Wednesday, April 29, 2009

Ancenstry of a Pencil

I, Pencil:
My Family Tree as told to Leonard E. Read

I am a lead pencil—the ordinary wooden pencil familiar to all boys and girls and adults who can read and write.


Writing is both my vocation and my avocation; that's all I do.


You may wonder why I should write a genealogy. Well, to begin with, my story is interesting. And, next, I am a mystery—more so than a tree or a sunset or even a flash of lightning. But, sadly, I am taken for granted by those who use me, as if I were a mere incident and without background. This supercilious attitude relegates me to the level of the commonplace. This is a species of the grievous error in which mankind cannot too long persist without peril. For, the wise G. K. Chesterton observed, "We are perishing for want of wonder, not for want of wonders."


I, Pencil, simple though I appear to be, merit your wonder and awe, a claim I shall attempt to prove. In fact, if you can understand me—no, that's too much to ask of anyone—if you can become aware of the miraculousness which I symbolize, you can help save the freedom mankind is so unhappily losing. I have a profound lesson to teach. And I can teach this lesson better than can an automobile or an airplane or a mechanical dishwasher because—well, because I am seemingly so simple. . . .

Read the rest of Leonard Read's essay.

Monday, April 27, 2009

Buy This House, and Get a BRAND NEW CAR !!

If you purchase this former Parade of Homes property in West Michigan, the sellers will toss in a brand new Chevy Malibu to sweeten the deal.

Now, as a professional economist, I know at least two things that have bearing on this matter:

(1) Generally speaking, payments of money create greater welfare-enhancing possibilities than do payments in kind (i.e., stuff). You can spend money on anything you want, in whatever increments you want. "Stuff" is less liquid.

(2) Presumably, from a potential buyer's perspective, there is some lower price the sellers could offer for the house that would make a buyer just as happy as finding a new Chevy Malibu in the driveway following the closing.

And knowing these two things as an economist reminds me how little I understand about marketing.

Worth Checking Out: John Lunn's (Basically Economics) Blog

My Hope College colleague John Lunn has a very interesting blog that is worth checking out. John Lunn's Basically Economics Blog keeps its focus mainly on the current economic situation and the road to recovery. John--together with our delightful colleague from the Hope accounting faculty, Marty LaBarge--is also working on a book related to recent events.

John earned his doctorate in economics at UCLA, and walked away from a tenured post at Louisiana State to join Hope's economics group. John made that move several years prior to my arrival at Hope, and I am thankful to count him among my dear Hope College friends and colleagues.

Sunday, April 26, 2009

Steven Levitt: Are children's carseats necessary?

Steven Levitt shares data that show car seats are no more effective than seatbelts in protecting kids from dying in cars. However, during the Q&A, he makes one crucial caveat.

Levitt is the coauthor of the now very famous Freakonomics, and its new sequel, SuperFreakonomics.

Saturday, April 25, 2009

Armenian Martyrs Day

Yesterday I attended services and a dinner at St. John Armenian Church in Southfield, Michigan. Both were being held in commemoration of Armenian Martyrs Day, April 24. For some background on the 1915 deaths of ethnic Armenians living within the Ottoman-Turk empire, watch Ivan Watson's CNN report. (The accompanying story is here.)

The dinner included a wonderful talk by a very close friend of Antonia Arslan, author of Skylark Farm--a novel that traces one family's experience during the 1915 genocide. Here is a link:

As the video and story above make clear, whether the word "genocide" may be attached to the events of April 1915 is the subject of tremendous international controversy and debate. Even President Obama stopped short of using the word in his official statement released Friday afternoon, despite a campaign pledge to officially recognize the deaths as genocide.

Friday, April 24, 2009

Is Your Town a Winner in the High-Speed-Railway Tournament?

The new American Recovery and Reinvestment Act (aka "the stimulus package") has dedicated US$8 billion to outfitting selected corners of our nation with publicly-run high-speed railways.

Will we soon be zipping around these United States the way they do in places like Japan and Spain? Perhaps, but the eight billion dollars is a mere drop in the bucket; a new article from the BBC claims that it will cost $30m per mile to build the track. And we have a big country. (Designated high-speed rail lines are outlined in red above.)

So check out the map above, and the full article from the BBC. I do hope your city has been selected.

Thursday, April 23, 2009

"Hot" = "Keynesian" ?

Given the rise in face time that economists are getting these days in the media, The Daily Beast has unveiled its list of "10 Hot Economists." And if you click through the slideshow, you'll quickly see that "hot" probably refers to their current stature and visibility, rather than some other measure of "hotness" (though their spouses may disagree).

At any rate, I find it interesting that an economist's current "hot" status appears to have a lot to do with being a Keynesian economist. This isn't necessarily true for all ten, but being a Keynesian sure seems to help.

The past couple of summers I have taught a course for Acton University called, "Why Keynesianism Failed." This summer's class will be especially interesting to teach, I think.

