Ben Muse

This blog supports Ben Muse's classes in the Master of Public Administration program at the University of Alaska, Southeast. These classes are Economics for Public Managers and Economics of Public Policy. This blog is for past, present, or prospective students in the classes.

To leave a comment click on the word "comment" at the end of each post.

Click here for Atom feed



New York Times headlines

Juneau webcams
Alaska/Yukon photos
The Fight for Free Trade
Economics blogs
Australian economics blogging
Other blogs
Economics links
Natural Resource Policy
Public Finance
Alaska Finance
Regulation
University of Alaska, Southeast
Blogging


Archives


This page is powered by Blogger. Isn't yours?
7/22/2004
 
Sunken U-boat Found

Janet Kornblum reports in today's USA Today about the discovery of a sunken u-boat on Georges Bank, off of New England: "'Sea Hunters' find deadly U-215 ".

The havoc in the Atlantic sea lanes was only caused by a relatively small number of the u-boats commissioned, and the losses were enormous:
    "Though they were deadly for the Allies, they were often a death sentence for the sailors aboard. There were 1,171 U-boats commissioned during World War II, says Jak Showell, a naval historian from Folkestone, England, and member of the U-Boat Archiv in Germany. But only 859 U-boats were deployed for battle, and three-fourths of them — 648 — were sunk or captured at sea, Kurson says. And only 321 U-boats actually attacked and caused damage to allied ships, Showell adds."


posted by Ben Muse at 12:34 PM

7/21/2004
 
Fixing the ETI

George Mundstock on the genesis and evolution of the new Corporate Tax Bill: "No Corporation Left Behind"  (this is the one that does so well by GE).

Mundstock also begins a series on corporate taxation of multinational enterprise, here: "US Taxation of Multinational Enterprise: Part I".

Mundstock is guest blogging at Michael Froomkin's Discourse.net.

I learned about this from Brad DeLong.

posted by Ben Muse at 11:41 PM

7/20/2004
 
How to pay a restaurant bill

Michael Stastny marshals the theoretical models and experimental evidence: "The Unscrupulous Diner's Dilemma". It's a public goods problem.

posted by Ben Muse at 10:44 PM

 
Tom Lehrer

There are a lot of web sites dealing with Tom ("I'd like to take you now, on wings of song as it were, and try and help you forget for a while your drab, wretched lives.") Lehrer- a political humorist, satirist, song writer and performer from the 1950s and 1960s.

For anyone interested - there are biographies here and here.

There are interviews here, here, and here.

A list of songs, with lyrics, here. A lot of work has gone into this site. References that were current at the time, but might not be familiar to younger people, are carefully explained. I was glad to finally see a photo of Alma Mahler Gropius Werfel.

A list of audio CDs available from Amazon is here.

We've come a long way since the mid-sixties. The second world war was only 20 years past; the Cold War was at its worst.  A song like the "MLF lullaby" was funny then in a way it isn't now, because it tapped into anxieties we've forgotten:
    "A considerable amount of commotion was stirred up during the past year over the prospect of a multilateral force, known to the headline writers as MLF. Much of this discussion took place during the baseball season, so the Chronicle may not have covered it, but it did get a certain amount of publicity; and the basic idea was that a bunch of us nations, the good guys, would get together on a joint nuclear deterrent force including our current friends, like France, and our traditional friends, like Germany.  Here's a song about that, called the MLF Lullaby:

    Sleep, baby, sleep, in peace may you slumber,
    No danger lurks, your sleep to encumber.
    We've got the missiles, peace to determine,
    And one of the fingers on the button will be German.

    Why shouldn't they have nuclear warheads?
    England says no, but they all are soreheads.
    I say a bygone should be a bygone,
    Let's make peace the way we did in Stanleyville and Saigon.

    Once all the Germans were warlike and mean,
    But that couldn't happen again.
    We taught them a lesson in 1918
    And they've hardly bothered us since then.

    So, sleep well, my darling, the sandman can linger.
    We know our buddies won't give us the finger.
    Heil - hail - the Wehrmacht, I mean the Bundeswehr,
    Hail to our loyal ally!
    M L F
    Will scare Brezhnev.
    I hope he is half as scared as I!"
On the other hand, our relationship with the French hasn't changed all that much:
    "One of the big news items of the past year concerned the fact that China, which we call Red China, exploded a nuclear bomb, which we called a device. Then Indonesia announced that it was gonna have one soon, and proliferation became the word of the day. Here's a song about that.

    First we got the bomb and that was good,
    'Cause we love peace and motherhood.
    Then Russia got the bomb, but that's O.K.,
    'Cause the balance of power's maintained that way!
    Who's next?

    France got the bomb, but don't you grieve,
    'Cause they're on our side (I believe).
    China got the bomb, but have no fears;
    They can't wipe us out for at least five years!*
    Who's next?

    Then Indonesia claimed that they
    Were gonna get one any day.
    South Africa wants two, that's right:
    One for the black and one for the white!
    Who's next?

    Egypt's gonna get one, too,
    Just to use on you know who.
    So Israel's getting tense,
    Wants one in self defense.
    "The Lord's our shepherd," says the psalm,
    But just in case, we better get a bomb!
    Who's next?

