Thought of the Day

People often ask if studying economics will make you rich? While econ majors tend to do well, its biggest impact is making you realize you already are.

A World Without Law Professors?

Mathias M. Siems:

Self-referential research would diminish. Doctrinal research would persist but it would be done by practitioners and the current oversupply would melt down. At universities legal research would continue but it would shift to related fields of social sciences and humanities. Thus, the threshold would be an “academic dinner party test”: legal research would have to show that it is of interest for other academic disciplines. Overall, I would therefore expect some changes; however, legal education and research would not disappear. In some respects, one could even argue that without law professors the quality of both teaching and research may improve.

Download his full paper from SSRN.

The Kindle Goes International

And the US version has dropped in price from $299 to $259. The international version will sell for $279 and can be pre-ordered now. Downloads will cost $2 each outside the US, but that's a great feature to have for those who travel overseas frequently. The US and International versions are identical in every respect other than the cellular radio. Instead of using Whispernet over the Sprint network, the International Kindle will use AT&T's global network.

As someone who loves to travel internationally, here is my favorite news:

It makes the Kindle a travel guide, too: If you want the lowdown on a Kyoto temple, or are wondering where to get the best fries in Amsterdam, you can download a relevant guide on the spot. And for the first time, the Lonely Planet series will be sold on Kindle, along with the previously available travel books from Frommer, Rick Steves and Michelin. No wonder the Amazon press release has an ecstatic quote from AT&T’s CEO Randall Stephenson and not a word from Sprint honcho (and vanity TV pitchman) Dan Hesse.

I've been puzzled why more travel guides haven't been offered on the Kindle sooner? With the ability to store travel guides on the Kindle (and even better to download them on the fly), that would significantly help reduce what I carry when I travel. (Between my Kindle, iPhone, and netbook, I've been able to shave several pounds off of my typical travel load -- which is already trimmed down to carry-on only.)

To make the international Kindle a reality, Amazon had to negotiate differing royalty payments depending on country of download:

Amazon staved off copyright problems by negotiating an arrangement with English language publishers that pays royalties depending on the territory of purchase. (If you buy a copy of The Perfect Thing in London, for instance, the UK publisher Ebury press gets the sale, instead of US publisher Simon & Schuster.) Still, the rights clearances aren’t yet comprehensive; of the 350,000 books in the Kindle store, only around 200,000 will be available in some countries.

I wonder if this has anything to do with why it's taken so long to get the Kindle overseas? This helps illustrate that some of the biggest hurdles in bringing new technologies to market are often legal/contractual, not technical.

The article also mentions that Amazon is working to make it possible to read Kindle books on other platforms:

Bezos hasn’t missed the buzz about upcoming digital tablets. He says that Amazon is hard at work making software apps (like the one already available for the iPhone) that will extend the Kindle system to other devices. He’s also still open “in principle” to rival e-reader manufacturers who wish to use the Kindle store to provide content. But he feels that while people may read on phones and web-surfing tablets, the dedicated e-reading device will keep improving.

With the slew of recent announcements of new eBook readers and rumors of new tablets coming out, I believe we are about to see eBooks start to really take off. Once the legal issues get hammered out, we may be witnessing the biggest change to books since the invention of the printing press.

Related: Will Books Be Napsterized?

Too Many Lawyers or Too Many Laws?

Following up on Justice Scalia's recent comments suggesting too many of the best minds are going into law, Ilya Somin wonders if the problem is too many lawyers or too many laws?

In my view, Scalia is half-right. We are indeed devoting more of our “best minds” to law than we ideally should; perhaps more of our merely average minds too. But the high salaries of lawyers suggest that there is a genuine demand out there for all that lawyering. Quite simply, we need a lot of lawyers because we have a lot of laws. In the criminal law field, the United States imprisons far more people than any other industrialized nation, in large part because we punish so many nonviolent offenders through our massive War on Drugs. The War on Drugs is, among other things, a full-employment program for criminal lawyers. In civil law, we have a massive tort law suit system and hundreds of state and federal regulatory agencies that issue mindbogglingly complex regulations that require interpretation by experts if you want to avoid costly liability. And of course we also have an extremely complex tax system that requires many people to hire tax lawyers if they want to keep the IRS off their backs.

