Archive for the 'Uncategorized' Category

Matters of Money

I have some questions about how money works.

I’ll start by talking about Bitcoin, though my questions are more general than that.

As you are probably aware, Bitcoin is a cryptocurrency that is currently trading for US Dollars at the rate of (depending on the exact moment when you’re reading this) somewhere between $15,000 and $20,000 per Bitcoin.

As you are somewhat less likely to be aware, Bitcoin Cash is another cryptocurrency that is currently trading for US dollars at the rate of something less than $2000 per Bitcoin Cash token. Despite the similar name, Bitcoin Cash is (now) entirely separate from Bitcoin. It originated in a “hard fork”, where each holder of Bitcoin was given an equal amount of Bitcoin Cash for free (so if you were holding, say 50 Bitcoins, you got 50 Bitcoin Cash tokens). After the fork, the two currencies have evolved, and will continue to evolve, separately.

The technology of Bitcoin Cash is very similar to the technology of Bitcoin. It offers the same sorts of anonymity, security, and so forth. There are some reasons to believe that in the future, Bitcoin Cash will be a bit easier to trade than Bitcoin (though that is not true in the present), and there are some other technological differences between them, but I’d be surprised to learn that those differences are accounting for any substantial fraction of the price differential.

The total supplies of Bitcoins and of Bitcoin Cash are currently about equal (because of the way that Bitcoin Cash originated). In each case, the supply will gradually grow to 21 million and then stop.

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Winston Churchill Foresees Donald Trump

Those who are possessed of a definite body of doctrine and of deeply-rooted convictions upon it will be in a much better position to deal with the shifts and surprises of daily affairs than those who are merely taking short views, and indulging their natural impulses as they are evoked by what they read from day to day.

Churchill, The Gathering Storm

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McCloskey at Chicago, Take Two

It was a pleasure and an honor to reminisce about Dee McCloskey for the Festschrift volume just released by the University of Chicago Press. It was less of a pleasure to discover that the U of C Press had ignored all the editorial corrections I sent them.

If you run into this volume, please don’t read my chapter. Read the corrected version here instead.

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A Modified Algorithm for Evaluating Logical Arguments

A Guest Post


Bennett Haselton

In a previous guest post I had argued that we should use a random-sample-voting algorithm in any kind of system that promotes certain types of content (songs, tutorials, ideas, etc.) above others. By tabulating the votes of a random sample of the user base, this would reward the content that objectively has the most merit (in the average opinion of the user population), instead of rewarding the content whose creators spent the most time promoting it, or who figured out how to game the system, or who happened to get lucky if an initial “critical mass” of users happened to like the content all at the same time. (The original post describes why these weaknesses exist in other systems, and how the random-sample-voting system takes care of them.)

However, this system works less well in evaluating the merits of a rigorous argument, because an argument can be appealing (gathering a high percentage of up-votes in the random-sample-voting system) and still contain a fatal flaw. So I propose a modified system that would work better for evaluating arguments, by adding a “rebuttal takedown” feature.

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Quick Crossword Update

I realize I’m overdue to announce the winners of the crossword contest from last week. I promise to get to this before the weekend!

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Nature or Nurture?

My sister snapped this picture of my Dad and me sitting on a couch:

No, this wasn’t posed. It’s just how we happened to be sitting.

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The Egomaniac in Chief

So President Obama finds it remarkable that he’s been mistaken for a valet driver and a waiter.

I have some questions for my readers:

  1. Is there anyone who hasn’t been mistaken for a driver, a Home Depot associate or something of the sort?
  2. When this has happened to you, have you felt terribly insulted by it?
  3. Do you feel that casual strangers owe you more respect than they owe to a valet driver or a waiter?
  4. Do you feel that your social or occupational status is so great that it should be immediately visible to casual strangers that you are not employed as a valet driver or a waiter?
  5. If you answered yes to the previous question, have you sought professional help?

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Something to Celebrate

Here’s a key lesson of economics: Trade is good, but trade with people very unlike yourself is even better. I’m a teacher who eats beef, drives a car and lives in a house. I don’t need other teachers so much as I need students, ranchers, autoworkers and architects. If your neighbors love gardening as much as you hate it, you’ll find it easy to hire a gardener. If it’s the other way around, you’ll do well in the gardening business.

