If You Win A Nobel, But No One Reads Your Work...

I just asked Joe, “Who is going to win the World Series?”

He answered, “Oakland, of course.”

I knew Oakland was his favorite team since the days of Canseco, McGwire, Stewart, and Eck, so I replied “No, who do you really think is going to win?”

Was Joe's answer biased? Or did he answer truthfully. Does it matter? Are there any true population parameters to subtract our sample parameter from? When we say something is biased, aren't we guessing about a guess? My advisor explained bias as systematic pressure in one direction. Everything had to be either biased upward or downward or towards Oakland. But like with externality theory, someone has decide that Truth exists, someone has decide on social optimality or a true population parameter. Saying something is biased upward implicitly assumes your sample results are higher than some unknown Truth. So it seems to me that bias is as an arbitrary concept that has no real objective meaning.

So Forsythe et al in “Anatomy of a Political Stock Market” explain the assimilation-contrast effect and the false-consensus effect, but I do not understand how they jump to bias. People see through rose-colored glasses and think everyone else is like themselves. Of course, but how is this bias? Don't the people think that their candidate is going to win? They might be fooling themselves, but who am I or the authors to say what people are thinking? I see bias as a slippery slope that can be used to explain every result a researcher dislikes. (Footnote 22 is an example which does not deal with bias, but I never like when researchers throw away inconvenient observations.) He voted for Joe, but he was biased and really wanted Jack. Let's make Jack Senator. He chose Oakland but he really thinks Detroit is going to win. “Really thinks” and “really wants” scares the hell out of me. I see Hitler and Stalin. I see Orwell's “stopthink.” I see my Dad telling me to eat my vegetables because “they will put hair on my chest” (like chest hair was important). I just do not get it. Maybe I am biased.

This is a good paper, but one error is so blatant, so absolutely disgusting, it cannot go without discussion. Forsythe et al. comment:
“Our findings lend support to the so-called Hayek hypothesis which asserts that markets can work correctly even if participants have very limited knowledge about their environment or about other participants. How markets can work under such circumstances was never clearly specified by Hayek, and the hypothesis is not easily tested.”
The second sentence shows the authors' complete ignorance of Hayek's work. He won a Nobel Prize, and no economist outside of George Mason or Auburn could tell anyone why. Hayek and the Austrian School's greatest contribution to economics was explaining that we can never explain how markets work (especially with calculus). But they do work, and economists should spend their time letting them work and defending them against the collective. And that is exactly what this research shows. All of the statistics, all of the money spent on polls, and all the political “science” professors on TV cannot predict as well the Iowa Presidential Market even with all of its possible judgmental bias (whatever the hell that means) and its misrepresented sample. Hayek would be proud. It is a shame the authors do not know who Hayek is. (I am biased. Hayek is one of my favorite economists and currently I am reading Hayek' s Counter Revolution of Science.)

To summarize, the authors set up an electronic betting market on the 1988 Presidential election. Since it is specifically for research purposes, it can legally compete with state-run lotteries, Wall Street, Las Vegas, and Atlantic City. Since it is electronic, all trade information can be saved and analyzed. The effects of different news events, debates, and polls could be teased out the market. It is a wonderful set-up.

The authors throughly analyze their data. I doubt if their statistics could withstand a barrage of misspecification tests. But even if the statistics do not hold up, it does not change the significance of their results. The whole thing worked. Make people put money where their mouth is, and the market will do the rest.

The authors go on to discuss that the market works because prices are determined on the margin while bias only affects averages. They separate the markets into arbitragers who look for profit and political “homers” who only buy shares in their candidate. The arbitragers set the prices while making money off the “homers.” This idea pulls their work back into economic theory and makes sense. Every grocery store manager knows that the “cherry pickers” (those customers who only by items on sale) keeps stores afloat by increasing cash flow but homers who buy everything at the store regardless of price generates profits.

But it greatly simplifies what is actually going on in the market. Hayek and the Austrians describe the market as an “information discovery process.” Prices convey information. The Iowa Presidential Market allowed individual traders (and researchers) to discover information and to use this information as they deemed fit. This discovery process led to the final market price giving a good prediction of the actual election. Is it because “markets allocate scarce resources to their highest value”? Well, that depends on how you define value. Economists have been trying to pin that definition down for 200 years. But in the end, the whole decentralized process worked. Why it worked can be partially explained by saying some traders understand calculus and throw their personal preferences out of the window, but there is a whole lot more to it than that. A whole lot more than we will never be able to explain. But markets work.

Athena

"Sleep comes like a drug"
From boredom or toil

You were standing there
An angel amongst mortals
Effort was all around
Muscles being strained
Impressions trying to be made

But you
You were above it all
For everything that was around
Did not interest you
You had much better
Ideas on your mind

Things I Could Never Explain

1. "When I look in to your eyes
I see the world cut down to size."

(I think this comes from a John Hiatt song. He sings it on the Nitty Gritty Dirt Band's Will The Circle Be Unbroken Volume 2. )

2. Everything really is going to be alright.

3. I like to argue.

4. I like to think.

5. Saying something "is" is not a reason it should exist.

"When I Go There, I Go There With You. It Is All I Can Do."*

I restarted John Kenneth Galbraith's Economics, Peace, and Laugher. There has never been a writer who makes me so angry. But I cannot put him down. Most everything he says is so wrongheaded and pompous, but I agree with his basic assertion that economists are fake. I agree that the world should be better.

Here is how I described Galbraith in The Affluent Society:

Galbraith's major flaw is the same as Leontief. He assumes ceteris paribus always holds. Nothing changes except what he wants to change. A better educated society still wants pornography, tobacco, and drugs. The masses are always the masses, no matter how much education they have. Galbraith cannot see what is not seen. He has no vision.

But Galbraith makes me think. He challenges me in different ways.

I have two ideas. First I would like to raise $25,000. I would go to Africa or Southeast Asia and find the best entrepreneurs. I would make loans and contribute any expertise I have. I would promise to pay the $25,000 plus interest back in ten years.

Or I could start a school in Southwest Virginia. I would probably need $50,000 to do this, and I could not promise to pay anything back. I would have to use a church or something similar as a school. I would have to convince my sister or someone like my sister to teach. But I would be successful and prove GGM wrong.

* U2's "Where The Streets Have No Name" is a beautiful song.

Private Schools

Last night I ranted about how all education should be private. My colleague from Southwest Virginia proceeded to tell me that 60% of children at the school where her mother taught were on free lunch. She said most of the children's parents were hooked on meth, in jail, or should be in jail. She said sometimes children will miss a month of school without any explanation from their parents. She said without government forcing parents to send their children to school there would be no school for these children. GGM also assured me I was a fool.

And I still think all schools should be private. There is no doubt in my mind that churches and concerned citizens armed with their tax rebates would fill gaps the public system cannot. I imagine church vans picking up students. I imagine drivers walking into houses, waking up children, helping them dress, and making sure they got their education. I imagine ingenious teachers freed from "standards" helping children find their individual place in the world. I imagine a better world.

But what am I going to do to make it happen?

Things I Write In My Notes

People are good. People are bad. I do not know. I do not care. I do not know why I do not use don't. I know nothing.

I am not a scientist. I am an artist who sees beauty in the world. Scientists describe. I cannot describe beauty. Scientists are limited by the tractability of their questions. An artist is limited by what his eyes can perceive.

(GGM said I was becoming a bad poet. He assured me this was not a good thing.)

Before I got up this morning, I was laying in bed debating whether to get out or not. For some reason, I started to think about the marginal benefits of getting up versus the marginal costs of staying in bed. How much was twenty extra minutes of sleep going to cost me? I got up when I had to puke.

Happy Birthday Dr. Buchanan (October 3rd)

I do not understand hypotheses. I have been learning about hypotheses since the third grade scientific method unit. I did not understand them then. I do not understand them now. Therefore I do not fully understand Kachelmeier and Shehata's “Internal Auditing and Voluntary Cooperation in Firms: A Cross-Cultural Experiment.”

Hypotheses are guesses. Guesses are relevant ex ante, but ex post we do not need guesses. We have real results. So Kachelmeir and Shehata waste a number of pages describing three common sense hypotheses: 1. Asians, especially the Chinese, will cooperate more than Canadians. 2. Because natural cooperation can be expected with Asians, internal audits will be more costly to Asians than to Canadians. 3. Asians will demand fewer audits than Canadians. But all three of these effects will be muted when participants' decisions are highly anonymous.

These hypotheses are a charade. Do the authors think their audience is third graders? Are these hypotheses or stereotypes? Aren't they obvious? I know they do not matter. Because the authors do an experiment. They get real results. I do not care about guesses. Tell me what happened. As in most economic and business research, hypotheses are the common sense part of this paper.(1)

I guess hypotheses fill pages.

Hypotheses are a big joke to make economics look more like a science. (I know the authors are accountants, but academic business research is economics.) Economists study people. Economists study institutions. Most of these institutions just happen. No human plays God and consciously builds institutions. They evolve. From chaos comes order. The amazing thing about markets is they work. Nobody before Adam Smith could hypothesize that markets would work. They still cannot. That is why the market has so many critics.(2)

The authors run public goods experiment. These experiments are common place in economics. The authors' main contribution is to compare how the game was played in different countries. This is an interesting objective. Since they are accountants, they want to say the game relates to divisions of firms and companies' desire for internal audits. Each player represents a division. All players in the group represent the firm. The firm is better off if everyone contributes. The player has incentive to keep some for himself.

