Russell Roberts's Blog, page 1518

The Choice

Here's a letter to the Boston Globe, in response to a letter-to-the-editor written by someone who really must read Russ's book The Choice:

Rejecting Jeff Jacoby's argument for free trade, John Schreiber writes "Does he [Jacoby] want his kids to be greeters at Wal-Mart selling cheap Chinese goods or to be engineers or scientists designing a new product?  That choice is easy for me" (Letters, Oct. 12).

Mr. Schreiber has matters backwards.  By buying products such as textiles, footwear, and luggage from China and other foreign countries, workers and resources in America are freed to work in fields such as bioengineering and artificial intelligence.

If we prevent the importation of "cheap Chinese goods," we'd thereby promote in America industries that produce – what? – cheap American goods.  How bleak.  We Americans would pay higher prices for cheap goods and, more importantly, be denied many of the cutting-edge and challenging career opportunities that Mr. Schreiber and I (and, I'm sure, Mr. Jacoby) want for our children.

Sincerely,

Donald J. Boudreaux

A few thoughts on the iPad

I have more than a few thoughts but I'll try to control myself.

(In my previous post mentioning that I now have an iPad, a number of commenters mentioned their dislike for Apple's approach to software development. I want to come back to that for another post, so please wait to comment on that issue. This post is about the product, not the ideology.)

When the iPad was first announced it was mocked by many for its seeming lack of niche. It's just a giant iPhone without the phone. Who will want it? Just the Mac fan boys and geeky lovers of anything new. That prediction was wildly off the mark. Having sold 3.5 million units in the first 80 days or so, it is the fastest selling electronic device ever.

I wasn't going to get one–I have a Kindle for reading which I like a lot and my laptop goes everywhere with me–so I have all my photos (about 3000) and all my music (about 3000 songs). What use would I have for a device that weighed more than the Kindle, promised to distract me from reading with browsing and email, and added little functionality beyond my laptop?

Then I met someone who treated it like a serious business tool.

Then I had an idea for a serious economics education app for the device.

Then someone gave me one.

I've had it for four days so here are some impressions.

It's gloriously beautiful. I've added apps and bought some I don't expect to use much just because I want to admire they way they look on the screen. Examples are Star Walk, Solar Walk and the Louvre app.

I have the entire Talmud (or close to it–they're still creating the parts of it for the app). I had the entire Talmud in English on my Kindle. I think it was $1. It was just for the fun of it. It wasn't very usable. iTalmud for the iPad is $30. It's Hebrew or English. It comes with an audio file explaining the page you're viewing. It tells you where there are daily Talmud classes in your area. It comes with 6 commentaries and when one of those commentaries have something to say about a phrase in the text, the text is highlighted. You touch it and the commentary appears in a box. So instead of buying maybe 50 or so volumes that take up 20 or 30 feet of shelf space and would cost thousands of dollars, I have the Talmud in my hand. It blows me away.

I can read my Kindle books on my iPad. I like the Kindle screen better (though it isn't self-lit like the iPad.) But when it comes to eye strain the Kindle's more like reading a book. The iPad is more like reading a computer screen. But the book looks better, generally on the iPad. The charts are crisp–on the Kindle you can't always read them and photos are the same. On the regular-sized Kindle they're a joke. On the iPad they're glorious.

Email on the iPad is fantastic. The on-screen keyboard is pretty good. Not great for long (more than a paragraph or s0) writing but fine for short emails.

The pdf reader I'm using (GoodReader) is spectacular. It is unbelievably easy to create a pdf out of a web page and store it for later reading. It's incredibly easy to annotate the pdf. I had to go downtown today. Instead of taking my Kindle on the Metro, I took the iPad and read a superb analysis of the securitization market by Josh Rosner. (More on that another time). But while I've read pdfs on the regular-size Kindle it's pretty horrible. The iPad makes me want to read them.

Reading blogs on the iPad is better than on the web. I'm using Pulse as a blog reader. The posts are cleaner and crisper with less distractions.

All of the integrated tasks are really superb–emailing a pdf, a photo, selected text–it's all really intuitive and a breeze.

In short, the iPad is a pretty good substitute for my laptop. I hate lugging my 6 pound laptop through airports on my shoulder. But it's not just that the iPad is lighter. There's something more intimate about the tactile experience of the iPad. Touching the screen seems natural. The only thing I struggle with is selecting text. It's pretty good but not great. Maybe I'll get better at it. Maybe there's something that will make it better.

