I’ve just discovered that the guys behind Freakonomics have a blog on the New York Times Website. And the peasants rejoiced.

I liked this post in particular: Freakonomics v. Lolita: Can You Tell the Difference?

Fark says it best: “What happens when you give an old crazy man with no understanding of economics the reigns to a wealthy country?”

The answer is obvious: rampant shortages, the collapse of the business environment, black marketeering, and riots. Poverty and starvation are right around the corner.

Zimbabweans are shopping like there’s no tomorrow. With police patrolling the aisles of Harare’s electrical shops to enforce massive government-ordered price cuts, the widescreen TVs were the first things to go, for as little as £20. Across the country, shoes, clothes, toiletries and different kinds of food were all swept from the shelves as a nation with the world’s fastest shrinking economy gorged itself on one last spending spree.

This sort of market-blindness isn’t just in Zimbabwe of course; Chavez has been putting in price caps in Venezuela too. The difference there is that Chavez can buy out his mistakes with a steady income of Venezuelan oil money. It’s not just an “over there” issue either; hurricanes such as Wilma and Katrina bring up talks of anti-price-”gouging” laws.

What most people (including national leaders apparently) don’t understand is that the number involved in a price (including the price of labour: wages) is pretty much arbitrary: it’s just a placeholder for actual value/wealth. Changing prices across the board doesn’t make things more or less valuable or available; all it does is change the value of the cash itself, both in hand and in bank accounts. Force people to sell at below the market price and you’re not making goods more accessible: you’re simply transferring value from the business to the consumer in a one-time shot. You can’t afford to do that forever (or even more than once); there’s no incentive to create more wealth if you’re going to have it taken from you.

The same goes for minimum-wage increases by and large: by dictating that business pay employees more, you’re not creating more wealth to better the lives of those employees, you’re just moving the goal posts. A employee who earns the minimum wage is also earning minimum value, and that doesn’t change when you increase the number attached to the law. What does happen is that you evaporate the value of anything that’s tied to a particular amount: things like savings accounts and old-age pensions which aren’t indexed to inflation.

Mugabe doesn’t realize (or intentionally ignores) the relationship between money and value — and so he’s going to get hit in the head with the reality of “bookish economics” in short order. Let’s hope everyone else learns the lesson.

Scott Adams does it again. This time he’s prosing (with tongue in cheek) that, in exchange for higher taxes, the super-rich get extra privileges that don’t really have a significant impact on the rest of us.

For example, let’s say the super rich are granted the right to use the carpool lane even if no one else is in the car. They’d need special stickers on their cars so they didn’t get pulled over. It wouldn’t clog the car pool lane because there are so few super rich people, and half of them have chauffeurs, so they use the carpool lane already. Society wouldn’t notice the difference.

While I’m not expecting any of this to actually happen, it did make me think. Consider that:

1. The super-rich already get special privileges. They’re just not official ones.
2. They’re paying for them with money that they’d otherwise keep.

The idea of special rules for special people is an obvious affront to egalitarianism. However, that same egalitarianism should, in theory, be affronted by the difference in wealth. Adams’ idea is about trading one inequality for another; they should really balance each other out.

So why does the special rules suggestion offend me (and I suspect everyone else as well) so much? That is what makes me wonder.

This is perfect material for a third Freakonomics book: Using promiscuity to slow the spread of AIDS.

The premise is this:

1. Person A and Person B, under normal circumstances, would decide to hook up. Both are infection-free.
2. Person A decides against having sex due to STD concerns.
3. Person B still wants to find a partner.
4. Person C is not dissuaded by STD concerns, and is both available and infected.
5. Since Person A is out of the partner market, Person B sleeps with Person C instead, and becomes infected.

Had Person A decided instead to sleep with Person B, Person C would not have had a chance to infect B, and so the disease slows in its progress.

The author then goes on to discuss individual vs. group benefits, how the interest of the former can directly conflict with that of the latter… and how to work around that so that both can benefit. Great stuff.

It figures: now that I’m living in Canada and earning US dollars, the exchange rate between the two hits its worst level in my lifetime.

Still, I’m not complaining too loudly: I did pay off my student loans while the exchange rate was near the historically best levels (circa 1999). Complaining that the exchange rate is poor is like complaining about the weather: you can’t do much about it, unless you’re willing to move… and it’ll probably change by the end of the week anyway.

Microsoft is going to set up shop in Vancouver. One of the reasons for doing so is the more favorable immigration policy in Canada:

The Vancouver area is a global gateway with a diverse population, is close to Microsoft�s corporate offices in Redmond and allows the company to recruit and retain highly skilled people affected by immigration issues in the U.S.

This is a good thing for Vancouver and Canada, a big win for those who favor relaxed immigration policies (such as myself), and a big slap in the face for those in favor of tighter immigration controls — both for economic and homeland-security reasons.

There are smart & talented people all over the world. Those people may not be able to do the work they want to do in their home countries for a variety of economic and political reasons. Many of those people aren’t allowed to work in the U.S. due to the American love-hate relationship with immigration; this practice will allow them to work in a similar (better?) environment. While they do that, they’ll draw a salary (which is largely made up of U.S. money) and spend most of that within Canada (on taxes and domestic purchases).

Microsoft is showing that it’s not just trying to lobby for an H1B cap increase (as many have claimed): they’re serious enough about a real problem to take some actions outside the realm of the U.S. Government. The message to the American closed-border crowd is very clear: current policy is detrimental to business, and if it’s not corrected the U.S.A. will be loose out in the long run.