The authors describe a management problem. Good managers provide the correct incentives to cooperate. A company should organize itself in the way that maximizes profits. But every company is different. Some companies will use internal audits. Some companies will hire honest managers. Some companies will have leaders whose people skills ensure cooperation. Some companies solve the asymmetric information problem. These solutions might differ between countries. Those who do not fail.

Their results are in line with their hypotheses. Asians behave differently than Canadians. Anonymity matters. Their statistics are simplistic. I doubt if the authors have any idea of the probabilistic reduction approach. Honestly I doubt if they have the mental acumen or courage to fully understand the probabilistic reduction approach. I know I have neither. But I can appreciate the fact that the authors' statistical results are circumspect. I can also appreciate that people from different countries give different amounts which is the important research result.

The authors recognize their limitations. Playing contrived games does not guarantee external validity. [I think the future of experiments will get away from neutrality and become more parallel with reality. ( The authors specifically wanted to look at auditing. Build auditing into your experiment.) Really this has to do with “bias” which is another concept I do not understand, because I do not understand hypotheses.] Students do not necessarily represent a random sample of their population (especially in China). (I cannot tell if they pay students either.) They leave the reader with a politically correct message, “Thus, although cultural studies are useful for identifying general patterns of of societal values, they do not negate the importance of individual differences.” The message is very nice, but every good manager knows to judge a worker by his performance not by the color of his skin. But I doubt if good managers will or need to read this paper.

(1) The idea of maintained hypotheses is important but never highlighted in economics like testable hypotheses. But the beauty of experiments is we can throw many maintained hypotheses out the window and just observe what happened. People cooperated. People traded at a single price where marginal costs equals marginal benefits. The maintained hypotheses that cripple most economic research only come out when external validity is discussed.

(2) Since it is Jim Buchanan's birthday, I am reminded of one of his eight cryptic statements about economics: “Economics has a didactic role.” This paper is full of economic concepts. The game encompasses the economic concepts of prisoners' dilemma, public goods, and incentives. The authors recognize most of these concepts, but I do not know if they understand them. They have a “principles” understanding, but it is superficial. They have never thought about how prisoners' dilemma games depend on payoffs. What if we can change the payoffs? What if the prisoners feel guilty? What if managers change perceived payoffs? Why are there privately supplied “club goods”? How can we justify Virginia Tech's state funding when Roanoke College and Harvard University exist? This lack of understanding bothers me. Economists have to teach better.

But, Buchanan said it best in his “Retrospect and Prospect” epilogue to What Should Economists Do?:

“7. Economics has a didactic role. As a discipline or area of inquiry, economics has a social value in offering an understanding of the principle of order emergent from decentralized processes, of spontaneous coordination. (The market is a classic example.) Such an understanding is necessarily prior to an informed decision on alternative forms of social order, or even on alternative directions of marginal extension. The principle of order that economics teaches is in no way “natural” to the human mind which in innocence, is biased toward simplistic collectivism.”

The real problem is this cryptic statement is not understood by most economists. Experimental economics has taught me and can teach others that society works without central planners, without politicians telling people what they can and cannot do. But will economists let it?

A Proposal

GGM told me my last few posts have been depressing. I replied that is just me. I also told him he was the sixth person to call me depressing. The first five were women.

A colleague told me she wanted me to tell her three things that I enjoyed. I gave her some bullshit list that included Green Tea. Green Tea was just a stupid phase. If you put enough sugar (or artificial sweeteners) in anything, I will drink it.

So while I was depressing myself, I came up with this idea. It really is a social experiment that will probably depress me more, but what the hell.

I propose to watch one of the two funniest movies of all time Annie Hall or Metropolitan. I will pay for the rental of the movie, a portion of the refreshments, and provide a place if needed. (My apartment is small. My TV smaller. But I can arrange something.) My only entry requirement is you bring a single female friend who finds Woody Allen or Whit Stillman funny.

I am joking about the entry fee, but if anyone is interested, leave a comment or Email me. I will not set a date until I have deemed the social experiment a success or a failure.

If by chance you are a random reader who finds Woody Allen or Whit Stillman funny and are willing to travel to Blacksburg you can leave a comment too. Even if you find Woody Allen or Whit Stillman funny but are not willing to travel, you can still leave a comment. Shit, anyone can leave a comment if they want to. I do not care who or what you like. I appreciate the attention.

I Know How To Spend My Money

From CafeHayek.com:

"The government has the Sidam touch--it ruins everything it touches, increasing the demand for more government unless we realize the true source of the problem. Remember Milton Friedman's insight, one of his deepest:


And that is the fallacy -- this is at the bottom of it -- the fallacy that it is feasible and possible to do good with other people's money. Now, you see that fallacy -- that view -- has two flaws. If I want to do good with other people's money I'd first have to take it away from them. That means that the welfare state philosophy of doing good with other people's money, at its very bottom, is a philosophy of violence and coercion. It's against freedom, because I have to use force to get the money. In the second place, very few people spend other people's money as carefully as they spend their own. Let me take this down to the situation of New York City right now. About six or seven or eight years ago -- I've forgotten when it was -- John Kenneth Galbraith, in an article he wrote in The New York Times Magazine Section, said, there are no problems in New York City that would not be solved if the New York City budget were twice what it is now. Now, the New York City budget has since then something like tripled. And all the problems are worse. Why? Because the fact is, it's a confusion to identify the City with the people. The New York City's budget is higher, but that means that the people of New York have less to spend. It's only been transferred from people individually to the City. Now, who spends the money more carefully -- the City civil servants or people who are spending their own money? Now, of course, you may say to me, but when the City spends the money, it'll go for the good things, and so even half of it is wasted, it's better off. But that's nonsense. City civil servants and others are just like the rest of us. We're all of us interested in pursuing our own objectives. The label again on the bottle may be welfare or health or education. But you have to look at all of the places where it drops off en route to going there. There are lots of other things that can be accomplished under those titles, and the fact is that no more -- no larger a fraction of the money the City spends goes to good things. Let me illustrate in a very concrete way. A major problem in New York City is housing. Why? Because of bad governmental policy. Rent control, which was continued in New York after World War II, and the only city in the country where it was continued, everywhere else it was dropped. It has caused enormous abandonment of houses, eroding the tax base, public housing, governmental subsidy to housing, so that people who occupy it have no incentive to maintain it. If you had eliminated the government from the housing market and left that money in the hands of the people themselves, the housing situation in New York today would be far better than it is. "

The major ideological conflict that faces every generation is the collective versus the individual. Unfortunately very few intellectuals want to attack this conflict to find a resolution.

Indifference, Transaction Costs, Women, And Bus Drivers (Things That Matter But Cannot Be Modeled)

I am sitting in my office. I hit another bottom. I wasted a day debating whether it was worse to be indifferent to the world or the world being indifferent to you. They are both pretty damn bad.

Note to self: This up and down shit has to stop.

I am walking to the bus. Two average looking women pass by me. They look like they are going somewhere. I want to ask them "why not?" I am not a bad guy. I can make conversation. Why not?

But I am scared shitless. As usual I try to explain fear away by rationalizing. I am scared shitless.

I am sitting on the bus. Two average looking women get on. I am still scared shitless. I think they were lesbians. But I was still scared shitless.

The bus stops. I tell the driver if he leaves on time it will be shorter for me to continue riding than walking. I tell him it is close. He says "While you wait to make a decision, the decision is being made for you."

Afternoon Pep Talk To Myself

And I decide this lifestyle is not what I want. A beautiful girl is sitting in front of us talking to some bald dude. At first I would have killed to be that bald dude. But the whole scene is fake. No that is not true. The whole scene does not fit me. I am an angry guy who likes to think. No I am not an intellectual, never will (or can) be. But "I ain't no glamour boy; I am fierce."

It is okay to bitch and complain. It is okay to be me. I have been on this kick where I think I am too American-centric. I think I am too serious. But damn it, that is me. Why am I apologizing? Why am I so worried about changing myself? I care. I cannot change that. Don't even want to.

People I respect keep telling me to find something I care about and pursue it. They keep telling me economics needs people like me. Economics needs guys who won't keep their doors open just to get tenure. The profession needs people who care about honesty, not making themselves a buck or intellectual pride. They are right.

Yeah, I am lonely. Yeah, I am depressed. But so what? I am not going to feel better compromising. I am not going to feel better trying to be someone I am not.

I have made some mistakes. All I can do is live and work through those mistakes. I am not going to change the past. And I am not going to change anything worrying about the future.

Boudreaux Does It Again

Poverty was the natural state of man for thousands of years. Now it is something that requires study?

At dinner last night, two college educated guys talked about how they wanted to rough it for a period of time. Admittedly, they wanted to make money while doing it, but it always worries me when smart people think poverty is a learning experience.

I do not know much. But I know I do not want to be poor.

Things I Learned Today

It takes courage to get up in front of a crowd.

No matter how much alcohol I have consumed, some bands are not going to sound good.

It can rain anytime.

Vegetarian pizza tastes like shit unless you are with a woman who wanted it.

Everything tastes better when a woman wanted it.

While eating pizza, men should talk about sports and sex.

Past relationships need to stay in the past.

Long legs that go all the way up... are a beautiful thing.

If a man stares at a woman's ass long enough, he will find something he likes.

Vanity Is Not Necessarily A Bad Thing

Sam told me everything I say is a non sequitur. At first all I could think about was that great cartoon called "Non Sequitur." But then I got mad. What was Sam trying to pull?