    Luxembourg is next to go
    And, who knows, maybe Monaco.
    We'll try to stay serene and calm
    When Alabama gets the bomb!
    Who's next, who's next, who's next?
    Who's next?"


posted by Ben Muse at 8:19 PM

 
GE sees and seizes an opportunity

General Electric (GE) is on the verge of winning enormous tax advantages in upcoming corporate tax legislation.  Jeffrey Birnbaum and Jonathan Weisman reported on GE's lobbying efforts a week ago in the Washington Post: "GE Lobbyists Mold Tax Bill"

In 2002 the U.S. lost a case before the World Trade Organization (WTO), which ruled that elements of U.S. international tax laws violated international trading rules to which the U.S. had agreed.  Foreign countries were authorized to begin imposing punitive tariffs on U.S. products.  Congress undertook to rewrite the corporate tax laws to deal with the problem, and things spun out of control. Birnbaum and Weisman note that
    "Lobbyists for the nation's biggest companies have dusted off their favorite tax benefits and tried to sell them as part of the legislation. As a result, the measure, which began as a simple repeal of the $5-billion-a-year export subsidy, has swollen to include more than $140 billion in tax breaks over the next 10 years."
GE has been among the companies doing best in this legislation.  Birnbaum and Weisman have written a short case study describing how this happened:
  • GE had been thinking about what it wanted for a long time - since the passage of the Tax Reform Act of 1986.  Moreover, "In some ways, the recent lobbying campaign was anticipated in 2001 with the release of a scholarly study called "International Tax Policy for the 21st Century" by the National Foreign Trade Council. Lobbyists say the study's recommendations for change in the law, influenced by GE's input, helped lay the groundwork for the provisions that GE now seeks."

  • GE has donated a lot of money to candidates; its lobbyists can expect to get a hearing.

  • Its stable of international tax lobbyists is large, unusually knowledgeable, and worth listening to. "Unlike other corporations, GE's contract lobbyists do more than open doors so that its executives can make the case. The lobbyists are renowned in their fields and the company encourages them to function as much as advisers as pleaders to lawmakers who crave their expertise."

  • GE early on identified the possibilities of the bill to address the WTO concerns. "General Electric realized more than two years ago that the need to repeal the export subsidy would snowball into a major corporate tax bill...The GE team also was among the first companies to sign on to Thomas's [House Ways and Means Committee. Chairman Bill Thomas (R-Calif.) - Ben] initial efforts to solve the foreign-treaty issue and stuck with him as other businesses and lawmakers fought him at every turn."
  • GE characterized (or framed) its desired statutory changes in highly favorable terms. "The company's tax lawyers compiled a wish list and framed the firm's desires as simplification." [tax simplification - Ben]

  • GE didn't just lobby Congress. "The company's lobbying team touched every base. Joseph M. Mikrut, a former tax legislative counsel at the Treasury Department, teamed with his colleague at Capitol Tax Partners, Jonathan Talisman, a former assistant Treasury secretary for tax policy, to work the policy experts at Treasury."


posted by Ben Muse at 7:26 PM

7/19/2004
 
Patrolling the Malacca Straits

The Straits Times reports that Singapore, Indonesia, and Malaysia have begun a joint 17 naval vessel patrol of the pirate-ridden Malacca Straits.  "50,000 ships ply the Straits of Malacca each year, carrying oil from the Middle East, and goods bound for Europe through the narrow passage between peninsular Malaysia and Singapore on one side and the Indonesian island of Sumatra on the other.": "3 countries start joint patrol of Malacca Straits"
    "The security of the straits was put firmly on the political agenda in March, when Admiral Thomas Fargo, commander of US forces in the Pacific, said a US plan to heighten security there might involve US elite troops who could 'take action when the decision has been made to do so'.

    The plan was rejected by both Muslim-majority Indonesia and Malaysia, although Singapore embraced the proposal.

    Kuala Lumpur and Jakarta insisted foreign troops were not needed to help safeguard the waterway, and that any active US deployment would infringe on their sovereignty. However, the three countries then agreed to start their own coordinated patrols."
This initiative by friendly countries seems like a good solution for the U.S., which is allowed to economize on its scarce military resources.

posted by Ben Muse at 10:41 PM

 
Productivity comes unexpectedly

Alex Tabarrok, at Marginal Revolution, describes how new communications tools are changing service procedures at some McDonalds restaurants. The economic meaning of space, and the need to co-locate economic activities in space, is changing radically: "Who would have guessed?"
 
The economist Ronald Coase argued that business firms evolve because it's often cheaper to coordinate the work effort of different people administratively, rather than through markets and prices.  Once it was less expensive for drive-thru order takers in fast food restaurants to yell the orders to the cooks; now it's apparently sometimes cheaper to transmit the orders hundreds of miles to a call-in center which then sends the orders to the cooks.  The order takers and cooks don't even have to work for the same firm.

posted by Ben Muse at 6:34 PM

7/18/2004
 
No road to Juneau - yet

You can't drive to or from Juneau - we're cut off from the rest of the world by rivers, arms of the sea, mountains, ice fields and glaciers. You have to fly in or come by boat.
 