What are the drawbacks? I wonder about eye strain. Blogging with it is horrible. WordPress has an app but it's pitiful. I assume it will get better. But typing long docs on a virtual keyboard would be very frustrating. There's an amazing free Dragon Dictation app that allows you to dictate. I'm also going to try a wireless keyboard.

So based on four days, it's clear to me that this isn't just a giant iTouch or an iPhone without the phone. It's a different tactile, intimate way to interact with your data and photos and hobbies and some of your work life. (And check out the Korg iElectribe. $20 and I'm tempted to buy it just to admire it.)

I don't want to overdo it. It's four days. Maybe I'll get tired of it or frustrated by the drawbacks. But I do think it's a spectaculart way to carry a bunch of intellectual stimulation and aesthetic diversion when I travel. I'm planning on leaving my laptop at home on my next short trip. (And LogMeIn Ignition seems to be able to get at your laptop's files from your iPad. Amazing) I'd like it to replace my laptop. It can't yet. But the fact that I want it to, tells me something.

If Real Wars Were Like Trade Wars….

In response to this report at Reuters on the looming trade war between Uncle Sam and Beijing, [HT Andy Roth] I sent in this comment (which, as of 1:03pm EDT today, has yet to appear on the Reuters' site):

If governments fought real wars like they fight trade wars, here's how the transcript of the communiqués between the leaders of two warring nations would read:

Leader of Absurditoptia (A): I say, leader of Stupidia – we demand that you stop occupying that contested strip of land.  If you refuse, we'll have no choice but to shoot our own citizens.

Leader of Stupidia (S): You don't scare us!  That land is ours.  And if you do kill some of your own people, make no mistake that we will immediately – and just as cruelly – commence to killing our own people.  Courage is our national motto!

(A): Ha!  You're bluffing.  But I'm not.  I've just courageously ordered my troops to mow down in cold blood ten percent of my fellow countrymen.  Take that!

(S): How dare you attack you like that!  You leave us no choice but to attack us.  I am ordering the Stupidian army to slaughter 15 percent of innocent Stupidians here in Stupidia.  How do you like them apples?!

(A): You are cruel and inhuman to damage us by killing your people.  I hereby instruct all of my fellow Absurditopians to commit suicide!  Only then will you nasty Stupidians get your proper comeuppance and we Absurditopians the justice that we are due!

(S): You can't beat us, you Absurditopian you!  Listen up.  I'm ordering all of my fellow citizens – Stupidians all! – to commit suicide.  We'll see who emerges victorious!

….

Then a long, long silence.

If Trade Wars Were Like Real Wars….

In response to this report at Reuters on the looming trade war between Uncle Sam and Beijing, [HT Andy Roth] I sent in this comment (which, as of 1:03pm EDT today, has yet to appear on the Reuters' site):

If governments fought real wars like they fight trade wars, here's how the transcript of the communiqués between the leaders of two warring nations would read:

Leader of Absurditoptia (A): I say, leader of Stupidia – we demand that you stop occupying that contested strip of land.  If you refuse, we'll have no choice but to shoot our own citizens.

Leader of Stupidia (S): You don't scare us!  That land is ours.  And if you do kill some of your own people, make no mistake that we will immediately – and just as cruelly – commence to killing our own people.  Courage is our national motto!

(A): Ha!  You're bluffing.  But I'm not.  I've just courageously ordered my troops to mow down in cold blood ten percent of my fellow countrymen.  Take that!

(S): How dare you attack you like that!  You leave us no choice but to attack us.  I am ordering the Stupidian army to slaughter 15 percent of innocent Stupidians here in Stupidia.  How do you like them apples?!

(A): You are cruel and inhuman to damage us by killing your people.  I hereby instruct all of my fellow Absurditopians to commit suicide!  Only then will you nasty Stupidians get your proper comeuppance and we Absurditopians the justice that we are due!

(S): You can't beat us, you Absurditopian you!  Listen up.  I'm ordering all of my fellow citizens – Stupidians all! – to commit suicide.  We'll see who emerges victorious!

….

Then a long, long silence.

How Big?

This gorgeous graphic (HT: Tyler at MR) shows how big Africa is without the distortions of the Mercatur projection. It is a beautiful example of how to display information. (Assuming it's accurate…)[image error]

Local Humor

Here's what Jim Swift spied this morning near Washington, DC.

