Reactionaries

I do not know if I am using the political science definition of reactionaries, but my definition concerns people who think in the short-run. People who do not bother to take the time to fully think out the consequences of their opinions and decisions. People who over-react to situations and immediately call for collective action. We are all reactionaries at times.

Politics is based on reactionaries. Government is influenced and run by people who suddenly care about something that has been going on for years. Something that will work itself out given time. This country has survived years without universal health care or assisted suicide laws. But something happened, and the reactionaries made them political issues.

I could not watch the State of the Union address. I cringed thinking about it. I got sick to my stomach thinking about hearing Bush discuss Iraq, energy, and health care. I got even more sick thinking about the Democratic Congress' response to the State of the Union.

Most things do not matter. It kills people to admit this fact, but when you take a step back, it is all small stuff. Neither Bush nor Congress can do anything about energy or health care. As it has for the past thousands of years, individuals will act and face the consequences of their action.

These actions and consequences will extinguish the need for reactionaries, but I am afraid they will not go away.

Time

I started the year with the goal to write more intelligent and regular blog posts. So far, I have failed. And that is okay.

But I have been reading Thomas Jefferson. The man must have written constantly. And when he was not writing, he must have been reading. He is an excellent example of what one can do without TV. He knew about everything. He wrote about everything.

My Granddad used to buy at big fruit markets. He would get there at about 4:00AM and walk up and down the market until 9:00AM. Anyone whoever went with him used to complain that they "wore out their shoes" following him. No matter what was at the market, he would look at everything. "Walking the market" maximized profits or at least his utility (whatever the hell that means).

But my favorite professor once told me "everyone must specialize, specialize, specialize!"

Specialization scares me. It scares the Office Space generation. I grew up watching Headline News, Sportscenter, and Jeopardy. I know a lot of useless information. I cannot let it go to waste.

Now the best guys know a little about everything. But to get to be one of the best guys in academia or any professional career, you have to specialize and separate yourself. A dissertation that takes on a big subject does not get approved. A young professor who knows a little about a lot does not get any papers published.

But fuck it. I am going to keep "walking the market."

Lessons From A Mediocre Seminar

1. Most people are nice. They keep their mouths shut. Other people are not. If the not nice people refuse to shut their mouth, then the presenter should not shut his or her mouth. Or, give the not nice people a stare that reminds them that you can whip their ass.

2. Proofread your presentations. Small errors make the presenter look like an idiot.

3. Do not overwrite or overgraph. Do not do what everyone else does on slides. Too much information is worse than too little. Use the presentation to go beyond the slides.

4. Study, teach, and talk about what you know. I cannot teach an effective class on ballet, menopause, or India. I should not even try.

My Goals For The First Half Of The Year

By July 1st, 2007,

I will weigh 250 or less pounds. This means I need to drop about 15 pounds. I should be able to do this relatively quickly, but maintaining is the difficult part. It means I must change my diet. Right now, I just need to eat less.

I will bench 275 pounds three sets of eight. In October, I was doing three sets of five. Right now, I am probably at threes or fours. So I should be able to do this relatively quickly also.

I will bench 225 pounds three sets of fifteen. In October, I was doing sets of ten. This will be more of a mental challenge than anything else. I expect this will take a while.

I will be able to walk up the stairs to my office without being winded. I have been doing cardio exercise in small doses, but I must find the time to do more for more extended periods of time.

I will live an active lifestyle. I will walk up stairs instead of using the elevator. I will ride the bus or walk instead of driving. I will take walks instead of napping. I will participate in more recreational sports.

I wish myself good luck.

Gladwell and Hayek

I finally finished Hayek's The Counter-Revolution of Science. It is a great introduction to what is wrong with social sciences and social scientists. It is deep, and maybe even over researched, but Hayek admits that the only objective observer of mankind is God. A PhD does not qualify you as an objective observer of men. Most people with PhDs do not understand this point.

Bill Simmons at ESPN.com pointed me to Malcolm Gladwell's new article in the New Yorker about mysteries and puzzles. The article is also deep and a little overwritten, but it hits in a similar vein as Hayek. We cannot know everything.

Life is a mystery, so is economics.

I suggest people read Gladwell's article. I might comment more later.

Sad Men

I am trying to change in the lockeroom. I am trying to keep my eyes up as the old men parade around naked. I am so sore from squatting that I want to cry. I am afraid I am going to cramp while I am naked.

Then this guy whose skin is blood red sneaks up to this other guy who has a locker near mine. Red Guy says "I have new favorite exercise."

My Neighbor replies "Oh, what is it?" He asks it in a way that demonstrates that he is a little scared of this conversation's potential.

"Oh, the sauna. You know, last weekend, I talked to my wife. We might be able to reconcile." Red guy breaks the code of the lockeroom. If he had had sex, then this would be a fine conversation, but they just took a walk and talked.

My Neighbor placates Red Guy, and gives some words of encouragement. Red Guy could not find the courage to even say "thank you."

