Tuesday, May 25, 2010

This American Life on Haiti and Development Economics

If you're interested in development economics and/or Haiti, you absolutely have to listen to this This American Life podcast. It has almost everything: insecure property rights, infrastructure problems, education, health, incompetent NGOs, justifiably skeptical Haitians, and the hazards of central planning. The focus is on attempts to improve the mango industry, one of Haiti's few exports. What's missing is discussion of how markets can solve some of these problems, but it's lurking in the background.

You might also enjoy this Bob Murphy story about his experience in Haiti.

Monday, May 24, 2010

Do They Hate Everyone Who Breaks Dumb Laws, Or Just Some?

It bothers me how many people get upset about illegal immigration simply on the grounds that the illegal immigrants are here illegally. They are upset that the immigrants didn't go through the (ridiculously convoluted, nearly impossible to penetrate) legal process to gain entry, permission to work, and citizenship. Laws that keep out peaceful people who just want to be productive are dumb. Shouldn't we be mad at the lawmakers, and not the people who break the dumb laws?

I wonder if the same people think the operators of speakeasies during alcohol prohibition were also moral monsters. Were they evil for allowing people in to drink? I think most people now agree that alcohol prohibition was a dumb policy. What about jaywalkers? What about someone who loses his temper and cuts off one of those "Do not remove under the penalty of law" labels on mattresses? Do illegal immigrant-haters hate those people, too?

Here are two seldom-heard reasons to want a lot more immigrants:
  • They tend to be young, and they pay payroll taxes, which means that they would postpone our problems with social security for many years. 
  • They all need to live somewhere. We have a lot of excess housing. It's not "re-inflating the bubble" if increases in housing prices are the result of more people buying houses to live in!
Check out Art Carden's posts on Division of Labour regarding immigration herehere, and here.

UPDATE: Hat tip to Art Carden yet again for this great Jeff Miron piece on illegal immigration. 

ANOTHER UPDATE: A friend who wants to remain anonymous says:
Another example of law-breaking relevant to the immigration debate is this: in the South before the war, you were BREAKING THE LAW by teaching slaves to read and write.  Might this look familiar:
Now, I'm not a racist and I'm all for people learning how to read and write, but they need to do it LEGALLY and not BREAK THE LAW of our sovereign country.

Friday, May 21, 2010

New Article in the Freeman on Nuclear Energy Loan Guarantees

Art Carden and I have a new piece in The Freeman on nuclear energy subsidies. Do we get to call ourselves prescient for our comments on removing limits on tort liability for the energy industry?

Tuesday, May 18, 2010

Guns in Nashville Bars: Opt-out Versus Opt-in

Here in Nashville the legislature has tried to pass bills making it legal for individuals to carry handguns into a bar. On first hearing this sounds like a terrible idea; well-armed drunks are a recipe for trouble. I personally don't like guns; I'm sure if I owned one, I would end up shooting myself in the foot. I'm simply not comfortable around them.

In this case, however, I think the bill's supporters have actually managed to craft a reasonable bill. Gun carriers cannot drink in the bar, and bar owners can opt out, banning weapons from their bars as they see fit. If it really is such a terrible idea, then all the bars end up banning guns and the problem is solved. The bill ends up doing nothing.

Perhaps, one might argue, the law would still be inefficient because bars will have to spend money on signage announcing that guns are not allowed; prohibiting guns in bars would accomplish the same goal without any wasteful expenditure by bar owners.

There is a simple solution to this: Make the bill opt-in instead of opt-out. Make the default legal rule "guns are banned in bars", but allow a bar to post signage saying "guns are allowed here". Bar owners could even add stipulations, such as "gun carriers can't drink" or "guns must be checked at the door" or "only guns below .38 caliber allowed" (or whatever). The result would be that only bar owners that actually wanted guns in their bars would have to deal with them. Bar patrons who don't want to worry about guns at bars can simply avoid those that have chosen to opt in. I wonder, would any of the bill's current opponents accept this version? They can't think that bar owners would willingly place themselves at risk (physically and financially) and their patrons at risk (mostly physically, I guess) if guns in bars really are a bad idea. If they still don't support the bill, are they really worried about safety or do they simply not like the idea of people carrying guns?

That last question isn't rhetorical; I genuinely want to know. What are the remaining objections to my alternative version of the law?

XXX Isn't Really About YYY: Some Suggested Compromises That Won't Fly

Robin Hanson famously argues that signaling drives much of behavior. Medicine isn't about health; it's about signaling to other people that we care, or that we're trying to be helpful--the real outcome isn't important (as suggested by evidence that health care expenditures don't contribute much to health).

Much (most?) policy discussion is driven by this signaling.  So, for example, the BP oil platform accident drives one side to suggest banning offshore drilling, and the other side to remain steadfast or even increase its support for drilling. Surely neither side can really mean this--stopping all offshore drilling would be too costly, and no one can really think that oils spills are a reason to be more willing to support drilling. These positions are just posturing to keep the other from getting some advantage.

