Thursday, October 25, 2007
Bullet Points I Won't Get To
by Ken Houghton
Especially in the context of that last, there has been a lot of straw-man idiocy recently alleging the superior "efficiency" of the private sector. But, as has been noted frequently, if you assume a functional democratic republic, there is a clear process in place for improving efficiency, one dependent only on the will of slightly over 50% of the people being realised.* That mechanism in the private sector (Shareholder meetings) is, at best, even less responsive.**
*I will freely stipulate that this is more true of an actual democracy than a democratic republic such as the United States. Overall, though, for a population of 300MM+, both (1) the benefits outweigh the risk and (2) that is the process.
**Oh, right, in Masonomics, you blame the victims.
- Barron's, via Felix Salmon:
As a retail-industry laggard with tired locations and mediocre merchandising, Sears figures to suffer mightily if consumers retrench and the economy slows, they insist.
English translation: people know where their stores are, so they won't go there.
This, one presumes, is why the accompanying graphic declares that Sears is "A Screaming Bargain: The implied value of Sears' retail real estate is absurdly low relative to competitors' property." - Because Everyone Cares about the Green, not the Yellow, Jersey:
And for the first time since 1967, the race will start with a full road stage, 121 miles from Brest to Plumelec in Brittany, instead of an opening individual time-trial race against the clock that had become traditional. The goal is to give more riders, and not just time-trial experts, the chance to compete for the race lead and its coveted yellow jersey from the very start.
Right; because a pack sprint and a Tom Boonen victory will definitely be something New and Unusual for the first week of the tour.
Continuing with Press Release "Reporting":After the drug problems of the past two Tours, [there will be] 19 major mountain passes that riders will face, two fewer than in this year's race.
Because mountains are never interesting television, and climbing video (not to mention those 70mph descents) are boring."The idea was really to break the classic scenarios," Tour director Christian Prudhomme said. "I am convinced that cycling will rediscover its romanticism that made it a legend."
I'm convinced that the Tour de France just moved to a lower Utility Curve. - Via Felix again, a Milken Institute report indicating that Congestion Pricing Works [PDF] —but so far has required an autarch to be implemented successfully.
In the case of London, Mayor Ken Livingston was determined to introduce congestion charging and made it part of his platform in 2000. The act restoring the mayoral form of government to London after more than two centuries also gave him powers to introduce congestion charging without consent from the national government....
Later on, the public indirectly endorsed the plan, re-electing Livingston a year after congestion pricing was introduced. There were no U-turns at the local
government level at any point.
Singapore has been run by the People’s Action Party since it first won an election in
1959. As the ruling party, it has dominated most of the political and economic development of Singapore....Thus, it is not surprising that once the decision was made to charge for road use, there was little dissent. [emphasis mine]
The most encouraging part of that, from NYC's point of view, is bolded above. Londoners voted for a man who promised to deal with congestion by setting a charge for externalities, and he did. And they re-elected him.
Especially in the context of that last, there has been a lot of straw-man idiocy recently alleging the superior "efficiency" of the private sector. But, as has been noted frequently, if you assume a functional democratic republic, there is a clear process in place for improving efficiency, one dependent only on the will of slightly over 50% of the people being realised.* That mechanism in the private sector (Shareholder meetings) is, at best, even less responsive.**
*I will freely stipulate that this is more true of an actual democracy than a democratic republic such as the United States. Overall, though, for a population of 300MM+, both (1) the benefits outweigh the risk and (2) that is the process.
**Oh, right, in Masonomics, you blame the victims.
Labels: bicycle racing, congestion pricing, conspicuous consumption, rational expectations, sports
Friday, August 03, 2007
Don Boudreaux Needs to Speak with an Economist
by Ken Houghton
Let us ignore that it is unclear how 50 minutes became 120, and assume that Don and Karol[1] made optimal use of their other time. Let us further assume (since he grouses about it) that they placed a nonnegative Utility value on making that connection. Here is what they did for the fifty minutes:
It's a pity there wasn't an economist looking over their shoulder, Marshall McLuhan-like. Because, had there been an economist available, s/he could have told him a few things, such as
Economists the world over should feel sorry for Mr. Boudreaux, who decides to blame "the government" for his choice not to engage in any Price Discovery and goes on to make a specious comment about national health care when his time might be better spent taking intermediate economics at a local community college.
Unfortunately for him, anyone with more than a soupcon of training in economics (or, probably, psychology or sociology) would recognize his Revealed Preferences, and note that he has only himself to blame for his Utility Maximization preferences.[5]
For an example of what an Economist would do—what Information Exchange and Discovery can produce—see John Whitehead, who appears to understand that economics is still a social science.
[1] I am assuming that Karol is the other person's first name, and therefore referring to them the same. This should not be thought to assume familiarity.