Fair Trade is Good

In my latest column in the Pittsburgh Tribune-Review, I support fair trade.  Here are my concluding paragraphs:

Yet even for those rare jobs that have no direct connection with trade, the wages earned by their workers are higher because of trade. By keeping prices down, and outputs and product varieties up, trade makes every dollar earned go further. This fact means that the attractiveness of any particular job — even one that does not depend upon sales to foreigners or on inputs or investments supplied by foreigners — is raised by trade.

Put differently, among the very reasons that losing a particular job to trade is so traumatic is that that job is made so attractive by trade.

Of course, each of us would love to have our own job guaranteed while we simultaneously exercise the consumer sovereignty that enables us to enjoy a high standard of living. But to guarantee your job requires a sacrifice of some of your neighbor's consumer sovereignty — just as a policy that guarantees your neighbor his job requires a sacrifice of some of your consumer sovereignty.

The only fair policy — and the only one that ensures long-run prosperity for all — is a policy in which no one's consumer sovereignty is ever sacrificed.

Keynesians are fond of claiming that advocates of unconditional savings commit the fallacy of composition.  I'm pretty sure that this Keynesian claim is mistaken.  But here's a real instance of the commission of the fallacy of composition: "Monopoly power increases the wealth of producers in industry X; therefore, if every industry is monopolized, we'll all be wealthier."

Hey, Big Spender

Here's a letter to the New York Times:

Paul Krugman says that the reason unemployment remains high is that "There never was a big expansion of government spending" during the current economic slump ("Hey, Small Spender," Oct. 11).  More specifically, he alleges that increased spending at the federal level was "modest" while spending cuts by state and local governments were "drastic."

Not so.  Inflation-adjusted spending at the federal level rose 29 percent between 2007 and 2009.  The White House Office of Management & Budget estimates that this spending will rise another six percent in 2010 and three percent in 2011 – meaning that, since 2007, Uncle Sam's spending is on course to rise by nearly 40 percent over the course of a mere four years.*

As for state and local governments, here's the headline of a July 14, 2010 news release from the U.S. Census Bureau: "State and Local Government Spending Increases by 6.5 Percent in 2008."  Careful estimates of such spending for 2009 and 2010 show that it will rise even further. [I'm unsure why, in October 2010, it's difficult to get solid data on actual state and local government spending for 2009.]

Mr. Krugman alleges that the belief that government is growing too fast is the result of "fact-free assertions and cooked numbers."  Well, I offer here real facts, and leave it to your readers to judge who is doing the cooking.

Sincerely,

Donald J. Boudreaux

* See Section 1 of this OMB document.

Jim Agresti, at JustFacts, reports the following to me by e-mail:

I ran the BEA's numbers for federal, state, and local spending (http://www.bea.gov/national/nipaweb/T...) on 6-29-10:

Governments at all levels spent 4.1 trillion in 2006, 4.4 trillion in 2007 (when this recession began), 4.7 trillion in 2008, 5.0 trillion in 2009, and were on track to spend 5.2 trillion in 2010. This equates to 27% growth over a period in which we've had 8% inflation.

More evidence against Krugman's strange myth of government frugality is provided in yesterday's Wall Street Journal.

Testing 1,2,3

This is a test. I'm posting this from my iPad to se if this works. If it does I'll soon post on my impressions of the iPad after 72 hours of ownership.

Where has all the money gone?

(Apologies to Peter, Paul, and Mary)

Where has all the money gone, long time passing?

Where has all the money gone, long time ago?

Where has all the money gone?

Gone to pensions, everyone

When will we ever learn?

When will we ever learn?

David Brooks makes the same point in a slightly less lyrical way:

Over the past few decades, governments have become entwined in a series of arrangements that drain money from productive uses and direct it toward unproductive ones.

New Jersey can't afford to build its tunnel, but benefits packages for the state's employees are 41 percent more expensive than those offered by the average Fortune 500 company. These benefits costs are rising by 16 percent a year.

New York City has to strain to finance its schools but must support 10,000 former cops who have retired before age 50.

California can't afford new water projects, but state cops often receive 90 percent of their salaries when they retire at 50. The average corrections officer there makes $70,000 a year in base salary and $100,000 with overtime (California spends more on its prison system than on its schools).

States across the nation will be paralyzed for the rest of our lives because they face unfunded pension obligations that, if counted accurately, amount to $2 trillion — or $87,000 per plan participant.

All in all, governments can't promote future prosperity because they are strangling on their own self-indulgence.

Self-indulgence is not the right phrase. Other than that, he's on to something.