Afternoon roundup

• Larry White joins the faculty at George Mason University: a great hire for GMU. Larry's monetary work is top-notch.
• Brian Doherty at Reason covers Seasteading. Liberty by exit or liberty by voice is probably the most important argument libertarians are going to be having over the next little while. Seasteading has much greater chances of advancing liberty than do other options; whether existing states would allow them to exist remains the biggest problem.
• Annie Pootoogook's work is on exhibition at the Museum of the American Indian. I'm a fan of Cape Dorset work: in particular, Ningeokuluk Teevee's owls. A print of "The Owl and the Boy" hangs at our house: it depicts what happens to young children who stray too close to the edge of the ice at dusk.

Google and Antitrust

The Washington Post lays out the issues nicely.

But that raises the question: "Why bother?" There's no law against trouncing your business competitors. Ever since Judge Learned Hand's landmark decision in U.S. v. Aluminum Co. of America 64 years ago, the court has recognized that under certain circumstances a company may come to dominate its field through "superior skill, foresight, and industry."

It's hard to see Google as anything other than a model example of such a company.

Moreover, nobody's come up with a particularly good case that the company has been stifling other companies. ...

Still, Google has reason to dread the perception of even benign dominance. Just ask Gary Reback, an attorney for Carr & Ferrell who played a big role in pinning monopoly status to Microsoft in the 1990s. Even if U.S. antitrust law allows for justly earned monopolies, it's rare that a high-profile company ever gets to enjoy that status in peace.

As Reback puts it, the government's approach has traditionally been: "We won't punish you for being successful. But if you're a monopolist and you spit on the sidewalk, we'll break up your company."

Thus monopoly Google could expect a relentless stream of litigation. Historically, this has been a nightmare for the target companies, hemming in their management and constraining their business decisions. It was an antitrust problem that forced AT&T to license the transistor in 1956 at no cost. And as Reback notes in a recent book, "Free the Market!," advocating for more interventionist competition policies, it wasn't a government monopoly lawsuit that broke Standard Oil's power -- it was Texas regulators' decision to hound Standard Oil with litigation. With Standard unable to exploit major new oil discoveries in the state, new competitors such as Texaco arose.

Substitute tech fields for oil fields and you've got an approximation of Google's potential problem. Many routine parts of the company's growth, such as buying small companies to stake out a position in search-related fields, could potentially be construed as anticompetitive if Google is already deemed to have market dominance.

"I think they're going to have trouble with damn near any acquisition, including acquiring your local dry cleaner," Reback said.

How times change. Seven years ago, Don Boudreaux and I gave Google as a counterexample to claims of Microsoft lock-in. If the lock-in story about Microsoft dominance were true, then surely Microsoft also would dominate search: versions of Internet Explorer then in existence would redirect browsers to Microsoft Search in cases of mistyped URLs. Since most folks chose Google despite Microsoft's lock-in advantage, we might similarly view skeptically other claims of lock-in induced dominance. Now Google's the target, simply for having done search better than anyone else. And of course Google will have to redirect productive resources away from innovation and towards protecting itself from FTC, the EC, and others. Depressing.

Vote-buying deal of the day: Mattresses!

Latest reports from Tanzania indicate that both the government and the opposition bought voter cards in areas where they were likely to face greater opposition. The going currency? Mattresses. Trade in your voter card for a new mattress. Reports the Guardian on Sunday:

While CCM was quick to accuse opposition party Chadema of buying voter cards, inside information shows that the ruling party also participated in the dirty politics especially in the areas where it faced stiff opposition.

“I gave them my card in exchange for the new mattress on the condition that after the voting they would return my ID card,” one voter told The Guardian on Sunday. “I didn’t establish whether they were agents for the ruling party or opposition.”

Eyewitnesses from Geita told The Guardian on Sunday that the night before the by-election; hundreds of mattresses were being distributed to voters in exchange for voter cards.

One mattress dealer from Geita town admitted that he had sold more mattresses during the campaign period than he had sold in all of 2008, but he said he couldn’t be sure he had been selling his stock to party strategists.

“It might be true because suddenly the demand for mattresses surged dramatically during the months of April and May,” said the salesman, who spoke to The Guardian on Sunday on condition of anonymity. “I can assure you that, what I sold during that period was more than my annual sells for last year.”

