Monday, January 28, 2008


Sunday, January 27, 2008


One of the arguments made against the free market is that businesses are shortsighted - only concerned about short-run profits. Now, I'm not going to make a sweeping claim saying "no they aren't" because that would be simplistic (just as the original claim is). The truth of the matter is that some business are shortsighted and, of course, some aren't. The market process has a way of sorting out those entities whose vision (short or long) doesn't align with consumer interests.

My own personal experience shows that companies can be both long- and shortsighted at the same time. For example, I currently work in the rail industry as a software architect. Like a lot of technology companies, there is a tendency to produce software quickly without looking at the long-term costs of "rushing to get into production." While at the same time the rail industry is spending billions to upgrade their rail network. In one case you have a short-run view to get products delivered, while in another you have a long-run view of protecting future revenue.

I had a discussion with someone this week about the health care industry and whether or not such companies were shortsighted. He gave the example of the shortsighted companies that just wanted to produce drugs, for example, that only dealt with treating current problems and not investing in research for cures to diseases like cancer. (This was also part of discussion about the so-called conspiracy to keep the cancer cure secret from the public.) This is not true, of course, because there are lots of companies spending billions to find cancer cures. What the correct mix of investment for producing treatments for current problems and searching for new cures is something only the market process can determine.

I bring this up because the claim that the market is shortsighted goes along with the claim that government is better at long range planning. This is silly on its face because politicians have an incentive to pander to constituents on a time frame based on the next election. A perfect example is ethanol. Everyone knows that ethanol is at best no better than regular gasoline, and when all environmental impacts are taking into consideration, may even be worse. Yet we spend billions on subsidizing ethanol in part because Iowa is the first test for presidential candidates.

Anyway, Steven Landsburg has a great article on the shortsighted "stimulus" plan now circulating in Washington (HT: Cafe Hayek). Here's a quote:
Ultimately, the only solution to unemployment is for displaced workers to get retrained and find their way back into the workforce. The new stimulus package only delays that process by propping up dying industries for a while and postponing the day of reckoning. Ultimately, there will be just as much hardship because the stimulus package can't last forever. Why spend all this money trying -- and probably failing -- to delay the inevitable?

Sunday, January 20, 2008


Wednesday, January 16, 2008

The Firm

Russ Robers over at Cafe Hayek has another good EconTalk episode. He talks with guest Mike Munger of Duke University on the Nature of the Firm. The concept that I took away from the conversation was that firms economize on transaction costs. This may sound a bit arcane, but take a listen anyway. You may appreciate the company you work for a little more.

Speaking of The Firm...

Monday, January 14, 2008

Is Space Exploration Worth the Costs?

Over at the Freakonomics Blog Stephen Dubner asks this question to a panel of 'space authorities'. The post is a long one, but the consensus is yes, space exploration is worth the costs. I'd like to comment on some of the answers.

Let's start with G. Scott Hubbard. He states, in part
2. We explore space and create important new technologies to advance our economy. It is true that, for every dollar we spend on the space program, the U.S. economy receives about $8 of economic benefit.
I'm inclined to be skeptical of this figure, but even it is accurate we have to ask the question "compared to what?" Mr. Hubbard has apparently never heard of Frederic Bastiat. I won't rehash the seen/unseen argument, so go read it yourself.

Along with the seen/unseen argument there is a political angle to this as well. How would politics be different if there weren't billions of dollars available for the taking by crafty politicians trying to buy votes with extravagant projects for congressional districts?

Mr. Hubbard continues:
3. Space exploration in an international context offers a peaceful cooperative venue that is a valuable alternative to nation state hostilities. One can look at the International Space Station and marvel that the former Soviet Union and the U.S. are now active partners. International cooperation is also a way to reduce costs.
Umm...didn't we race into space to beat the Soviet Union, not to cooperate with them? Yes, it's great that we cooperate now, but that's not the way it was from the beginning.

Some more from Mr. Hubbard:
4. National prestige requires that the U.S. continue to be a leader in space, and that includes human exploration. History tells us that great civilizations dare not abandon exploration.
'National prestige' reeks of nationalism to me which contradicts #3 above with regards to 'peaceful cooperation'. Maybe we need fewer 'great' civilizations and more that respect basic rights of the individual. Besides, I hear this argument from every do-gooder and 'grand' thinker who wants to solve some big problem or erect some monument to our greatness. I say to these people "open your wallet and get your fingers out of mine."

Having said all of that, I have always been a fan of astronomy and space exploration. I love hearing about new discoveries and seeing images from the Hubble Space Telescope. I even listen to the Astronomy Cast on a regular basis. I just don't think it's right to force others to fund my hobbies. Maybe if I had less of a tax bite I could privately fund some of these efforts.

More to come...maybe.

Saturday, January 12, 2008


Thursday, January 10, 2008

Hoops Goulet

ESPN tends to have some of the more amusing commercials. Back in the 90's they created some to promote their NCAA Basketball coverage and I that they were some of the best. Here are a few.

This one is about UCLA.

Dicky V.


This was my favorite.

I almost forgot about Downtown!

Saturday, January 05, 2008

New Year's Whatever

  • This is one example (and here's another) of why I am not pessimistic about Global Warming. As we grow richer we can solve ever more problems. We just need to make sure the enviro-socialists don't destroy the wealth-producing engine that is the market economy.
  • This story should convince anyone that humans and monkeys have a common evolutionary ancestor
  • Traffic anarchy (HT: CafeHayek)
  • So, the Fed acts to curb "risky" lending practices, then the Senate acts to make it easier for sub-prime borrowers to get loans. Oh brother!
  • George Will has some good views on the whole sub-prime mortgage mess