Wednesday, September 29, 2010

Not What We Had In Mind

When a law is passed to prevent a behavior that is found offensive or problematic it is not always effective. Sometimes such a law will merely cause people to be more sneaky about the behavior. For example, drinking is illegal for people ages 18-20. Most college students fall into this range. Do students therefore abstain from drinking? No. College and alcohol have a very close relationship. Where the rules are more strictly enforced, harder liquor is drunk, and when drinking does occur it is more likely to be in excess.
Well, many states are now passing laws prohibiting texting while driving. What do you think the consequences of such a law might be?
Here is one report:

Tuesday, September 28, 2010

Link to Yandle on Econtalk

This is the podcast I would like for you all to listen to.
Econtalk with Bruce Yandle and Russ Roberts

Writing Assignment #1

You may choose either topic. Please type a 3-5 page response and email it to me by Tuesday, October 12, by Midnight.

A) Pick a policy issue which illustrates the bootleggers and Baptists story. Who is who? What enables the persistence of the relationship?

B) Reviewing Hayek's Use of Knowledge in Society: What is the role of prices in a market economy? How might a price control in the market for gasoline impact other markets? What gets lost?

Yandle at Reason

A Question From the Crowd:

One of your colleagues emails this question, which I try to answer:

Q: You mentioned that last night you agreed with legalizing prostitution and drugs. I understand your reasoning but I had a quick question. I have yet to make a decision on those matters. Sure, the quality of those illegal goods would be better (purer drugs with less harmful substances and less vd in brothels) but wouldn't the quantity increase? If that is the case, wouldn't the question be between fewer low quality drugs/prostitutes or higher quality drugs/prostitutes. Or is that over simplifying the matter at hand. (I do understand that there will always be prostitution and drugs no matter what the government tries to do)
Does that make sense?

A: On this one I had to get out paper and pencil and draw the graph. Hehe! You should do this, too.

Draw a supply and demand graph.
Now show a second supply curve, to the left of the original supply curve.
The first curve was the un-regulated market for prostitutes.
The second curve shows the new equilibrium quantity and price for prostitutes.
The cost of evading the police is what forced the Supply curve inward (upward).
Consumer surplus has gotten smaller.
Price has risen.
Quantity has fallen.
There is a deadweight loss triangle.
Some of the previous consumer surplus is now being spent evading the police.
Some of the previous producer surplus is now spent evading the police.
But: The police don't have to be evaded if they can be paid, and if pimps can pay the police, then they might not have to pay them the full amount of the costs, so they get to keep some money derived from higher prices for themselves.
Also: The pimps get this money, not the prostitutes. The pimps are necessary because they have a comparative advantage in dealing with the police, while prostitutes are not as good at dealing with the police.
If prostitution were legal, there would be no need for police-relations specialists. Instead of working for pimps, prostitutes would hire off-duty cops to work security for them.

So, basically you are right. With prostitution legalized, there will be more prostitution.
Whether this is normatively good or bad economics does not say.
But, with prostitution legalized pimps are out of business, as are human traffickers.
The proceeds (surpluses) are all split between the prostitutes and their clients.
There is less abuse of prostitutes.
The incentives to enslave young and helpless people to sell for sex are removed.

You might draw another graph, the market for pimps.
When prostitution is made illegal the demand for pimps increases dramatically.
Pimping is then a complimentary good (or a factor of production) for the market for prostitutes, which is what pushes the supply curve inward in the market for prostitution.
Legalizing prostitution eliminates the market for pimps, and the force pushing the supply curve inward in the market for prostitution.

More Sex Is Better From the Horse's Mouth.

Ummm... that didn't sound quite right...
Here is a link to Steven Landsburg's Slate article explaining why More Sex Is Safer Sex.

Career Services Information

I encourage all of you to take a look at Career Services. They can help advise you in such a way that you are better prepared to enter the workforce once you have finished your degree.
Click here to get a copy of the handout.
I have reproduced the handout below, but I don't think the links will work. If you open the word document the links should be fine.

