November 2008 Archives

Who Needs Long-Run Profitability?

Life is tough for everyone in a recession. Even well off arts benefactors who make their living in commercial real estate are feeling squeezed:

"If you go up 270, from Chevy Chase out to Frederick, you will see building after building with big signs on them that said: 'Space.' Or you will see ground that is not being built on where you will see signs, 'Build to Suit.' The next year is going to be very tough," Charlie said. "Those who have the ability to keep up payments will be able to make it. The government has to step in and help."

The government -- local, state, and national -- has to, and should do, NO SUCH THING.

Commercial property owners should realize that their gains from when times are good are to more than cover their losses from when times are not. And if their firms have less than zero long-run profit, perhaps their management skills are best honed in other industries.

H/T: UrbanTrekker

When Intervention Creates Uncertainty

Michael Karesh warns:

Unless you must have a car now, if you are considering a domestic car–or even any car that directly competes with a domestic car–I would wait. Many proposed measures to save the domestic auto industry would have the effect of cutting car prices by thousands of dollars. If you buy a car now, you could pay thousands more.

Debates about bailing out automobile companies: Free

Same debates incentivizing people to stop buying cars: Priceless

Interleague Competition

In the NYT today, a curious passage about the international baseball free-agent market.

As interest from scouts affiliated with Major League Baseball escalated and Japan’s Oct. 30 draft of amateur players approached, Tazawa requested that all Japanese teams not select him. They acquiesced, smoothing his path to the United States’ free market.

Except the market is not entirely free. Officials of major league teams have a wide spectrum of views as to whether Tazawa should be signed.

Here we have the unusual case of two monopoly cartels -- the baseball cartels in the U.S. and Japan -- competing for a scarce input -- Mr. Tazawa. He is a rather unique case of brand new Japanese talent not connected with the Japanese monopoly trying to sell his services within the U.S. cartel.

Now, the hidden point of the article seems to be that the leagues would rather not have to compete with each other for inputs; instead, they'd rather control their own supplies. The leagues had previously set up formal and informal rules making it difficult for young players to sign with any team in the other league.

But some teams in the U.S. cartel see a first-mover or market-shifting advantage to hiring Mr. Tazawa, so not at all surprisingly, there are differing views of how well the current territorial agreements are working.

Any which way, there's little either side can do about it. The U.S. league may cross the antitrust barrier if they try to stop the acquisition of Mr. Tazawa and others.

As for formalizing any rule barring the signing of amateurs outright, some major league team officials think that could violate American antitrust or anti-discrimination laws. And if one team pursues a top player, others will surely follow.

Then the floodgates will have opened, leading perhaps to the dreaded bidding war -- featuring not just intra-league, but also inter-league competition -- for new talent.

So it's left to the Japanese league to punish the poaching -- by punishing the players, or course!

Fearful that Tazawa’s signing would encourage more Japanese amateurs to follow him, Nippon Professional Baseball recently passed a rule that requires any amateur who jumps to a major league team to sit out two or three years before being able to return to play in Japan.

Completely Backwards

Various surveys have found that 20 million to 50 million family members in the United States provide care that has traditionally been performed by nurses and social workers.

-- Jane E. Brody, NYT, "When Families Take Care of Their Own", 11/10/2008 (emphasis added)

That has it completely backwards.

In the past century or so, nurses and social workers are have been providing care that has, for thousands of years, been performed by family members. Modern capitalist economies in democratically run countries have produced a wildly different outcome than traditional societies. The extraordinary wealth required to have other people look after your family members was once had only by the elite. How strange to see the modern specialization and division of labor in healthcare called "traditional".

Family caregivers are, in effect, home-based representatives of the patient’s medical team. They provide medical services, make assessments of the patient’s well-being and determine when to call the doctor or bring the patient to the emergency room. Yet they often lack 24-hour access to professional advice and clear instructions about when and whom to call for help.

The medical establishment-centered view of care seems to overestimate the relative value of the judgments of medical professionals. Yet, I think analysis should be done to assess the relative cost and quality of care provided by "home-based representatives" versus "professionals".

Still, something doesn't sit right with me about this. Aha! Wait a minute. All these people being cared for at home by family members have suddenly become "patients"! That's pretty slick, Ms. Brody!

How to Make Me Your Enemy

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AmericaServes.JPG

Here's the original.

Solomon has made a preliminary ruling: not 50/50, but 96/4

Next-Day Update: Solomon has put away the sword; instead, he will use other policy levers to achieve his goal of 96/4.