My first realization was I had no idea what non sequitur really meant. So I looked it up:

non sequitur (from dictionary.com)

n 1: a reply that has no relevance to what preceded it 2: (logic) a conclusion that does not follow from the premises

Sam might have a point.

But most of my arguments reconsider initial premises. Should government be involved? Is this the correct way to approach the problem? Is there a problem?

So maybe I am a non sequitur, but my arguments are relevant.

I am reminded of a quote from Metropolitan:

Jane Clark: Why should we believe you over Rick? We know you're a hypocrite. We know your "Polly Perkins" story was a fabrication...

Nick Smith: A composite.

Jane Clark: Whatever. And, that you're completely impossible and out of control, with some sort of drug problem and a fixation on what you consider Rick Von Sloneker's wickedness. You're a snob, a sexist, totally obnoxious, and tiresome. And lately, you've gotten just weird. Why should we believe anything you say?

Nick Smith: I'm not tiresome.

In Response To Helibroner's Introduction To The Worldly Philosophers

This is what floats my boat. All the math, the bullshit, discourages me. It is just a means to an end. I love making money and knowing making money is good for the world.

It is all normative. Well, anything worth a damn is normative. It isn't good enough to say "it is" and that is it. A model is only as good as what it predicts. An idea is only as good as what it can change. One must say that artificial product differentiation is perverse before he can decide its effects, before he can be man enough to admit he is wrong.

My finance professor (and the professor I am most indebted to) told us "the greatest financial market is a grocery store." He was right.

No matter how much I delude myself, I cannot escape the grocery store. I love two things in the world: women and economics. I am getting neither right now.

Hemmingway's Story

Just sitting here
Waiting for the Blues to go away

Mom, I don't want to be like you
I don't care if I am one of your chosen few

Just sitting here
Waiting for the Blues to go away

I have seen and thought things that force me to be alone
The best years, the best times of my life are blown

Just sitting here
Waiting for the Blues to go away

I was a young man
Dapper, Dapper
I could dance and sing and...
All night long
Now I am an old beyond years
My life has been shit down the crapper
Can't you see my fountain of tears?

I used to love women in the month of May
I used to love women everyday
Now they bore me
All I desire is to flee

Just sitting here
Waiting for the Blues to go away

Dad can give me the car
But I won't get very far

Just sitting here
Waiting for the blues to go away

Boudreaux, Bastiat, Krugman, Competition, And Freedom

Here is a link.

Bastiat captures the importance of "I have the right to exist." You cannot expect a man to produce if you take away what he produces. You cannot expect a man to think if you punish his thoughts. You cannot expect a man to live if you emphasize death.

"There can be no contradiction."

"When You Were Out Of Luck, Luck Was Doing Alright"*

I am riding the bus. A girl gets on with a muffin. She cups her hand under her mouth to prevent making a mess. She finishes the muffin. She rides five miles with a handful of crumbs. She does not throw them on the bus floor. She waits until her stop. She empties the crumbs in the grass for birds, squirrels, and decomposition.

She acted beautifully. And I could not find the courage to tell her.

ML told me love was a choice. You decide to love someone. You decide to ignore or forgive their faults. You decide to compromise.

I never believed her. I thought love was magic. Something happened and you woke up next to a wonderful woman for the rest of your life.

I am an idiot. ML is right. The things I want are not magic. They are not unattainable. I want to be challenged. I want to be called an idiot. I want a pat on the back. I want to watch good movies and talk about them afterwards. I want to listen and discuss jazz. I want to be happy.

Colleagues have been telling me I have to make a decision. "Fat, drunk, and stupid is no way to go through life." I have to start wanting to get out of bed. I have to decide how I want to live.

Unfortunately I am having a difficult time making that decision. But I have to make it. I cannot continue to let beautiful acts go unnoticed.

*John Hiatt's "Paper Thin"

Find Carmen McRae's "The Ballad of Thelonious Monk." Listen to it.

"Kind Of Blue"

Parking lot is empty;
It always is
You are alone
By yourself
Is that such a bad thing?
So what?

Had a girl
Not really
She was never mine
Is that such a bad thing?
So what?

Knew a man
Said he had a good plan
I am not gay
But he was a handsome Dan
Is that such a bad thing?
So what?

Who do you want to be today?
Who would you like to be today?
What do you want to see?
I don't know
Is that such a bad thing?
So what?

I make up wonderful stories
They say things that need to be said
Fantasies so real
I should have a book deal
Actually they are bed time stories
To get me thorough the night
Is that so bad?
So what?

Funniest Thing I Have Heard

Another employee to my Dad: "You are three Doritos away from maternity leave."

"Whose Constitution Should Be Spread Where?"

A colleague asked me this question earlier this week. She challenged me to reconsider my views on constitutional government. She challenged me to stop being so American-centric. Classic liberalism must have limitations. And, classical liberalism never supported violently pushing constitutions down people's throat. And, how can one allow starvation and war in the name of an ideology? She said I wanted to spread my constitution everywhere.

My first reply was to rehash the difficulty of the initial endowment question. If I screw up, it is my fault. I had a good home and have been given every opportunity in the world. But with that kid in Africa or that poor inner-city kid, how can I talk about individual choice? Can we really punish children for their parent's mistakes? Can I really watch children starve in the name of libertarianism? Without taxes, I could give more to charity. Would I? I do not have an answer to these questions, but aren't the answers essential to my position?

For a little while, I was in a quandary, but then Sam sent me this Email:

I read this article and thought you would be able to appreciate it. What does this say about local knowledge? I am sure there are smart business people in the developing world but what to you do about the equally stupid and unruly populists? It seems wrong to let them starve, but what else is there for them to do if they forsake property rights and the rule of law?

I have no problem with someone who believes in something. A man who looks you in the eye and says "I am right, and here is why" can do great things.

So my constitution consists of one mandate stolen from Ayn Rand, "I have the right to exist." This means I have a right to the fruits of my labor and acumen. I have the right to property I earn. I have the right to choose. I have the right to my sphere. Of course this is vague, but it is true. It requires people to be honest with themselves. It puts responsibility on the individual instead of blaming non-existent entities.

It does not mean that the people of Baghdad have to accept American ways, but they as individuals have to decide. Neither majority rule nor dictators can decide for them. Each person has to look inside himself and decide what he or she wants.

And this constitution should be spread everywhere.

Bastiat's Rules For Football Fans

1. Respect the game. You can drink. But if you are stupid, stay at home.

2. Know the difference between punt block formations and punt return formations. Frank Beamer (or any special teams coordinator) has studied film all week. He knows when to go after one and when to set a wall.

3. Respect the fact that the players and coaches have spent all week preparing.

4. If you do not know anything about football, shut up. If you knowledge is limited to College Gameday, do not speak unless spoken to.

5. Be honest. If your team sucks, admit it. If your quarterback underthrows all deep balls and is visibly indecisive, then consider the back-up. It is no sin to say something bad about your team. For example, the Redskins suck. Their quarterback has no arm and no legs. He might win games, but he will not win a Super Bowl. The days of the one-dimensional quarterback are gone. I do not know if the back-ups are any better, but I am willing to consider them.

This was inspired by this post which I found from this site.

"Baby, I Could Walk You All The Way Home"*

Before I review Engelmann and Strobel's “Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiment,” I think Bolton and Ockenfels bring up the essential question, “...what it is that experimental economics can hope to accomplish.(?)”

Bolton and Ockenfels like most economists consider themselves scientists. Experiments must be explained. Researchers must find causations. Economists must write theories. They want to “present a broader, more valuable map of economic behavior.”

What for? Why? Do economists really think they can predict behavior? Do they secretly hope that with these new theories they will be able to usher in a new wave of social planning with themselves doing the planning? What exactly is “economic behavior?” Until we attempt to answer these questions, economists cannot progress. I am not saying Bolton and Ockenfels are wrong. But they do not try and make their case. They do not tell the reader what a “broader, more valuable map of economic behavior” should be or what it will do. We are ignoring the fundamental philosophical question that forms any discipline. What is an economist's purpose?

I cannot answer this question, but I do know economic experiments yield individual decision information from a controlled setting that suggest how people will make other decisions. The ultimatum, bargaining, and distribution games are not parallel with real life. Subjects will never be told to split $10 in their life like they are told in the experiment. They will make similar decisions with their spouses, friends, and children but never will it be as blatant as in the experiment.

But just because we cannot ex ante predict behavior does not mean the
experiment has no value. That logic is a stupid way to examine the problem. The experimenter created this experimental institution, and certain results occurred. If we changed the experimental institution, the results would change. The main lesson from experimental economics is institutions matter. You cannot separate the decision from its context.

Experimental economics and economics will not progress until researchers decide what economic theory should do. Classical theorists ignore reality, but their theories still hold didactic and normative value. Nash equilibrium makes a young student look at a problem in a different way. As Engelmann and Strobel suggest new theories based on experimental results do not predict any better than older theories. But the new theories and the experiments that birthed them challenge students to think.

Economics has to decide what it wants to do. This competition between different economists pursuing different objectives can lead to progress. But researchers trying to match experiments and theories will impede economics. Experimentalists need to design new games and institutions that allow new behavioral hypotheses to be tested. Conducting the same simple experiments in an attempt to test new theory is a lazy exercise that will not push the boundaries of economics but instead stifle thought. We need new experiments and different contexts to see how people make decisions given different institutions. We need our experiments to be more parallel.

