Review of Concierege Confidential

While on my cruise, I picked up Concierge Confidential thinking it would be light vacation reading.

It was very interesting!  It's a story from Michael Fazio, who worked as a concierge at one of the most exclusive/expensive hotels in New York.  However, it also had several good business/economic concepts.

1. Discusses how there are benefits from trade.  Those who used his services often could not obtain the product for a similar price.  Michael went through an example where he would get a product for $300, the client wouldn't have been able to obtain the product for less than $500, and he charges $400.  Each side gains $100.

2. Entrepreneurship!  The author changes careers and also thinks about new business opportunities.  He does a really good job thinking through and explaining how his previous opportunities and training have prepared him to go into new business ventures.  He describes the ones that work and the ones that don't work.  I found this very enlightening and fascinating.  

3. Human capital.  The skills he acquired from his early jobs clearly helped him develop skills that allowed him to succeed as a concierge.  Economists call this human capital - which can easily be acquired in most jobs.  (As a side note: part of the reason I'm so opposed to minimum wages is the high teenage unemployment has a devastating affect on their human capital acquisition - which decreases their future earning potential.)

Outside of the economics, it was still extremely interesting.  There are many anecdotes, from bathtub issues, to guys who bring suitcases of money, to cases where men try to hide their newly earned STDs from their wives.  Sometimes a bit sleazy, but all very interesting.  This book is both fun and educational, and it's always great when an entertaining story contains many examples of economic principles.

In Chicago this week

I’m in Chicago for the AEA Conference on Teaching& Research on Economic Education.  I attended this conference last year in Boston and learned a lot.  I’m hoping it will be just as valuable this year.  Further, I’m presenting a research paper focusing on pedagogical issues. 

Usually when I visit abroad I like to take some time to see the city.  I will be so busy this time that I don’t think that will happen.  That being said, I am staying at the Hard Rock Hotel, and my room (and view) are both pretty cool.  

A trip to the Federal Reserve is also included, as well as meals at a couple pretty nice places, including Epic Restaurant. So, all-in-all, it's not bad for a conference where I'm working almost non-stop.

One thing that I liked so far was meeting Eric Chiang, who authors a principles textbook.  He has a neat youtube video where he goes “Around the World in 80 Hours” and examines various economic issues:

Assorted Links

1. Great story on Chris Moneymaker's win at the 2003 World Series of Poker.  I started playing around the time he won that tournament, and poker was a big part of my life (and income) until 2011.  I even played in the World Series of Poker in 2005, 2006, 2008, 2010, and 2011.  I have also read a lot about poker (I have 40+ poker books) and can safely say that this article is one of the best poker articles ever written.

2.  Via Greg Mankiw.  Reinhart responds to Paul Krugman.  Krugman has been extremely obnoxious about an error in their paper.  An excerpt:

We admire your past scholarly work, which influences us to this day.  So it has been with deep disappointment that we have experienced your spectacularly uncivil behavior the past few weeks.  You have attacked us in very personal terms, virtually non-stop, in your New York Times column and blog posts.  Now you have doubled down in the New York Review of Books, adding the accusation we didn't share our data.  Your characterization of our work and of our policy impact is selective and shallow.  It is deeply misleading about where we stand on the issues.  And we would respectfully submit, your logic and evidence on the policy substance is not nearly as compelling as you imply.

3.  The March against Monsanto.  Of all the things in the world that cause problems, tough to believe people have free time to protest this.  Bad use of a limited resource (time).  Further, GM foods are crucial to agricultural productivity and decreasing food prices (which translates to decreasing world hunger).  Yet these protesters spend time and energy fighting against them.  It would be sad enough if the protesters were just expending their energy on something useless, instead of trying to solve actual problems in our world.  The fact that what the protesters want is counterproductive makes it worse.  It is just sad.

My Thoughts on Cruising

My wife and I went on a cruise this past week.  (Sorry for lack of posts - but I was mostly off-line.)  This was my first cruise, and I really enjoyed it!  A few observations:

1. I wondered how the cruise line can pay 1,000 employees on the ship when there are only 2,000 guests and the prices are so reasonable (cruises can make for inexpensive vacations, because food and entertainment are included in the price).  I suppose the employees get free food and accommodations, so all money they earn could be saved, which is pretty huge.  

2.  Related to point one: about 40-50% (according to a staff estimate) of the staff was from the Philippines.  I suppose low wages in that country plus citizens that had good English skills are the combination that caused Norwegian Cruise Lines to hire from the Philippines.  There really weren't that many American employees, and most seemed to be in visible PR type positions.