[2] We will ignore for the moment contracts of adhesion and the like, as they clearly do not apply in this circumstance.
[3] In the real world, they are called altruists. In the economics world, they are either treated as irrational or modeled so that they gain Utility from surrendering it. For the purpose of this discussion, though, it is sufficient to know that (1) they exist and (2) they might be in front of you.
[4] It is even possible, in such a situation, that Boudreaux would have discovered someone (behind him in line) who valued his Utility enough to compensate Boudreaux. Clearly, though, there was no economist behind him, either.
[5]Megan McArdleA blogger for The Economist, apparently, excepted.
Don Boudreaux, posting at Cafe Hayek, encounters congestion:
Late Friday evening, Karol and I flew, on Delta Airlines, from Bucharest to New York's JFK airport. We had two hours to connect to our Delta flight to Washington's Dulles airport. We missed our flight. And herein lies a lesson.
The reason we missed our flight is that nearly 50 minutes of our time after landing was consumed by waiting in a long and slow-moving line to clear passport control. At that terminal on Friday evening, the TSA had only three agents to service the line of U.S. citizens returning from abroad. Three. That's it. Most of the passport-control-agent booths stood empty.
Let us ignore that it is unclear how 50 minutes became 120, and assume that Don and Karol[1] made optimal use of their other time. Let us further assume (since he grouses about it) that they placed a nonnegative Utility value on making that connection. Here is what they did for the fifty minutes:
So as we silently fumed and inched forward in line...
It's a pity there wasn't an economist looking over their shoulder, Marshall McLuhan-like. Because, had there been an economist available, s/he could have told him a few things, such as
- The person in front of them took slightly less than 50 minutes, the person behind them (presuming there was one) slightly more.
- There were likely people in front of him who were not catching connecting flights, or in any other way time-dependent. For those people, the Utility value of getting through Passport Control was likely lower than it was for Don and Karol.
- People who do not value something as much as you do are likely willing to exchange it for a sum that you are willing to pay. This is how the ideal free market works.[2]
- It is even possible that there are some people—not economists, to be certain, but people who take up a customs agent's time nonetheless—who would willingly let you get in front of them.[3]
- Many years ago, an economist named George Akerlof wrote a paper about the effect of Informational Asymmetries on a free market. (Despite its lack of mathematics, it is well-known in economics, as is Akerlof.) He noted that some asymmetries can be remedied, though they may have Discovery Costs associated with them.
- In this situation, the initial Discovery Cost is time spent asking people questions. Since Boudreaux spent the time "silently fuming," one must presume he found this more utile than doing some Price Discovery.[4] Economists can explain this to him as well, it's called "revealed preferences." (For instance, see this economist discuss how creditors actually treat people who declare bankruptcy.)
- Now Mr. Boudreaux may note that altruists are few and far between, and, knowing point (3) above, might note that he would have had to compensate someone in front of him. An economist could have told him that he would then have been involved in a market transaction in which he and Karol would decide whether the Utility they would perceive is worth the cost. This is called "choice" and "opportunity cost," which Tim Schilling lists as the Most Important Concept in Economics. It is a shame no one ever taught it to Mr. Boudreaux.
Economists the world over should feel sorry for Mr. Boudreaux, who decides to blame "the government" for his choice not to engage in any Price Discovery and goes on to make a specious comment about national health care when his time might be better spent taking intermediate economics at a local community college.
Unfortunately for him, anyone with more than a soupcon of training in economics (or, probably, psychology or sociology) would recognize his Revealed Preferences, and note that he has only himself to blame for his Utility Maximization preferences.[5]
For an example of what an Economist would do—what Information Exchange and Discovery can produce—see John Whitehead, who appears to understand that economics is still a social science.
[1] I am assuming that Karol is the other person's first name, and therefore referring to them the same. This should not be thought to assume familiarity.
[2] We will ignore for the moment contracts of adhesion and the like, as they clearly do not apply in this circumstance.
[3] In the real world, they are called altruists. In the economics world, they are either treated as irrational or modeled so that they gain Utility from surrendering it. For the purpose of this discussion, though, it is sufficient to know that (1) they exist and (2) they might be in front of you.
[4] It is even possible, in such a situation, that Boudreaux would have discovered someone (behind him in line) who valued his Utility enough to compensate Boudreaux. Clearly, though, there was no economist behind him, either.
[5]
Labels: congestion pricing, Economics, Health Care, Trains Planes and Automobiles
Friday, July 06, 2007
It's the Infrastructure...
by Ken Houghton
Following up to my post below, the U.S. Food Policy blog goes on a slight tangent to consider cylcing in Europe:
Contrast this with Ruth's comment at that post noting the logistical disasters surrounding even an attempt to commute by bicycle in New York City.
