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March 2009

Tim Harford's solution to grade inflation

From the Financial Times, 3/20:

The obvious solution to grade distortion is to ration grades so that no matter whether standards are high or low, only the better students can receive the top grades. Unfortunately, like any competitive system, such policies can create ill-feeling towards high-flyers, and even sabotage.

If grade rationing is unacceptable, perhaps grade distortion should be replaced with true grade inflation, freeing grades from the worldly confines of a maximum 100 per cent or A*.

Readings in Applied Microeconomics: The Power of the Market

Edited by me. Forthcoming, but available for Fall '09 courses. Or if you don't want to adopt it, buy a dozen or two to give as gifts. (Or use it as a doorstop; as I understand my contract, I'll be paid the same.)

$64.95 in paperback from the publisher or Amazon.

Includes some classics: Hayek's "The Use of Knowledge"; "I, Pencil"; two seminal articles by Demsetz; Klein and Leffler. Includes some underappreciated work: two chapters from Maurice and Smithson's The Doomsday Myth; Baumol's 1980 piece on incentives and economic growth; David Hemenway's history of the New York City ice cartel (and its failure). And includes some very cool more recent writing: Steven Horwitz's fine essay on who helped most after Katrina; John Lott on how radio solved its seemingly intractable public good problem; and Ronald Bailey on increasing returns.

A summary, the table of contents, and the preface are here (.pdf file).

Note: the book has nothing about our current financial problems. Those and some other alleged market problems--unsustainability, anti-community, systematic irrationality--will be addressed in the sequel, if there is one.

Twitter is *everywhere*

I realize I'm way behind the cool people, but it's interesting how many times Twitter is turning up just in the sites an old guy like me sees. (Mickey Kaus noted the same thing and asked, "You don't think that a lot of it might be the result of a paid mentioning campaign?")

"The Twitter Platform: 3 Years Old and Ready to Change the World".

"Twitter, the Most Important Website Since Google?"

"6 Reasons Why Twitter is the Future of Search - Google Beware".

My take: if Twitter really does threaten Google, Google'll just buy them. Think of the funny antitrust suit that will ensue: "monopolization of tweets".

One sign of its influence and potential power: there's already a Twitter backlash:

"There's Twitter the company, and twitter the medium".

"Twouble With Twitter".

"Tweet On, Tweet Off".

"Tweeted Out".

There's tremendous interest in Twitter's business model:

"The Obsession With Twitter's Business Model".

"Firms Seek Profit in Twitter's Chatter".

"How Will Twitter Monetize?"

"The Future of Twitter: Social CRM".

But anything with as many users--NBA starscelebrities, business executives (though--surprise!--some of these folks may be using "ghost twitterers"), librarians, and economists--and uses--daytrading, tracking the hottest food truck in Los Angeles and the national debt--will probably do fine.

It is both our past--"But concision has a 'long, proud history'” --and our future--"But it also represents a milestone in human communication."

You may even soon be able to use Twitter from your car.

If you need to come up to speed, "The Ultimate Guide for Everything Twitter" might help.

Last, please remember, like other powerful tools, Twitter can be dangerous. It apparently has broken Jennifer Aniston's heart (yet again).

More on the increased interest in Atlas Shrugged

"Will Atlas Shrug? A Compilation of Blogosphere Commentary about 'Going Galt'”. (The Liberty Papers blog, 3/6.) 

"Going Galt: An NRO Symposium". Some of the comments here could be used as examples of the ad hominem fallacy. Rather surprising from folks who can, and usually do, argue better.

An even more skeptical--in my opinion, wrong--view by Alex Knapp: "Tea Parties, Going Galt, Iraq, and Delicious Irony."

Words to remember

Richard Epstein (Wall Street Journal, 3/26):

Two basic principles that animated our Constitution appear to have no traction today. One holds that property is the guardian of every other right. The second asserts that voluntary exchange is the source of general peace and prosperity. Today's Supreme Court looks to neither principle for guidance.

Mark Steyn (National Review Online, 3/28):

“We can’t,” he [President Obama] continued, “allow institutions to cherry pick among competing regulators and ship risk to where it faces the lowest standards and weakest constraints . . . ”

Just as a matter of interest, why not? If you don’t want to be subject to the punitive “oversight” of economically illiterate, demagogic legislators-for-life like Barney Frank, why shouldn’t you be “allowed” to move your business to some jurisdiction with a lighter regulatory touch?

Borders give you choices. Your town has a crummy grade school? Move ten miles north and there’s a better one. Sick of Massachusetts taxes? Move to New Hampshire, as thousands do. To modify the abortionists’ bumper sticker: “I’m Pro-Choice And I Vote With My Feet.” That’s part of the self-correcting dynamism of capitalism: For example, Bono, the global do-gooder who was last in Washington to play at the Obama inauguration, recently moved much of his business from Ireland to the Netherlands, in order to pay less tax. And good for him. To be sure, he’s always calling on governments to give more money to Africa and whatnot, but it’s heartening to know that, when it comes to his wallet as opposed to yours, Bono — like Secretary Geithner — has no desire to toss any more of his money into the great sucking maw of the government treasury than the absolute minimum he can get away with. I’m with Bono and Tim: They can spend their money more effectively than hack bureaucrats can. We should do as they do, not as they say.

Stephen Moore (The Weekly Standard, 4/6):

Next is the hard-to-swallow assumption in the budget that all of the new spending in the $800 billion democratic "stimulus" bill that Obama signed in February will expire after 2011. "We are supposed to believe," says Paul Ryan, the ranking House Republican on the Budget Committee, that "Nancy Pelosi, Charlie Rangel, Henry Waxman, and Ted Kennedy are going to allow spending for programs ranging from education for disabled kids, to Pell Grants, to Head Start, to child nutrition programs to fall off a cliff two years from now." Not likely. When Ryan asked the Congressional Budget Office what happens if the spending for about two dozen of the most politically popular programs is continued, not cancelled, the CBO reported back that the deficit and federal outlays would be $3.27 trillion higher over the next ten years.