3. I would have hated to be these two people.

These were shots from the 12th deck on our boat, as my wife and I had decided to watch us sail away from The Bahamas. (We had three stops on our cruise, with Nassau, Bahamas being the third.)  About one minute after the ship started moving, we saw two people running towards the ship and waving their arms.  They missed the boat.  They were waving and asking it to stop, but that was never going to happen. This would not be fun. All their luggage (not to mention passports) were left on board.

They likely had to a) get a hotel for the night, b) go to the US embassy in the AM to get a copy of their passport, c) book one-way plane tickets back home, and d) all of this was with none of their luggage, which they'd have to pick back up in New York City after the cruise docked again on Saturday.  (This was Wednesday night.)  Their vacation was ruined and they had to spend a lot of money just to get back home.  There are some times you absolutely can't be late - and this is one of them.

4.  I read two great econ/business related books on the trip - reviews of them will be posted soon!

Bad government decision ... rescuing edition.

Here is a recent story of a city in California that rescued hikers but isn't going to charge them for the rescue.

This is bad for two reasons.  It encourages hikers to take greater risks than they would take if they were forced to pay for their own rescues.  Second, you have issues of fairness, as those who aren't engaging in the dangerous behavior are paying for the risky behavior of others. 

For more details/examples on this topic: John Stossel's new book goes into plenty of details on the harms of governments subsidizing risks.

Too much government - Selinsgrove, PA edition

City won't let man build a tree house on his property.

Nothing too unusual about zoning decisions like this, but this is from my town of Selinsgrove, PA.

Commonwealth Foundation posts two letters on liquor privatization

Two nice articles are posted on the Commonwealth Foundation site.  They are doing a great job keeping us in the loop on the latest with the push to privatize the liquor business and publicizing research and letters on this issue.

1.  One beer distributor arguing in favor of privatization.  He says:

It’s not just about the needs of my select business community.  Encouraging distributors to grow their businesses will also benefit all Pennsylvanians.  By allowing customers to purchase beer, wine, and spirits at one location (and likely for a lower price than under the existing state monopoly), many Pennsylvanians will stop illegally crossing the border to purchase alcohol.

2. A Democrat from Washington talks about how privatization has been good for their state.  Their tax revenue increased during this transition.  That's not necessarily a positive, although it is quite feasible that tax revenue could go up while consumers pay less by privatizing.  

Valuing lives and limbs

Good story here on MSNBC on the person who will determine how much each victim of the Boston bombings will receive.  In my principles of microeconomics class, we spend a short amount of time looking at how economists would value a person's life.  (By their choices, of course!)  I'm not sure how this person does it, but it probably isn't based on the value of a life calculations, however.  I suspect he uses methods similar to what a forensic economist use to determine how a person should be compensated in cases of wrongful death, etc.

Note: I think this is the first time I've ever linked to MSNBC.  Could also be the last.  

Assorted Links

1. Unfortunately, burning books is how some leftists deal with dissenting opinions.

2. More corruption in the executive branch as the government tapped the AP for two months.  To paraphase LBJ ... When you've lost the AP, Mr. President, you've lost America.

3. Lusk on Sunstein on GMO labeling.  Great post on how labels can not just inform, but send signals on government perceptions of quality.  As someone who has his students read  Sunstein's book Nudge (for a view from the left in Political Economic Thought), I found this post fascinating.  

Offering free haircuts ... but does he have a license?

This is a nice article about a retired barber who offers free haircuts.

One thing many government officials would want to know, however, is did this person have a license?  Those who try to cut hair without a proper license could be arrested.  This is one area where government restrictions prevent two consenting adults form engaging in a transaction they both would find beneficial.  (As Timothy Sandefur says, it impedes a person's "Right to Earn a Living".)

Some states, like Florida, don't require a license if you're providing a free service, but do require a license if you wish to be paid to cut hair.  This is still bad government policy.  If a friend of mine started cutting hair for $5 a haircut without a license, should the government really have the right to claim I can't get a haircut from my friend?  Shouldn't it be my right to take whatever risk is involved by going to an unlicensed hair stylist?

What makes this even worse is in order for the government to prevent consenting adults from engaging in these transactions, the government is spending our tax dollars.

This is another example of the many inefficient government agencies that should be eliminated.

