Monthly Archives: August 2007

Bush Bailout?

Was President Bush’s announcement that he is seeking to reform the FHA to assist strapped homeowners a bailout or an exercise in politics?

Our friend Barry Ritholtz says it seems like a political move before the holiday weekend.

Katrina

Peter Boettke discusses the recovery effort on the second anniversary of Hurricane Katrina:

On the second anniversary of Hurricane Katrina’s landfall in the Gulf Coast, received wisdom and today’s media coverage dictates that the Gulf Coast has barely begun to recover. This is not a fair assessment of the facts. Recovery is occurring on a neighborhood level; views of recovery based on political jurisdictions do not reflect accurately the quality or sustainability of the recovery. The ability to leverage social capital and make use of the leadership emanating from the voluntary sector is critical to promoting recovery.

Government-led recovery programs are in many ways causing more harm than help. By failing to clearly articulate the rules that govern the rebuilding process and the resources that governments will provide, governments at all levels have made it difficult for residents and business owners to make informed and intelligent decisions about whether and how to rebuild.

Community organizations, businesses, nonprofit groups and religious institutions help families make informed decisions about rebuilding. Reopened businesses, resumption of church services and similar phenomena send positive signals that communities are coming back. Residents making decisions about returning rely heavily on these signals in the face of conflicting or incorrect signals from authorities.

Economic History

Those who know me well, know that I have a soft spot for anything regarding economic history. Thus it was a pleasant surprise when Brad DeLong recently posted two excellent essays The World in 1900: The View from 1900 and The World in 1900: Poverty.

Read them both.

30 Days

Lew Rockwell lays out his 30-day plan for less government. My favorite line:

DAY FOUR: The minimum wage is reduced to zero, creating jobs for ex-federal bureaucrats at their market wage.

Kudlow’s Deflation

I have great respect for Larry Kudlow and his affinity for free markets, but I am not sure where he is coming from when discussing possible deflation:

There’s housing price deflation: The Case/Shiller home-price index is off 3.5 percent over the past year.

There’s commodity deflation: Gold prices are off nearly 15 percent from their 2006 highs. Stock prices for materials are off nearly 13 percent since July 19, while metal and mining shares are off 16 percent.

There’s the deflation of loan values, both CDOs and CLOs.

And there’s the deflation of the Treasury bill rate from 5 percent to 4 percent.

Larry is largely discussing specific falling prices, not deflation. In other words, he is speaking in anecdotes that do not reflect the overall price level. In fact, by any measure of the overall price level, prices are rising — and rising at a rate above the Federal Reserve’s comfort zone. Thus inflation is still a concern. Meanwhile, Larry has fallen for the old adage, if we ignore the prices that are rising, there is evidence that prices are actually falling.

I think that Larry is more concerned about housing and its effects on the economy than he would like to admit.

Addendum: I better not tell our friend Barry Ritholtz. This is his pet peeve.

Thoughts on Tipping

Tipping is somewhat of a bizarre practice because it suggests that you are rewarding a person for a job well done. However, often times it merely reflects societal norms. For example, when I go to a restaurant, I always tip the waiter/waitress. How much I leave largely depends on the service, but their performance has to be awfully bad for me to neglect to leave a tip altogether.

I am particularly interested in situations where it is not the norm to leave a tip. For example, I went through an automated car wash this morning. After the car passes through, two or three employees of the car wash then proceed to dry the car. I may be mistaken, but this is not a situation that requires a tip by some societal norm. Some employees are better than others and, in my view, they should be rewarded with a tip. However, I do not like to roll down my window after a car wash and thus I sometimes give the tip prior to the wash.

So here are my questions. Is this efficient? Should I tip before they have completed the job? Will this provide an incentive to do a good job? My rather unscientific observations suggest that they do a good job when tipped prior to the wash. However, since I do not know any of the workers I cannot be sure that this is as a result of the tip or the natural work ethic of the employees.

Any thoughts?

Radicals for Capitalism

Will Wilkinson and Brian Doherty discuss libertarianism over at Bloggingheads.