A road from Juneau north to Skagway, where it would connect with the rest of the North American road net, is under consideration, but very controversial.  Sarah Kershaw laid out the issues in Thursday's (July 15) New York Times : "Alaska's Capital Weighs Loss of a Glorious Isolation"

I learned about this from Ben Muse of Cape Cod, Massachusetts.

posted by Ben Muse at 4:49 PM

 
Talleyrand drops in the Hamiltons

In 1794, the cynical and unprincipled French diplomat Talleyrand was on the lam from revolutionary France.  He fled to England and then the United States...where he met U.S. Treasury Secretary Alexander Hamilton.  Ron Chernow tells the story of the resulting friendship in his new biography of Hamilton:
    "In January 1794, Talleyrand, informed that he had five days to leave England or face deportation, decided to join other stateless emigres in Philadelphia. The Churches [Hamilton's in-laws, then living in England - Ben] subsidized the trip, and Angelica [Angelica Church - Ben] smoothed the way for Talleyrand and his traveling companion, the chevalier de Beaumetz, by writing Eliza [Hamilton's wife, Angelica's sister - Ben] and introducing the two gentlemen as martyrs for "the cause of moderate liberty...To your care, dear Eliza, I commit these interesting strangers..."
In 1794, Hamilton was in his last year as Treasury Secretary.  He would resign early in 1795. Washington declined to meet Talleyrand, for political reasons.  There was, apparently, less concern about contact with Hamilton.

    "Talleyrand soon acquired a mulatto mistress, whom he squired openly through the Philadelphia streets [At this time Philadelphia was the U.S. capital - Ben].  This bothered some priggish souls in polite society but not Hamilton, although Eliza may have been less forgiving. "He was notoriously misshapen, lame in one foot, his manners far from elegant, the tone of his voice was disagreeable, and in dress he was slovenly," she remembered as an old woman. "Mr. Hamilton saw much of him and while he admired the shrewd diplomat for his great inellectual endowments, he detested his utter lack of principle. He had no conscience."...  He and Talleyrand became companions with a mutual fascination, if not close friends.

    During his two-year sojourn in America, Talleyrand cherished his time with Hamilton and left some remarkable tributes for posterity: "I consider Napoleon, Fox, and Hamilton the three greatest men of our epoch and, if I were forced to decide between the three, I would give without hesitation the first place to Hamilton. He divined Europe." Of Hamilton he told one American travel writer that "he had known nearly all the marked men of his time, but that he had never known one on the whole equal to him." Hamilton savored the roguish diplomat's company and gave him, as a token of esteem, an oval miniature portrait of himself.

    Hamilton and Talleyrand were both hardheaded men, disgusted with the utopian dreams of their more fanciful, radical compatriots. As one Talleyrand biographer put it, "They were both passionately interested in politics and both of them looked at politics from a realistic standpoint and despised sentimental twaddle whether it poured from the lips of a Robspierre or of a Jefferson." Both men wanted to create strong nation-states, led by powerful executive branches, and both wanted to counter an aversion to central banks and stock markets.  Oddly, Talleyrand agreed with Hamilton that Britain, not France, could best supply America with the long-term credit and industrial products it needed. Talleyrand recalled vividly how Hamilton asserted a passionate faith in America's economic destiny. In their talks, Hamilton said that he foresaw, "the day when - and it is perhaps not very remote - great markets, such as formerly existed in the old world, will be established in America." Talleyrand confessed to only one complaint abut Hamilton: that he was overly enamored of the grand personages of the day and took too little notice of Eliza's beauty..."
In 1797, Washington's successor, President Adams, sent a three man delegation to France to negotiate the so-called quasi-war between France and the United States.   (Hamilton was now out of office, and was not a member of the delegation.)

    "...When the American commissioners arrived in France in August 1797, they were greeted by a lame minister of foreign affairs who had been a pariah a few years earlier: Charles Maurice de Talleyrand-Perigord, who had befriended Hamilton in Philadelphia. With the end of the Terror, Talleyrand had been rehabiliated and returned to France. Hamilton knew that he was avaricious and regarded public office as a means of obtaining money. The cynical Frenchman once told a mutual friend that "he found it very strange that a man of his [Hamilton's] quality, blessed with such outstanding gifts, should resign a ministry [Hamilton had resigned his position as Treasury Secretary in 1795 - Ben] in order to return to the practice of law and give as his reason that as a minister he did not earn enough to bring up his eight children." After Hamilton returned to New York, Talleyrand was enroute to a dinner party one night when he glimpsed Hamilton toilng by candlelight in his law office. "I have seen a man who made the fortune of a nation laboring all night to support his family," he said, shocked.  After becoming French foreign minister in July 1797, he rejoiced at the plunder placed at his fingertips. "I'll hold the job," he confided to a friend. "I have to make an immense fortune out of it, a really immense fortune. "He proceeded to scoop up an estimated thirteen to fourteen million francs during his first two years as foreign minister."
He demanded bribes from the U.S. delegation, among other conditions for entering negotiations. The three agents he sent to meet with the U.S. delegation were identified in U.S. diplomatic codes as "X", "Y", and "Z".  The conditions, including the demand for bribes, created a political firestorm in the U.S., referred to as the "X Y Z Affair."

