Different River

”You can never step in the same river twice.” –Heraclitus

May 4, 2006

Price Gouging

Filed under: — Different River @ 9:17 pm

Julian Sanchez repeats a version of this joke, which I rephrase slightly:

Three (former) business executives are in prison for “white-collar” crimes, and they are comparing stories.

The first one said, “I charged higher prices than my competitors, and I was found guilty of price gouging.”

The second one said, “I charged lower prices than my competitors, and I was found guilty of predatory pricing and unfair competition.”

The third prisoner said, “I charged the same prices as my competitors, and I was found guilty of price-fixing and collusion.”

Is it Genetics or Environment?

Filed under: — Different River @ 9:15 pm

Matt Drudge reports:

Police labor union officials asked acting Chief Christopher McGaffin this afternoon to allow a Capitol Police officer to complete his investigation into an early-morning car crash involving Rep. Patrick Kennedy (D-R.I.), son of Sen. Ted Kennedy.

ROLL CALL reports: According to a letter sent by Officer Greg Baird, acting chairman of the USCP FOP, the wreck took place at approximately 2:45 a.m. Thursday when Kennedy’s car, operating with its running lights turned off, narrowly missed colliding with a Capitol Police cruiser and smashed into a security barricade at First and C streets Southeast.

“The driver exited the vehicle and he was observed to be staggering,” Baird’s letter states. Officers approached the driver, who “declared to them he was a Congressman and was late to a vote. The House had adjourned nearly three hours before this incident. It was Congressman Patrick J. Kennedy from Rhode Island.”

Baird wrote that Capitol Police Patrol Division units, who are trained in driving under the influence cases, were not allowed to perform basic field sobriety tests on the Congressman. Instead, two sergeants, who also responded to the accident, proceeded to confer with the Capitol Police watch commander on duty and then “ordered all of the Patrol Division Units to leave the scene and that they were taking over.”

A source tells the DRUDGE REPORT: “It was apparent that the driver was intoxicated (stumbling) and claimed he was in a hurry to make a vote.

“When it became apparent who it was, instead of processing a normal DWI, the watch commander had the Patrol units clear the scene. The commander allowed other building officials drive Kennedy home.”

This morning’s incident comes just over two weeks after Kennedy was involved in a car accident in Rhode Island.

ADDENDUM (5/5/06): In all fairness, we have to give him some credit. At least he didn’t leave anyone to die at the scene while he ran off to call his political advisers.

Economists Don’t Think Everything is About Money

Filed under: — Different River @ 3:35 pm

One of the most common misconceptions about economics and economists is that we are concerned mainly, or even only, about money. Once when I was teaching an introductory economics class, on the first day I asked the class, “What is economics?” Eventually I got them around to the right answer, which is roughly, “The study of how people make decisions in response to incentives.” One student jumped in to clarify/correct me: “Financial decisions,” he said — no doubt expecting some brownie points for claifying what I really meant for the rest of the class.

No, I said — all decisions. And then I gave my now-standard introduction — a discussion of the decision whether or not to wear a seatbelt. That’s an economic decision — but it’s not a financial decision, at least, not in the way most people understand the word “financial.”

Donald J. Boudreaux of George Mason University has explained how economic — but decidedly not financial — thinking applies to the price of gasoline. He writes:

Contrary to popular misconception, economists do not believe that money is all that matters.

I remember during the 1979 gasoline shortage that many Americans opposed getting rid of the government-imposed price ceiling on oil and gas prices because, these people thought, lifting this ceiling would raise the cost of gasoline. Economists explained again and again that while lifting the price ceiling would raise the price charged at the pump, the full price of gasoline would in fact fall.

By bringing forth greater supplies of oil and gasoline, lifting the price ceiling would eliminate the necessity of waiting in long lines at the pump — as well as eliminate motorists’ anxiety of not knowing if they’ll be able to fuel their automobiles.

In short, the full price of gasoline was much more than the dollar amount charged at the pump; it included also the time spent waiting in long lines and the anxiety caused by the uncertainty of gasoline availability.

To suppose that the only cost incurred by motorists was the money they paid at the pump is to overlook the value of their time and peace of mind.

And here it is applied to wages and employment:

Recognizing that costs and values go well beyond those things whose prices are expressed in money is a key to the economic way of thinking.

For example, suppose that Congress raises the federal minimum wage from $5.15 to, say, $6 per hour. Further suppose that employers don’t fire a single worker in response to this minimum-wage hike [as economic theory suggests they will -- but for now assume they don't --DR]. Can we conclude that workers are made better off by this minimum-wage increase? No, at least not if we understand that workers value things in addition to the wages they are paid.