The story has no real point, but I am going to bullshit for another few paragraphs.

I felt sorry for Red Guy, but he also scared the hell out of me.

I know women can turn men into whipped dogs. I know love is a powerful thing. I know losing love is a devastating thing. But you cannot dump your feelings on a guy in the lockeroom when he is half-dressed. Somethings you have to discuss in private.

This is stupid. I am scared, because I do not want to be Red Guy. I am scared, because things do not always work out the way according to plans.

It is okay to be scared, but you have to find confidence in your ability to survive and adapt.

Today, I am confident in my ability to survive and adapt.

I do not know about tomorrow. But that is okay.

A Potential Health Care Study

Some colleges and high schools require "wellness" or health classes. Other colleges and high schools do not. It would be interesting to compare health data for graduates for these competing schools (controlling for other possible effects). Basically you run a dummy variable in your regression telling whether the person had a class emphasizing health or not.

My and GGM's hypothesis is those students who went through organized classes on "wellness" are no better off than those students who did not.

I am curious to hear Sam's and Jeff's thoughts about this idea and their hypotheses. I am also curious to know if someone has already done this study.

Notice I understand that measuring health is complicated. I think BMI is a poor measure. To measure health correctly, you have to look at a variety of features, but this post represents an idea not a master plan. Also everyone knows my distrust of statistics and regression equations, but I am curious.

A Conversation Between Sam And I

The conversation started with this article.

Sam starts off:

However, the more I read about the subjective theory of value the less convincing and satisfactory it seems.

While I don't mean to get engaged in too great a debate about what makes for a "good" theory this seems to punt on every aspect of market price. As James Buchanan once put, "The result of the market process is the result of the market process." What about Frank Knight's idea of all costs being opportunity costs? If with an hour's worth of effort a man can obtain one deer or two beavers, the price ratio of beavers to deer should be 2 to 1. Not because it is some whimsical happenstance but because there exists an opportunity for arbitrage. The neoclassical ideas of production cost and utility being the two edges of a pair of scissors hemming in the price makes more intuitive sense if you ask me.

Certainly there are exceptions where the Austrian story fits better, rare art work leaps to mind, but the price of nails, chicken or gasoline fits the neoclassical story much better than the subjective theory of value. I have no love for gasoline, I do however enjoy seeing my family during the holidays.

--Sam

The scissors of demand and supply is a great teaching tool. Most people think prices are given by God or decided by evil corporations. Demand and supply is a much better explanation than these mystical interpretations of price, but demand and supply functions do not exist in any tractable form.

The Buchanan example works better when you only have beavers and deer and identical consumers, but add microwaves, toasters, prostitutes, and people with varying preferences. This is why Buchanan could not get his point across. I have no idea my value for a cook until a cook exists. Neo-classicals and their prevalent methodology cannot incorporate new cooks into their models.

The real problem with objective theories of value is the paternalism and socialism they suggest. Once you say nails should cost $X, then you are suggesting that if they do not then it requires collective action.

Answer this, why do nails have different prices at the local hardware store than they do at Lowe's or Home Depot? It is not by transaction costs alone. There is a little subjective theory of value there.

You do love what gasoline can do for you. We (like the Austrians and Neo-classicals) are arguing trivialities, but that is what academics do.

~WB

I think you have asked just the right question. Why is it that nails atone store are cheaper than another?

The economist jobs is to be able to explain, and hopefully predict, the answer to questions like this. I stick by my original answer that the economists role is to help society understand trade offs between policies and look for ways to reduce transactions costs. The subjective theory of value is useless on this front. We might as well just throw our hands up in the air and say we have no idea how any of it works and aren't especially interested in figuring it out. Why might one store have cheaper nails than another. Perhaps they have economies of scale and can out compete their neighbor. Maybe its just a gimmick to get people in their store so they buy other higher margin items.

As economists I think we should be looking at our theories and working on developing new ones, game theory sounds like a good choice for modeling gimmicks, to explain and understand our world. The world will never fit neatly into any theory but that doesn't let us off the hook to continue looking.

--Sam

This is where we disagree. I agree that economists illuminate tradeoffs, but you automatically jump into policy, society, and"reducing transaction costs."

The subjective theory of value tells economists exactly what to do. Let people do whatever the hell they please. I listened to Walter Williams for three hours going down to Raleigh, and he kept saying the same thing over and over again, limited government, limited government. I think it is a worthy claim to make.

You go to Small Town Hardware Store and ask Rick why he prices the nails the way he does, and then go to Medium Sized Hardware and ask Bob why he prices nails the way he does. I am sure they both have reasons, but they are different and based on competing rationales. And you will never be able to formalize these differences. And it would be foolish and a waste of money to try. Now if Rick or Bob is willing to pay you to figure out the optimal price for nails then that is okay. But if Senator Joe pays with my Dad's tax dollars, then I have a problem.

~WB