Economics must recognize its normative basis. Positive economists cannot refute this normative basis. No matter how many free riding experiments one does, Milton Friedman (or myself) cannot be convinced that taxes are a good thing. Economics is not mature enough for experiments to prove the validity or invalidity of economic theory, because our theory is still normative. We do not know enough about the brain, genetics, and environmental effects to “make a map of economic behavior.”

And it is foolish to pretend that economists can or should do this. Since Adam Smith the best economists have mixed philosophy, a loose interpretation of the scientific method, and a general desire to question their surroundings to create important works. Modern economics has forgotten philosophy, and it rarely questions reality but emphasizes what other economists have done. Equity, efficiency, and selfishness are normative issues that require debate in a philosophical forum. Economists cannot continue to argue over these issues in a positive forum without stagnating the profession.

Engelmann and Strobel's “Inequality Aversion, and Maxmin Preferences in Simple Distribution Experiments” has many interesting results. Their main conclusion is people's decisions cannot be predicted by a number of new and old theories. The game matters.

Distribution games entail an individual deciding how income is distributed amongst two other players. The decision maker's payoff stays the same in all three scenarios, but his fellow players' values change. The decision maker basically decides how equal all three players' payoffs are. He is implicitly trading off between equality and aggregate wealth for all three players.

Engelmann and Strobel vary the values to form the taxation, envy, and rich and poor games. Their results are mixed. The classic economic arguments of efficency, maxmin, and selfishness, probably does the best job of predicting decisions. People want to get as much money out of the researcher as possible, but it clearly does not explain all of the decisions. Other theories do better in certain games, but there are no clear predictors even for these simple games.

And their conclusions are what experimental economics can hope to accomplish. People differ. People care about different things. People are absolutely crazy. For some reason and because of market experiments, I find comfort in their craziness.

*The Boss

My Playlist

I put the MP3 player on random, and I got a hell of a playlist. I do not know how to copy and paste it. But I assure you it was great. It started with Bruce Springsteen's "Cover Me" and ended with Ella Fitzgerald's "I Won't Dance." It had some Janis Joplin and John Coltrane in the middle.

Jeff sent me this link yesterday. It is one of those things that makes you examine what exactly you are doing with life. And more importantly, what you should be doing with your life.

"Great Things Come From Angst"*

Matthew Rabin (1993) sets out to “Incorporate(ing) Fairness Into Game Theory and Economics.” He, other economists, psychologists and most adults have observed that individuals do not behave like “economic man.” People care about equity. People punish selfishness at the expense of their own welfare. Economic theory does not consider fairness, and Rabin works to rectify this obvious shortcoming.

This paper strikes me personally. Game theory was the first economic subject I studied outside of the classroom. A professor briefly introduced the subject. I bought Morton Davis's Game Theory and Fudenberg and Tirole's upper level textbook. I bought John Nash's biography with the original “Nash equilbrium” paper. I thought game theory described life. If we could define all strategies, payoffs, and rules, we could describe the world. Every decision could be broken down into payoff matrices. The subject infatuated me.

But then I was working at the grocery store and a woman bought a liter of Canada Dry Ginger Ale for $1.39. She could have bought two liters for $1.29. I explained to her that she could throw the extra liter away and still be better off, but she did not care. She bought the one liter bottle. I was perplexed. I told my Dad. He replied: “Son, you have to let people do what they want, and you can't spend your life thinking other people are stupid. She knew what was best for her.”

My Dad was right. Game theory might be predictive if we could decipher utility functions and determine payoff matrices, but we cannot. And if we could, they would be instantaneous and have no practical value. So if Rabin really wants to describe and predict behavior, I assure him that he will fail.

But if Rabin wants to change the way people look at problems, he succeeds. The idea of expectations, fairness equilibriums, and mutual-maxes and mutual-mins is an interesting way to examine problems. His stylized facts and new concepts challenges the logic of Nash equilibrium. Rabin makes economists think.

His examples are also interesting. Especially the idea that one person chickening out is not an equilibrium with his criteria. (Mutual destruction does occur.) His suggestion that monopolies cannot set a profit maximizing price is also interesting. (If Wal-Mart has such market power, why aren't their prices higher?) His labor market suggestion is also a more complete formalization of the employer-employee relationship. (My Dad, Granddad, and uncle are/were entrepreneurs. My Dad and Granddad treat workers kindly and get good effort. My uncle treated people unkindly and got little effort.) Again Rabin challenges conventional game theory, and at the least, he makes readers think.

His assertion that “As the material payoffs involved become arbitrarily small, equilibrium utility levels do not necessarily become arbitrarily small” makes wonderful sense. As anyone who has been in a relationship can attest, the small immaterial things can mean a lot. Rabin's Proposition 6 depresses me. I want to say his wrong, but I cannot. There always seems to be a lose-lose outcome that can occur in every situation.

Rabin's new theory satisfies economist's criteria. It uses equations, calculus, and even has proofs in the appendix. It also attempts to incorporate reality. Anyone who has been in a relationship knows considering others feelings can be rewarding.

But feelings cannot be represented by equations and variables. Feelings change. Feelings grow. Feelings wane. Feelings are completely subjective.

Given this, I do not understand Rabin's conclusions. If he recommends future researchers follow his lead and challenge conventional game theory, I commend him. If he is challenging economists to consider psychology, sociology, marketing, religion, and other things that affect decisions, I commend him. But if he is trying to predict human action, then I suggest he spend some time at a grocery store. The fact is people do crazy things that only make sense to them. Game theory helps us think about these crazy things, but it cannot tell us when or why they occur.

*S.A.

James Taylor's "Steamroller"

Steamroller

Well, I'm a steamroller, baby, I'm bound to roll all over you.
Yes, I'm a steamroller now, baby, I'm bound to roll all over you.
I'm gonna inject your soul with some sweet rock 'n roll
and shoot you full of rhythm and blues.

Well, I'm a cement mixer, a churning urn of burning funk.
Yeah, I'm a cement mixer baby, a churning urn of burning funk, god damn right.
Well, I'm a demolition derby, yes, a hefty hunk of steaming junk,
Mister McGee got the blues for you and me, way down, yeah.

Now, I'm a napalm bomb, baby, just guaranteed to blow your mind.
Yeah, I'm a napalm bomb gotta tell you one more time to sit down, stand up, go home, yeah.
No guarantee to blow your mind, momma, yeah.
And if I can't have your love for my own to take home and keep me warm,
there’s only one thing left to find, oh, bokka nine, bokka nine, bokka.
I just don’t seem to can’t lose these here low down, no way up, half flying,
freeze drying, fat frying, chicken choking, mother fucking can’t, oh, roll on over,
I got those steamroller blues.

Economics

Guth, Schmittberger, and Schwarze's “An Experimental Analysis Of Ultimatum Bargaining” challenges itself to experimentally “investigate the so-called ultimatum bargaining behavior.” The authors achieve their goal. But they fail in their presentation.

The authors run simple and complicated ultimatum games on economics graduate students (who had no training in game theory). In the simple game, the first subject is given an endowment. He takes an amount for himself. What is left goes to the second subject. The second subject either accepts the first subject's decision or cancels the trade leaving both subjects with nothing. In the complicated game the first subject is given an endowment of black and white chips. The first subject chooses a mix of white and black chips and sends it to the second subject. The second subject can either take the mix chosen by the first subject or take what the first subject has left. These black and white chips are worth different values to the first subject than the second subject.

The results of these games are interesting. Some subjects choose egalitarian splits. Some subjects choose less egalitarian splits. Some subjects choose to leave with nothing. When the endowments differ, subjects choose somewhat different splits. Subjects play the easy and complicated games differently. Experience changes decisions.

But the authors refuse to stop there. They choose to examine economic theory. This approach is common to experimental economics. Experimental economists test economic theory. That is what they do.

Refuting economic theory cannot be done with experiments. Economic theory does not concern itself with human behavior. It is normative theory. The authors even call game theory predictions normative solutions. Nash equilibriums entail what should be. Players should only care about their own payoffs. They should be economically rational. It does not say anything about “what is” or human behavior. At best economic theory provides a way of thinking. A way of approaching problems. Playing the Nash equilibrium ensures a type of outcome. At worst economic theory is “vain playing with mathematical symbols” (from Ludwig von Mises' Human Action). No sane person who has ever spent more than three minutes in a modern grocery store could defend economic theory's positive predictions.

Now this situation does not doom economic experiments or economics. The results of economic experiments are interesting without their insistence to test game theory. They suggest positive behavioral hypothesis. They suggest how complicated human beings are.

In particular this paper's easy games suggest a significant percentage of people care about equality. People do not take all of the money for themselves, and people will punish players at the expense of their own income. Players behave differently when the stakes change and when they have more experience with the game. Also players have different expectations when they are the first and second subject. Some players do not follow “the golden rule of treating people like you want to be treated.” They reject offers as the second subject that they would have offered as the first subject.

The complicated games yield somewhat different results. The game is contrived so two possible mixes make both players payoffs as high as they can be. These mixes make sense. They are envyfree, Pareto optimal, and Nash equilibriums. But players do not necessarily choose these “superior” mixes. And sometimes the secon subject will not choose the bundle that generates the most income for himself. These results might occur because subjects did not understand the game, but again, it seems some subjects prefer equality and will sacrifice their own and total income for equality.

But these results say nothing about Nash equilibriums, Pareto optimality, or any other economic theory. Economic experiments explicitly confront human behavior. Economic theory does not concern itself with reality. As Ludwig von Mises said about economic theory, “...it did not deal with real living beings, but with a phantom “economic man,” a creature essentially different from real men.” This does not mean economic theory is fruitless. It still provides a systematic way of thinking through problems, but it is foolish to confuse economic theory with reality.