Ron Chernow. Alexander Hamilton Penguin Press. New York. 2004

posted by Ben Muse at 11:38 AM

7/16/2004
 
Kerry campaign issues staff: legal issues

Jonathan Groner reports on Kerrry campaign issues staff legal advisors: "The Lawyers in John Kerry's Corner"
    "She's ["She" is Susan Liss - Ben] doing so as part of a group of lawyers that advises Kerry on judicial and legal policy issues.

    That group, headed by Nicholas Gess, of counsel at the D.C. office of Bingham McCutchen, is one of several clusters of well-connected lawyers and policy experts, many of them Clinton administration veterans, relied on by Kerry to brainstorm key issues.

    Other groups, larded with lawyers from the D.C. offices of such firms as Arnold & Porter; Latham & Watkins; Mintz, Levin, Cohn, Ferris, Glovsky and Popeo; and Skadden, Arps, Slate, Meagher & Flom, focus on issues like economics or foreign policy. All of them report to Sarah Bianchi, the campaign's policy director and a former domestic policy adviser to former Vice President Al Gore..."
This mid-February story identifies lawyers advising the campaign on different policy areas.


posted by Ben Muse at 7:03 PM

 
Angry Bear passes on conservative columnist Bruce Bartlett's thoughts on likely Kerry picks for economic positions: Kerry's Cabinet .
 
Recently the Washington Post and Slate have carried stories or columns on the same topic.


posted by Ben Muse at 4:32 PM

7/15/2004
 
Which countries are economically freest?

The U.S. is third freest out of 123 ranked countries, according to a new CATO study. The Straits Times reports: "Singapore 2nd in economic freedom". Hong Kong comes in first. The judgment is based on an evaluation of:
    "...the key ingredients of economic freedom are personal choice, voluntary exchange, freedom to compete and protection of person and property."
Does it matter? The blurb for the report says that:
    "Economic freedom is strongly related to prosperity and growth. Countries that are economically free tend to grow faster and be more prosperous. New research in the 2004 report finds that economically free nations attract nearly $11,000 of investment per worker, 12 times more than the $847 investment per worker in unfree economies. Moreover, the productivity of investment is 70 percent greater in economically free nations than in unfree nations.

    Nations in the top fifth of economic freedom have an average per capita income of $26,100 compared to $2,800 for nations in the bottom fifth. Economic freedom benefits the lives of all people including the poor. In nations in the top fifth of economic freedom, the average income of the poorest 10 percent of the population was $6,877 compared to just $823 in the least free nations."
The report itself may be found here: "Economic Freedom of the World: 2004 Annual Report".

posted by Ben Muse at 11:24 AM

7/14/2004
 
House approves FTA with Australia

The Straits Times reports that the U.S. House of Representatives approved the Free Trade Agreement (FTA) with Australia today - 314-109. The Senate takes it up tomorrow: "US House approves FTA with Australia"
    "...The measure had robust bipartisan backing because Australia, unlike less developed free-trade partners, has strong labour rights and environmental laws and poses no threat to US jobs. 'If you can't agree with this trade agreement, I don't know what trade agreement you're ever going to agree with,' said Representative Jim Moran...
Update,  July 15:  The U.S. Senate approved the FTA today, 80-16.  Prescription drug issues were a potential sticking point, according to The Australian: "US-Australia FTA approved"
    "...A rare sticking point during the two days of debate was language that some lawmakers said could undermine efforts to legalise importation of cheaper prescription drugs...

    But lawmakers also objected to language reconfirming US law under which patent holders keep control over sale of imports of their products in the United States, saying that could prevent drug importation.

    "It's an attempt once again to thwart those in this country who want to find a way to put downward pressure on prescription drug prices," said Senator Byron Dorgan, a Democrat.

    But the USTR emphasised the agreement creates no new rights for US patent holders, that Australia bans exports of its subsidised pharmaceuticals, and that the pact does not alter Congress' authority to change US law on importation."


posted by Ben Muse at 9:55 PM

 
Who should lead a Kerry administration economic team?

Yesterday I linked to a Jonathan Weisman story in the Washington Post on the Kerry campaign issues staff, paying particular attention to the economics staff: "Kerry Economic Team"

Today's Daniel Gross Slate column asks who should lead the team: (I assume he's asking who would be the best Treasury Secretary): The Men Who Would Be Bob - Can Kerry find his own Robert Rubin?. Gross reviews the pros and cons for seven candidates.
posted by Ben Muse at 8:12 PM

 
Did it jump, or was it pushed?

Did General Motors kill off urban mass transit in the 1920s "by employing a host of anti-competitive devices which, like National City Lines, debased rail transit and promoted auto sales." Or not?

Craig Newmark posts links to a selection of essays making and debunking the case: "Follow-up" Also see Newmark's post: "Revisiting two previous topics". Newmark's conclusion, after reviewing the discussion - it jumped.
posted by Ben Muse at 5:02 PM

 
Is the U.S. the top exporter to Cuba?

