The Filter^

Class poll: name 3 economists

On the first day of class I asked the students to list 3 economists.

I kept the instructions deliberately vague, such that the answers would be "the first 3 to come to mind" rather than "who do you consider to be the most famous", or "who do you think the rest of the class will think are the most famous", or "what will impress the Professor the most..."

Given that many students (this is a one-year general management post-graduate course) have never studied economics before, but all come from good prior universities from across Europe, I thought the results would be mildly interesting. Here they are:

MTV Cribs

Back when I was a grad student I wanted to film an "MTV Cribs" mockup of my apartment. I wrote out some of the script, imaginning how hilarious it would be to talk about the "rims" of my 5 speed bicycle, show my collection of Mises books, and open my fridge to reveal a cache of Nat Ice.

Well, I never got round to it. But Bob Frank did:

 

More on Comparative Advantage

I'm enamoured with Matt Ridley's exposition, but consider an alternative:

-- It takes Og 3 hours to catch a fish and would take 4 hours for him to gather some fruit,

-- While it only takes Iga 1 hour to catch a fish, and 2 hours to gather some fruit

Q1: Who has a comparative advantage in fish, who has a comparative advantage in fruit?
Q2: Are there any gains from trade?
Q3: Does this example disprove the Ricardian model?

Smoking ban - tracing the unintended consequences

See the Boston Globe, (via Tyler Cowen)

A rigorous statistical examination has found that smoking bans increase drunken-driving fatalities... jurisdictions with smoking bans often border jurisdictions without bans, and some bars may skirt the ban, so that smokers can bypass the ban with extra driving... The authors estimate that smoking bans increase fatal drunken-driving accidents by about 13 percent, or about 2.5 such accidents per year for a typical county.

Scenario training

As part of one of my courses I lead a workshop on "scenario building" - an established management technique that has immense parallels with Austrian economics. Here's an interesting post by Bryan Caplan describing Tetlock's use of scenarios with politicians. The problem is that scenarios are not a method for assigning probabilities - they're a tool for imagining and preparing for radically (i.e. "Knightian") uncertain events. I can't tell if the problem lies in Tetlock's study or Caplan's interpratation, but is a classic example of ships passing in the night.

See also The Economist, here and here.

Bertha

Bertha was definately one of my favourite TV shows growing up. I've been trying to rationalise that, and I'll make two points

1. Was this the first Indian as a regular character on a TV show? (i.e. even before Apu?)
2. Bertha presents the neoclasical view of capital equipment - that is is homogenous. Each week the factory produces a different product, and all they need to do is reprogram "Bertha" for it to produce it. In reality - ans even as a small child - I understood that this isn't realistic. The raw materials used by Bertha would change depending on what it was producing. It glossed over the main entrepreneurial challenge of finding combinations of heterogenous capital resources. As a metaphor for crude capital theory though, it's jolly useful

The subsistence fund visualised

I've just found the documentary version of "Guns Germs and Steel" (they're all on YouTube). Note the answer to the question: "How was there enough grain to fill a granary?"

• Stayed close to water sources
• Planted fields of wheat and barley around them
• They brought the resources *to* the village (including domesticated animals)

Here's the rub:

• Because the farmers could store grains, they could devote some of their time to making tools
• Their "savings" provided a subsistence fund to permit investment
• This lengthens the structure of production (you can't consume a knife - the only purpose it serves is to make it easier to produce consumer goods)

Part 5/18 6 min 52 sec - a growing population can support specialists to develop new skills/technologies (e.g. plaster from limestone - and using fire enabled people to subsequently to make steel)
"New Guinea never developed advanced technology" - still using stone tools. They couldn't develop metal tools because they didn't have sufficient farming capability to generate enough surplus to provide for the specialists that would develop new technologies.

Here's an article from The Economist:

To settle down in one place requires a reliable food supply, so the discovery of granaries is no surprise. Pits that might (or might not) have held grain have already been found, but the latest discovery is on a far grander scale. It helps confirm what had previously been suspected—that it was a technological change to the gathering half of the hunting-and-gathering lifestyle that propelled the domestication and cultivation of crops

This is the basics of economic specialisation and trade - and it's fascinating to see emerging anthropoligical evidence.

2010 Liberty Lectures

Back in August I gave a talk at the Adam Smith Institute's "Liberty Lectures", held at Cass Business School. I was very impressed with both the concept and organisation, and the turnout was fantastic. 

Here's what Charlie Edwards had to say:

Anthony J Evans, ... , likened the economic cycle to a night out. The inflationary ‘boom’ is the good part of the night, drinks are flowing, perhaps more than you can handle. When it does become too much to handle, you chunder.

Fortuitously Nikolai Wenzel arrived at St Pancras that afternoon and was able to attend (if you look closely you might spot us both in the photo above).

Update: I held off posting this until the video was out, but it seems to be taking a long time so I'll publish anyway.

I don't know the answer (but not in the same way that you don't know the answer)

“Sometimes the only honest response to a question is “I don’t know.” In recognizing that, one may rely just as much on imagination, because one needs it to determine that several competing hypotheses are equally compatible with one’s evidence.”

Four cultures

Saying that you don't know something does not mean that you are ignorant. It might mean that you can see many plausible answers, and this knowledge prevents you from forming conclusions with certainty. I don't often meet new people, but the last few weeks I've engaged in a lot of small talk with strangers. I sometimes find myself with non-economists saying that "I don't know" in answer to a question, to which they might respond "me neither". My urge is to say, "well hang on, I don't know, but but in the same way that you don't know".

Cable on competition

The empirical evidence suggests that Marx was wrong. There is no tendency for capital to become more concentrated. Studies show that firm growth is independent of size (or anything else!), and so the distribution of firm size doesn’t change much over time. The degree of competition or monopoly is roughly stable. Tesco or Wal-Mart might seem monopolistic, but they are less so than 19th century truck stores.

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