The lesson spills over beyond the markets for goods and services. We learn new ways of thinking and new ways of living from people who think and live differently than ourselves.

We thrive on diversity — diversity of skills, diversity of interests, diversity of lifestyles, diversity of religious and political outlooks, diversity of culinary and artistic tastes, diversity of lifestyles, and, lest we forget, diversity of income. Capitalists need workers and workers need capitalists. A wealthy factory owner won’t stay wealthy for long if here’s nobody to work the assembly lines. A middle-class assembly line worker won’t be middle-class for long if there’s nobody building factories.

Let us then celebrate diversity, not try to extinguish it. And let’s not forget that diversity of income — or, if you prefer, “income inequality” — is just as much a blessing as diversity of skills, preferences, cultural outlooks, and ways of living.

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I GIve Up

These were the posted prices at my local gas station this morning:

(Note the 5 cent discount for cash on regular and premium, as opposed to the 65 cent (!!!) discount on plus.) Unless this was just a mistake, my complete inability to explain it makes me question whether I should be allowed to teach economics.

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Live Streaming Sex

The Future of Freedom Foundation plans to livestream my talk this afternoon, titled “More Sex is Safer Sex and Other Surprises”. I believe you’ll be able to find the stream here. Starting time (I think!) is 6PM.

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Update: livestream cancelled for techical reasons but high quality video will be available in a few days.

The Party’s Over

Thus the headline in today’s New York Times. Well, the Tea Party was nice while it lasted.

Good News and Bad News

Good news and bad news: Romney lost; Obama won.

What’s most depressing about the Obama victory is that it seems to have come largely as a reward for two things: the execrable auto bailout and a despicable campaign of character assassination.

What’s most refreshing about the Romney loss is that it seems to have come largely as a punishment for his cruelly evil immigration rhetoric. (Remember “self-deportation”?) This is tempered somewhat by the fact that Obama seems to have escaped punishment for his cruelly evil immigration policies. (Under Obama, deportations have reached an all-time high.)

Obama, I believe somewhat more than Romney, pitched his rhetoric at an audience presumed to be incapable of critical thinking. It’s a little depressing to be reminded how large that audience must be.

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The Other Dunce

I tried listening to Mitt Romney on the radio Sunday morning, but after a few minutes it just got too depressing.

Here’s what I heard in that few minutes:

1) We need to maintain defense spending because (among other reasons) it “creates jobs”. If Mitt Romney does not understand that the creation of jobs — i.e. the consumption of resources that could be valuably employed elsewhere — is the downside of defense spending, then he has no better chance of “fixing the economy” than a blue-bottomed monkey.

2) It is “immoral” for us to “pass on debt” to future generations — future generations who will almost surely be richer than we are. Note that in this context, “pass on debt” means exactly the same thing as “leave a smaller inheritance”. So Romney’s view is that there’s a moral imperative for the relatively poor — namely us — to transfer income to the relatively rich — namely our grandchildren. What’s interesting about that is that Romney is already on record in favor of a more progressive tax code, the sole purpose of which is to transfer income in the opposite direction — from the relatively rich to the relatively poor. (More precisely: Romney would tax capital income at a lower rate for the “middle class” than for the “rich”. Since there is no conceivable efficiency-based justification for such a policy, his position can only indicate a pure preference for rich-to-poor redistribution.) Either Romney has just declared himself immoral, or he’s just spouting random words. (Or, just possibly, he has a good argument for why we have a moral obligation to redistribute from the rich to the poor in some situations but not others. I would like to hear him articulate that argument.)

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The Numbers Racket

If you’re the sort of person who reads economics blogs, you’ve probably heard that the median US worker has enjoyed hardly any income gain over the past few decades. Here are the numbers behind the noise (all corrected for inflation):

A mere 3% increase over 25 years does indeed look pretty grim. And note that the year 2005 is pre-crash, so what we’re seeing is not an artifact of the recession.

Now let’s look a little deeper and ask which demographic groups account for all this stagnation. White men? Nope, their median income is up 15%. Nonwhite men? Up 16%. White women? Up 75%. Non-white women? Up 62%. That’s everybody:

What gives? How can the median income shoot up in every demographic sector while the overall median remains nearly unchanged?

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Kindle Update

The all-new revised edition of The Armchair Economist is now available in a Kindle edition (as well as paperback) here.

