Eric Rasmusen’s Weblog

Thirty years ago, a popular notion among intellectuals was that of John Kenneth Galbraith’s “countervailing power”: the idea that if one side of a market was monopolized, it would be good to have the other side monopolized too, for balance. This is actually a respectable idea. I don’t know how Galbraith justified it in the 50’s, but the plausible basis for it is that whereas a monopoly (or monopsony) limits trade to improve its price, a bilateral monopoly would reach something closer to the perfectly competitive price, or perhaps would even bargain to exactly the efficient output. Thus, if we had just one employer in town, it might keep wages at $10/hour (and limit its hiring to do so), but if the workers unionized, creating a monopoly seller of labor, the result might be a wage of $15/hour and greater employment.

Looking at this idea from the point of view of the micro theory of 2005, though, it looks flawed. It is not bad as far as it goes, though since the loss from Harberger triangles is small, the inefficiency from monopoly or monopsony is not great (on the other hand, remember the Tullock rectangles). The problem is that bilateral monopoly creates a bargaining situation, and when information is asymmetric, that leads to a lot of inefficiency as parties try to bluff each other and trade breaks down entirely occasionally.

This could be looked at empirically in the labor context. How much do strikes cost, and how does this compare with the likely triangle loss from monopoly, using Harberger-like assumptions?

Amnesty International used to be mainly interested in the uncontroversial task of finding out about political prisoners. Now it has become a liberal lobbying group like any other, as we see here:

Amnesty International’s 2005 Report on worldwide human rights was released this week, and its contents have justly outraged Americans who support U.S. efforts in the war on terror –including the Washington Post which noted that Amnesty had “lost its bearings” and joined “in the partisan fracas that nowadays passes for political discourse.” Among other things, the report accuses the United States of “war crimes,” and openly compares the detention facility at Guantanamo Bay, Cuba, with the Gulag Archipelago. In addition, the executive director of Amnesty International USA has called on foreign governments to seize and prosecute American officials traveling abroad, just as a Spanish judge attempted to prosecute former Chilean dictator Augusto Pinochet in 1998….

…the report’s three fundamental measures of a good human-rights record, which are applied to every included state: (1) whether the death penalty has been retained; (2) whether the International Criminal Court treaty has been ratified; and (3) whether the U.N. Women’s Convention, and its Optional Protocol, has been ratified.

Various people have noted that perhaps the clearest indicator of Republican vs. Democrat now is Believer vs. Atheist– stronger even, I think, than All Other vs. Single Women. This would be even more true if we put aside the special case of the black vote, which is Believing but Democrat. A natural fear, then, is persecution under Democratic administrations. We have seen that Democratic administrations have never worried much about persecution of Christians abroad, and their judges have done their best to expel religion from the public square. Consider the letter below. (more…)

This morning at Fox River Lutheran Church the sermon was on embryonic stem cell research. Unfortunately, the sermon begged the question, which is whether destroying embryos is immoral. Instead, it was about the level of benefits from stem cell reesearch, and, to some extent, on whether any level of benefits would justify murder. Perhaps, though, the problem was that the pastor has already preached on the definition of life before.

The moral argument against embryonic stem cell research is simple, if flawed:

1. Suppose you could murder someone and by drinking his blood cure your illness. That would be immoral.
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I went to this 2004 harp concert by Miss Dan Yu (Chinese, thus the “Dan”), who won the 2001 International Harp Competition. It was very good, and I realized that the harp may be unique in allowing, like the piano, for two separate parts to be played simultaneously, but by plucking strings. A violin can play chords, but one hand has to hold the instrument and choose the notes while the other plays the notes. Since each string of a harp is a separate note, each hand can pick and pluck a separate note. But the harp is still digital, like the piano, rather than analog, like
a violin.

How about someone designing an electronic instrument that has two or more lines, is analog, and allows for varying volume for each note? It might be laid out as ten horizontal strips like violin strings. Pressing a given spot would produce a particular pitch; pressing slightly to the right would produce a slightly higher pitch. Pressing hard would make it louder. Such an instrument would have the analog potential of a violin, with the multi-note possibilities of the piano. (original: 04.07.05b)

I plan to start re-using old weblog posts of mine that aren’t obsolete. By now I have about two years worth of posts, and I ought to go back and see what I’ve been thinking about and whether I can improve on it. At the least, I can remind myself and my readers.

I like WORLD Magazine, but this article on bioethics is typical of so many I’ve seen that miss the most important element in whether it is ethical for a doctor to let a patient die. That key element is: “Who is actually letting the patient die?”
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Healy vs. Milwaukee Metropolitan Sewerage, 50 F3d 476 (7th Cir, Posner, 1995) is a good case to remember. The two parties had a 2,306-page contract which didn’t specify enough contingencies. It said that before digging, tests would be done to see if there was more than 25gpm water. There wasn’t, and digging started. Then the water level turned out to be higher than 25 gpm. Healy said it deserved extra payment under a “Differing Site Condition” clause; Sewerage said that the conditions did not differ materially from specified in the contract.