The Progressive Policy Institute "Trade Fact of the Week" reports on U.S.-Cuba trade:"Top Exporter to Cuba, 2004: The United States?"
    "...Four years ago, Congress legalized cash-basis food and medicine exports; as a result, tens of thousands of tons of rice, chicken, wheat, corn, and black beans now flow to Cuba monthly. This has pushed total exports up from $7 million in 2001 to $260 million in 2003, and considerably higher in early 2004. The 166,000 tons of rice sold from January to May of 2004, for example, was a tenth of all U.S. rice exports to the world, bringing in $61 million and placing Cuba third (behind Japan and Mexico) as a rice market. Twenty thousand tons of chicken cuts, meanwhile, made Cuba the United States' eighth-ranking poultry market and brought in $29 million. Cuba is also now the third largest export market for American condensed milk, seventh for black beans, and in the top 20 for wheat and corn.

    If these trends hold up for the rest of 2004, total exports to Cuba will top $600 million... Perhaps more interesting, such a figure could make the United States the world's largest exporter to Cuba. The island's total imports in recent years, according to IMF data, have been around $3 billion. Spain is usually the biggest exporter at around $500 million a year. Venezuela is close behind, and sometimes above, depending on the price of oil. Other contenders include Mexico at $150 million a year and Brazil at about $75 million..."

posted by Ben Muse at 3:57 PM

 
Royal Mistresses

Eleanor Herman's new book, Sex With Kings. 500 Years of Adultery, Power, Rivalry, and Revenge, a history of European mistresses, isn't devoid of information about the public finance. Jonathan Yardley reviewed it in the July 1 Washington Post: "In His Majesty's, Ahem, Service"
    ""In the sixteenth through the eighteenth centuries, the position of royal mistress was almost as official as that of prime minister. The mistress was expected to perform certain duties -- sexual and otherwise -- in return for titles, pensions, honors, and an influential place at court. She encouraged the arts -- theater, literature, music, architecture, and philosophy. She wielded her charm as a weapon against foreign ambassadors. She calmed the king when he was angry, buoyed him up when he was despondent, encouraged him to greatness when he was weak. She attended religious services daily, gave alms to the poor, and turned in her jewels to the treasury in times of war."
The position was fraught with difficulty. Yardley notes:
    "As for the mistresses, they may have been pampered and even adored, but they lived in limbo. A mistress's claim upon the king's time and exchequer rested entirely on her ability to please and amuse him. There was an endless stream of "pretty women attempting to gain the king's attention," and the mistress of the moment was forever on red alert: "When the royal eye wandered, as it did with alarming frequency, there was great speculation as to whether the object of kingly desires would prove a meaningless flirtation or if she would completely replace the existing power structure at court."
I learned about this from the Arts & Letters Daily
posted by Ben Muse at 12:04 PM

7/13/2004
 
Kerry economic team

Tomorrow's Washington Post has a story by Jonathan Weisman on the Kerry campaign's issues organization: "Kerry's Inner Circle Expands"
    "...The campaign now includes 37 separate domestic policy councils and 27 foreign policy groups, each with scores of members. The justice policy task force alone includes 195 members. The environmental group is roughly the same size, as is the agriculture and rural development council. Kerry counts more than 200 economists as his advisers...",
So he's getting plenty of economic input. Key economic advisors include:
    "...Kerry's campaign was not always so expansive. On economic policy, for instance, a core group of four once held the key to the policy process: Bianchi [Sarah Bianchi, now "Kerry's domestic policy chief" -Ben], campaign economic aide Jason Furman, investment banker Roger C. Altman and Gene Sperling, former top economic adviser in Bill Clinton's White House.

    Now, things are more complicated. Three more economists -- London Business School Dean Laura D'Andrea Tyson, Princeton University's Alan S. Blinder and the Brookings Institution's Peter R. Orszag -- are consulted on virtually every policy decision. Former Treasury secretary Robert E. Rubin also weighs in on major policy pronouncements.

    Another circle, including Akerlof     [George Akerlof, Nobel prize winning Berkely economist - Ben], University of California at Berkeley economist Alan J. Auerbach, Princeton's Cecilia E. Rouse, and Harvard University labor economist Lawrence F. Katz, advises on specific issues.

    A separate "New York group" -- including investment bankers Eric Mindich, Blair Effron and Steven Rattner -- tutors Kerry on matters of domestic and international finance, while helping to raise money and woo business support...
Later sections of the story describe the functioning of this large policy apparatus.

posted by Ben Muse at 11:37 PM

 
The Carlos Boozer Affair

Michael McCann (on Sports Law Blog) posts on the ethical issues raised by Carlos Boozer's move from the Cleveland Cavaliers to the Utah Jazz:
"Oral Promises & Professional Sports: The Carlos Boozer Saga"

Boozer played high school basketball here in Juneau.
posted by Ben Muse at 10:50 PM

7/11/2004
 
Pricing driving

The Guardian reports on an upcoming, government funded, report in the U.K. that will recommend a new system to price road access. It sounds like cars would be required to carry a combination GPS/radio unit capable of transmitting the cars' locations to satellites. The system could track road usage and bill drivers appropriately. The report is due out later this month. The goal is to address road congestion problems. Here's the story: "Crisis plan for tolls on all roads ".