One stereotype is that teenagers are lazy and carefree, but this study says otherwise:

Canadian teens averaged 7.1 hours of unpaid and paid labour per day in 2005 – a 50-hour work week, virtually the same as that of adult Canadians aged 20 to 64 doing the same activities.

Personally, I felt a pretty big burden lift once I’d graduated college; there was no longer any project or paper looming in the near future which required weekend or evening attention. I now had legitimate time off. It was a wonderful realization.

Paid work is a big thing right now for teens too. Calgary has a tremendous labour shortage going on right now, and most of Western Canada (and perhaps further east) is in a similar situation. With demand for labour rising (taking wages along with it), people who wouldn’t work otherwise are drawn into the labour force… and a big part of that pool is teenagers in high school. I see them all over the place in retail jobs; some look around 14. That wasn’t the case when I was that age; finding a job was difficult (as there were plenty of out-of-work adults with experience who would work full-time for those low-end jobs) so most of my peers and I didn’t bother.

For me, the most distasteful part of the article is this:

Homework was the most time-consuming unpaid activity for teens, with 60 per cent averaging two hours, 20 minutes every day.

When you consider that most homework (especially at the high school level) is unproductive busy-work, this amounts to a huge loss of productivity and an increased stress burden. That doesn’t benefit anybody.

This one line sums up the entire article and similarly makes a societal statement:

But with gas close to $4 a gallon near his home in Paso Robles, Calif., Mr. Collinsworth has been driving the Yaris instead of his BMW X5 sport utility and GMC Sierra pickup.

This sort of thing is ridiculous both economically and environmentally. You’ll spend far more on depreciation and insurance on an extra car than you will save on burning less fuel. The amount of energy that went into making, transporting, selling, maintaining, and disposing of the car won’t be offset by your better mileage unless you’re driving a heck of a lot of miles (which, as a Yaris-driving commuter, you’re almost certainly not).

Laura and I own a Toyota Highlander non-hybrid SUV which gets a mediocre 19/25 mpg. This is our only car. I work from home, and Laura works part-time relatively close to home. I’d be willing to go toe-to-toe on transportation and environmental costs with any two- or three-car family, even if they own hybrids. On top of our savings, we get a nice, comfortable vehicle with great visibility that can handle less-than-perfect roads (handy in the mountains) and haul a bunch of cargo when necessary.

Smaller cars are often status symbols and political statements rather than conscious choices for better living. Be sure to recognize them as such.

Marco replied to my previous blog post:

There are a lot of questions as to *why* these numbers are the way they are.

The article has a few statements on this:

Further analysis showed that a nation’s level of happiness was most closely associated with health levels (correlation of .62), followed by wealth (.52), and then provision of education (.51).
…
There is a belief that capitalism leads to unhappy people. However, when people are asked if they are happy with their lives, people in countries with good healthcare, a higher GDP per captia, and access to education were much more likely to report being happy.
…
We were surprised to see countries in Asia scoring so low, with China 82nd, Japan 90th and India 125th. These are countries that are thought as having a strong sense of collective identity which other researchers have associated with well-being.
…
The frustrations of modern life, and the anxieties of the age, seem to be much less significant compared to the health, financial and educational needs in other parts of the World.

So the answers are perhaps not so mysterious: people who are materially comfortable, healthy, and well-educated are happier, but individualism also plays an important role (or else Japan would be way up on the scale).

When it comes to socialism vs. capitalism in economic discussion, there’s lots of evidence and good arguments for both sides of the debate. That’s a topic I’m interested in.

But when it comes to authoritarianism vs. libertarianism, I think the issues are much more cut-and-dried: authoritarianism is pretty much always a bad thing for everyone but the authority.

From Venezuelan Congress grants Chavez power to enact by decree:

“Viva President Hugo Chavez, long live socialism!” National Assembly President Cilia Flores said as she proclaimed the law approved.

Note that they’re (intentionally) confusing Chavez’s socialist economic strategy (which I think is a legitimate strategy to hold, even if it’s ultimately wrong) with his authoritarian grab for more power. That sort of thing happens all the time, and it often works.

The key to understanding politics is that it isn’t a one-dimensional spectrum; there’s more to the world than Left-versus-Right. (Incidentally, that is absolutely not understood by most Americans, and that’s something that enabled the current Republicans to masquerade as conservatives. By most measures, they’re not.) One of the more useful divisions I’ve seen (and adopted) is to split political ideology into social and economic axes: that is, the role of authority (versus individual liberty) and the means of a creating a successful economy (free-market versus central planning).

If you haven’t already, be sure to check out The Political Compass and take their test see where you land on the social and economic scales. Here’s my most recent one; it actually comes out more socialist than my previous tests (but still mostly center). I’m

On the same page as the test results is a chart showing various leaders/famous people and how they’d score if they took the test (based on their public statements):

Note how almost of the “big-name” leaders score high on the authoritarian side. That is, of course, no accident: if you’re the authority, you’re probably more likely to think that authoritarianism (ie: Do-As-I-Tell-You-To) is a good way to do things. And, if left to their own devices, someone given authority will tend to exert it in order to keep it/gain more. That is exactly why authoritarianism needs to be kept in check; it’s self perpetuating, and it’s only beneficial to those who have it.