As long as we have such a large and complex legal system with so many laws, we are likely to need a lot of lawyers too – including many of our “best minds.” To be sure, some of that complexity is the result of lobbying by lawyers themselves. The ABA and state bar organizations often oppose efforts to simplify the legal system or cut back on the size of government. But lobbying by lawyers is far from the main culprit responsible for our overgrown legal system. Many other interest groups are responsible too, as is the general public that supported many of the laws that created the need for large numbers of lawyers. The best way to safely reduce the number of lawyers is too cut back on the number of laws.

Sounds good to me.

The Masters of Light: 2009 Nobel Prize in Physics

The Nobel Prize in Physics for 2009 has been awarded with one half to Charles K. Kao and the other half jointly to Willard S. Boyle and George E. Smith for their groundbreaking achievements in optics:

This year's Nobel Prize in Physics is awarded for two scientific achievements that have helped to shape the foundations of today’s networked societies. They have created many practical innovations for everyday life and provided new tools for scientific exploration. In 1966, Charles K. Kao made a discovery that led to a breakthrough in fiber optics. He carefully calculated how to transmit light over long distances via optical glass fibers. With a fiber of purest glass it would be possible to transmit light signals over 100 kilometers, compared to only 20 meters for the fibers available in the 1960s. Kao's enthusiasm inspired other researchers to share his vision of the future potential of fiber optics. The first ultrapure fiber was successfully fabricated just four years later, in 1970.

Today optical fibers make up the circulatory system that nourishes our communication society. These low-loss glass fibers facilitate global broadband communication such as the Internet. Light flows in thin threads of glass, and it carries almost all of the telephony and data traffic in each and every direction. Text, music, images and video can be transferred around the globe in a split second.

If we were to unravel all of the glass fibers that wind around the globe, we would get a single thread over one billion kilometers long – which is enough to encircle the globe more than 25 000 times – and is increasing by thousands of kilometers every hour.

A large share of the traffic is made up of digital images, which constitute the second part of the award. In 1969 Willard S. Boyle and George E. Smith invented the first successful imaging technology using a digital sensor, a CCD (Charge-Coupled Device). The CCD technology makes use of the photoelectric effect, as theorized by Albert Einstein and for which he was awarded the 1921 year's Nobel Prize. By this effect, light is transformed into electric signals. The challenge when designing an image sensor was to gather and read out the signals in a large number of image points, pixels, in a short time.

The CCD is the digital camera's electronic eye. It revolutionized photography, as light could now be captured electronically instead of on film. The digital form facilitates the processing and distribution of these images. CCD technology is also used in many medical applications, e.g. imaging the inside of the human body, both for diagnostics and for microsurgery.

Digital photography has become an irreplaceable tool in many fields of research. The CCD has provided new possibilities to visualize the previously unseen. It has given us crystal clear images of distant places in our universe as well as the depths of the oceans.

Click here for more information from the Nobel Prize website

Meeting Harold Demsetz

Last Friday, I attended a conference on The Gridlock Economy with Nathan and Ali. While there, Ali and I had a chance to hear and meet Harold Demsetz, author of the highly influential 1967 article, Toward a theory of property rights. (Highly recommended reading!)

In addition to meeting Demsetz, we got to hear a debate between Richard Epstein and Michael Heller about the tragedy of the anticommons. Epstein in particular impressed me with his brilliance and grasp of legal and economic concepts -- he was one of the most coherent speakers I have ever heard.

Overall, it was a great conference. I think Ali liked it too.

Apple's Been Working on a Tablet Since 2003?

Former Apple employees informed The New York Times that Apple has been working on a tablet since 2003. What's the hold-up? Here's what they had to say:

Apple has been working on such a Swiss Army knife tablet since at least 2003, according to several former employees. One prototype, developed in 2003, used PowerPC microchips made by I.B.M., which were so power-hungry that they quickly drained the battery.