Wednesday, April 22, 2009

UK Experiences First Deflation in a Half-Century

The UK's Retail Price Index (RPI), the nation's broadest measure of prices, fell into negative territory in March--the first deflation since March 1960. While prices were down overall, which would normally be sweet for consumers, several items purchased by older Brits rose in price.

Even though the cost of living for pensioners may have gone up--despite the slight drop in the overall level of prices--those living on retirement incomes may see the values of their checks frozen for now, since their checks are often indexed to the RPI for cost-of-living purposes. So seniors may be feeling a pinch.

Google Searches as Proxies in Econometric Research?

According to an article appearing in the April 16 issue of the Economist, Hal Varian (econ grad students, you know his textbook) and Google colleague Hyunyoung Choi have discovered surprisingly strong statistical correlations between certain Google searches and the movement of related economic variables.

For example, time-series search data from the Google Trends database for Ford vehicles is highly correlated with Ford's light-vehicle sales in the United States (see graphic). You can read Choi and Varian's full paper here.

Google Trends is free for now, friends. So if you are looking for potential proxies for variables you cannot precisely measure--or ones you simply cannot afford--think about using Google Trends data.

Just be sure to cite Choi and Varian.

Saturday, April 11, 2009

Buy Three Ounces, Get Five Free--And That's Our Regular Offer!

While doing some last-minute shopping in preparation for my recent trip to Guatemala, I discovered something very interesting. Almost anywhere you shop, you can buy these two items for the same price. (If you want to verify it, please click the images.)

Now the item on the left is a 3 oz. package, while the "Super Size" item on the right is 8 oz. Wow! So you can buy three ounces, and get the next five ounces for free if you purchase the item on the right.

Which begs an interesting question: If the bigger tube is by far the better value, why does Banana Boat have them priced the same? On the face of it, it would seem like no one would ever buy the 3 oz. size. And if so, Banana Boat would notice this and begin cutting the price on the 3 oz. size. But they don't.

So does Banana Boat know what they are doing? Or are they destined to fail this summer due to silly pricing?

I think Banana Boat is probably getting it right, and here are two of my suggestions why. First, the marginal cost of five more ounces of sunscreen must be very, very small for a company that is already making so much of it. And if many of their costs involve packaging (i.e., the tubes), shipping, and distribution, then perhaps they are willing to give five ounces away to anyone willing to cough up the full price of the smaller bottle.

Here's my other one, and one I like very much. When you go through security at a U.S. airport these days, you are not permitted to have any liquid health/beauty items larger than three ounces in your carry-on baggage. So I suspect that demand is up--way up--for three-ounce sizes of all kinds of health/beauty items, including sunscreen. And given the higher demand, Banana Boat can charge a surprisingly high price for the smaller, but legal-to-take-on-board, three ounce size.

Well, those are my first reflections. If you think of others, please leave a comment!

Friday, April 10, 2009

Caveat Comestor: Fifth-Third Burger a Hit, Bears No Warning Label

In a West Michigan story that garnered some surprising national media attention, a local minor-league ballpark opened the season by unveiling the Fifth-Third Burger.

Because of its 5/3 pounds of beef--not to mention the toppings of cheese, chili, chips, etc.--the 4,800-calorie monster has caused quite a stir. It even motivated Susan Levin, a staff nutritionist from the Physicians Center for Responsible Medicine, to write the ballpark, requesting that the burger bear a label stating that "eating meat is associated with increased risk of heart disease, cancer and death," and also requesting that the burger not be sold to anyone younger than 18. The team's director of marketing politely declined to affix the warning.

Sales were strong on opening day at Fifth Third Ballpark, home to the Class A West Michigan Whitecaps. Seventeen fans even managed to devour the entire monstrosity.

And I'm guessing all 17 know that eating a chili-cheeseburger with 1.67 pounds of ground beef is never a healthy option.

Chocolate Business Extra Sweet in Troubled Economic Times

Little things can mean even more during an economic downturn.

Based on the historical evidence, small extravagances serve as substitutes for the more expensive pleasures to which we might treat ourselves if times were better, and incomes higher. We'll pick up some flowers or chocolate as a substitute for the nicer, more lavish treats we might ordinarily consume.

And we make similar substitutions in our gift-giving, too. If you can't afford to spend much on a gift for a friend or loved one, why not spend what you do have on a sweet chocolate indulgence. It's one of the reasons chocolate has made U.S. News & World Report's 10 Winners in the Recession list.

CNN's Atika Schubert filed this Easter weekend report. (And I am especially fond of peanut-butter-filled chocolate eggs.)

Friday, April 3, 2009

Out Like a Lamb: West Michigan Housing Market Turning Around?

Looks like the housing market in Grand Rapids may be turning. Now one month doesn't make a trend, of course. But the number of March sales was certainly better than March last year, and the average price was up slightly from February.

Wednesday, April 1, 2009

They Must Have Been Joking!

The BBC has compiled at top ten list of news stories from April 1 (Wednesday) that seem like they must have been Fools Day inventions. But every one is the deadly truth.

And check out some pranks those yucksters at the Economist have played on us over the years. Let the uncontrollable laughter begin.