It sounds like, with this technology, it would be relatively easy to adjust charges to reflect varying levels of congestion in time and space (downtown at 3:30 PM on Sunday morning may be relatively uncongested and the charge per mile could be low; the inbound expressway at 7 AM on Monday morning may be relatively congested and the charge per mile could be high).

The technology sounds like that used to monitor vessel location and movement in the waters off Alaska. Certain classes of vessels are required to carry Global positioning system (GPS)/radio units so that their movements can be monitored. This system was introduced to monitor vessel activity with respect to areas closed to protect the endangered Stellers sea lion.

I learned about the Guardian article from Skip Sauer's Sports Economist blog: "Toll Roads"
posted by Ben Muse at 2:58 PM

7/10/2004
 
The allocation of scarce club tables among competing celebrities

Coco Henson Scales describes her life on the service staff of a hot New York night spot in today's New York Times: "The Hostess Diary: My Year at a Hot Spot". What's Naomi Campbell like? The Bush Twins? Monica Lewinsky? Star Jones (who is Star Jones)? An honest article about a lot of mildly bad behavior.

    "It is near midnight and I am standing at the door of the restaurant with Kevin, the bouncer, patiently waiting for customers, so that I can turn them away.

    "Who are you here with?" I ask a man holding a woman's hand.

    "Just us," he says. Couples are usually passive, pleading. I look them up and down. I look past them and around them, even if there is no one else there. I bite my bottom lip as if I am genuinely worried for them. "I don't know," I say pensively.

    If they are meek and I am bored, I will let them in. But if they become agitated, I turn away, or even better — pick the group behind them. Either way, my ego is going to get a boost..."
How do you learn to accept large bribes for access to tables:
    "...Slowly, I grow thicker skinned. About a month after I start, on a crowded Saturday, a dark-haired young man wants a table for himself and five friends. They don't have a reservation and don't want to wait. I tell him it will be "about an hour," which really means two. After consulting with his friends, he peels off a $100 bill and slips it to me in a handshake. I am surprised — no one has offered me a bribe before — but I give him the next available table. The hostesses all divide the money, and when he and his group leave, we wave to them, smiling.

    I like this business of people paying for tables, and I begin to go out of my way for customers, hoping for a reward..."

posted by Ben Muse at 9:41 PM

 
Is light rail worth it?

Molly Castelazo and Thomas Garrett of the Federal Reserve Bank of St. Louis think not: "Light Rail: Boon or Boondoggle?" (Boondoggle, they say).
    "...The economic value that society places on light-rail transit is reflected, in part, by people’s willingness to pay for it. This is true for most products and services in the economy. To make a profit and stay in business, private companies must offer a product or service whose production costs are below what consumers are willing to pay for it. The public provision of light-rail services, in contrast, costs more than consumers are willing to pay. For example, fare revenue covers only 28.2 percent of operating costs in St. Louis, 19.4 percent of costs in Baltimore and 21.4 percent of costs in Buffalo.2 Nationwide, annual light-rail operating costs ($778.3 million) far exceed fare revenue ($226.1 million); the balance ($552.2 million) is paid for with tax dollars. Note that these numbers refer only to operating expenses. With such large annual losses, no light-rail system could possibly recoup its construction costs, which can amount to several hundred million dollars. No privately owned system would ever be operated (or even be built) with such a dismal balance sheet.

    One justification for the subsidies paid to build and operate light-rail systems is that light rail will reduce pollution and congestion from automobile traffic. However, building light rail is only a short-run solution to the problems of traffic congestion and pollution. To permanently alleviate the problems of traffic congestion and pollution, policy-makers must address the root cause of both: the inefficient pricing of roadway usage. Traffic congestion and pollution exist because the costs of driving an automobile are artificially low..."
There are also cheaper ways to provide transportation for poor people. For example, for what's being spent on the St. Louis MetroLink:
    "...the annual light-rail subsidies could instead be used to buy an environmentally friendly hybrid Toyota Prius every five years for each poor rider and even to pay annual maintenance costs of $6,000. Increases in pollution would be minimal with the hybrid vehicle, and 7,700 new vehicles on the roadway would result in only a 0.5 percent increase in traffic congestion. And there would still be funds left over—about $49 million per year. These funds could be given to all other MetroLink riders (amounting to roughly $1,045 per person per year) and be used for cab fare, bus fare, etc."
Or maybe just provide traditional bus service - it would still be cheaper than light rail.

Given the draw backs, why do we still keep building light rail systems? Large, concentrated benefits to a few special interests, while the total costs, which may be large, fall lightly on individuals in the overall tax paying population.

I learned about this from Peter Gordon: "Airy Plans".
posted by Ben Muse at 9:05 PM

 
Pricing parking

Douglas Kolozsvari and Donald Shoup point to the potential benefits from pricing curbside parking so as to effectively ration access. They point to reforms in the Old Pasadena neighborhood of Pasadena, California, that combined: (1) an increase in curbside parking meter charges, (2) earmarking of the meter revenues for investment in the neighborhood in which they are raised, (3) under the supervision of a neighborhood committee.

