To life

Probabilities and distributions are hard to grasp. We usually avoid the problem by settling on mean values and hope they are somehow representative. But every stat textbook warns students that one must at least look at variances also; large variances undermine the usefulness of means and medians.

Longevity and morbidity data are of particular interest for all the obvious reasons. The good news is that the trends are very favorable if you enjoy living. Visit any old cemetery and note the life spans recorded on the old tombstones and markers. And as average life expectancies increase, so must the associated variances.

I mention all this because I had trouble digesting Dr. Ezekiel Emanuel's  "Why I Hope to Die at 75." The man is a scientist and an ethicist. He knows that every statement (generalization) in his essay must to be stated in terms of distributions. He even includes one in the essay.

Even the relevant distributions are conditional; the one that applies to any one individual is contingent on the years already reached -- as well as the state of health, etc.

Whether it is Immanuel Kant or Daniel Gilbert, many wise people have had something to say about our ability to know our state of mind in the future. There is not an epidemic of suicides among the old an infirm because most cling to life and hope for another day.  I hope that when Dr. Emanuel reaches 75 that he is able to say "not so bad after all."

Shout it

Here is the announcement of David Andersson and Stefano Moroni's edited volume Cities and Private Planning.  It includes a chapter by Wendell Cox and myself.  Look at the TOC to find many of your other favorites.

There are many types of planning; I often refer to bottom-up and top-down. Both are, of course, always in play. Identifying the proper division of labor is an interesting problem. When it comes to cities, it is a hugely interesting problem. Nevertheless, city planning is widely presumed to be a top-down activity. When I talk to reporters, they usually begin with the cliche that Los Angeles being "unplanned" how can such a thing not spin into a dystopian nightmare. Other think we are already there.

A related problem has to do with the failure of economists to clarify their central theme; markets are important because they coordinate an uncountable number of private plans. This also describes how cities work. Read the book; shout it from the rooftops.

Writing about cities

The City by Deborah Stevenson is reviewed here by three not-so-sympathetic reviewers. Perhaps that's for the best and I hope Stevenson agrees.

I am beginning to think that most of us write for (and are only heard by) others in our own bubble. The odds are slim that I would have read the book had there not been the request for a review. Her's to "reaching across the aisle."

What is our biggest economic problem? In my view, it is growth. I am interested in cities insofar as they are an essential part of the growth riddle. In Deborah Stevenson's view, the big problem is class warfare. Her task was to show the role of cities in pitting the haves against the have-nots. Future work will have to get all this under one cover.

Food nuttiness

Did someone say that the rich are different? Here is Pierre Desrocher's review of "The latest culinary fad: famine food ... Middle-class foodies are paying a fortune to eat what peasants once lived on." I know nothing about psychiatry so I can only chuckle. One of Pierre's interests is food nuttiness; he and his wife wrote about it in The Locavore's Dilemma.

On a related note, here is the PBS NewsHour's coverage of the "GMO debate". In the producers' quest to be even handed, they gave equal time to serious people concerned with the science of health and nutrition and, on the other side, lunatic luddites shown gleefully destroying crop on an experimental farm in the Philippines.

Too crazy

Today's WSJ includes Peter Thiel's "Competition is for losers ... Only one thing can allow a business to transcend the daily brute struggle for survival: brute profits."  He also notes "Economists use two simplified models ... perfect competition and monopoly." Ugh!

Too many economists (and their textbooks and their other writings) are guilty of all this. But are serious people (in our out of the field)? To be sure, some economics texts, beginning with Alchian and Allen to Paul Heyne (later Heyne, Boettke and Prychitko), were much more careful. "Monopoly" (just one seller or source) exists where it is protected by law (public schools for people too poor to send kids to private schools or to home-school). Otherwise any market-power (successful product differentiation) and any profits are fleeting and must be maintained via steady hard work. Surely Thiel knows that this is what business people do all day.

Apple was pressed to introduce new product last week; they could not rest on any "monopoly" advantage -- and they were surely not "perfect competitors." Advertising and clever merchandising are never enough; the buyers are not that stupid. Consumers' tastes are subjective and formed in mysterious ways. They constantly consider possible substitutes; there are no "perfect" substitutes, only good ones and not so good ones. That distinction is again a complex and personal one ("in the eye of the beholder").

Were any of this not so, staying  in business would be pretty simple.

Economists and others have been turning people off for much to long by belaboring implausible models and approaches. Economic thinking is actually indispensable; bizarre claims too numerous to count are made all over the place by people who remain innocent of economic thinking. But many remain in this state because the models and textbooks they had been exposed to were too crazy to take seriously.

Alpha cities

People like to choose and join teams. There are many examples. Nationalisms and regionalisms are just two of many. Among the latter, there are city vs country-cousin rivalries which probably exist in most cultures -- with each side claiming peculiar wisdom by which assert their superiority over their rivals. There are also the peculiar distinctions between any country's "alpha city" vs the rest of that country's folk.

Think New Yorkers vs the rest of America. Each side is pretty sure of its own superiority and the awfulness of the other side. I imagine that the same holds for Londoners vs all other Brits, Parisians vs the rest of France, Shanghaiers vs the rest of China, Muscovites vs all other Russians, etc.

This Alpha list is one man's opinion and is not quite right because he lists more than just one city for some countries. The U.S., for example, has many cities where one can find interesting things to do. But in how many of them can the general tourist spend more than two or three days and nights?  Let's be honest, for the U.S., New York (where I do not live and where I was not born) is special. One can spend weeks (or more there) and not be bored.  I suppose the same distinction applies to Paris, London, Tokyo, Berlin, etc.

Urban economists celebrate agglomeration economies. Nothing succeeds like success. There are agglomeration economies (net positive externalities realized via proptitious location) in all cities. But the non-linearities are breathtaking.  The outsized presence of the arts, intellectual variety, fine food, great architecture, etc. in New York stands out. In other words, the real alpha city in each country outdraws the rest by leaps and bounds. 

NBTO, nothing but trade-offs

Those who favor higher mandated minimum wages argue that the affected workers "need" and/or "deserve" the extra money. The claims are rhetorical but makes sense when made by those low-wage workers who expect to be covered. But Bastiat's distinction between what is seen and what remains unseen is also relevant. The businesses never started, the jobs never created, the promotions that never come are necessarily unseen -- and harder to measure. We have to rely on the law of demand which does slope downward.  In fact, the great man was more specific.

There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.

Los Angeles Mayor Garcetti wants the L.A. minimum wage to go to $13.75 by 2017. The Great and the Good of L.A. have lined up in support. Here is Eli Broad's op-ed. Broad and others cite a UC Berkeley study which adds that a higher minimum wage is a local economic stimulus; lower income people spend a greater share of their income and multiplier effects kick in.

Free lunch. Those who write and who repeat this stuff are likely to have 401k plans and other links to "corporate America."  Some may even check their accumulated balances on occasion. They have probably noticed that share prices are volatile and responsive to earnings and earnings prospects. In other words it is not simply about digging into other people's deep pockets.

TANSTAAFL is a mouthful.  NBTO, nothing but trade-offs, is much more manageable.