A worker’s job quality surely matters to him. How many breaks is he allowed to take while at work? How readily does his employer forgive him for innocent mistakes? How willing is his employer to allow him to take a day off to sit with his sick child? How comfortable and safe is the workplace? These and countless other “non-price” features of a job are vitally important even though they don’t show up in the wage figure.

If employers respond to this hike in the minimum wage not by hiring fewer low-skilled workers but instead by working their low-skilled workers harder, the quality of low-skilled jobs falls. Of course, these workers are now being paid a higher wage. But only those who focus exclusively on wages will conclude that this increase in the minimum wage definitely makes workers better off.

In other words, if your employer is forced to pay you more than is required to make you take the job, he or she may respond by making the job harder in a way that recaptures some of that “extra” wage. Or some nonmonetary benefits may be reduced. (Do you get free coffee at work? Free burgers if you work at a fast-food place?)

Why (Legal or Illegal) Immigrants Are Better for Texas than California

Filed under: — Different River @ 3:21 pm

Virginia Postel notes:

Texas has no income tax, which means public services are funded by sales and property taxes. Everyone, regardless of income or legal status, pays sales and property taxes, either directly or indirectly through rent. California, by contrast, relies heavily on a very progressive income tax that doesn’t fall on people who are paid off the books or who don’t earn much money in the first place. Liberals who support immigration should rethink their love of progressive income taxes.

The Dow Reaches Zero Return

Filed under: — Different River @ 2:30 pm

Well, that’s my financially cynical take, anyway:

Ron Scherer writes in the Christian Science Monitor:

Six years later, the Dow is back

Propelled by the economy, the Dow is nearing its all-time high of 11,723 from 2000.

By Ron Scherer | Staff writer of The Christian Science Monitor

NEW YORK – Without much fanfare, the Dow Jones Industrial Average is closing in on its all-time high, set at the beginning of 2000 before Americans became disenchanted with stocks and turned to real estate.

So the Dow is reaching it’s all-time high. This means that if you bought stock according to the Dow in January 2000, you are now back to where you started. You have had a zero rate of return over the last six years –which is really a loss, since that zero doesn’t account for inflation. Inflation is not too high these days, but after six years, even a small amount can add up. That 0% “gain” on the Dow is really, after inflation, a 13.8% loss!

The Dow Reaches Zero Return

Filed under: — Different River @ 2:30 pm

Well, that’s my financially cynical take, anyway:

Ron Scherer writes in the Christian Science Monitor:

Six years later, the Dow is back

Propelled by the economy, the Dow is nearing its all-time high of 11,723 from 2000.

By Ron Scherer | Staff writer of The Christian Science Monitor

NEW YORK – Without much fanfare, the Dow Jones Industrial Average is closing in on its all-time high, set at the beginning of 2000 before Americans became disenchanted with stocks and turned to real estate.

So the Dow is reaching its all-time high, achieved in January 2000. This means that if you bought stock according to the Dow in January 2000, you are now back to where you started. You have had a zero rate of return over the last six years –which is really a loss, since that zero doesn’t account for inflation. Inflation is not too high these days, but after six years, even a small amount can add up. That 0% “gain” on the Dow is really, after inflation, a 13.8% loss!

What goes up, must come down

Filed under: — Different River @ 10:18 am

So this woman in Houston was the maid of honor at her best friend’s wedding, and what getting ready to try to catch the thrown bouquet, when all of a sudden her arm started bleeding. She’d been hit by a different flying object — a bullet.

Shot by whom? A crazed relative? A jealous ex-boyfirend of the bride? A rival gang member?

Nope.

Some idiot fired his gun in the air, probably more than a mile away. The bullet came down through the roof of the ballroom, hit Kristin Campbell in the arm … and then fell out of her arm onto the floor.

The good news is, the bullet apparently lost most of its energy when it crashed through the roof, so Miss Campbell was not seriously injured. Those of you who once took a physics class might recall the Law of Conservation of Energy, according to which a bullet fired up will have the same amount of energy coming down as it did when it left the gun (before correcting for air resistance) — so a bullet coming from above would normally hit nearly as hard as one fired at point-blank range. Fortunately, in this case the roof took most of the impact. It would have been a lot worse had it hit someone outside.

I don’t know where people get the idea that they can fire guns in the air harmlessly, especially in a populated area. Do they think the bullet just disappears up in the sky? That it goes into orbit, or outer space? More likely, they just don’t think at all. The news story doesn’t have any definitive information on the shooter, or why he or she shot into the air. If he was confronting a mugger and fired a “warning shot,” take a lesson — shoot directly at the bad guy, not into the air — for your reticience might cause injury to an innocent person somewhere else.

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