In the absence of the reform, underpriced curbside parking spaces are a common property good. Creation of a neighborhood committee of residual claimants able to influence the curbside parking price, and the use of the revenues, simulates privatization of the resource. Kolozsvari and Shoup attribute the rehabilitation of the Old Pasadena neighborhood to this approach: "Turning Small Change into Big Changes" What's the neighborhood's optimal charge for curbside parking?:
    "...The right price for curb parking is the lowest price that keeps a few spaces available to allow convenient access. If no curb spaces are available, reducing their price cannot attract more customers, just as reducing the price of anything else in short supply cannot increase its sales. A below-market price for curb parking simply leads to cruising and congestion. The goal of pricing is to produce a few vacant spaces so that drivers can find places to park near their destinations. Having a few parking spaces vacant is like having inventory in a store, and everyone understands that customers avoid stores that never have what they want in stock. The city should reduce the price of curb parking if there are too many vacancies (the inventory is excessive), and increase it if there are too few (the shelves are bare).

    Underpricing curb parking cannot increase the number of cars parked at the curb because it cannot increase the number of spaces available. What underpricing can do, however, and what it does do, is create a parking shortage that keeps potential customers away. If it takes only five minutes to drive somewhere else, why spend fifteen cruising for parking? Short-term parkers are less sensitive to the price of parking than to the time it takes to find a vacant space. Therefore, charging enough to create a few curb vacancies can attract customers who would rather pay for parking than not be able to find it. And spending the meter revenue for public improvements can attract even more customers..."
I learned about this from Peter Gordon: "Free parking".
posted by Ben Muse at 8:32 PM

 
Eugene Volokh's new writing exercise

Eugene Volokh shares a new writing exercise that he plans to use in the next edition of his text Academic legal Writing, here: "Writing exercise".

Volokh takes a paragraph written with too many abstract words ("negative consequences") and shows how to put it back together using more concrete and specific words ("social ostracism, government harassment").
posted by Ben Muse at 8:18 PM

7/8/2004
 
Making it cheaper to import services

The Progressive Policy Institute "Trade Fact of the Week" reports that the world deployed 325,000 additional miles of fiber-optic cable between 1998 and 2002: "Miles of Submarine Fiber-Optic Cable Deployed, 1998-2002: 325,000"
    "...Modern fiber-optic cables...began replacing the older copper network in the late 1980s. Telecom companies laid about 325,000 miles of these cables, creating more than half of today's fiber-optic submarine network, between 1998 and 2002. Since then deployment has slowed, but continues especially around India. The effect has been to increase global telecom capacity about 30-fold: the Japan-U.S. Cable Network, for example, can handle three times as many simultaneous phone calls as all of the older Pacific cables combined.

    The shift has cut the cost of calls and so enabled people and businesses to spend more time calling overseas. This is one reason services trade is growing so fast..."
Among other things, investments like this will help us keep our medical costs down, by making it cheaper to get x-rays evaluations and consultations from places like China and India. Not to mention reducing call center costs.

You might enjoy A Thread Across the Ocean. The Heroic Story of the Transatlantic Cable by economic and business historian John Steel Gordon. After moving heaven and earth for years, entrepreneur Cyrus Field and his Anglo-American Telegraph Company completed the first two telegraph lines across the Atlantic in 1866. After working so hard to bring the old and new worlds into instant communication, Anglo-American took steps to limit use of their lines, and to prevent other lines from taking up the slack:
    "...At first, the rates were set extremely high - $10 a word with a ten word minimum. As $10 was a good weekly wage for a skilled workman at that time, these rates eliminated all but large businesses and the very rich from using the cable. Still, between July 28 and October 31, 1867, the Atlantic cable transmitted 2,772 commercial messages across the Atlantic,and this produced enough revenue to be profitable, averagng $2,500 a day. At this rate, however, only abvout 5 percent of the cable's capacity was being utilized. So the company cut the rate in half, charging $46.80 for a ten-word message, and revenue increased to an average of $2,800 a day as many more people began to utilize the cable.

    It was only when competition reared its head that prices began to fall rapidly and usage exploded. In 1869 a new company, the Societe du Cable Trans-Atlantique Francais, laid a cable from Brest, France, to the French Island of St. Pierre, south of Newfoundland, and then on to Massachusetts. The Anglo-American Telegraph Company, naturaly opposed this new enterprise, which was largely funded by British capital, but had not means to prevent it..."

posted by Ben Muse at 9:33 PM

 
French imports of African services

The Straits Times reports on African call centers selling telephone subscriptions in France: "Outsourcing goes to Africa"

Senegal exploits its advantages:
    "...Senegal, a former French colony boasting a rare African record of 44 coup-free years since independence, is luring outsourcing of the Francophone world.

    Senegal's stability, low wages and stock of young, educated employees attracted Ms Ndiaye's employer...

    So did Senegal's infrastructure - a fibre-optic cable running all the way from France which gives the country telecommunications as good as any in Europe.