As of this writing, the Amazon page still says you are buying the 2007 version, but that’s wrong. The version you’ll get is the new 2012 version.

Barnes and Noble still has the 1993 version for the Nook. This will be fixed in a day or two.

A Tale of Two Cities

The London subway stations have NO trash receptacles. The tracks look like this:

The New York subway stations have more trash receptacles than I can count. The tracks look like this:

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Quote of the Day

You do not examine legislation in light of the benefits it will convey if properly administered, but in light of the wrongs it would do and the harms it would cause if improperly administered.

—Lyndon Johnson

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Econ 101 for the Supercommittee

Here is my op-ed on deficit reduction from this morning’s Wall Street Journal (subscription required). For those without subscriptions, the thrust (which won’t be new to long-time readers of this blog) is that raising taxes can’t convert fiscally irresponsible spending to fiscally responsible spending.

If your household is over budget, you can address that problem either by spending less or by earning more income. It is tempting to fall into the trap of thinking that by analogy, the government can address its budget problems either by spending less or by raising taxes. But the analogy fails because raising taxes is not like earning more income; it’s more like visiting the ATM.

The government is an agent of the taxpayers. Raising taxes to pay for government spending depletes our assets just as visiting the ATM to pay for household spending depletes our assets. That’s not at all like earning income, which adds to our assets.

So insofar as the supercommittee relies on tax increases to address issues of “fiscal irresponsibility”, it will have failed.

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Wisconsin Followup

A couple of followups on yesterday’s post about Wisconsin:

1) Several commenters have pointed out that the conflict in Wisconsin is not (directly) about wages, benefits or working conditions, but rather about collective bargaining. This seems to me to be a distinction without a difference; nobody would care about collective bargaining unless they expected it to affect wages, benefits, and/or working conditions. The point stands that workers who are very upset about losing their collective bargaining rights must expect to use those rights to achieve above-market compensation.

2) Jim from Wisconsin made a comment, and I made a reply, that I think bear highlighting here. Jim from Wisconsin said:

Futhermore, isn’t the idea in private business that if you want the best and the brightest, you pay them well? Don’t we want our Government programs run effectively and efficiently? Seems to work in the private sector, so why can’t this apply to public sector as well?

To which I replied:

The problem with this is that every “best and brightest” who is hired by the public sector is unavailable to the private sector, so it’s not at all clear that we WANT the best and brightest in the public sector. To take an extreme case, I don’t want the best Silicon Valley engineers tempted to work as high school teachers; I’d rather have them pushing the limits of technology. From the point of view of economic efficiency, this is the one and only reason why public sector employees ought NOT be overpaid. (It’s also a reason why private sector employees ought not be overpaid, but there’s generally less threat of that happening because of the private-sector profit motive.) It’s the one and only reason not to overpay public employees — but it is a good and sufficient reason.

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Test post

Here is a test post for Tom.


This morning’s probability puzzle, as originally posted, contained a remark at the end saying For extra clarity … “the medicine killed him” should be interpreted to mean that if he hadn’t taken the medicine, he wouldn’t have died.

I’ve realized that for some readers that wording might be subtracting more clarity than it’s adding. It is, however, correct as originally stated.

Happy New Year

Happy New Year, one and all. I’ll see you in 2011.

Speed Math

speedometerOver the course of my childhood, I remember asking exactly one intelligent question. Unfortunately, I couldn’t make my parents understand what I was asking. Perhaps it was that frustration that deterred me from ever formulating an intelligent question again.

I was, I think, six years old at the time, and my question was this: If you’re traveling at 50 miles an hour at 1:00, and you’re traveling at 70 miles an hour at 2:00, must there be a time in between when you’re traveling exactly 60 miles an hour?

What made this question intelligent—and probably what made it incomprehensible to my parents—was that I was very keen to distinguish it from the question of whether your speedometer would have to pass through the 60-mile-an-hour mark. It seemed clear to me that the answer to that one was yes—that even if your true velocity could somehow skip directly from 50 to 70, the speedometer needle, in the course of whipping around from one reading to the other, would have to pass through the midpoint.