Assorted Links

1. Another brilliant article by Thomas Sowell.   

2.  John Lott's blog post about Obama.  I agree with much of it and think the actions of many people in his administration are criminal.  Anybody who is objective should easily see the similarities with Nixon (an enemy's list, exploiting tragedies, cover ups, etc.).

3.  The Commonwealth Foundation has a nice discussion on why we don't want a monopoly for alcohol on the wholesale level.

We're bad at assessing probabilities of being harmed ... gun edition

Citizens are bad at assessing probabilities of harm.  People think some events, like shark attacks, airplane rides, terrorist attacks etc. occur more frequently than the do.  For example, how many people do you think die from shark attacks each year in Hawaii compared to drowning?  Answer is here.

Here's a story from the LA Times on gun crimes.  Gun crimes have dropped dramatically in the past 15-20 years, but the majority of the public thinks it has risen.

This makes sense, as there have been a couple very high-profile mass-shootings recently.  With all the press coverage we have seen from Aurora and Sandy Hook, many people might now overestimate the probability of gun crimes occurring   This, of course, plays into the hands of the Obama administration and those pushing for more gun regulations.  Just as his former Chief of Staff said ...

Great Picture!

Milton Friedman on Discrimination

This video ties in well to the link I posted yesterday about the government going after a firm that wanted to hire a British worker.

Here's a classic Milton Friedman clip.  Since the mid-1970s and earlier, we've known government intervention does nothing to help ease economic discrimination.  As we learn in principles of microeconomics, firms that hire less qualified workers (for the same pay) will be punishing themselves, and firms that do not will be more profitable.  Of course, this drives less profitable firms out-of-business and eliminates unequal pay for equal work.

My favorite line: "Anybody who lets irrelevant considerations enter in (to the choice of whom to hire) is going to pay for it".

Enjoy the clip!

I'm consuming Occupy SU's time again ...

Here's a screenshot of the Occupy Susquehanna group's facebook page.  I have "occupied" quite a bit of their time this year - I think they've posted four or five times criticizing my work this year.  

In this post, they are posting a letter to the editor from State Senator Leach.  I posted my response to Senator Leach in a comment. 

Assorted Links

1.  Great George Will article on Judicial Activism.

2.  South Carolina House voted to criminalize the enforcement of Obamacare.   

3.  Great oped in the Tribune Review on the PLCB debate.

4.  Noahpinion discusses the benefits of getting an economics Ph.D.

Government agencies causing problems again - Discrimination edition

A British-themed pub in NYC got in trouble for saying "Being British definitely works in your favor".

As the story goes on to say, the firm ended up in trouble with NY City Commission on Human Rights.  The pub eventually had to pay a $2,500 fine to settle the case.  

This is terrible.  A firm thought a British person would be best for their position, and the government had to intercede.  While the firm was discriminating, they were discriminating to appease the tastes of their customers.  That shouldn't matter though.  As Friedman argues in Capitalism and Freedom and Murray argues in What it Means to be a Libertarian, private firms should be allowed to discriminate.  They may have to deal with market repercussions, but they shouldn't have to deal with government repercussions.  In most cases, discrimination based on gender, race, nationality, etc. will lead to lower profits for the firm (and usually will put them out-of-business).   The government is attempting to fix something that isn't a problem.

My response to State Senator Daylin Leach

State Senator Daylin Leach wrote a letter to the editor in response to my oped calling for a repeal of the prevailing wage. You should read the whole thing (academic debate is good!), but I think Senator Leach's argument can be summarized by his statement here:

The problem with this argument, of course, is that it completely ignores the impact on the workers themselves. In fact, Mr. Rousu explicitly dismisses any legitimate interest workers may have in earning enough to support their families when he says "whatever wage we can pay in which someone will accept the work." In a recession, or a soft economy such as we have now, workers might be forced to accept work at wages below the poverty level. Their lives would be dismal and their families deprived of even the basics of life. But heck, we'd have more cheap buildings.

I think the Senator is wrong for two reasons.

1. I don't think there is one single case where the government didn't pay "enough to support their families" without a prevailing wage. I will use the definition of the poverty rate. Can anyone come up with a example where the pay by the government would mean a worker is in poverty? If you're thinking about trying, save your time, as you won't be able to. Let's suppose that the wage offered was $12/hour. This is lower than almost any government would pay (even without prevailing wage), but it allows us to analyze Senator Leach's position. A person working full time at this wage, with no overtime, will earn about $24,000 annually.

