Think Economically


Maximum understanding, minimum average total cost.

Good news or bad? Unemployment rate drops despite weak jobs numbers

So on first glance, these jobs numbers are nothing but bad. 96,000 new jobs with downward revisions on the two previous months. So as far as description is concerned, it looks like weak growth continues to carry the day. So “what does it mean?” Well, it means we aren’t suddenly in a booming economy; things continue to peter along.

“What does it mean” has another interpretation, though: what will happen as a result? The upshot as far as I can tell?

  • Undecided voters will mostly hear 8.1% unemployment and think these are good numbers.
  • QE3 is gonna happen.
  • The fire under the Republicans to ensure the “fiscal cliff” doesn’t occur will continue to burn hotter, meaning Obama might be able to make some headway on either stimulus or deficit reduction or both in a second term.

Certainly Nate Silver at fivethirtyeight has stressed that the jobs numbers will have significant consequences for the election: good numbers and Obama’s sure to win; bad enough numbers and he’s out. The Bernanke¬† is relying on these BLS numbers, among others, to try to decide what to do. So I was trying to think about what to think about the actual consequences of the numbers. I’m just freewheeling here, but I think there might be some interesting and counter-intuitive results.

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Principles of Microeconomics – news video feed and some commentary

So the Fall semester has begun. I show YouTube clips in my class and discuss them. If you’re interested in following along, the playlist is here and will expand as the semester goes:

In the first class, I talked about texting campaign contributions, Rio drug gangs banning crack, and football players going on diets.

First, texting campaign contributions. The goal here, presumably, is to drive down the transaction cost of contributing–or at least the psychic transaction cost borne by the contributor.

A few things worth noting: this is probably aiming at people for whom texting is a regular activity–so read: younger.

Second, the contributions are for $10, which is not very much, so this is probably aiming at some kind of “warm-glow” giving, which when aggregated can really add up; the danger being that if people are substituting texting donations for $25 checks, then the campaigns are in trouble.

Finally, the transaction costs here are actually really high–the video said 40% if I recall. That means that even if these are substituting for $7 checks, the campaigns are in trouble. Unless there are some sort of external benefits of voter engagement or something, but yeah…I’m curious whether this is a flash in the pan or a new way of giving that pans out. Read the rest of this entry »

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This week I have read: Patent Trolling, Cloudpaging, Santorum’s Polls, Obama’s Polls, Taco trucks, Gas and Crude Oil Prices, LEGO Monthly Mini Builds

Patents are broken

Economists, for the most part, have not yet developed the tools to think about information goods. Undergraduate econ still revolves mostly around agriculture. So what do we do about software patents? Or the sharing economy?

I got nothin’. Maybe I’ll devote some focused thought to it some time soon. By then, of course, the entire industry will have changed.

For and insider’s view on the patent wars, check out Andy Biao on his work on patents for Yahoo that have been weaponized and fired at Facebook.

Polls are broken

Political polls have been turned into the analogue to baseball statistics by Nate Silver. As someone who teaches and uses statistics, and watches politics and baseball, this has been delightful. And yet.

Nate Silver points out that Santorum has significantly outperformed his poll numbers. What to make of that? Are people disinclined to admit they’ll vote for Santorum?

That would be odd enough, but no one can figure out whether Obama is universally reviled or climbing back into the catbird seat. On net, InTrade seems to think there has been little change in Obama’s likelihood of reelection in the last six days, and so I read all that news for nothing.

Tacos are yummier from trucks?

For some reason Felix Salmon wants to know why tacos taste better from taco trucks. For some other reason, Matt Yglesias responds. My guess? Because you’re at SXSW and it’s a slow news morning? Also something about more competition, lower average total cost, etc. It doesn’t actually seem that mysterious.

The President can’t affect gas prices

In the CBS/NYTimes poll linked to above, 56% of people thought that the President could affect gas prices. He can’t. Peter Van Doren and Jerry Taylor over at Cato point this out, but if you don’t like reading words and stuff, the White House has just released a very involved, but stylish, infographic. Personally, I think they protest a little too much, with a dash of preaching to the choir.

Ultimately, James Hamilton argues it shouldn’t matter for the recovery, and IMHO, he would know. Matt Yglesias concurs.

Everything else

It was a good week for us. Personal spending is low; personal income is steady. David Brooks is apparently a Mets fan. I bought some silicone-based glue to repair a mug. Also, LEGO Monthly Mini Builds are awesome and brickset has instructions from mid-2010 onward.

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Stupid subsidies are stupid. Economists know this. Obama’s proposed manufacturing subsidy may be good politics but it’s bad policy..

Matt Yglesias is great here. Seriously? What possible argument can there be for manufacturing subsidies?

It’s not an infant industry. It’s not clear that we have huge returns to capital in manufacturing that are being ignored by the private markets. And if we do, lowering the corporate tax rate and broadening the base is the right solution–why would we favor manufacturing jobs over other jobs? It just means less jobs.


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