My First Take On Development

I wrote the following in William Easterly's The Elusive Quest for Growth:

Can I really give a damn about the poor? Every now and then I talk a good game. But poverty is so far away and then I think about domestic poverty. It is easy to blame poverty on ignorance, almost as easy as blaming it on bad luck. A child might not have opportunity, but he or she is paying for his or her parent's mistakes. Somebody has to pay. Zero-sum is neither complicated nor new, but it is real, relevant, and true.

Three years later, with a trip to the Philippines under my belt, I feel the same way. Poverty cannot be solved in a classroom or by an American researcher. It has to be solved in the bedrooms of Africa. It has to be solved in American ghettos and trailer parks.

The problem with most poverty experts is they do not see the poor as people. They do not care about the poor's ambitions. They want to treat the poor's symptoms but refuse to understand the disease.

Obviously I have no clue about development. But unlike most development economists I am not afraid to admit it.

How Do Things Work

Sam, GGM and I have been arguing about change. I argue change can and should come rapidly. Sam and GGM argues change can only come incrementally.

We agree the world faces problems. We agree on world's imperfection. But how do we change the world?

My problem with incremental change is it denies the ideal. People get so caught up in the intermediate steps, in their own actions, they forget the big picture. WTO negotioators forget free trade's universal benevolence in favor of political bickering.

It is Hayek's "good intentions." The WTO is a small step forward. But it does not solve problems. Good intentions pave the road to hell.

Well I have lost the motivation to properly finish this post. Small steps might eventually get us there, but I doubt it. With big steps, we might overstep or blow our load too early. I do not what way is better, but I do not think the answer lies in science, NGOs, or government.

Tribute To MarginalRevolution.com

Best sentences I read today

From a Vernon Smith article, "Theory, Experiment and Economics," in the Journal of Economic Perspectives (Winter 1989):

"However, if one wants to gain a greater understanding of economic phenomena, the most productive knowledge-building attitude is to be skeptical of both the theory and the evidence."

"Simultaneously, data should be ever more demanding of the empirical relevance of theory and of the theorist's expertise in working imaginatively on problems of the world, rather than on stylized problems of the imagination. "

"Words, pictures, and formulas cannot convey a lifetime of experiences under the able tutoring of one's experimental subjects."

Random Thought On Economics

Campbell's Select Microwavable Soups provide a quality product at a low price. Tonight I had Italian Wedding soup. It was tasty. I am sure real Italian Wedding soup would taste better. It would have fresh ingredients and less salt, but will I enjoy that much more?

I ate an imported mango today. I let it ripen up for a few days. It was close to heaven. It was nowhere near a tree-ripened Filipino mango, but again, I am not in the Philippines.

What does this say about where the quality of food is going? Of course it is increasing, but will the best fresh food exist in a few years? Will I ever pay for real Italian Wedding soup or tree ripened mangoes?

Advice For Graduate Students

When a graduate student gets depressed, he should read something a fellow student has written, something from someone he considers a rival. If it is good, the depression will at least temporarily turn into anger and desire, especially if it is well done and the reader sees some of himself (but not enough) in the paper.

They Were Not Perfect, But They Believed In Something"*

*A preacher describing the founding fathers.

You have to believe in something. You have to believe in yourself.

Yesterday Sam got a Chinese fortunate that said character is built upon courage. He disagreed with the fortunate, but the Chinese are wise.

I have been lost in a dense fog for a year. I have no idea who I am, what I want, or why anything matters. I go back and forth between being moderately and mildly depressed. Everything I have done has been half-ass. From the outside, it is a sad situation. From the inside, it is frightening. It feels like I am locked in a closet. Every now and then, I see the light, but the light does not stay.

My fear, my depression comes from fear, from the lack of courage. I do not have the courage to look into the mirror. I do not have the courage to get out of bed. I do not have the courage to distinguish between right and wrong.

Very few know who they are, what they want, or why anything matters. But they find the courage to act. Action requires courage. Blind action, action for action's sake accomplishes nothing. But sometimes, you have to weigh the odds and roll the dice.

Rolling the dice takes courage.

The Crazy Way

My Dad used to say, "There are three ways: the right way, the wrong way, and the the Agnew way."

Agnew was a hard-headed store manager that treated his employees like an overseer. He could not see his employees as people. He thought everyone who worked for him was stealing money from his wallet. He was an asshole.

But the Agnew way was really a mix between the wrong way and the right way. Agnew understood discipline. He understood what it took to be successful. He understood how to work. Both my Dad and I learned a tremendous amount from him.

So I am adjusting my Dad's saying, "There are three ways: the consensus way, the dumb way, and the crazy way."

Doing things the consensus way is easy. It requires no thought, no questions. You do what everyone else is doing. There is a good chance the consensus way is the right way.

Doing things the dumb way is stupid. It requires doing something you know is wrong. Most people do not do things the dumb way. (Note: The dumb way is sometimes refereed to as the American way, the Chinese way, the Albanian way or the WannabeBastiat way.)

The crazy way is the fun way. It requires taking a chance, being a man, courage. It requires flipping the finger at consensus at the risk of doing something dumb.

Sometimes the crazy way leads to progress. Sometimes it makes you look like a fool.

Maybe it is not so bad to be absolutely fucking crazy.

Zhe Mad Dogs, Zhe Englishmen, And Joe Cocker

The poetry of Leon Russell sung by Joe Cocker:

Woman of the country now I've found you
Longing in your soft and fertile delta.
And I whisper sighs to satisfy your longing
for the warmth and tender shelter of my body.
Oh you're my, yes you're my Delta Lady
Yes, you're my, me oh my, Delta Lady.

Please don't ask how many times I found you
Standing wet and naked in the garden.
And I think of days and diff'rent ways I held you,
Held you closely to me, yes our heart was beating.
Oh you're my .....

Oh, and I'm over here in England;
But I think of you, think about you ....
Because I love you,

There are concrete mountains in the city
And pretty city women live inside them.
And yet it seems the city scene is lacking.
I'm so glad you're waiting for me in the country.
Oh you're my ....

Eureka

I was sitting on the toilet reading Friedman's Capitalism and Freedom when I started to think:

I do not matter. My significance in only in my head.

I either overtip or undertip attractive female waitresses. When I am thinking with my dick I overtip. When I am thinking with mind I overcompensate for my superficiality and undertip.

Being happy does not come from the lack of stress, but the ability to react to stress.

We had this saying at Bridgewater, "If he is so damned good, why he is playing D-III. " That is an important statement to keep in mind in life.

I care about things no one else cares about. The only thing I care about is myself. No one else gives a damn.

Whit Stillman's wisdom rings true:
Man at Bar: The acid test is whether you take any pleasure in responding to the question "What do you do?" I can't bear it.
Nick Smith: Rick Von Slonecker is tall, rich, good looking, stupid, dishonest, conceited, a bully, liar, drunk and thief, an egomaniac, and probably psychotic. In short, highly attractive to women.

Society does not stand on trust. Society's foundations are incentives, the whip, sexual desire, religion, and courage. Trust comes secondary.

I will not be afraid. Being afraid is being stupid. I will not be terrorized.

"The Pretender" Tries To Work

He could not be friends with anyone, especially superiors. He was much too arrogant to like somebody that was his boss. He was so afraid to disappoint or fail them. He lay in bed in the morning dreading failure. His stomach ached with failure. He wanted to medicate the pain; he wanted to pacify his mind; he wanted to run to keep from hiding. He wanted.

And that was it. He wanted. He tried to deny wants for so long. He had learned expecting little rarely disappointed. It was the way he lived his life. He scratched his head. He rubbed his face. He decided to let it go, but he could not. He could only pretend.

Things I Learned This Week

1. I am bald. Every time I get a haircut, I get balder. There is nothing I can do about this. It is something I must accept.

2. Everyone should read an English grammar book once a year. English is a complicated but great language.

3. A sexy woman is more dangerous than a good woman. But a woman who is both sexy and good can kill a man without touching him.

4. I am crazy, absolutely fucking crazy. This is another thing I have to accept.

5. All there is in life is right now. The past and future do not matter. (Thank you C.S. Lewis and Jeff.)

6. You cannot be angry all your life.

7. A woman's scent is enough.

8. Everything is going to be okay.


There is this guy who comes to the gym that looks like a cross between Gary Busey, Nick Nolte and Robert Redford. He is 60 years old and carries himself like Gary Busey, Nick Nolte, or Robert Redford. He thinks he is hot shit and gives the impression he might just be.

Today he walks into the gym with a woman half is age. She is somewhat attractive. She looked like the intellectual type. I doubt if anyone had ever told her she was beautiful before the old guy did. They are holding hands and kissing. I am getting sick.

At first I convinced myself the whole thing was a crock. He did not love her. He loved screwing a woman half his age. She thought she was in love, but she was fooling herself. She had fallen for his sophistication and how he always knew what to say.

While we are changing, he starts whistling. Here is a whistling 60 year old man completely naked. After the horror of being in a room where a naked old man was whistling subsided, I decided maybe he was in love. And even if was not, he must be happy.

I thought about the somewhat attractive intellectual changing in the women's locker room. After I quickly forgot the image of her naked body to prevent embarrassing myself, I decided she was probably happy too.

What more can anyone ask for?

Meant To Do This Yesterday

Here is a post from another blog.

The blog's title describes my current stance on economics.

I am a rationalist. I believe in reason. I believe in science. I believe in the scientific method.