Buying voter cards is not a new trend in Tanzanian elections, but the tactic has been spreading rapidly as of late, and has apparently gone unnoticed by election officials.

While I'd be more than happy to stay home from voting in exchange for a mattress or even a ham sandwich (conditional on quality of course), careful observers would know that this would be pure rent: payment isn't required to induce the desired behaviour. Such ever is the case for the inframarginal non-voter.

Why mattresses though? Isn't cash both less obvious and more fungible?

HT: Jeet Sheth, faithful graduate of my Public Choice class.

On the sensitivity of rankings when N is small

It's a bit of a running joke how sensitive economics department rankings can be to the location of the author of the ranking. David Anderson and John Tressler have found a different kind of sensitivity in rankings of New Zealand economics departments: how you treat the contributions of regular departmental visitors. This matters in small countries. Peter Phillips is a regular visitor at Auckland. Depending on the weighting scheme used for ranking the various journals, Peter Phillips personally accounts for between 9.6% and 56.8% of the total output of quality-adjusted pages produced in New Zealand economics departments (139 economists in total). If Phillips is not included in per capita output rankings, Auckland counts as 4th overall. If he counts at 10%, Auckland rises to 3rd. At 40%, Auckland rises to 2nd. If all of Phillips' contributions count for Auckland, Auckland moves up to first.

Long story short: it's not great to be graded on a curve that includes Phillips. I'll avoid other Phillips curve puns as William Phillips != Peter Phillips.

Canterbury comes in second in the per-capita rankings, with Otago in the lead. But we've made some very nice hires since the survey.

Afternoon roundup

• Radley Balko continues to provide reasons for us to stay angry

  The blood-boiling story of the day comes from San Francisco:

  He sleeps under a bridge, washes in a public bathroom and was panhandling for booze money 11 months ago, but now Larry Moore is the best-dressed shoeshine man in the city. When he gets up from his cardboard mattress, he puts on a coat and tie. It’s a reminder of how he has turned things around.
  
  In fact, until last week it looked like Moore was going to have saved enough money to rent a room and get off the street for the first time in six years. But then, in a breathtakingly clueless move, an official for the Department of Public Works told Moore that he has to fork over the money he saved for his first month’s rent to purchase a $491 sidewalk vendor permit.

  It just gets worse from there.

• Cory Doctorow continues to be the best thing happening over at BoingBoing, today pointing us to this obscenity, which he'd previously considered for a sci fi story before finding out it's already fact:

  Richard W. Fields says he has come up with a win-win financial strategy for the downturn. He is investing in lawsuits.
  
  Not in trip-and-fall cases, mind you, but in disputes that are far larger, more costly and potentially more lucrative, often pitting major corporations against each other.
  
  Mr. Fields is chief executive of Juridica Capital Management. which runs a fund that invests in one side of a lawsuit in exchange for a share of any winnings.
  
  “It’s always a good time to invest in litigation,” Mr. Fields said, though he added that the weak economy helped. “When the recession started to bite, the phones started ringing off the hook. Last year, we looked at 122 cases and we made 17 investments.” A small but growing number of investors are exploring this idea, helping companies avoid some of the risks and costs of litigation in exchange for part of any money paid out when the case is settled or resolved by a court. After all, it can be costly to hire lawyers, who may charge close to $1,000 an hour at the most elite firms.

  In a sane tort system, this would be efficiency-augmenting. But we're not in that world.
• Brad Taylor continues to remind us of the dangers posed by landlubbers' meddlesome preferences for any proposed Seasteads.

Offsetting behaviour: Rush edition

Did a fiction article in Road and Track (1973) predict the Peltzman Effect before Peltzman?

Denis at ALD today points us to a brilliant piece by PJ O'Rourke.

America’s romantic foolishness with cars is finished, however, or nearly so. In the far boondocks a few good old boys haven’t got the memo and still tear up the back roads. Doubtless the Obama administration’s Department of Transportation is even now calculating a way to tap federal stimulus funds for mandatory OnStar installations to locate and subdue these reprobates.