This comes up again, of course, in the context of congestion pricing. My initial objections to Mayor Bloomberg's proposal have been, to some extent, answered. The Mayor has acknowledged that trucks don't have an alternative, and has proposed tiered pricing related to the truck's actual resource consumption and TCO.**
The recent objections has been rather more mundane. For example, Fern Cohen at Metroblogging NYC takes the NYT at its word (rarely a good sign):
This, not to put too fine a point on it, was bollocks. Mentioned only as a throwaway in the final paragraph is:
The Second Avenue Subway is an NYT obsesssion that makes little economic sense. The computerized signal system, on the other hand (as noted elsewhere, not in the NYT) can increase the capacity of each line by approximately 43%.
Let's assume that's optimistic, and that the real number will be closer to 25%. So the subways will be around capacity.
But the streets will be emptier.
Buses and bicycles become even more valuable and have the same transaction costs. Walking will be safer.
The plan is to increase the viable options, not just the current ones. And the original plan has been improved enough that it is worth support.
*The only disadvantage is that the film selection for the day is Dreamgirls; clearly, someone in management wants to put the passengers to sleep.
**The pricing will not, in itself, pay for replacing current trucks. However, it will be influential in a decision, and have, therefore, a marginal, positive effect. And the differences will have to be managed.
I'm finishing this post on the way to Boston/Burlington. The family drove up a few days ago, so I opted for mass transit—in this case, the LimoLiner (from NY Hilton to Boston Back Bay Hilton), complete with wireless access, food and drink service, comfortable leather seats with leg room, and electrical supplies.* All for effectively the same price as Amtrak.
Following up to my post below, the U.S. Food Policy blog goes on a slight tangent to consider cylcing in Europe:
Even real cities like Geneva (just over the border in Switzerland) or Annecy have bike lanes all over town. The automobile traffic is usually considerate of cyclists. The countryside is full of regular riders of all ages and shapes, and also world-class athletes. My family got to see the latter race in the Criterium Dauphine. I also get to see them in teams, from behind, as they pass me on the roads cruising along at perhaps double my pace. Sometimes, they have a cheery word of condolence for me -- pointing out in French as best I can tell that the headwind is strong, as if that would explain why I alone am affected.
Every type of public transportation seems to accept bicycles. The inter-city bus driver will stop and block traffic in order to open the cargo area for a bicycle. On Saturday, my family caught a special city bus from Annecy to the peak of a mountain called the Semnoz. Fully half of the interior of the public bus was dedicated to hooks for mountain bicycles, and every single hook was filled. The cyclists have what looked to be a glorious reckless path downhill back to Annecy. Then, a couple days later near the Mt. Blanc range, there were kids with mountain bikes on a cable car ride!
Contrast this with Ruth's comment at that post noting the logistical disasters surrounding even an attempt to commute by bicycle in New York City.
This comes up again, of course, in the context of congestion pricing. My initial objections to Mayor Bloomberg's proposal have been, to some extent, answered. The Mayor has acknowledged that trucks don't have an alternative, and has proposed tiered pricing related to the truck's actual resource consumption and TCO.**
The recent objections has been rather more mundane. For example, Fern Cohen at Metroblogging NYC takes the NYT at its word (rarely a good sign):
William Neuman reports that some major subway lines are "maxed out"to a point that the tracks can't take any more trains. Especially affected are the 1,2,3,4,5, and 6 lines, which are part of the old IRT system.
So there we have it -- nowhere to put anyone. If we manage to divert drivers onto the subways, there is no room for them.
This, not to put too fine a point on it, was bollocks. Mentioned only as a throwaway in the final paragraph is:
Other long-term solutions are also years away, including a new Second Avenue subway and expansion of a computerized signal system that would allow the trains to run closer together, increasing the number that could run on the tracks.[emphasis mine]
The Second Avenue Subway is an NYT obsesssion that makes little economic sense. The computerized signal system, on the other hand (as noted elsewhere, not in the NYT) can increase the capacity of each line by approximately 43%.
Let's assume that's optimistic, and that the real number will be closer to 25%. So the subways will be around capacity.
But the streets will be emptier.
Buses and bicycles become even more valuable and have the same transaction costs. Walking will be safer.
The plan is to increase the viable options, not just the current ones. And the original plan has been improved enough that it is worth support.
*The only disadvantage is that the film selection for the day is Dreamgirls; clearly, someone in management wants to put the passengers to sleep.
**The pricing will not, in itself, pay for replacing current trucks. However, it will be influential in a decision, and have, therefore, a marginal, positive effect. And the differences will have to be managed.
Labels: congestion pricing, cycling, Trains Planes and Automobiles