But statistics is not science. Economics is not science. Calculus and a special kind of statistics (econometrics) does turn philosophy into science.

Rigor can be overrated. Making something more difficult than it can be is the opposite of science. A basic premise of science is parsimony. Alfred Marshall threw this out of the window. Economics has not recovered.

Things Happen

A colleague got shit on yesterday. Instead of flying off the deep end, instead of blaming the world, instead of tapping out, he decided things happen for a reason. I disagree with his "covered with shit" decisions, but he made me think.

I went to church tonight. It was an uplifting experience.

We started off with a hymn that contained the refrain "I want to be a worker... in the vineyard of the Lord." I want to work. I need work like oxygen. Work is the poor man's Prozac. But you have to do the work you love. It cannot just be a diversion from depression. It has to be fulfilling. It has to build and maintain your confidence. It has to be something you can do well. It has to be you.

The sermon had a two-pronged message. First, do not let the things that do not matter interfere with what matters. As Bruce Hornsby said, "job is to shed light, not to master." Just because a letter is missing does not mean something is of no value. Just because I am not going to be great, does not mean I should kill myself.

The second message (adapted for my audience) was everything is not an empirical question. Free trade is good. Subsides are wrong. That tariffs and subsidies exist says nothing. You cannot win an argument with statistics. Just because something exhibits a chance regularity pattern does not say anything about causation. Evidence cannot trump common sense.

Here is my Email to another colleague who was close to the shitted on colleague:

"The most successful people in academia are assholes. To be a good graduate student, you have to always put yourself first. It isn't about principles or intellectual integrity. It is about taking care of yourself and not worrying about what makes sense.

The only thing I have learned from economics is economists are not needed."

I believe everything I said in that Email. But that says nothing about what I should do. It says nothing about right and wrong.

Things happen, maybe for a reason, maybe not. But it is up to you to decide what to do after they happen.

Best Article I Have Read Lately

Jason Whitlock does it again. He is one of the few guys at ESPN who understands the fine line between professional sports and professional wrestling. He even sounds like a libertarian every now and then.

Mike Lupica and Mitch Albom are sports snobs who are jealous they were not gifted with 4.3 speed or any athletic talent. They take their inadequacies out on athletes.

The Allman Brothers' "Soulshine"

Soulshine
by Warren Haynes
(c) 1995 Sony Music Entertainment Co.
Transcribed by Sean Carpenter

When you can't find the light,
That got you through the cloudy days,
When the stars ain't shinin' bright,
You feel like you've lost you're way,
When those candle lights of home,
Burn so very far away,
Well you got to let your soul shine,
Just like my daddy used to say.

[Chorus]
He used to say soulshine,
It's better than sunshine,
It's better than moonshine,
Damn sure better than rain.
Hey now people don't mind,
We all get this way sometime,
Got to let your soul shine,
shine till the break of day.

I grew up thinkin' that I had it made,
Gonna make it on my own.
Life can take the strongest man,
Make him feel so alone.
Now and then I feel a cold wind,
Blowin' through my achin' bones,
I think back to what my daddy said,
He said "Boy, in the darkness before the dawn:"

[Chorus]
Let your soul shine,
It's better than sunshine,
It's better than moonshine,
Damn sure better than rain.
Yeah now people don't mind,
We all get this way sometimes,
Gotta let your soul shine,
shine till the break of day.

Sometimes a man can feel this emptiness,
Like a woman has robbed him of his very soul.
A woman too, God knows,
she can feel like this.
And when your world seems cold,
you got to let your spirit take control.

[Chorus]
Let your soul shine,
It's better than sunshine,
It's better than moonshine,
Damn sure better than rain.
Lord now people don't mind,
We all get this way sometimes,
Gotta let your soul shine,
shine till the break of day.
Oh, it's better than sunshine,
It's better than moonshine,
Damn sure better than rain.
Yeah now people don't mind,
We all get this way sometimes,
Gotta let your soul shine,
shine till the break of day.

Lyrics That Caught My Ear

"Well my idea of a good time
Is walkin' my property line
And knowin' the mud on my boots is mine"

From The Marshall Tucker Band's "Property Line"
I did not know Marshall Tucker were libertarians.

"When you hang up that phone
Well you cease to exist"

From Fleetwood Mac's "Welcome to the Room Sara"


"If you wrote all the woman's names down I know
And let me pick one out
I don't think there'd be one in the whole bunch
Aw I'd give a hoot about"

From The Marshall Tucker Band's "This Ol' Cowboy"

I am not trying to be a misogynist here.

Relationships cause so much enjoyment and so much pain. Think about how much energy "love" creates and how little anyone knows about "love."

Columbia Market

12:00AM
Rest stop in some Carolina
Old Man doesn't drive but
Doesn't sleep either
Big Man drives
But wants sleep

2:00AM
Time to switch
Old Man will take us in

4:00AM
Red Columbia lights
Sleeping town
Old man revs the engine at every stop
Big man wakes up
"Best deals made before daylight"

7:00AM
Old man looks at every stall
Big man looks too
Neither happy but finally satisfied

9:00AM
Hot as hell
Breakfast in the diner
Old man knows everything
Big man knows almost everything
All I know it is hot

4:30PM
Almost home
Still hot
But we are almost there
Mama missed the exit
But Big Man Doesn't
151 never seemed so long

9:00PM
Truck is empty
Sleeps comes easy

15 years later
I miss those long hot days
I miss the Old Man
The Big Man has become old
All I wanted was to be a man
Now all I want to be is a child
Sitting in the middle
Between the Old Man and the Big Man

But the one thing I learned
From the market
You cannot be a child
When you are tired
When it is hot
You have to keep searching
For the best deal

Eventually you have to load
Get back home
And sell

The market
Will always be hot
You will always be tired
But the best deal awaits

Quote And Questions

"Some of this bullshit is pretty cool." ~Bono speaking about the Zoo TV tour

I have forgotten how fun the bullshit can be.


As an economist do I have to champion the market?

As a libertarian do I have to champion the market?

What is happiness? Is it personal or social? Can I be happy if someone I know is not?

What is good management? How important is performance? Is it all about presentation?

If I was the last person left on Earth, would I be able to survive? Would it be worth it? How would I know I was the last person on Earth?

What is more important arithmetic or calculus?

Sunday Morning

Church (worship) provides discipline and spiritual/intellectual stimulation.

The discipline is like going to football practice. It is something you do not necessarily want to do, but it pays off in the end. Or at least you think it pays off in the end. Discipline is mutual accountability. It is social.

I have neglected this discipline.

The intellectual stimulation is more personal. It is the search for Truth. Most people have a hard time internally creating this search. They require an outside force to make them question their existence. Church provides this force.

I do not have as much of a problem here.

Notice not all churches provide these two things. And church does not have to be the only place where they are provided. But they are required for an individual to be healthy.

"When I First Met You, You Were Larger Than Life"*

I love Wal-Mart as much as one can love a non-living being. Tonight I bought a computer, deli roast beef, sliced sharp cheddar cheese, turkey bacon, sweet Italian sausage, Carolina Pride beef bologna, an extra firm pillow, non-pasteurized apple juice, NABs, a Ghiradelli dark chocolate and expresso bar, whole wheat bagels, and Hershey milk chocolate bars for $551.08. The whole experience almost alleviated my depression. Wal-Mart reaffirms my faith there is a God. I am not even going to let the fact that $25.71 will be wasted in Richmond bother me.

No matter what the poverty expert says, White Hall Vineyards produces a fine Cabernet Franc.

*This line comes from Top Gun. The love interest says it to Tom Cruise's Maverick. It worries me Maverick is what women want. Maverick is a prick. A prick who has a difficult time looking himself in the mirror. A prick who refuses to confront his own inadequacies. Yes, he is confident, but no one is larger than life.

Of course most men have a little Maverick in them, but if these qualities attract women, what does it say about women?

I do not know. The love interest has a PhD in astrophysics, and she still cannot separate lust from love. I mean of all people, Maverick. Maverick chased after the admiral's daughter. Is Maverick ever going to be faithful? Iceman is less of a prick than Maverick.

My Dad has this saying, "If a man knew what was going on in a woman's head, his head would explode. " In other words, I should shut up.

Are People Stupid?

I think people are smart. Most people get through the day. They take care of their needs and move on to their wants. Do they always make the right decision? No. But they learn from bad decisions. They stop touching the stove. They can even watch TV.

Most people I work with think people are stupid. They think they can make better decisions than other people can. For example, left on their own, people will put houses on every square inch of land. They will starve themselves as farm land is converted to subdivisions. People left on their own will commit mass suicide. That is why we need myself and the people I work with. We are all working suicide prevention hotlines "saving humans from themselves."

Sam (who has had some good posts lately) and I discussed this Cafe Hayek post about the current account deficit. Sam says the guy is missing something. In particular US government spending is out of control.

My thoughts on government spending are transparent. Government should not exist must less spend.

But I do not see any problem with the post. Trade is mutually beneficial. People are smart. The Chinese give us consumer goods. We give them safe investments. The Chinese are not stupid. Americans are not stupid. It is give and take. No one is forcing anyone to do anything.

One day Americans might conclude those Chinese goods were bad decisions. The Chinese might see those safe investments were not so safe after all. Everyone will learn from these bad (or good) decisions and move forward with life.

But people will figure it out for themselves without the help of the suicide prevention hotline.

Disappearing Acts And State Vehicles

I am going on a vacation. No one will miss me. No one will care. But I feel the need to post my intentions.