Among certain youths—often first-generation Americans—there remains a vestigial fondness for Chevelle low-riders or Honda “tuners.” The pointy-headed busybodies have yet to enfold these youngsters in the iron-clad conformity of cultural diversity’s embrace. Soon the kids will be expressing their creative energy in a more constructive way, planting bok choy in community gardens and decorating homeless shelters with murals of Che.

I myself have something old-school under a tarp in the basement garage. I bet when my will has been probated, some child of mine will yank the dust cover and use the proceeds of the eBay sale to buy a mountain bike. Four things greater than all things are, and I’m pretty sure one of them isn’t bicycles. There are those of us who have had the good fortune to meet with strength and beauty, with majestic force in which we were willing to trust our lives. Then a day comes, that strength and beauty fails, and a man does what a man has to do. I’m going downstairs to put a bullet in a V-8.

O'Rourke nails it exactly. Regulation has forced the car to become utilitarian; Japan does utilitarian better than does Detroit. Read the whole thing.

The O'Rourke article, of course, drew to mind Rush's (to my mind) best song: Red Barchetta. I hadn't known that the song was based on an old fiction article from Road & Track in 1973. Wikipedia informs me:

The song was inspired by the futuristic short story "A Nice Morning Drive," written by Richard Foster and published in the November, 1973 issue of Road and Track magazine. The story describes a similar future in which increasingly-stringent safety regulations have forced cars to evolve into massive "Modern Safety Vehicles" (MSVs), capable of withstanding a 50-mile-per-hour impact without injury to the driver. Consequently, drivers of MSVs have become less safety-conscious and more aggressive, and "bouncing" (intentionally ramming) the older, smaller cars is a common sport among some.

Note the year: 1973. Peltzman's seminal article, The Effects of Automobile Safety Regulation, came out in the JPE in 1975. I wonder if Peltzman read Road and Track. The Road and Track article, "A nice morning drive", outlines the argument perfectly:

Despite the extent of the safety program, it was essentially a good idea. But unforeseen complications had arisen. People became accustomed to cars which went undamaged in 10-mph collisions. They gave even less thought than before to the possibility of being injured in a crash. As a result, they tended to worry less about clearances and rights-of-way, so that the accident rate went up a steady six percent every year. But the damages and injuries actually decreased, so the government was happy, the insurance industry was happy and most of the car owners were happy. Most of the car owners - the owners of the non-MSV cars - were kept busy dodging the less careful MSV drivers, and the result of this mismatch left very few of the older cars in existence. If they weren't crushed between two 6000-pound sleds on the highway they were quietly priced into the junkyard by the insurance peddlers. And worst of all, they became targets . . .

I'd always thought the gleaming alloy aircar in Red Barchetta was a police car trying to chase down a forbidden gas-powered car; Foster's article (above) suggests rather a post-regulation griefer car. I prefer the former; it's less depressing. In any case, Foster is picking up the basic Peltzman mechanism. More accidents as folks take less care, fewer deaths per accident, but external costs for folks outside of the safer vehicles. Should we really call it the Foster Effect?

Some days, I really miss my old 350-4bbl '69 Skylark Custom. It waits for me in Manitoba. Sigh.

Ignorance and current events

Pew recently released a report on American public knowledge about current events. Respondents were asked some questions about the current state of the economy and about current political matters. You can try the survey here and rate yourself against the public at large. Summary results, without spoilers, below: I missed the one asking about number of troops killed in Iraq, but my answer was adjacent to the correct one.



Pew notes in its report that Republicans are more knowledgeable than Democrats, and that most of this advantage lies in greater knowledge of economic matters, but that controlling for income, age and education wipes out the party effect. They also find that men know a lot more about both politics and economics, with greater gaps in economic knowledge. My work in New Zealand finds that left-wing political ideology correlates with knowing more about politics but less about economics, controlling for all kinds of personal demographic characteristics; men know more about both, with bigger gaps in economic knowledge than in political knowledge.

Always interesting to find results that are consistent across countries and methodologies.

Apologies for the lack of posting of late: I've been rather busy doing up a more formal breakdown of the BERL report on the costs of alcohol use. It's looking like net external costs are about 10% of BERL's cost figure. More on this in a few days.