If they were really interested in the public welfare, they would support some kind of compromise. This is a pretty easy one: Get rid of the limits on liability for oil spills, which causes injurers to take into account the full scope of the damage they could cause. This causes them to take greater precautions against accidents. It doesn't cause them to reduce the probability of an accident to zero; that's impossible, and the closer we get to zero probability of an accident, the more costly it becomes. Given that there's little the injured can do to influence the damage from an oil spill (aside, I suppose, from living on or near the coast), simply making the injurer liable for the full scope of damage caused should give the injurer the incentive to take the efficient level of precaution.

This might upset some conservatives, as it means that some oil platforms might shut down or fail to start up in the first place, due to increased safety or liability costs. It might upset some liberals because it only reduces the amount of drilling and the probability of accidents, rather than eliminating them. But if both sides were really interested in increasing safety and allowing drilling, it seems to me a reasonable compromise. Of course, the limit on liability will not be removed. The two sides are interested in signaling to their constituencies, not in making society better off. Drilling regulation isn't about safety; it's about showing you care about the environment or people driving cars. The same goes for mine safety: tort and civil law won't simply be allowed to sort out who should bear the liability for accidents, because it's not really about safety or business.

Another example is Cap and Trade. Liberals want to limit CO2 emissions with regulation, conservatives do not, due to opposition to the taxation implied by Cap and Trade or carbon taxes. Here's another simple compromise: Replace payroll taxes with CO2 taxes (or CO2 allowance auctions for Cap and Trade). Tax burdens shift but do not go up overall--in fact, a tax that creates a deadweight loss is replaced by a tax that eliminates a deadweight loss. Yet neither side will even propose such a bill, because they're interested in heat, not light (some people outside of government, including Al Gore, have proposed such an arrangement). CO2 regulation isn't about reducing CO2; it's about showing you care about the environment or taxpayers.

Such compromises are not always possible, but the fact that they sometimes are available but unexplored should create some doubts in the minds of anyone with faith in the efficiency of democracy.

ADDENDUM: Robin Hanson talks sensibly about regulation and infrequent accidents. Hat tip to Bryan Caplan at Econlog.

Wednesday, May 12, 2010

People DO Respond to Gasoline Price Changes

This is a terrible graph, layout-wise (if they're arguing that higher gasoline prices reduce miles driven, why is the dependent variable on the horizontal axis?), but it is interesting. The sections where the graph bends backwards are gas price spikes that lead to reductions in miles driven per capita. When gas prices go up, people do respond by driving less, and the bigger the price increase, the bigger the drop in miles driven.

The most interesting part of the graph is the section from 2008 to 2009, where the price falls while miles per capita continue to fall. I don't know what's causing this. If I had to guess, I would guess that, unlike the 1970s, we have a greater ability to adapt to gas price changes--by telecommuting, maybe--so once people started identifying such opportunities, they just kept on going. Also, the drop in housing prices may have allowed some people to move closer to work. Finally, the 2008-2009 price, while lower than 2007-2008, is still high by historical standards, so people may still be trying hard to find ways to reduce their high gasoline bills.

One more thing: If we want people to drive less, and use less gasoline, gas prices are the tool to use. Higher gasoline taxes will drive the price up and reduce gasoline usage. Whether or not that is a good idea is a separate question, but if the goal is to force people to use less gasoline, higher gasoline taxes are the most efficient tool to accomplish this.

Tuesday, May 04, 2010

Let's Play "Pat Robertson Channels God's Anger"

We all remember how Pat Robertson let us in on why God smote New Orleans and Haiti. This raises the question, why does God hate Nashville? Or more accurately, what is the reason Pat Robertson would (will?) give for why God hates Nashville?

On Facebook, Eric Lease suggested "It's that demon country music!".

Also on Facebook, Art Carden suggested "They finally released Johnny Cash's American VI, so Nashville has apparently outlived its usefulness.

My own suggestions: Tennessee failed to make it illegal for gays to adopt last year (Nashville being the seat of the state government). 

What do you think? What horrible sin has Nashville committed to deserve divine wrath? 

More Pictures of Nashville from Metrocenter and Salemtown

I went for a bike ride around Metrocenter with the crummy 2 megapixel camera in my cell phone and took some pictures and really low-quality videos. The area has experienced some flooding. It doesn't look like the buildings are in terrible shape. Last night my wife and I were part of a huge crowd that showed up to throw sandbags on a low spot in the levee that shields Metrocenter from the Cumberland River.

Some of the pictures below are panorama stitched together from several pictures. Combine the terrible quality of the camera with stitching and the result is a pretty bad image, but you can at least get an impression of the water levels. Be sure to click on the pictures to enlarge them.

Here's Morgan Park. That big body of water is supposed to be a big open grass area, with a baseball diamond in one corner. The auto stitching is particularly bad here. I had some images to the left, too, but the change in perspective made them unstitchable.

More pictures after the jump.

Sunday, May 02, 2010

Pictures From the New Nashville Aquarium

You might have heard that we got some record rainfall here in Nashville. In fact, it's been disastrous, with many homes destroyed and businesses damaged. Our house here is fine, although the dogs have been getting cabin fever from being cooped up all day.

We went for a walk to take some pictures this afternoon (all of the pictures below were taken by my wife). The Salemtown/Germantown neighborhood seems to have fared pretty well. Here's a view of Morgan Park from the river side, looking back to the west toward the community center (visible on the right). The park itself is flooded.

More pictures after the jump.