That is higher the poverty rate for even a family of four! (Link here.) So when the State Senator is talking about wages being low, it's all either a) a hypothetical possibility that hasn't happened yet, or b) it's related to some wage in the Senator's mind that is already higher than the poverty rate. But we can go a bit farther in our analysis. Our $24,000 annual income assumed a single-earner family. With a 2-person family that both earn this wage, you're at about the national average for annual incomes. Without the prevailing wage, we are nowhere near the poverty rate. Why should any government official have the power to choose which workers should be getting paid artificially higher than their market value, and which ones won't? This puts way too much power into the hands of government and invites corruption.


2. One would hope that an elected official's goal is to best serve his/her constituents. It should be to provide as much government service as possible for as low a price as possible. By supporting the prevailing wage, the Senator is arguing that taxpayers deserve fewer services so they can pay some members of society more money than others. This is government at its worst.


The prevailing wage should be repealed. State Senator Leach's arguments that workers will be in poverty without it is incorrect. Further, it gives elected officials way too much power to choose winners and losers, for crony capitalism, and for corruption.

Government inefficiency - duck stamp edition

Feds award "Duck Stamp" award to 6-year old, then it rescind saying she plagiarized.  

Excerpt:  

The U.S. Fish and Wildlife Service, which runs the annual contest, says that by first tracing the outlines of her duck from one of her father’s unpublished photos before painting it, MadisonGrimm violated the rules. 

But Madison’s father Adam says the rules don’t actually ban tracing or “graphite transfer,” and he is backed up by the man who used to run the program and helped write the current rules, who said there’s no way Madison should have been disqualified — much less been declared the winner and then had it rescinded.

Robert Lesino, who ran the duck stamp program from 1993 through 2001, said he was shocked that the current program officials wrote the letter disqualifying Madison, saying the explanation seemed thin to him.

He said the rules were meant to stop someone from taking a picture from the encyclopedia and tracing it, or tracing over a previous year’s duck stamp winner. He said graphite transfer from someone’s own unpublished photo was not meant to be outlawed.

Wow.  This is how we spend our tax dollars?  Employing these people?  This family probably has a pretty good case in a lawsuit, as well.  This means even more taxpayer money wasted.

This is just awful.  Why can't the sequester eliminate the jobs for these clowns?  

Update - I was finishing this post when I saw the government has now reinstated her as winner.  Your tax dollars at work, ladies and gentlemen.  

Assorted Links

1.  Liberal college student fakes rape threat to make bash conservatives.  Stay classy, liberals.

2.  A restaurant denies Michael Bloomberg (he of "no excess soda for you" fame) a second piece of pizza.  This is so awesome, and I will definitely eat there if I ever get the chance.  What surprises me is Bloomberg first thought it was a joke.  As if he'd never tried to restrict other people's consumption choices.

3.  Commonwealth Foundation testimony on PLCB.  Well worth the time to read this.

PLCB privatization foes are getting desperate

Link to Philly Inquirer article here.

An excerpt:

"Social issues were front and center in the Senate Law and Justice Committee, with privatization painted as a harbinger of doom by a parade of testifiers who promised everything from an increase in crime and disease to higher rates of unemployment and prostitution.

And all, they said, because a private retailer would be allowed to sell a bottle of wine instead of a state-run establishment."

 

 

You can't make this stuff up.  How stupid do these "testifiers" think we are?  Almost every state in the US has private sales of beer and wine.  Are those states suffering from higher crime rates, more diseases, more prostitution, and more unemployment?  Of course not. 

 

Hopefully Pennsylvania's politicians aren't dumb enough to believe the hype.  Or, hopefully they've been to any other state in the US (not counting Utah) with less restrictive liquor laws.

 

 

Story on "legal" online poker

From USA Today.  Also here.  Quote:

"This is, for Nevada, a new day," said Reno gaming analyst Ken Adams. "There's been a huge amount of speculation on what online gaming means. Estimates in New Jersey run from $20 (million) to $30 million to $2 (billion) to $3 billion. The only way to find out is when it starts. Up to now, we've been talking in theories. Now we'll get a peek at reality."


Two thoughts:

1. Some stories are saying it's the first time for "legal" online poker.  Online poker has never been deemed "illegal".  I'm no lawyer, but that basically means it is legal.  But Nevada is the first state to explicitly try to license/regulate this and official state that it is legal.

2. This is a (rare) issue where Democrats have things figured out better than Republicans.  Republicans are supposed to want economic freedom, but many fail miserably on this issue.