“It couldn’t be built. The battery life wasn’t long enough, the graphics performance was not enough to do anything and the components themselves cost more than $500,” said Joshua A. Strickon, a former Apple engineer whose name is on several of the company’s patents for multitouch technology.

Another former Apple executive who was there at the time said the tablets kept getting shelved at Apple because Mr. Jobs, whose incisive critiques are often memorable, asked, in essence, what they were good for besides surfing the Web in the bathroom.

The iPhone has certainly changed all of this. It demonstrates that reasonable battery life (although still to short in my experience), a wonderful interface, and simplified software make for a powerful user experience and an incredibly useful product. If Apple expands on this success and builds it into a larger platform, they have the potential to launch another computer revolution.

Here is my wishlist for such a tablet from Apple:

• Day-long battery life (8-12 hours).
• Ability to wirelessly tether to an iPhone for data connection when wi-fi isn't available.
• The option to use either multi-touch (like on an iPhone) or a stylus for more precise writing/highlighting of text. My dream tablet could be a replacement for pencil and paper which would require more than finger painting on the screen. I think some form of stylus would be needed to best accomplish this goal.
  
• Some type of video output so it can be used for giving presentations.
• It would be a brilliant eBook reader, capable of reading Kindle format books (the iPhone already does this) as well as PDFs, Microsoft Office documents, ePub, and more. Additionally, the eBooks should provide the ability to reference the same page numbers as in the physical books -- something very important for research. Even better would be the ability to select and copy text, complete with all the reference information. There is no technical reason this type of metadata couldn't be embedded in digital books and would be a tremendous boon to students and researchers.
  
• It will maintain the same pixel density as the iPhone but have a larger screen size. Ideally, it would be something like a 10.6-inch display with 1440x960 resolution (three times the length and width of the iPhone).
• The ability to immediately install all apps you have on your iPhone without having to repurchase them.
  
• A decent virtual keyboard with the ability to pair with a bluetooth keyboard and mouse. (Making it Apple's answer to netbooks.)
• At least 64GB of solid-state memory.
• Ideally, some ability to multitask -- either running programs in the background and/or the ability to divide the screen in two and run two apps side by side. Even better would be the ability to use the multitouch interface to cause the two apps to interface with one another. (Similar to the two screens on the Microsoft Courier concept.)
• Built-in GPS, wi-fi, and Bluetooth -- with the option to get a 3G modem. The 3G modem should include a non-subscription based ability to download eBooks and apps -- similar to the Amazon Kindle.
  
• At least one USB port.
• An SD card slot for transferring photos from a digital camera.
• Nice options for cases. (Something like the covers M-Edge makes for the Kindle.)
• Size, weight, and form roughly like that of the Kindle. Great for carrying around without too much bulk.
• Mini-USB for charging/syncing instead of the 30-pin iPod connector. (Not holding my breath on this one.)
• Like the iPhone/iPod Touch, it should require minimal training for figuring out how to use it and install/uninstall new apps. Everything should be intuitive and simply work without all the fuss people have to contend with on desktop and laptop computers. (Hopefully this robustness will eventually come to those platforms as well.)
• Standalone capability -- requiring no computer to fully use or update.
  

Elsewhere, John Dvorak describes his Apple Tablet theories:

The idea of a touchscreen, full-color e-book reader combined with a device that can run those 80,000 iPhone apps as well as easily browse the Internet does have appeal. One thing to note is the uniquely high readability of the iPhone's screen. Making the screen even larger would provide a stunning display that's easily as readable as the Kindle MEMS screen.

The screen would also be ideal as a photo display, photo-sorting table, and small presentation device for business meetings. Look for it to come with a remote control, so you can blow through PowerPoint slides during sales pitches.

The tablet's battery life will, of course, stink, compared with that of the Kindle. But I can see a device like this tethered to a wall plug and sitting near the couch in the family room. It could be easily unplugged and passed around as needed.