    'Besides, here we can get the best and smoothest French accent,' said call centre deputy managing director Abdoulaye M'boup..."
And reaps higher income jobs:
    "...About 600 operators aged 20 to 25 work up to 40 hours a week - each equipped by their employers with a French-sounding pseudonym and a carefully drilled French accent to raise the comfort levels of the customers they'll be calling up.

    Thanks to a generous loan from a West African development bank - and operating costs that are 30 per cent cheaper than in France - the call centre will be more than doubling its staff later this year, Mr M'boup said.

    Eight hours a day earns a starting salary of US$200 (S$340) a week. Pay goes up to US$500, plus benefits and bonuses, for the most productive workers...

    But for a country where the minimum wage is US$85 a week, it's a godsend..."
And the French, I assume, reap more cold calls at dinnertime - but they are made more efficiently.
posted by Ben Muse at 9:21 PM

7/7/2004
 
Do you use your productivity for consumption or for leisure? And why?

Kash at Angry Bear posts an OECD figure showing changes in work hours per capita for a variety of countries between 1970 and 2002: "Labor Versus Leisure in the US and Europe"
Kash:
    "The astonishing difference between the US and the major European countries is evident; the average person in France and Germany works about one-fifth less now than they would have in 1970, while the average person in the US works about one-fifth more...

    ...In Europe people have preferred to take their higher productivity in the form of leisure time. In the US the preference is to enjoy higher productivity in the form of greater consumption."

posted by Ben Muse at 12:18 PM

 
Using markets to aggregate information

Skip Sauer has a useful post, crammed with links, on the creation of internal markets by business firms seeking to take advantage of information dispersed among their employees: "Markets as a management tool"

Tyler Cowen also addresses this today: "Idea futures inside the corporation".
posted by Ben Muse at 11:59 AM

 
The counterfactual "Dominion of North America"

Matthew Yglesias and Brad Delong wonder if the American Revolution was a really such a good idea: "Was the American Revolution a Good Thing?"
posted by Ben Muse at 11:32 AM

 
Welfare states and work disincentives

Tyler Cowen highlights the work of Peter Lindert: "Where are tax disincentives highest?"
posted by Ben Muse at 7:00 AM

7/6/2004
 
What went wrong in Cancun II

On June 30 I posted on a recent speech, "Reviving the Doha Round", by Jeffrey Schott of the Institute for International Economics (IIE). My post focused on Schott's post-mortem on the Doha meetings of last September: "What Went Wrong in Cancun".

Schott argues that delays caused by internal European Union negotiations over agricultural reforms left preparations for Cancun way behind in the summer of 2003. Efforts to recover on a short time frame were frustrated by a cascade of negotiation failures, confusion, and misunderstanding, as everyone scrambled to catch up. This leaves out important elements in Schott's story - you can read the relevant extract from his speech using the link above.

Peter Gallagher thinks Schott's explanation lets the U.S. off way too easily:

    "Jul 01 2004, 04:13 am

    Ben,

    I think Geoff Schott has 'bought' a post-hoc rationalization of events from his friends in USTR.

    My perspective on this was that the US and EU were asked to come up with an alternative to the 'Harbinson II' paper because neither (until Montreal) had made any substantive contribution for well over a year. The EU was engaged in trying to come up with internal consensus on the "Agriculture 2000" reform package and the USA had retired 'hurt' to its own corner after taking a battering on the 2002 Farm Bill.

    The chairman of the top negotiating group (Amb. Perez del Castillo of Uruguay) perhaps wrongly felt he had no option but to put forward the Zoellick/Lamy paper for the Cancun meeting. But it never had much chance.

    The weakness (not to say, 'implausibility') of the explanation of the supposed US tactic given by Geoff Schott ('hope that other WTO members would push the US back towards its original proposals on agricultural reform') indicates how muddled the US position was. The world's largest trading economy can't play coy games in trade negotiations, hoping to be pulled back from the brink by smaller allies.

    Zoellick had been outmaneuvered by Lamy on several key aspects of the hastily negotiated paper, apparently under pressure to find some sort of deal (he probably already knew that he was not going to pull off the AFTA deal with the Latins).

    Smaller allies (including Australia) were just stunned by the lack of US consultation and/or it's lack of steadfastness, as they saw it. The already-deeply-fractured Cairns Group -- the US' strongest ally on agricultural reform -- split instantly along lines where cracks had been papered-over (market access obligations for developing countries). The leadership of the G-20 was carved out of the side of the Cairns Group (Brazil, South Africa, Argentina) and its 'fellow travellers' (Egypt).

    Now we have a fully fractured negotiation with dozens of 'factions', few good ideas and hardly any leadership. No one (it seems) really knows how to get what they want except the EU. It only has to wait....

    Peter Gallagher"
A January 2004 U.S. General Accounting Office (GAO) report on the Cancun meetings provides additional background: "World Trade Organization. Cancun Ministerial Fails to Move Global Trade Negotiations Forward; Next Steps Uncertain." This is a nice piece, explaining arcane vocabulary, describing key issues, and providing an overview of negotiations between the Doha Ministers' meeting in 2001 and the breakdown in Cancun in 2003.
posted by Ben Muse at 9:17 PM

HOME