The office has become oppressive. Oppression is not a good thing. It is preventing me from getting through that first practice.

This university has too many state vehicles. This 2005 Ford Explorer has taken up two prime parking spaces for three days. It is ridiculous.

There is no reason that Ford Explorer should have ever been bought. I wonder what my Dad would think about a state official riding in a 2005 Ford Explorer on my Dad's buck, while he was hoping his '86 Chevy pick-up did not break down while hauling a load of apples.

He would not think anything. He would not trade that '86 for any Ford unless it was a diesel F-350. My father is a smart man who gets things done. I am not.

Boredom

My father's work is his life. He loves his family. But work is the reason he gets his tired body out of bed. There might have been a time when work was just a way to get things for his family, but work became his life.

My work is not my life. I have been bored for over a year.

I came to graduate school wanting to change the world. By the Spring of my second year, I knew I could never change the world from graduate school. I saw a bunch of professors who pretended. I saw students who chose to be indifferent and played the game. My ambition slipped into boredom and depression.

I decided there had to be more to life than work. I stay in school under the false pretense it is an investment in my future. But work is not going to be my life. I have given up on excelling or caring. It is not worth it. Like the high schooler who does not fit in with any clique, I will make fun of everyone and still get a degree.

But it will not work. I am pretending too.

The last year has felt like I have been waiting for the first day of football practice. On the first day, you run. You run a lot. No matter how hard you train, the running is hard. It wipes you out. But when you are done with the first day, practice gets easier. You dread the first day for eight months, but the first day comes and goes. No matter how much you puked or how sore your legs are, life progresses.

So I have to get through the first practice. I do not know exactly what that means. It has something to do with caring about what I am doing. It has something to do about making a decision and going "balls to the wall." It has something to do with telling the fear of failure "fuck you." It has something to do about discipline. It has something to do with confidence. It has something to do with happiness.

There has to be a day when boredom ends. There has to be a day when depression ends. Why not today?
(My jackass side wants to say why not tomorrow or next week? Is that my jackass side or is it just me? Stopthink.)

"And If You Want It Just Come And Get It"*

The concept of original sin is bogus. It a Christian cop-out. It is the basis of Christian guilt. It gives evil a moral sanction to exist. It allows imperfection to continue.

I know the difference between right and wrong. I knew it when I was a child. I know it now. I was not born to do wrong. I was born to do right. I have no excuses for doing wrong, none whatsoever.

The Adam and Eve story has been misinterpreted. When Eve ate the apple mankind began. Mankind was given the ability to recognize Truth. We were able to distinguish between right and wrong. We were no longer animals. God did not want us to be animals that is why he created the serpent. Eve eating the apple was the original gift. There was nothing sinful about it. (I am sure theologians will rake me over coals, but frankly, I do not give a damn. I am right.)

An ideal society can exist. All it takes is people doing right. Doing right does not mean sacrificing your talents in the name of a mythical public good. It does not mean maintaining a broken system in the name of the status quo. It does not mean justifying evil by calling it human. Doing right means recognizing one's own greatness and pursuing this greatness. It means being truthful to yourself.

Yes, I went to church this morning. The pastor (she was not a preacher, this church does not believe in preaching) said the same thing I said in "Everyday Low Prices." She said it better, but honestly I doubt if people understood the significance of being real. They will continue to go on mission trips because of vanity. They will continue to ignore the consequences their decisions. I guess it is the 80/20 rule. A preacher can only hope that 20% live his message.

The music still sucks.

*From David Gray's "Babylon." This is a song I would like to sing in church.

Three Good Church Songs Other Than "Babylon":

1. U2's "I Still Haven't Found What I Am Looking For"

2. The Allman Brothers' Band's "Soulshine"

3. Don Henley's "The Heart Of The Matter"

300th Post And Taking The Trash Out

I am still a child. I am petty. I cannot stand someone beating me. When life does not go my way I sulk. My anger sinks into self-pity. I still want superiors and colleagues to recognize my greatness.

My grandfather would say "I was full of shit."

Growing up means shitting. It means throwing away childish emotions like self-pity and jealously. It means progressing. It means you love yourself so much you do not worry about others. It is being happy with yourself morning, noon, and night. It is confidence.

Paul Shirley Describes Academia

I mean the NBA.

I enjoyed my days playing football. Of course, I did not fit in with most of the team. I did not listen to rap or country. I cared about school. But they were a great bunch of guys.

We were a bunch of individuals who sweated together. We were a bunch of angry guys who were angry at different things, but come Friday night or Saturday we were a team.

I do not know what this says about anything. But I said it.

What Am I Doing?

I am a jock. I trust my physical skills. I trust my ability to compete. I am an asshole to those who do not trust.

GGM and I were trying to play basketball yesterday. I am fat, slow, and have turf toe. I cannot run for any length without going into cardiac arrest. I cannot push off my right foot without crying about my toe. My shoulder feels like shit. I can make two out of ten shots when no one is guarding me.

But I convinced myself that GGM and I could take anyone in the gym. Fortunately we did not get into any games.

Later we went to the races. I convinced myself I could be a driver, or at least, run a team.

As I was going to bed, I decided I needed the jock atmosphere to snap out of my doldrums. I could not decide if I needed explicit competition or a coach telling me what to do.

I decided I needed a coach telling me what to do. So I went to church this morning.

My goal for the day was to get my life in order. I wanted a plan. I decided I needed to simplify my life to essentials. With God's help, I was going to be my own coach. I was going to make a schedule and stick to it.

Church was a disaster. It deserves its own post. Most people go to church for the same reason I went this morning, stopthink. They sing bad songs that say very little but say it repeatedly. They listen to sermons without questions. They want someone to tell them what to do. In fact that is what the sermon was about this morning. "Don't do what you think is right. Do what God thinks is right." (I can imagine the NAZIs in Germany saying this to themselves every morning.) But as my roommate told me as I was leaving this morning, "There are a lot of women there (at church)."

I waste the rest of day watching sports and eating hot dogs. I did wash clothes. I postponed planning my life until this evening.

When I got back to the office, I got depressed. There is not competition in the office. There is no coach telling me what to do. I have a shelf full of books and a wall of quotes telling me the futility of planning. The only thing I have learned from Graduate Schools is you cannot plan life. People have control over their lives. But they cannot plan. It is spontaneous order. Things happen. Shit happens. Other things happen. We deal with shit and things.

So here I sit late at night in a depressing office. I am not happy. I have no plans. Instead of dealing with the shit and things, I am just sitting here.

But tomorrow I will make a plan.

Everyday Low Prices

“Why do you like the Blues?” she asked in a tone making him believe she wanted an answer.

A beautiful woman had asked him a thoughtful question, not a dumb question like who or what do you like, but why do you like the blues. She seemed to want to know the answer. He was amazed. “It is real. Those guys didn’t hide anything.”

She smiled. He did not know if she was impressed or amused a white guy liked the Blues because it was ‘real.’ She was beautiful. Her skin was mocha. He did not know what color mocha was, but he was sure her skin was mocha. The contrast of her red lips and her mocha face made him recall the beautiful faces he had seen. She was on the list. Her body looked like a woman’s body should, muscle and fat in the right places. She was real.

He primed this conversation. He asked the easy, “Why do you like the Blues?”

She answered too quickly. “My father listened to the Blues. He indoctrinated me. He said it was our heritage. I hated it. I thought it was primitive compared to modern R and B. I guess I am rediscovering my heritage…My father died a couple of months ago.” She did not want to reveal the last sentence, but she did.

“I am sorry,” he could not decide if she wanted him to leave her alone. She did not look sad. She was not crying. He thought of telling her how his father loved bluegrass, how he hated it, and how he learned to accept it, but that was cliché. He thought her first question was a test. He usually did the testing. Maybe this time he was being tested. She was intelligent. He could push a little. “All music is primitive. It is emotional. It is about wanting. It is about primitive wants. Some music just voices these wants better.” He could not believe he had let that tirade go.

“I know,” she replied. “Some people do not understand music. They claim to like all kinds of music.” Her body language emphasized the stupidity of the claim. “But, they do not understand what they are listening to. They cannot articulate what a good song means, because they cannot define what a good song is.”

He mumbled, “Rand.”

“Yes. People refuse to confront their tastes and preferences. Who is John Galt?” She raised her shoulders and eyebrows to add emphasis.

He was in love. He wanted to kiss those wonderful lips. He wanted to make love to her. It was the perfect answer. He hated the subjectivists surrounding him. He disliked those who listened to everything but knew nothing about what they listened to.

He looked her straight in the eye, he thought when he looked into a woman’s eyes he had magical powers, “That was the most intelligent thing that I have ever heard in Wal-Mart.” It had a hint of humor, but it was also true. There was no hyperbole. A woman with her sensibilities would understand.

She looked him straight in the eye. He remembered why he had always been scared of black women. Their confidence was more genuine than white women. A white woman would not have had the courage to carry on this conversation. They would have shrunk into the little girl they were trained to be. White women were the ones claiming to like all types of music. A beautiful woman he might have a chance with was staring straight into his eyes, and he was rightfully scared.

His grandfather would be rolling over in his grave. No he would not, beautiful women transcended race. He wondered if her father was tossing and turning at his daughter’s thoughts.

“Thank you.” She smiled. She quickly picked up a Lightin’ Hopkins CD.

He went with a live Muddy Waters’ CD.

They both continued shopping.

Another Article

ESPN's Patrick Hruby discusses government waste.