I hope he's wrong about the battery life, but like most of the rest of what he had to say. Others are saying that an Apple tablet could redefine print. (Possibly being to eBook readers what the iPod was to MP3 players?) Gizmodo seems to agree.

Brad Stone lists five reasons tablets have flopped:

1. Commitment of manufacturers.
2. Technology -- particularly touch screens. (The iPhone has changed this.)
3. Input systems.
4. Price.
5. Software. (Most tablets ran Windows which is primarily designed for a mouse and keyboard.)

To this list, I'd add battery life, size, weight, and clunky, non-aesthetic design.

Hopefully, all of this is about to change. If it does (and I think it will), I believe it will help pave the way for new paradigms for computing technology and interface that will have broad implications including dramatic reduction in the size, weight, cost, and learning curve for using computers. The more people interact with easy-to-use computers, the more they will expect this type of interface from other technologies. I'm optimistic the computer industry, with Apple leading the charge, will ultimately live up to these expectations. I can't wait for these expectations to be realized.

Quote of the Day

"The state is the great fiction by which everybody tries to live at the expense of everybody else." - Frédéric Bastiat

Superhero Facebook Statuses

What would it look like if Batman, Spider-Man, and Superman had Facebook pages? Follow the link to find out. Below are two of my favorites.





That's funny -- I thought no one liked Richards because he was married to Jessica Alba Invisible Woman...

(HT Neatorama)

Judge Judy = 100 Chief Justice Roberts?

Salarywise that is...

A commentator observes that the salary disparity between Chief Justice Roberts (roughly $220,000) and Judge Judy (roughly $25 million) is the “result of markets” and asks the following question: “is there any reason to assume that simply because the market has delivered that outcome, that Judge Judy deserves to make 100 times more than Chief Justice Roberts? I would say not.”

Michael Ward (Managerial Econ) responds:

Please define terms. What do you mean by “deserves?” Chief Justice Roberts also receives the prestige of being Chief Justice while Judge Judy gets the disdain of being a TV judge. Is this deserved too? Unless there is an identifiable market failure (perhaps more likely for Roberts than Judy), I assume that each are generating value in excess of their compensation. Regardless of what they deserve, we third parties receive the excess value that they generate (whether we deserve it or not).

Another question. Please define “result of markets” as it relates to Justice Roberts’ salary.

47% Will Pay No Income Tax in 2009

The increasing number of households paying no taxes is a trend that may be unsustainable:

In 2009, roughly 47% of households, or 71 million, will not owe any federal income tax, according to estimates by the nonpartisan Tax Policy Center.

Some in that group will even get additional money from the government because they qualify for refundable tax breaks.

Here is how government spending has increased over the past 40 years. Blogger Joe Kristan argues this is what happens when a few taxpayers bear the burden of federal spending.

Here is a breakdown of how people voted in the 2008 presidential election based on income level, which seems to lend support to Joe's hypothesis. Those most likely to pay zero taxes overwhelmingly favor the party most in favor of expanding federal programs.

(HT Paul Caron)

No Unemployment for Economics PhDs?

Good news for the dismal science:

Economics has long been called the dismal science. The general economic outlook today is indeed dismal, but that doesn't mean job prospects in the field are. "There is no unemployment among Ph.D.'s in economics," declares John Siegfried, a Vanderbilt University professor. Just do the math, and you'll see why: In the current academic year, the American Economics Association has listed approximately 2,200 job openings worldwide—but U.S. universities will grant only 950 Ph.D.'s in economics.

Universities themselves may cut back, but economists remain in demand in government, business, and nonprofits and as consultants or policy analysts. "Depending on the program, about half the graduates stay in academics, and the other half go into the private sector, government, or places like the World Bank or International Monetary Fund," says William Collins, director of graduate studies in economics at Vanderbilt.

Good news indeed! Now if I can just get that dissertation done...

Cash For Clunkers: One Of Washington's All-Time Dumb Ideas?

How does destroying assets create value?