Under a narrow reading, the water-test clause is irrelevant to the issue of whether conditions differed materially from those expected, but of course under a reasonable reading, one can deduce that Sewerage was worried that a high water content would make the project too expensive. The jury and the Seventh Circuit were both reasonable. (Actually, the 7th Circuit said that the question of materiality of the water level was one for a jury, not a judge, and extrinsic evidence was admissible.)

I was at a Bible study on the Sermon on the Mount yesterday, and went away having learned a few things:

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Have presidential nominees for the executive branch ever been successfully filibustered?– that is, blocked by a minority of senators when if they had been voted on , they would have passed? The recent discussion has been about judicial nominees, where apparently this has never happened. But what about the executive branch?

Here is a People for the American Way list of judicial and exec branch appointment filibusters. I know it’s not accurate. Fortas’s delay was not a classic filibuster, but merely a slight delaying tactic and he didn’t have the votes to win anyway– but this might be a starting point. Manion is a judge now, so apparently the filibuster made no differnece. Breyer, Rehnquist, and Wilkinson all became judges too. Those are all the cases I know of among the judges, so none was a successful filibuster, it seems. And the congressional report to which PFWA actually doesn;t have any of the data they say came from it– judging from the copy of the report they have elsewhere on their website. Probably these were just nominees on which a vote to close debate was taken, regardless of whether the intent was to block a nomination or truly to allow more time for debate.

This drawing is by one of my favorite artists.

I just updated to Wordpress 1.51, which seems to have truly fixed the trackback bug. In my test, a link to post B in post A shows up as a comment in Post B, even without my separately saying to send a trackback to A. And the update to WP 1.51 was pretty easy.

UPDATED JUNE 1 2005

The Eastern Orthodox church in Europe is showing signs of rottenness at the highest levels, as Christdot reports. The two things in the news lately have been widespread corruption in Greece, and the de-recognition of the Patriarch of Jerusalem for being willing to lease land to Jews. (more…)

I’ve wondered why the criminals in the various corporate fraud scandals aren’t being brought up in state courts, not federal, and with the charge of fraud rather than the more complicated charge of violation of security laws. I see that Dennis Kozlowski actually was tried in New York’s state courts, and for larceny. I wonder if I as wrong about others. The Enron defendants, it seems to me, are guilty of fraud, but not so clearly guilty of violating accounting rules.

This webpage/A> lists the elements of fraud:

Taylor v. State Compensation Insurance Fund, 175 Mont. 432, 913 P.2d 1242 (1996) To sustain a claim of fraud, insurer was required to plead and prove each of the nine elements of fraud: (1) a representation; (2) falsity of the representation; (3) materiality of the representation; (4) speaker’s knowledge of the falsity of the representation; (5) the speaker’s intent it should be relied upon; (6) the hearer’s ignorance of the falsity of the representation; (7) the hearer’s reliance on the representation; (8) the hearer’s right to rely on the representation; and (9) the hearer’s consequent and proximate injury caused by reliance on the representation.

Those elements don’t seem hard to prove. Is there a problem of Federal securities law pre-empting state fraud statutes?

I need to sort out the debate over why crime fell in the 1990’s in the United States. I’m going to be teaching Professor Leavitt’s good JEP article on this in June, and it’s an important question in itself.
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Via Clayton Cramer, I found this wonderfully simple explanation by Walter Williams of why it is fair to say that almost all of those in poverty are there as a result of their own choice:
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M.R. at The Right Coast pointed me to a a Times Literary Supplement review of a book of biographies. The review tells us of an Oxford classicist named Eduard Fraenkel who apparently used to trade teaching for sexual favors in the 1940’s. Or, looking at it the other way, many of his students decided they would like to be academic whores: trading otherwise unwanted access to their bodies for what they thought was good teaching: (more…)

Via Marginal Revolution I found a wonderfully scathing review of Revenge of the Sith in The New Yorker. It is a florid style, and communicates at least three things to us: 1. Revenge of the Sith is a silly movie. 2. Some names are well chosen and some are not, and skill at choosing is an indication of the worth of the story. 3. Striking sentences ought to be mixed with tamer ones, to extract their full effect. Too many punch lines in a row is like a drink of 180 proof whisky. (more…)

I wonder if anybody has pointed out the huge hold-up problem in getting copyright permission for derivative works. The problem is that before I get to the stage of hiring lawyers to draft a contract for copyright permission for a book that I want to turn into a movie, I have to incur a lot of costs. Somebody needs to think of turning the book into a movie, write a script proposal for a producer, and the producer has to get seriously interested, which requires a lot of preparatory investigation. Then, if the copyright holder holds out for a large permission or simply refuses permission, or gives it to a competitor, all that effort is wasted. So it won’t be done in the first place, for many books.
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Pastor Whitaker had the sly idea of doing a sermon series on the Book of Revelation– but not on the gaudy parts with the Number of the Beast and the New Jerusalem, but the first few chapters, on the Seven Churches, which people looking for drama skip over. Today he talked about the Church of Ephesus. Revelation 2:1-7 says (more…)