$100 Billion of Welfare-Stimulus

I think reporters need a new language to describe what goes on in Washington:

Democrats are working on a $100 billion spending package that could be considered as early as this month if the Bush administration drops its opposition and agrees to negotiate a measure the president will sign. That package will probably include money for public works projects to create jobs, a 13-week extension of unemployment benefits, additional funds for food stamps and aid to strapped state governments struggling to cover the rising cost of heath care for the poor.

Automakers hope it will also contain another round of low-interest loans for them to retool factories for the production of fuel-efficient vehicles. Congress has already approved a $25 billion loan package. Lawmakers are also considering tax credits for car purchases aimed at driving up demand in the worst slump in auto sales in nearly a quarter-century.

Another stimulus package, to be assembled after Obama takes office in January, could grow to well over $100 billion and would include a permanent tax cut for moderate and lower-income families, Democrats said yesterday. Details of that package have yet to be worked out, but Democratic aides said the tax cut would be designed to appear immediately in people's paychecks.

-- Lori Montgomery and Kendra Marr, "Democrats Craft Economic Plan", WaPo, 11/7/2008

The lack of skepticism in this account -- like most accounts of legislation today -- annoys me. Why is it acceptable for reporters to label legislation by its publicly-stated intent --"stimulus" --, rather than its actual immediate effects on people, their organizations, and the formal rules of economic and social order?

"Stimulus" is just one possible effect of politicians raising spending without raising tax receipts, thereby increasing the short-run national debt. Why not describe the soon-to-be-proposed bill by a more honest name: welfare.

When a reporter writes that authorities suspect a man of committing a crime, whether or not the suspect's been arrested, they must, if I remember correctly, for legal reasons, use a variant of "allege".

But a more important reason for alleging is not legal, but a recognition of reality. While reporters may talk to the alleged criminal or his attorneys as well as authorities and the victim, they simply cannot know what happened.

There is an enormous difference, not just in jazziness, but in the way readers are cued, between "Democratic politicians are considering a stimulus package" and "Democratic politicians are considering a bill some are calling a 'stimulus package'" and "Democratic politicians are considering a wide-ranging bill they claim will provide economic stimulus..."

In the case quoted above, the reporter swallows whole the pronouncements of legislators alleging that the bill's purpose is "stimulus". Maybe. But it seems a large share of the bill are pet projects, targeted individual welfare programs, and a heaping load of corporate welfare. Maybe a considerable portion of the bill will have no net stimulus effect at all.

It seems reporters sometimes assume that the causes and effects of public policies are either obvious or irrelevant. When they're promoting or denouncing ideas, they know which policies are wise. But when they're looking for a good he-said / she-said partisan conflict, reporters may assume that there's no objective way at all to analyze the effects of public policies...

Their frame, all wrong for us, is just right for them...

"Steep Budget Cuts"

How did I miss W's Steep Budget Cuts?

Federal workers have told presidential transition leaders they feel rudderless, their morale impacted by the Bush administration's opposition to industry regulation, steep budget cuts or the departures many months ago of Bush political appointees.

-- Carol D. Leonnig, "Widespread Complaints About a Rudderless Government", WaPo, 11/6/2008

But for the public who wants to pay for the work the government actually performs, is the outrage that Bush cut the budgets that would have paid for projects these civil servants wanted to work on, or that he didn't also cut the budgets that paid for the civil servants?

Federal employees said that they are not a passionately partisan group

ROFL!

Hundreds of federally-employed scientists, researchers and agency lawyers have drafted, studied and restudied regulations that went nowhere.

The head of your organization makes it absolutely clear that he's not interested in X. You do X anyway. He basically ignores your work. You feel bad. Yet, you still have a career, and now you have hope.

"Discuss"

For the first time since the end of 1994, we can have normal politics and policymaking--can discuss what policies are best for America, and what America should be.

-- Brad DeLong

This snippet exemplifies both why I don't read Brad's site often, but also why I do go back. Even when I agree with him in principle or in part -- many intellectuals I know feel that W's administration has been tone deaf to their smarts and outputs -- at times I find myself wondering if Brad really means what he writes, or realizes that sometimes what he writes contains a refreshingly honest take on the relationship between left-or-right intellectuals and partisan politics.

Brad cannot possibly mean that he and others couldn't even DISCUSS their preferred Federal government policies while the Democrats had less power.... I'd say that by "discuss", he really means "impose"; that's uncharitable of me to point out, I think, the truth.

Of course, libertarians have had generations to get used to discussion not turning into policy. It's part of our tradition! :) I suppose intellectuals whose politics are part of the regular cycle simply get used to having their turn, and don't see academic-policy discussion as separate from implementation.

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