The basic fallacy of cash for clunkers is that you can somehow create wealth by destroying existing assets that are still productive, in this case cars that still work. Under the program, auto dealers were required to destroy the car engines of trade-ins with a sodium silicate solution, then smash them and send them to the junk yard. As the journalist Henry Hazlitt wrote in his classic, “Economics in One Lesson,” you can’t raise living standards by breaking windows so some people can get jobs repairing them.

In the category of all-time dumb ideas, cash for clunkers rivals the New Deal brainstorm to slaughter pigs to raise pork prices. The people who really belong in the junk yard are the wizards in Washington who peddled this economic malarkey.

(HT Don Boudreaux)

Did Pencils Make Us Dumber?

A critique of claims that technology is making us dumber:

Claims of pretty much every modern technology somehow making us dumber are almost never supported by the facts, but still, you get people just trying to drum up book sales telling us that Google makes us dumber by encouraging people not to read as much -- when actual evidence shows people are reading more long-form works.

It appears there's a recent book out, A Better Pencil, by Dennis Baron, that explores how these same fears and totally unsubstantiated moral panics seem to have come about with pretty much every new communications platform out there. Baron recently did an interview with Salon, where he pointed out that these same sorts of fears go back all the way to Plato:

I start with Plato's critique of writing where he says that if we depend on writing, we will lose the ability to remember things. Our memory will become weak. And he also criticizes writing because the written text is not interactive in the way spoken communication is. He also says that written words are essentially shadows of the things they represent. They're not the thing itself. Of course we remember all this because Plato wrote it down -- the ultimate irony.

We hear a thousand objections of this sort throughout history: Thoreau objecting to the telegraph, because even though it speeds things up, people won't have anything to say to one another. Then we have Samuel Morse, who invents the telegraph, objecting to the telephone because nothing important is ever going to be done over the telephone because there's no way to preserve or record a phone conversation. There were complaints about typewriters making writing too mechanical, too distant -- it disconnects the author from the words. That a pen and pencil connects you more directly with the page. And then with the computer, you have the whole range of "this is going to revolutionize everything" versus "this is going to destroy everything."

So, forgive me for being skeptical about each new fear about each new communications technology that comes about. For all the cries of "but this time, it's different," it's the same exact story we've seen pretty much throughout history.

Using Game Theory to Fight Crime

A smarter (and cost-efficient) way to fight crime:

Most crimes in the United States are committed by long-term repeat offenders, a majority of whom are eventually caught. One of every 100 adults in the United States is now behind bars; many are serving lengthy sentences. The crimes they committed clearly did not “pay” in any objective sense of the term.

Why, then, did they commit them? The short answer is that most criminals are not the dispassionate rational actors who populate standard economic models. They are more like impulsive children, blinded by the temptation of immediate reward and largely untroubled by the possibility of delayed or uncertain punishment.

The evidence suggests that when hardened criminals are reasonably sure that they will be caught and punished swiftly, even mild sanctions deter them. But not even the prospect of severe punishment is effective if offenders think they can get away with their crimes.

One way to make apprehension and punishment more likely is to spend substantially more money on law enforcement. In a time of chronic budget shortfalls, however, that won’t happen.

But Mr. Kleiman suggests that smarter enforcement strategies can make existing budgets go further. The important step, he says, is to view enforcement as a dynamic game in which strategically chosen deterrence policies become self-reinforcing. If offense rates fall enough, a tipping point is reached. And once that happens, even modest enforcement resources can hold offenders in check...

It is an ingenious idea that borrows from game theory and the economics of signaling behavior..

Read the whole thing.

(HT Tyler Cowen)

Happy 90th Birthday, Professor James Buchanan

Yesterday was James Buchanan's 90th birthday. Professor Buchanan was awarded the Nobel Price in 1986 for his pioneer work in public choice theory. He came to George Mason University from Virginia Tech in 1983. (A similar journey I eventually made myself -- a couple decades later.) I had the privilege of taking a seminar with Buchanan two-and-a-half years ago and he was still as sharp as ever.

Here is a collection of Buchanan's work and a picture of me with him.

