Wednesday, July 23, 2008

Gapminder for All

I don't know if I heard about this and forgot, or missed it entirely, but the fantastic Gapminder software is now available for anyone to use as part of Google Spreadsheet (which is part of Google Docs). It is now a Gadget called Motion chart.

Here's an example. This is a portion of the data from my dissertation. It consists of emissions of unregulated chemicals by corporations, their revenues, and their lobbying and political contribution expenditures (adjusted for inflation).

I recommend setting the scales to Log, the y-axis to Lobbying, the x-axis to Weighted Emissions (which is the toxicity-weighted sum of a firm's emissions), the size to Real Revenue, and the color to Industry. There is an awful lot of noise in the data. Nonetheless, I think there is evidence of a weak pattern of northeast-southwest movement. That is, it seems to be the case that when firms emit more, they lobby more, and when they emit less, the lobby less. It is not possible to control for firm size rigorously in this graph, but I did include revenue as a variable in the regressions in my dissertation, and found that the tradeoff still persists. Granted, the explanatory power of the regression was fairly low.

But that's not really the point of this post. The point is to say "hey, here's a neat tool for visualizing data, and you can use it too!" A warning: I found the gadget to be a bit finicky. You have to be careful how you enter your time variable, for example (1, 2, 3, 4 won't do, but 1997, 1998, 1999, 2000 work fine). I hope that researchers and teachers will start using this.

Tuesday, July 22, 2008

Save the Previously-Despised Corporate Behemoth!

There was an Econtalk podcast sometime last year (I think; I can't remember which one, and it isn't obvious from the titles. If anyone knows which one it is, let me know.) in which Russell Roberts's interviewee suggested that there would come a day--perhaps in the distant future--when Wal-Mart would become an ailing company. For whatever reason, it will come upon hard times, and possibly near bankruptcy. At that time, customers, employees, and pundits will decry the loss of an American tradition.

It happened for Sears (once the bane of local general stores with its convenient catalog, it grew weaker and weaker from the 1980s onward, and merged with Kmart in 2005). That day hasn't come yet for Wal-Mart, but this is almost as good. Remember when people used to get upset about Starbucks moving into their neighborhood? There was a South Park episode about it (Warning: for anyone who watches that video, it's a normal, hilarious South Park episode, which means it's not work-safe). Starbucks announced a little while back that they were closing 200 stores due to over-expansion and the weak economy. As a result, local "Save Our Starbucks" campaigns are starting in order to keep their local stores from closing.

What people really fear, I think, is change. Once things have already changed, this becomes the new status quo, and people don't fear it any more. They may even appreciate the benefits of what they previously feared. I suspect people would have a similar reaction if Wal-Marts started shutting down.

Speaking of Wal-Mart, my colleague Art Carden has a related op-ed on Wal-Mart's efforts to open an experimental superstore in Memphis.

UPDATE: Russell Roberts has kindly provided the podcast to which I refer at the beginning of this entry. The discussion (with Don Boudreaux) of Wal-Mart comes around the 57 minute mark. Don Boudreaux said:
"...I'm pretty sure that, if we don't live to see it, our children will live to see it: Wal-Mart will one day go bankrupt, and there will be, uh, commentary about how sad it is, about how, uh, the changes in this new economy are destroying a venerable American institution....What is wrong with the American economy when Wal-Mart is going bankrupt?"
On the other hand, here's an interesting contrast: I hear a lot of people express a total lack of sympathy with the big three "American" automobile manufacturers, saying they deserve all the trouble they're having due to their lack of foresight. I wonder what accounts for the difference.

Wednesday, July 02, 2008

WALL-E and Competition

I went to see Pixar's WALL-E last night with my wife and her parents. It is a beautiful, fun, touching film. Take some tissues if you go see it. I'll be getting the DVD as soon as it's available.

(Minor Spoilers) One of the background elements of the story is that a huge corporation took, "Buy-N-Large", over the world, filled it with trash, and then moved all the humans off-planet. (Slightly Bigger Spoilers) After 700 years of luxury, the humans on this ship, The Axiom, have become large, lazy blobs, their every whim catered to by robots. Think of this as Idiocracy with slightly less contempt for the average consumer. Fred Willard makes a couple jolting but hilarious appearances as the pre-recorded President of Buy-N-Large from 700 years ago (He and a few other humans in other videos are the only ones that are not computer generated).

This all reminded me of the old Kenneth Galbraith line, "the trouble with competition is that in the end somebody wins." That quip was intended to criticize economists' love of competition, and the belief that competitive markets can be left alone (absent other market failures, such as externalities). The problem with this quote is that it makes sense in the context of, say, a marathon, or a baseball game, or a round of Battlefield 1942, but it doesn't make much sense in a market context. There is no finish line in a market. There are no forty-five minute halves, no referee blowing the whistle at the end of the game. The market game goes on forever. Even a firm that gets a monopoly is not guaranteed to keep it. Wordstar was replaced by Wordperfect, which was replaced by Microsoft Office, but not even Office is safe from competition. If someone creates a better product, people will switch (I use OpenOffice on this computer because it is free and works fairly well).

The idea of one huge company taking over everything is unrealistic. There simply aren't enough natural barriers to entry to allow a company to get so big in so many markets (without some kind of external help). Furthermore, if it were to happen, I don't think the results would be as pleasant as those suggested by WALL-E. It would likely be far more tyrannical, and more poorly run.

WALL-E is not the first to hypothesize such an end to competition. In Demolition Man Taco Bell has "won" the fast-food wars, becoming the only surviving restaurant. Consider how nonsensical this is. New restaurants are opening all the time. What would stop someone from starting a new business to compete with Taco Bell or Buy-N-Large for such a long time? Only one thing could stop them: government. Yet I do not think that WALL-E or Demolition Man were intended to be a fable criticizing government regulation or regulatory capture. At least Idiocracy has a slightly plausible justification for the world being taken over by businesses: people have become too stupid to do anything about it.

The film also suggests that we are filling the earth up with garbage to such an extent that the entire planet is covered with mounds of it (again, much like Idiocracy). WALL-E's job is to pick it up, compact it into cubes, and stack them to help clean up the mess. This also seems unlikely without some change in policy or human behavior. Lack of landfill space is not currently a problem and will not likely be a problem, aside from local NIMBY difficulties. If it does get scarce, putting trash in landfills will get expensive, which encourages recycling and innovations to reduce the size or amount of material that goes into landfills.

Let me reiterate that WALL-E is a fantastic film, and I am merely quibbling. Go see it.

On other topics, check out Art Carden's blog entry on Gapminder. I show this to students in several of my classes, because the software is just too awesome. Also check out his depressing post on Japanese internment. Removing people from their homes and businesses "as a Democracy should", says the man in the video. Amazing.