What can I do with this degree?
On-line resources for Economics majors:

Mason career planning and job or internship search services:
Fall 2010 Job and Internship Fair, October 6 & 7, 11 -4 pm.
On Campus Interviews, see HIREMASON,

Banking and Finance:
Marketing Research:
Operations Research:

Career Publications for Economics majors, Mason Career Services Library

1. College Majors Handbook with Real Career Paths and Payoffs, Eds., Fogg, Harrington and Harrington. Chapter 17 Economics

2. Top Careers for Economic Graduates, Checkmark Books

3. Great Jobs For Economics Majors Blythe Camenson, see Appendix A, p. 214

Tax administrator
Bank examiner
Transportation specialist
Bank research analyst
Bond trader
Commodities Broker/stockbroker
Loan counselor
Portfolio Administrator
Database Administrator
Estate planner
Labor economist
Business Manager
Health policy planner
Benefits analyst
Claims adjuster
Resource Economist
Market research analyst
Sales representative
Budget Officer
Urban/regional planner
Technical writer
Financial reporter

Professional Associations for Economists
• Professional Associations for Economists:
• American Economic Association
• Resources for Economists on the Web
• National Economic Association
• National Economists Club
• National Association for Business Economics
• Women in International Trade
• Economic institutions and research centers worldwide (Univ. Connecticut)
• Inomics EconDirectory
• Job Openings for Economists

Government Jobs and Agencies
• Hot Jobs and Cool Internships
• Where the Jobs Are report on federal hiring
• US Office of Personnel Management
• Internal Revenue Service
• National Bureau of Labor Statistics
• US Department of Commerce
• Federal Deposit Insurance Corporation
• Securities and Exchange Commission

International Development Resources
• Society for International Development DC Chapter, annual career fair for International Development, October 8, 2010
• Resources for Jobs in Economics/International Development (The Riley Guide)

Monday, September 27, 2010

Sex, Craigslist, Prohibition

How can the number of individuals in sex slavery be most effectively reduced?
There was recently some controversy regarding Craigslist's Personal Advertisements.

From the Washington Post:
Craig Newmark was all over Twitter on Friday, as he is most days, yakking about Android, re-tweeting about Bart Simpson in summer school, reminding his 24,000 followers to vote to end world poverty. He engaged with friends and strangers alike.
MC is still waiting to hear from him.

Newmark is the founder of the worldwide online bazaar Craigslist. MC is a 17-year-old girl who says she was repeatedly sold for sex through ads on Craigslist. In open letters published as newspaper ads, she has beseeched Newmark to shut down the site's lucrative "adult services" section, which law-enforcement officials and advocates say facilitates prostitution and child trafficking.

"I was first forced into prostitution when I was 11 years old by a 28-year-old man," she wrote. "I am not an exception."

The sex-selling ads have been controversial for years, and after threats of legal action from 43 state's prosecutors, Craigslist agreed to police them. But patience appears to be wearing thin, and the new scrutiny is creating a public relations nightmare for Craigslist and Newmark, once celebrated as the creator of an online Utopia.
This week brought increased pressure. Friday morning, MC's "Dear Craig" plea appeared in a half-page ad in The Washington Post, along with the account of AK, who said she had been sold for sex by the hour at truck stops, 10 hours with 10 different men each night. Friday afternoon, a federal judge in South Carolina threw out a lawsuit in which Craigslist had tried to stop authorities from investigating whether it has a role in prostitution; and by Friday night, Connecticut's attorney general had called for Craigslist to shut down its "adult section" site completely. Earlier in the week, CNN aired video of a reporter ambushing Newmark, who was unable to muster a response when confronted with ads that depicted girls being offered for sex.

The company says it uses comprehensive monitoring to bar sex ads and works with law enforcement officials to help them arrest perpetrators. Although most of the site is free, posting an "adult services" ad costs $10, and that section on the site will bring in about $36 million in revenue this year, about a third of the company's total, according to an analysis by the Advanced Interactive Media Group.

Jim Buckmaster, Craigslist's chief executive, said his firm is the wrong target.

"Like the criticisms that has been leveled against the Washington Post for its adult services ads," he wrote in an e-mail, "scapegoating advertising services is a very unfortunate misdirection of attention and energy from the tough choices, hard work, and significant investments required for addressing actual causes of, and making actual progress against the scourges of trafficking and child exploitation."

Kris Coratti, a spokeswoman for The Post, said the newspaper does "not knowingly accept advertisements from businesses engaged in illegal activities," and has long "required massage parlors to produce copies of valid business licenses before we will publish their advertisements."

Andrea Powell, head of Fair Fund, a District-based group that works with girls and teens who have been sold for sex, calls Craigslist "the Wal-Mart of online sex trafficking." She said most of the young people she works with are sold through the site, which has 20 billion page views a month. Her organization was one of the groups that paid for the Post ad and vouched for the women's stories; AK has met with Attorney General Eric H. Holder Jr., Powell said.

"They are aiding and abetting the commercial sexual exploitation of children, and for that reason, they should take it down," said Rep. Jackie Speier (D-Calif.), whose Bay Area district includes Craiglist's headquarters. Speier has called for the firm to get out of the sex-ad business, as Connecticut Attorney General Richard Blumenthal (D) did Friday.