Below is a video tribute to Buchanan:



Happy birthday, Professor Buchanan!

Map of Complexity

Click on the image for a larger, interactive version of this map. Read more about complexity on Wikipedia. This is what I was studying in Santa Fe this summer at the Santa Fe Institute and in my agent-based modeling class at GMU. Fascinating stuff!

The High Price of Obesity

The "girth-wealth" gradient:

About 9 percent of health-care costs are directly attributable to obesity, which led Dubner to wonder if we should assess a fat tax (on fat food, that is, not people) as a way of picking up the tab. One strong objection would be that such a tax would likely be extremely regressive: “[S]ickness, poverty, and obesity are spun together in a dense web of reciprocal causality,” writes Daniel Engber regarding what he calls the “girth-wealth” gradient. To sum it up: the poorer you are, the fatter you’re likely to be; and the fatter you get, the poorer you’re likely to become. So it may be that the obesity fight and income inequality are one and the same.

Google Docs Rolls Out Student-Oriented Features

Nice:

Google Docs' summer interns this summer were tasked with working on improvements and additions to the service geared toward students.

The results of their work, now available to try out, include new features such as an equation editor, superscripts and subscripts, document translation, improvements to surveys, and more outlining options.

Scalia: ‘We Are Devoting Too Many of Our Best Minds to’ Lawyering

Supreme Court Justice, Antonin Scalia:

I mean lawyers, after all, don’t produce anything. They enable other people to produce and to go on with their lives efficiently and in an atmosphere of freedom. That’s important, but it doesn’t put food on the table and there have to be other people who are doing that. And I worry that we are devoting too many of our very best minds to this enterprise.

Right now, if you're one of the brightest, it's probably easier to make good money being a lawyer than it is as an engineer. Change the incentives and you change the behavior.

The Road to Happiness Is Not A Highway?

Happiness actually comes from keeping your commute short. Highways encourage the opposite effect:

It’s a well-documented truth that long commutes are bad for both the environment and emotional well-being of the commuter. So policy interventions aimed at reducing traffic and, by extension, commuting time have the potential to significantly improve welfare. A new paper by Gilles Duranton and Matthew Turner evaluates two frequently proposed solutions to the problem and finds both lacking. Duranton and Turner find that highway kilometers traveled actually increases proportionately to highways. Provision of public transportation has no effect on kilometers traveled. The authors conclude that, “an increased provision of roads or public transit is unlikely to relieve congestion and that the current provision of roads exceeds the optimum given the absence of congestion pricing.”

Free Wi-Fi Now At Borders

Following in the footsteps of Barnes and Noble, Borders is now offering free wi-fi too:

Popular bookseller Barnes & Noble teamed with AT&T to offer free Wi-Fi earlier this summer, and—not to be outdone—the other popular bookseller Borders today announced that they'll be joining forces with the other huge telecom company Verizon to offer free Wi-Fi to all of their customers. Free Wi-Fi party at Borders! Photo by doortoriver.

[Borders Signs Agreement with Verizon to Offer Free Wi-Fi via Consumerist]

50 Free Ivy-League Lectures on the Economy

A collection of lectures on economics from some of America's top universities:

The economy has taken central stage in world news for the past few years due to rapidly failing markets the world over. Even with so much attention focused on economic issues if you’re not familiar with the field, or simply want a more in-depth look at things, it can be hard to follow just what’s going on. These lectures, given by scholars from some of the most prestigious educational institutions in the United States and around the world can help give you that foundation of knowledge and help you better understand the financial crisis that’s been building over the past few years.

Follow the link for the full list.

(HT Tip'd)

In Academia, High Status = Useless?

Well that's depressing...

Thorstein Veblen made this point a hundred years ago in The Theory of the Leisure Class. Academics show their high status by doing useless research. Useful research is low status. When, as a professor, you see this in your own department — the uselessness of what people do — you think surely other departments are different. They aren’t. As a Berkeley grad student in engineering said to me, “95% of what goes on in Cory [Hall — where her department is] will never be used.”