The Wall Street Journal reports:
When it comes to watching video on the Web, some companies charge consumers for access. Others offer it free. Then there is ESPN.
In an unusual approach, Walt Disney Co.’s sports-cable titan is charging Internet-service providers for the right to offer its broadband Web site, ESPN360.
Posted in Economic News
Given the current state of the economy, this seemed like a good article to recommend:
The Hangover Theory, by Paul Krugman
Posted in Everyday Econ
Recently, I decided to purchase a new vehicle. This left me with many decisions to make — most notably, what to do with my old car. Ultimately I had two options. I could sell the car myself or I could trade it to the dealership. To the average person, this is likely an easy decision. However, an economist must weigh the trade-offs.
It was obvious that if I decided to trade the car to the dealership, I would receive substantially less money than if I sold the car myself. Such is the case because the dealer is looking to sell the car immediately after purchase whereas an individual buyer is merely looking for transportation. The decision thus rests upon how much I value my time. Does the cost of selling a car on one’s own time (opportunity cost) outweigh the cost of trading the car to the dealership (the difference between book and trade-in value)?
Time, however, was not much of a problem for me. It is the summertime and I have more time on my hands than usual and thus my time is not as valuable. So I decided to sell the car on my own. Shortly after making the decision, I was attending a family gathering and someone remarked that the most important part of selling a car was making sure that it is washed. I was told that I should never have a “For Sale” sign in the window of a car with any inkling of dirt. As an economist this go me thinking, does a clean car really make a difference? If so, why?
I came to two possible solutions.
First, perhaps a clean car attracts the eye. Individuals looking to buy a car are more likely to be looking at other cars that are passing by. Thus if the car is clean, it would immediately attract their eye to the car and the “For Sale” sign in its window.
The second — and more likely scenario — is that a clean car sends a signal.
Labor economists often discuss signals with respect to education and employment. Many have debated whether individuals with a college education are more likely to be hired because of the signal that a degree sends. For example, someone with a college degree has proven that they can achieve goals. Also, college educated individuals tend to have other similar characteristics that management may find attractive.
Similarly, a washed car may send a signal. A spot-free shine on a vehicle may demonstate how well the owner has tended to the car. If the car is dirty, it may signal that the owner is indifferent to the car. To them, it is merely a mode of transportation. Maintenance is done on the car, but not always on time. If a car is clean, it is more likely that it is owned by a person that has regular maintenance done on the car. The owner likely takes pride in the car.
Whatever the case, I decided I should wash my car.
Posted in Everyday Econ
Homework for the weekend. Part 4 of Milton Friedman’s Free to Choose entitled “From Cradle to Grave”.
Posted in Free to Choose
The Numbers Guy asks an intriguing question:
A lot of companies stand to make a lot of money if they can get a glimpse of the opinions of corporate executives, and what products and services they might like to buy.
Yet there may be no group more difficult to pin down: Even if executives do want to reveal their spending plans, they probably don’t want to set aside 15 minutes to tell pollsters about them.
[...]
My curiosity focused not on the studies’ results, but on their methods: How did Jupiter and Forrester survey all these busy executives to arrive at such definitive claims about corporate behavior?
Read the whole thing.
Posted in Economic News
The New York Times opines:
While Chicago was debating how much money working parents need to feed, clothe and house their children, the Congressional majority in Washington has been dodging any vote on a minimum-wage increase in favor of slashing taxes for millionaires.
Somehow I think this had more to do with Wal-Mart than with wages in general.
Posted in Economic News
Ron Haskins looks at the results of welfare reform in The Wall Street Journal:
It would be difficult to exaggerate the predictions of doom hurled against the Republican welfare reform bill signed by President Bill Clinton on Aug. 22, 1996. Mr. Clinton had previously vetoed two versions of welfare reform when, with skill, daring and persistence, Republicans in the House and Senate pushed it through Congress a third time and put it again on the president’s desk. In an act of remarkable political courage, Mr. Clinton defied senior members of his own party and most of the American left and signed the radical bill into law.