Powell and Malika Saada Saar, who heads the District-based Rebecca Project, said online pimps stay one step ahead of attempts to monitor their online activity. They said pimps drop the word "innocent" from an ad intended to appeal to a pedophile, for instance, and replace it with a new code word. "Young," "new to town," and "fresh" are common code words, the women said.

On Friday, on the Washington area Craigslist adult services section, more than 600 ads contained one of those descriptions.

From Politico:
Craigslist is defending its former adult services site, saying it considers the site’s shutdown “a step backward” in preventing future child sex trafficking.

But the company doesn’t plan to re-open the now-censored portion of the site any time soon.

“We do not have any intention to restore the [adult services] category,” William Clint Powell, the company’s director of customer service and law enforcement relations, told the House Judiciary Crime subcommittee, which is examining child sex trafficking.

“Taking that step may be a step backward in terms of addressing the core causes of the issue,” he added, because criminals are now using other web sites that are not as well regulated.

The company, under pressure from government officials, started manually reviewing every ad posted on the site in May 2009 to go after pimps looking for customers there.

Those efforts weren’t enough, however. After criticism from several attorneys general, like Connecticut Senate candidate Richard Blumenthal, the company took down the adult services site on Sept. 3, replacing it with a sole word: “Censored.”

Craigslist lawyer Elizabeth McDougall criticized the shutdown, which she said was prompted by intense public pressure and requests from attorneys general.

“A lot of advocacy groups think that taking down adult services was the wrong thing to do,” she said. “It’s much more difficult to find the victims now dispersed on these other sites that are noncooperative. Craigslist made this decision to do it here but that does not mean it’s the company position that this is the right move.”

The appearances break the company’s silence over the past year, as it has faced mounting criticism from law enforcement officials and advocacy groups. That criticism came to a head this summer, when the company was summoned to Washington to speak with White House and Justice Department officials.

Wednesday, September 22, 2010

Attendance!!!! And a video

Please watch these videos by your colleagues, Zheng, Lang, Jorge Osuna, Carlos Landazuri, and Michael Fitzsimmons, and leave a brief comment to verify you watched them.

Monday, September 20, 2010

More Peltzman

From Tyler Cowen's blog, Marginal Revolution:
The Peltzman Effect

The NHTSA had volunteers drive a test track in cars with automatic lane departure correction, and then interviewed the drivers for their impressions. Although the report does not describe the undoubted look of horror on the examiner’s face while interviewing one female, 20-something subject, it does relay the gist of her comments.

After she praised the ability of the car to self-correct when she drifted from her lane, she noted that she would love to have this feature in her own car. Then, after a night of drinking in the city, she would not have to sleep at a friend’s house before returning to her rural home.

From CSV. The Peltzman effect doesn't mean that improvements in safety are always negated but it does remind us that we can never ignore the human response.

Reverse Peltzman Effect

A.K.A. Alchian's Response to Peltzman:

Monday, September 13, 2010

Where Does Law Come From?

Please read this article by Bruce Benson in the Freeman for a more in-depth analysis of the origins of law and the importance of the Common Law.

Lecture at Home, Discuss During the Day

I hope to give this a shot before the semester is over.

instead of lecturing about polynomials and exponents during class time – and then giving his young charges 30 problems to work on at home – Fisch has flipped the sequence. He’s recorded his lectures on video and uploaded them to YouTube for his 28 students to watch at home. Then, in class, he works with students as they solve problems and experiment with the concepts.

Lectures at night, “homework” during the day. Call it the Fisch Flip.

“When you do a standard lecture in class, and then the students go home to do the problems, some of them are lost. They spend a whole lot of time being frustrated and, even worse, doing it wrong,” Fisch told me.

“The idea behind the videos was to flip it. The students can watch it outside of class, pause it, replay it, view it several times, even mute me if they want,” says Fisch, who emphasises that he didn’t come up with the idea, nor is he the only teacher in the country giving it a try. “That allows us to work on what we used to do as homework when I’m they’re to help students and they’re there to help each other.”

Sunday, September 12, 2010

Rinkonomics, Spontaneous Order

John Stossel demonstrates Dan Klein's principle of Spontaneous Order in this video. Enjoy.

Ethanol Madness

Friday, September 10, 2010

Steven Landsburg

If you enjoyed the chapter from this week's reading in The Armchair Economist you might be interested in his blog, and in this set of videos where he, among other things, explains why more sex is safer sex.