Thursday, January 31, 2013

My US News and World Report oped on the economics of making schools safer

Link here.

The final paragraph:

"After a tragedy, it is human nature to ask: What should we have done differently? Sometimes, however, "doing nothing" is the right answer. There are better ways to save lives. If we really want to save lives, we should not impose additional costs on society to make schools safer."

Saturday, January 26, 2013

Recent evidence of the adverse consequences of high tax rates

With the recent tax rate increases on high income individuals, it's worth reiterating that tax rates can be too high. The Laffer Curve shows that tax revenue could drop if tax rates are too high. We see some anecdotal evidence of this happening.

In France, where a 75% tax rate was just put into place, some have discussed leaving in the past few months. (e.g., see here.) More recently, one announcement stunned me. Nicholas Sarkozy thinks of leaving France after 75% tax rates put into place. This is the former president! Any president/former president wanting to leave their country because of tax rates is amazing. I think it's unprecedented, but I'm not sure.

In the US, one of my favorite golfers, Phil Mickelson, made comments about potentially moving from California. They imposed new tax rates in the November election. That, along with already high rates and a terrible climate for businesses, makes the move seem logical.

Tiger Woods stated that he did leave California because of taxes.

Thursday, January 24, 2013

From NPR ... Deadliest Professions

Link here.

In microeconomics, we often discuss what are called "compensating wage differentials".  Because of demand and supply forces, additional money is needed to convince workers to accept higher risks to their life.  This is part of the reason that workers who stand on the side holding a sign earn much more than your average fast food cashier, despite that fact that being a cashier at a fast food restaurant takes a higher skill level.  (The same logic can give us insight into why your average plumber often makes a higher income than your average elementary school teacher.)

I have heard that night-shift workers at gas stations were in more danger than police officers.  This graphic shows only "cashiers", but I'd be curious to see the risk for that specific sub-group (overnight cashiers at gas stations).

Link to my radio appearance

The link is here.  I come on at the 19 minute mark.

My plan had been to talk about several topics, including MLK day and gun policies (from an economist's perspective).  Given that Right-to-Work legislation was proposed Tuesday and I'm interested/informed on the topic, the whole show was devoted to that topic.

One note - when the host, Mark Lawrence, called me the smartest person in the room, I shook my head no and he incorrectly said that "Ben" is shaking his head no.  I was shaking my head no, and I don't want anybody to falsely accuse Ben of being mean/unprofessional/etc.

One caller was a left-wing professor from Bloomsburg University who used typical union talking points in opposing worker freedom in right-to-work.  Two points:

1. She illustrates the danger (which is there on both the left and right) that can occur if you read/believe items that are sympathetic to your view without reading the "other side" or understanding that you are reading analysis from a biased group.  She was under the impression that the Economic Policy Institute (EPI), whose analysis she was citing, wasn't a left wing think tank.  She's wrong (a quick look on their website will show what they care about - EPI advocates for unions, public health care, etc.).  There is nothing wrong with getting information from sources like that, but you should know who you're dealing with.  For example, I find the Heritage Foundation and the Commonwealth Foundation informative, but I also know their views (they are libertarians).  Citing statistics given from a left-wing organization and not admitting it's a left-wing organization is not very academic/scholarly.

2. I mention this in the radio broadcast, but the data on whether right-to-work helps or hurts the economy is mixed.  Left-leaning think tanks will say how workers receive less money.  Right-leaning think tanks will say how right-to-work won't result in lower pay for individuals and will help the state's economy.  The empirical evidence on this is rather mixed.  It's logical that the data will not be telling a good of a story, as it's tough to isolate the impact of one policy change when doing macroeconomic analysis.  There are dozens of things that make Michigan different than California, so it will be tough to know if wage changes over the next few years are because of right-to-work (regardless of which way things change).  Here's an NPR story with an economist that discusses some of these issues.  

Economic reasoning would indicate that a) it should help the economy of that state, b) workers should be better off by at least the amount of their union dues they now get to keep, and c) the increase in economic productivity should eventually mean higher demand for workers, pushing wages higher over time.  

Some people "in-the-know" say this will have a tough time being passed in Pennsylvania.  I'm happy to see it being proposed, however.  

Monday, January 21, 2013

Great Points by Pacific Legal Foundation

They discuss MLK day here.

Some good questions:

"I wonder what Dr. King would think about granting race-based advantages to certain groups in university admissions or construction contacts. Would he be shocked to learn that voter-approved constitutional initiatives to end racial classifications in public contracting, education, and employment are under legal attack? Or that in some schools, students’ scholastic goals in math and reading are assigned by race?"

I'll be talking about an economic proposal tomorrow on the "On the Mark" radio show that I think would help all Americans, but would help African Americans more than most. You can tune in from 9:00-10:00 on WKOK radio.

Gun Control Group Has No Shame

This is from John Lott's website.  His site is good for updates on the gun control movement.

Go to his site for the whole story (and for other good stories), but these two videos, the original and the one edited by the "Coalition to Stop Gun Violence" are all you really need to see.

The original

The one edited for political purposes.

Very sad that groups resort to this.

Great Quote from Sowell

Thomas Sowell thinks those who claim they want social justice really want "cosmic" justice - trying to correct for something from the cosmos.  Here's a great quote, from his book "The Quest for Cosmic Justice" (p 43):

"The only clear-cut winners in the quest for cosmic justice are those who believe in the vision it projects - a vision in which those believers are so morally and/or intellectually superior to others that their own relentless pursuit of this vision is seen as all that offers some modicum of hope to those who would otherwise be victims of the lesser people who make up the rest of society.  It is a very self-flattering vision-and hence not one easily given up."