The left, led by senior Democrats in Congress, the editorial pages of many of the nation’s leading newspapers, the Catholic bishops, child advocates in Washington and the professoriate, had assaulted the bill in terms that are rare, even by today’s coarse standards. Democrats speaking on the floor of the House labeled the bill “harsh,” “cruel” and “mean-spirited.” They claimed that it “attacked,” “punished” and “lashed out at” children. Columnist Bob Herbert said the bill conducted a “jihad” against the poor, made “war on kids” and “deliberately inflict[ed] harm” on children and the poor. Sen. Frank Lautenberg said poor children would be reduced to “begging for money, begging for food, and . . . engaging in prostitution.”
[...]
In the decade that has passed since the 1996 reforms, the welfare rolls have plummeted by nearly 60%, the first sustained decline since the program was enacted in 1935. Equally important, the employment of single mothers heading families reached the highest level ever. As a group, mothers heading families with incomes of less than about $21,000 per year increased their earnings every year between 1994 and 2000 while simultaneously receiving less money from welfare payments. In inflation-adjusted dollars, they were about 25% better off in 2000 than in 1994, despite the fall in their welfare income.
Undoubtedly one of the greatest pieces of legislative reform ever signed.
Posted in Economic News
The Iranian newspaper Kayhan erroneously reports that Tel Aviv has been evacuated and more:
Iranian conservative newspaper, Kayhan, claimed Thursday in its top story that “Tel Aviv has been evacuated.” The newspaper, associated with the spiritual leader Ayatollah Ali Khamenei, tends to exaggerate about anything connected to reports on Israel. It seemed Thursday that the imagination of the Iranian editors spilled over.
[...]
The article elaborates on Hizbullah leader, Hassan Nasrallah’s last speech, which according to the newspaper successfully instilled fear throughout the country, even causing several government ministers to relinquish the idea of disarming Hizbullah.
Another issue that received not a small amount of attention in the newspaper is the presence of demonstrations in Tel Aviv and Haifa. According to the report, “The demonstrators expressed disgust with the powerlessness of the army to stop the rocket shooting of Hizbullah towards Israel.”
It is good to see that Baghdad Bob found work.
Posted in Uncategorized
The Right is up-in-arms about Howard Dean’s recent comments (surprise!).
His first statement was regarding Katherine Harris:
“Thank God for Bill Nelson, because we’d have another crook in the United States Senate if it weren’t for him. He is going to beat the pants off Katherine Harris,” Dean said during his 20-minute address. “She doesn’t understand that it’s…improper to be chairman of a campaign and count the votes at the same time. This is not Russia and she is not Stalin.”
Stalin? No.
Then came his remarks regarding Iraqi Prime Minister Nouri Al-Maliki:
“The president made a big deal about bringing the Iraqi prime minister to address Congress. The Iraqi prime minister is an anti-Semite. We don’t need to spend $200, $300, $500 billion bringing democracy to Iraq to turn it over to people who believe Israel doesn’t have a right to defend itself.”
On the one hand it is refreshing to hear a Democrat defend Israel. On the other hand, he should not have to call anyone an anti-Semite to do so.
On the whole Dean’s comments were not that bad — at least by Dean standards. However, this set off the irony alarm:
Dean called President Bush “the most divisive president probably in our history.”
One cannot call others divisive when they unjustly compare individuals to Stalin or call them anti-Semites.
Posted in Politics
Megan McArdle has written a great review of Benjamin Friedman’s new book, The Moral Consequences of Economic growth. Here is a sample:
For many Americans, riches are so disreputable that taking them away is a goal in itself. The left used to offer the misery of the poor as a reason for redistribution, but these days an increase in inequality is just as likely to be the rallying cry for higher taxation. In a savage New York Times column this past March, the economist Paul Krugman turned rising inequality—a trend that has persisted for decades under both Republican and Democratic presidents—into a frontal assault on the hated Bush tax cuts. More generally, the chief plaint of Democrats about those cuts has been not that they are economically inefficient, or even that they are leaving wonderful programs starved for funds, but that they primarily went to “the rich.”
[...]
Even those who think wealth is good (or at least harmless) often implicitly suggest that the pursuit of wealth and the pursuit of moral goals are separate questions. They would do well to read Benjamin Friedman’s The Moral Consequences of Economic Growth. The author, a professor of political economy at Harvard, has written an economic tome that is accessible to the average reader without failing to offer something new to specialists as well: a compelling argument that rising incomes make us not just richer people, but better ones.
Read the whole thing.
Posted in Everyday Econ