I quite vividly remember worrying that my question about your speed would be misinterpreted as a question about your speedometer, a question to which I thought the answer was obvious and therefore could only be asked by a very stupid person—a very stupid person for whom I did not wish to be mistaken. Therefore I prefaced the question with a long discourse on how it was thoroughly obvious to me that if your speedometer reads 50 miles an hour at one time and 70 miles an hour at another, then surely it must pass through 60 on the way, but that this was not not not not not the question I was about to ask, which concerned your actual speed and not the measurement thereof. By the time I got around to formulating the question itself, my parents (or at least my father; I don’t remember whether my mother was present) had quite understandably given up on figuring out what I was trying to get at.

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Administrative Note

If you don’t blog, you might be surprised by how many spam comments show up every day. (These are automatically generated comments with no content beyond “Loved this post”, together with an attempt to get you to click through to the commenter’s web site.) I use the phenomenally great (and free!!!) software Akismet to snag these comments before they ever get through, and it’s amazingly accurate, though every once in a while there’s a false positive. That is, sometimes a legitimate comment gets tagged as spam (often because it contains a lot of links but sometimes for no apparent reason). So every now and then, I look through the spam folder and rescue those comments, if any.

But a moment ago, I hit a wrong button and permanently deleted 200 spam comments (all generated within the past few hours!) before I’d looked at them. Statistically, there was probably nothing legit in there anyway. But if by chance I threw your baby out with my bathwater, I do apologize — and please try again.


With the economy still faltering and economists increasingly in disrepute, I’ve decided that prudence dictates the acquisition of a new marketable skill. How am I doing?

Get the Flash Player to see this content.

(Larger version here.)

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To My RSS Readers

This morning’s post contains some imbedded video from Fox News that looks fine on the blog but shows up as a pointer to the wrong video in the RSS feed. Here is a link to the correct video.

Quantum Game Theory

I’m sure this won’t be everyone’s cup of tea, but some readers might be interested. I’ve been invited to write the entry on Quantum Game Theory for the Wiley Encyclopedia of Operations Research and Management Sciences, and I thought I’d share the current draft. If this is your cup of tea, your feedback is welcome.

Is Health Care a Right?—The Movie

screamA couple of weeks ago, here at the University of Rochester, two fine student organizations—the History Council and the Finance/Economics Council—joined forces to sponsor a debate on the topic “Is Health Care a Right?”. The disputants were myself and history professor Ted Brown, who graciously agreed to speak first at my request.

Over the course of the evening, I proposed a variety of mutually contradictory health care policies; my intent was not to endorse any one of them, but to demonstrate that all of them were preferable to Professor Brown’s pet proposals. I cribbed some important ideas from David Goldhill’s Atlantic Monthly article, and some important ideas and facts from the always insdispensable Bill Easterly. The format did not lend itself to citations or hyperlinks, but I’m glad to make amends here.

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Henry Molaison, it is said, was a man who lived in the past—an amnesia victim unable to form new long term memories, so that each new experience was quickly forgotten. From age 27 (when he underwent brain surgery for epilepsy) to age 82 (when he died last year), Henry Molaison could remember only the first 27 years of his life.

Today—and I literally mean today—Henry Molaison’s brain is being sliced and diced at the U.C. San Diego Brain Observatory in furtherance of neurological research. And starting soon, you can watch the slicing live via webcam. The process started yesterday, and they’re currently (as of 12:20PM eastern time on Thursday, December 3) on break, but a note on the site says that “cutting will resume shortly”.

The World Wide Web is a strange and wonderful place.

Godel in a nutshell

Godel’s theorem (or at least one of Godel’s theorems) says that no matter what axioms you adopt, there will always be true statements in arithmetic that can’t be proven. In Chapter 10 of The Big Questions I give an explicit example of such a statement, involving Hercules’s ability to win a certain game against a very persistent hydra.

There are many popularizations of Godel’s original argument, of which at least one (by Nagel and Newman) is superb. They do a marvelous job of boiling the argument itself and the surrounding issues down to a little over a hundred sparse pages. But I can boil it down further, into a single blog post. I can do this via the magic of one of my favorite expository techniques, a technique I call “lying”. I will lie to you throughout this post, by sweeping important technical details under the rug and (slightly) corrupting some important ideas to make them easier to grasp—but without, I think, sacrificing the flavor and the gist of the argument. At the end, once we’re clear on the big picture, I’ll ‘fess up to some of those lies.

Here, then, is (more or less) how Godel proved that arithmetic contains true but unprovable statements:

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