could possibly create a rational, effective system for fighting global warming that wouldn't degenerate into Yet Another "corporate welfare" system like our current agricultural price support system.

I'm also skeptical that he'd be able to actually get things done; I have a feeling our Senators and Representatives will not appreciate him vetoing every single pork-filled piece of legislation that they send to him to sign, and I have a feeling President Paul wouldn't suddenly be willing to compromise his principles if he found himself in the Oval Office. Maybe 4 years of total legislative gridlock in Washington DC would show us that we don't really need the Federal Government as much as we think we do. In any case, it would be a very interesting experiment!

Thursday, July 12, 2007

Productive Procrastination: RailTrail map

I went for a ride on the Norwottuck Rail Trail this morning, and when I got home I was inspired to play with Google Maps "create your own map" feature to create an interactive map of the rail trail. I'm impressed with Google; after just a couple of minutes, I figured out the user interface and it was pretty darn easy to use.

Now I'm going to ask Mary Carey and the folks at the Norwottuck Rail Trail Online if it's OK that I "deep linked" to their images of the rail trail... (I did give them credit and the image descriptions link back to their sites).

Tuesday, July 10, 2007


According to the Daily Hampshire Gazette, three local Amherst businesses had counterfeit, possibly dangerous, toothpaste on their shelves.

But we don't get to know which three businesses. The Health department is worried that revealing that information might hurt those local businesses.

Well, duh! That's how a free market is supposed to work. If you screw up, you get punished by the market.

Yes, it may not be the local business' fault. But it's their responsibility to make sure that the products they sell are safe. If they sell an unsafe product unwittingly because their distributor defrauded them, and they're financially damaged as a result, then they should be able to sue their distributor for fraud.

If there's no punishment for screwing up, then businesses have no motivation to do better.

Update, 11 July: Sanity reigns, and the names of the stores are released (Amherst MiniMart on College Street and Amherst Grocery on Main Street).

Monday, July 02, 2007

Minimum wage, redux

I try really hard to keep an open mind, so when I ran across a reference to this recent Economic Policy Institute paper on the minimum wage, I read through it.

It seems logical to me that raising the minimum wage should either increase unemployment, or increase the number of people working for below minimum wage in the underground economy. Why? Well, do the thought experiment at an extreme-- raise the minimum wage to $30 an hour. What would happen?

McDonalds would get replaced by McVendo (a hamburger from a vending-machine place). WalMart would get replaced by a big warehouse store where you look up what you want in a catalog and then tell a robot to go fetch it for you.

Only the most expensive restaurants would be able to afford to pay waiters and waitresses; the rest of us would eat out in cafeterias.

And you'd illegally pay the kid down the street less than minimum wage to mow your lawn (oh, wait, you're probably doing that now...).

So: I was VERY surprised to see the above-mentioned paper, where they found no increase in unemployment in states that raised their minimum wage above the federal minimum (when compared to states that did NOT raise their minimum wage). Then again, I'm nowhere near qualified to figure out whether or not their statistical methods are valid (they sure sound impressive...). And, as far as I can tell, the paper wasn't published in a peer-reviewed economics journal (BIG red flag there).

But assuming that they got it right-- money doesn't magically appear out of thin air1, so when the minimum wage increases what DOES happen?

Possible clues from the paper:
The minimum wage states... have fewer native-born citizens and more foreign-born citizens and non-citizens.

I don't think they looked at whether increasing the minimum wage INCREASED the number of non-citizens. If it did, that might explain it-- more illegal workers taking jobs at below-minimum-wage rates.

... the minimum wage is associated with higher wages for teenagers but an effect is not discernable for adults.

The number of people making minimum wage is pretty darn small. Maybe employers cut back on raises a little bit for everybody making above minimum wage so they could pay the minimum-wage-teenagers a little more. Good if you're a teenager, I suppose.

I also wonder what they'd find if they looked at state's population growth. Did the states that increased the minimum wage lose low-wage workers to other states?
1Well, money is created out of thin air by the Federal Reserve, but that should affect all states equally.