I do not agree with his 'blame the taxpayer' conclusion. Pork barrel projects should be unconstitutional. Congress funding the Syracuse Sports Hall of Fame has nothing to do with taxpayers. It is wrong.

The article exposes two problems.

First we see how separated the individual and government has become. $70,000 is not much money to a Congressman. It is to me. This problem stems from republicanism. The hierarchy from voters to elected officials is necessary in a large society, but leads to principle-agent problems.

Second we see the limits of democracy. Even if the majority of taxpayers approved of funding the Syracuse Sports Hall of Fame, the project should not be funded. It is not a public decision. It is the problem of fascism. Just because the majority of Germans were NAZIs, concentration camps cannot be justified.

I am adding political science to economics as disciplines who have not reached the public. Many people cannot intelligently think about economic and political issues. (This is what I was saying about the article in the last post.)

We have to teach better.

Two Articles

Here is another example of how little economics has taught. Demand and supply are abstract concepts to economists. They are more abstract to reporters. They are even more abstract to newspaper readers.

Demand and supply have no meaning to the public. Until this changes, the welfare state will thrive.


Here is a good movie review. I read a multitude of film reviews for my History of Film class. There is a difference between a well-written and thought-provoking review and a mindless summary. Criticism should teach as well as criticize. Good criticism stands on its own. It transcends what it is criticizing.

Is art about fun? My Dad says the purpose of a movie is to make you forget life for two hours. I have never accepted this purpose. Good art is interactive. It is not about forgetting but remembering and thinking.

I Have No Girlfriend

I did the best I can.

I have no regrets.

Sam Makes A Point

Sam discusses his future of economics.

We disagree, but I appreciate the feedback.

The first time I read about game theory I loved it. It was a way of describing the world. Every decision can be viewed as a play in a game.

I still think game theory gives us a good way to view the world. But people are crazy. It is no use trying to predict behavior.

In other words life is a game, but Nash equilibrium is meaningless.

Father To Son

The park was wonderfully dark. The creek leading to the lake was still. The ducks were asleep. It was neither cool nor hot. Everything was just right. The place was peaceful and that is why he had come.

His father and he had just quarreled over business. It was a stupid argument. An argument caused by miscommunication. He had thought he had explained his rationale well. His father did not understand or did not care about rationales. Of course, it was many meaningless things. As much as they were the same, they were also very different.

The argument had gotten him mad enough to make him talk to himself. It was not a loud conversation, but it was audible. His face was animated. His lips were moving rapidly. He bet he looked just like his father did when the old man got angry.

He saw the shadows of two lovers in the gazebo. At first, he was jealous. He had sacrificed for ‘business.’ He had no lover. He had no prospects. He had always thought all it took was effort. He had never chosen to put forth the effort. Now, while walking through this park on this glorious night, had he decided his previous choices were ill-conceived? No, not really, he knew a lover would come eventually. It would be hard, but so was everything else.

He cared as much as his father did. This was what the old man never realized. Of course, he made mistakes. But his father had made mistakes too.

He heard a woman let out a girlish scream. Her playful lover had done something in their privacy she had liked but did not want him to know she liked. Her scream fooled no one.

He wanted to scream. He wanted to give up on this world he had created for himself.

But the park was too beautiful. The lovers in the gazebo could not see it. The playful couple could not see it. But this idiot walking through the park talking to himself saw how wonderful the night was. He laughed out loud, loud enough to silence the playful couple.

He shook his head and stopped talking to himself.

The Future Of Economics

The economics profession is splitting into different schools.

One school, exemplified by Levitt and Dubner's Freakonomics and Tim Harford's The Undercover Economist, studies popular issues. Their audience is not economists but the (educated) public. They are applied statisticians and mathematicians. They do not care for normative debate. (Sam recently sent me this example.) Give this school data, and they will make an interesting conclusion about modern life. This is the Freak School.

The Traditional School focuses on government as an audience. They live by government grants. Most of the applied articles in journals are of this type. They make conclusions the public do not care about. They write for other economists. They rarely get into newspapers. They cannot author nightstand books. This Traditional School taught the Freak School.

The Archaic School is irrelevant. It is a group of failed mathematicians. It takes someone from the Freak or Traditional School to make the Archaic School's ideas relevant. Their ideas are rarely worth the paper they are written on. I refuse to consider them as having a future.

There are other Schools too. But I do not want to talk about them today.

The Traditional and Freak Schools requires statistics. Much of their empirical work is questionable. They miss the forest for the trees. The Traditional School has too many connections with the Archaic School to remain relevant. I am not saying government will lose faith in Traditional economists anytime soon, but government depends on popular opinion. The Freak School does a better job of recognizing popular opinion. The Freak School will eventually overtake the Traditional School. But both schools will suffer as social statistics is questioned by a greater number. Their conclusions cannot be supported by positive logic. Positive logic requires one to have no faith. Without faith statistics has no foundation to stand. Freak economists will start to battle one another over statistical details. They will quickly become archaic.

Also Freak economists cannot solve problems. They are passive observers. They study the correlation between waiting and successful surgery but will never convince a doctor to post prices. Their positivism will hamper their ability to generate change. Their lack of ideals will keep them in the middle of society. They will never be leaders or good teachers.

The Freak economists have the right audience. It is always about the marks. But by working with government the Traditional economists have greater opportunity to change society. It will take another school of economists to bridge the Freaks and Traditionalists. This school will be an idealistic group who believes in economics didactic value. It will be filled with a mix of politicians and entrepreneurs. It will create, instead of describing, our future.

Why I Went To Graduate School

I went to a doctor this morning. Two and a half hours later, I saw the doctor for 2 minutes. He told me I needed a procedure next Tuesday. I knew that on Saturday.

I filled out paper work. The same paper work I filled out in the hospital 100 feet away on Saturday. I waited with ten people past the age of sixty. All had more hair than I do. We all waited for hours. Old people have an easier time. Old people want air conditioners, a magazine, and the news. I want more.

I finally get called back. The nurse prys through my choking and family history. I almost cry when I tell her about my grandmothers' cancer. She got every death in the family out of me. She was nice. But she got pleasure out of my family's unpleasant health history. I did not. I have no chance of living past fifty.

Thirty minutes later I hear the doctor outside the door telling the nurse how he had misplaced a x-ray. Then he says, "Who is this guy?...Oh, the choker." I wanted to walk out, but I am scared of my mother.

He asks me the same questions the nurse did. I have to repeat my choking stories. They are not funny anymore. Repeating my family history brings another tear. In the middle of our consultation, he runs into the hall. I hope he found his x-ray.

He tells me I have to have this procedure. I probably have nothing wrong with me, but I have to have this procedure. Finally he asks what I do. I tell him "I am a graduate student studying 'econ'."

He gets a puzzled look on his face. I hoped he was going to tell me to go to hell. But instead, "What does 'econ.' stand for?" It made me real proud to be an economist. We have taught the world nothing, and do not plan on teaching anything.

In the end, I will pay who knows what to fill out paper work, wait, and briefly see a doctor who does not know what 'econ.' stands for. I have no idea what Saturday cost me or what next Tuesday will cost. The whole thing is ridiculous.

The American medical system needs to know what' econ.' means.

(Sam: I have not forgotten the 'service and flow' economy. I am leading up to it.)

One Year Anniversary

On July 11th this blog will turn one year old. Here is the original post.

It started as a group effort but turned into me whining. I am still searching for Truth while discovering myself. Unfortunately or fortunately myself comes before Truth.

The reason why I write this blog is boredom. Like the people who comment, I am bored. The other contributors found jobs. They relieved themselves of their boredom. They moved to better things.

I went home this weekend. A customer asked my father when the video store closed. He replied, "As long as their is a nickel walking the street, we will be open." He has said it many times. It still makes me think. I long to be so passionate that there is no closing time.

This blog is helping me decide how and from whom I am going to exchange nickels. Eventually I will have to make a decision and stop whining.

My Day

I moved someone from 9:00AM to noon. The total value of everything I moved was less than $200. The replacement value might have been higher, but I am taking my Dad's advice next time: "Give them $100 and tell them to hire someone, it is never worth it to move someone."

I go on a date with my girlfriend. (I have said it. I am sure she will break up with me within an hour.)

I do not have many stories. I have not lived an interesting life. So I told her about the time I got a piece of hamburger lodged in my throat. I hung upside down. I did everything I knew how to, but I had to go to the emergency room. It was not a pleasant day. I went to specialist. He told me I just needed to chew.

She laughed. Everything was going well. Then karma struck. I forgot to chew. Less than two minutes after the story, I had a piece of chicken or a potato lodged in my throat. I tried to throw it up off the deck of the restaurant. I went to the bathroom and tried to throw it up. I was trying to act cool by telling her everything would be fine, but my body was producing a gallon of saliva every thirty seconds. I went in and out of the bathroom eight times in ten minutes. I can only wonder what the other people on the deck were thinking.

She paid. We left by the backdoor. I tried to convince her everything would be alright. It was not. I kept spitting (throwing up) saliva every thirty seconds. She offered to take me to the emergency room. I said "No." "I can drive." "I will get my roommate." "Okay, you better take me."

Two hours later after an IV to relax the smooth muscles in my throat, I swallowed the chunk. They gave me an appointment to see a specialist on Monday morning. I have no idea what they charged me. The doctor saw me for a total of one and a half minutes.

(My girlfriend did not leave me. So I guess that is a good sign. All kidding aside, I cannot thank her enough. But I will be indebted to her until I save her life.)

The moral of the story: "Chew."