If you haven't read "The Quest for Cosmic Justice", I highly recommend it.

Sunday, January 20, 2013

One-hour radio appearance on Wednesday

I'll be joining the "On the Mark" show on WKOK radio from 9:00-10:00 AM Eastern time on Wednesday.  

I've been on the show several times, and have always enjoyed it.  They have advertised it as "Then at 9am: Susquehanna University Economics Professor Matt Rousu, on ‘Right to Work’ laws, the economic impact of new gun restrictions, and economic diversity."  For the last point, I told them I would mention my thoughts on a few law changes in honor of MLK Day.  These won't be the standard recommendations you hear ... but I think they're the right ones!

You can listen live here.

Thursday, January 17, 2013

Union related writings in PA

One from Nathan Benefield the Commonwealth Foundation.

One op-ed by Jerry Shenk that was recently published in the Patriot News.  One part I really liked:
"Similarly, the legislature should require unions to face their constituent members every two years, to prove their value to the workers whose dues Pennsylvania currently confiscates on the unions’ behalf, and, using secret ballots, guarantee workers the freedom to re-certify their bargaining units – or to decertify them without lengthy, expensive court challenges."

Also, I was recently pointed to this website, which has collections of articles on right-to-work and other timely topics.  

Tuesday, January 15, 2013

A New Semester Begins ...

Technically, the new semester began yesterday.  However, since I'm on a Tuesday/Thursday teaching schedule this term, it starts for me today.  

I always get excited for a new semester.  I'm lucky to have a job I love and I love the classes I get to teach.  This semester I teach principles of microeconomics and political economic thought.  Both are fun in different ways.  The principles class is where many students will find out that economic reasoning can be used to explain many different phenomena in our world.  Principles of microeconomics was the first class where everything "clicked" for me.  I couldn't believe there were analytical tools that explained the world so well.  The political economic thought course is fun as it is restricted to upper-level students and we are reading economic analysis from many intelligent economists from the left and right.  Further, after all the bitter political talk you see in the news, it's nice to see a class where students are debating with civility. 

I demand a lot from my students - more than many professors, in my opinion.  At the start of every semester, I always think of the song "Whipped Into Shape" from Legally Blonde the Musical and what I expect from my students.  The goal is to help them think better, but it won't always be easy ...  

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Saturday, January 12, 2013

Environmentalist converts and now supports GM foods

This is about a week old, but as I was on vacation, I'm just finding it now as I was looking through Jayson Lusk's blog.  A former fierce opponent of GM foods is now a supporter.  This is a good read.

If/when I am loudly supporting one side of an issue but later determine I was wrong, I hope I have the courage to be so open in admitting I was making a mistake.

The comments are stunning, yet unfortunately predictable (death threats, illogical arguments, etc.).

Great Speaker Coming to Susquehanna ...

Timothy Sandefur will be giving a lecture (tentatively) titled “The Right to Earn a Living” on Wednesday, April 17th.  His speech is sponsored by the Arlin M. Adams Center.
Timothy Sandefur is a Principal Attorney at the Pacific Legal Foundation in Sacramento, CA. As the lead attorney in the Foundation’s Economic Liberty Project, he has undertaken several projects designed to limit government regulation. He also has worked to prevent the expansion of eminent domain laws, having litigated important eminent domain cases in California, Missouri, and elsewhere, and having filed briefs in many significant eminent domain cases, including Kelo v. New London.
Sandefur is the author of two books, Cornerstone of Liberty: Property Rights in 21st Century America and The Right to Earn A Living: Economic Freedom And The Law, as well as some 40 scholarly articles on subjects ranging from eminent domain and economic liberty to copyright, evolution and creationism, and the legal issues of slavery and the Civil War. His articles have appeared in Liberty, National Review Online, The Claremont Review of Books, Forbes Online, The San Francisco Chronicle, Regulation, and The Washington Times, among other places. He is an adjunct professor of law at the McGeorge School of Law in Sacramento. In February, 2006, he became one of the youngest attorneys ever featured on the cover of California Lawyer magazine. He is a frequent guest on radio and television programs, including The Armstrong and Getty Show, the Jim Lehrer News Hour, and NPR’s This American Life.  Sandefur is a graduate of Chapman University School of Law and Hillsdale College.

If you have questions, please contact Matthew Rousu at

Thursday, January 10, 2013

Back from Disney World

Our family just returned from a trip to Walt Disney World.  I tried to avoid reading articles about politicians, and instead had visits with Mickey, Goofy, and the rest of the characters.  (Insert joke here ...)

Our kids love Disney World, and my wife and I have fun too, which is why we've gone a few times and will go back.  The rides are fun, but the entire atmosphere is amazing.  In econ-speak, I get large amounts of consumer surplus from my visits to Disney World.

It was a great trip.  Some links:

Touring Plans uses queueing theory to figure out the best way to tour the parks to minimize waiting times.  I use it to minimize the time we spend waiting in lines for rides/attractions, but as an academic I love this product.  Operations researchers determine the average length of the lines at all points of the day for each ride, then determine a plan that will minimize the time you spend in line for the list of rides you want.  I strongly recommend using their services if you plan a trip to Walt Disney World.

Here are articles on Disney by the Economist.

Finally ... the video below was from the trip.  This is Gaston from Beauty and the Beast.  His character is cocky, arrogant, etc.  The person playing Gaston here did a great job and had us all laughing.