All right, I’m down to pretty much two places in my quest to find a domicile now that I am employed starting Monday. One is much larger, slightly more expensive, and in a slightly worse location. The other is brand new, in a better location, smaller, and slightly cheaper. The former has a devilishly cute blonde girl as the leasing agent, the latter has a devilishly cute brunette as same. I’m pretty much indifferent, so I’m going to let y’all help me out.

Poll after the cut.

Here Be Housing!

Blonde or Brunette? BLONDE! BRUNETTE! Current Results

You’ve probably seen this elsewhere, but the WSJ Online is running an econoblogging feature this week. It’s pretty interesting an informative at the moment, the current discussion is on Social Security. I do want to point out what I see as a major flaw in John Irons’ (the “liberal” econoblogger they’ve recruited) thinking about social security:

The right way to think about the system is not “what do I get out of it,” but rather, “how do we as a society wish to treat our elderly?”

{snip}

Again, we need to think about the system as how we, as a civil society, want to treat our elderly — ensuring (and insuring) a modest income during retirement is the right thing to do. It is a “good deal” because we get a lot out of the system.

Why shouldn’t we restructure social security as a welfare program? Because what we’re doing is the “right thing” of course! It doesn’t matter if it’s massively expensive, it’s right! We must find a way to fund it! Furthermore, it’s the government’s job to provide for the lifestyle of the old! Private investment has fundamental flaws! Geesh. Irons is at least more like Brad DeLong than like Paul Krugman. DeLong might be wrong pretty often, but he’s at least civil and readable most days.

Tyler Cowen over at Marginal Revolution points to a short history lesson about the end of the US Draft. Major roles were played by Milton Friedman and Allen Greenspan among others, as well as economist William Meckling. According to that story Meckling was probably the most influential in that decision. To think, I’d never even heard of him before. So, thanks Economists for making the world safer for lazy, post-college schlubs. Oh, and thanks to Richard Nixon too for putting that council together. Man, never thought I’d be thanking Nixon for anything.

Sabernomics combines two things that I love and nobody else gives a rat’s ass about. Namely, econometrics and baseball! Nothing so cool will be invented again, ever.

If you’re not a regular reader of Marginal Revolution, you should be. The guys over there cover a very ecclectic range of topics, and most of the time it’s pretty interesting. The latest? This post on kidnapping in Mexico.

I’m speaking of this interview with Ray Fair in the NYT Magazine [horrible, free subscription required]. The Fair Model is an econometric model used to predict Presidential elections. And it’s been pretty good, (+/- 2.5% on average) on the whole. There’s a lot of potential here for a really interesting interview, but instead Deborah Solomon has exchanges like this one:

In your book ”Predicting Presidential Elections and Other Things,” you claim that economic growth and inflation are the only variables that matter in a presidential race. Are you saying that the war in Iraq will have no influence on the election?

Historically, issues like war haven’t swamped the economics. If the equation is correctly specified, then the chances that Bush loses are very small.

But the country hasn’t been this polarized since the 60’s, and voters seem genuinely engaged by social issues like gay marriage and the overall question of a more just society.

We throw all those into what we call the error term. In the past, all that stuff that you think should count averages about 2.5 percent, and that is pretty small.

It saddens me that you teach this to students at Yale, who could be thinking about society in complex and meaningful ways.

This is what passes for journalism. Ask Ray Fair questions, lady, don’t banter meaninglessly about your opinions. Science (yes, science, Ruff) doesn’t care whether you’re sad or not, and Ray Fair is a good Economist for teaching his students econometrics without getting all emotive about it. You want sociology, Ms. Solomon, you’ll have to go over to the Op-Ed desk and ask Krugman. [Via Antler]

I was reading a rather interesting Hitchens piece about how much he dislikes Michael Moore, and it seems that one of the clamis of Moore’s new film is that:

Saudi capital in general is a very large element of foreign investment in the United States.

Well, I decided to do a little investigating. This BEA Report is the most recent I could find, and has data up through 2001. On a historical-cost basis, “Middle East” Foreign Direct Investment (FDI) in the US makes up about 0.045% of FDI. By contrast Canada makes up about 8.22% and “Europe” makes up about 71.7%.

On a capital flow basis, the “Middle East” as a region actually recieves more FDI from the US than it sends here. Middle East capital inflows in 2001 were -$159 million, meaning that US businesses sent $159 million more of capital to the Middle East than the entire region sent to the US. Middle Eastern FDI only accounts for about 1.95% of income from FDI in the US.

But wait, there’s more! That only covers the income/production side of FDI, what about Middle Eastern holdings? Well, the second table in that same document has information about non-bank foreign affiliates in the United States. Of total assets held by foreign non-bank affiliates, Middle Eastern investment makes up 0.66%.

The other data in the tables points the same direction, that Middle Eastern investment in the United States is a relatively small proportion of FDI and, even assuming that ALL of that investment is Saudi, Saudi investment in the United States is a tiny proportion of the FDI that happens here, which is in turn a tiny proportion of the economy (10-15%).

It should be noted that in a lot of cases a “foreign firm” is sort of a nebulous term, but IIRC the US reporting standard is that being 15% foreign-held makes a firm “foreign” for the purposes of FDI reporting. A brief summary of the reporting requirements for FDI in the United States can be found here.

I’ll cover the personal investment side later, because that data isn’t really as interesting, is far afield from my areas of knowledge, and will take a lot longer to dig up.

This NYT piece is a pretty nice introduction to exchange markets. Extremely easy to read…and I’m not just saying that because I’m a huge dork. [Via Prof. Tabarrock at Marginal Revolution]

Hello healthcare! That Verdon Guy [you know what to do] put up that nice little post as a dissection of an Atrios post on healthcare. Go read it. What that post brings to mind, as did this one (whose original intention is a criticism of Austrianism, but it got me thinking) from earlier in the week, is the question of whether or not healthcare is a public good.

Meaning, really, does healthcare have the following two properties:

1) non-excludability [people cannot be stopped from consuming the good]
2) non-rival consumption [one person consuming the good doesn’t reduce the amount of the good available for others to consume]

In the United States, and the world more broadly, it is pretty much cannon that people cannot be stopped from consuming healthcare. In the US, hospitals are bound to treat any patient who comes through the door, regardless of ability to pay. Now, we can debate the relative merits of that policy at a later date, but for now we’re going to have to take it as given. So, clearly, healthcare meets the first criterion.

Non-rival consumption is a bit trickier in my view. If we assume there are both a finite number of doctors and a finite number of hours those doctors can work in a given period (say a week) then it seems fairly obvious that there is rivalry in consumption of healthcare. That is, if I’m taking nine hours to have my knee reconstructed, that’s nine fewer hours available for you to have a hip replacement [yes, I am assuming homogeneity of doctors and hours, don’t get on me about that, I know]. There are also finitely many medical devices and such. Just by failing that criterion, I’d say that healthcare certainly isn’t a wholly public good.

There are, of course, arguments regarding positive externalities etc. which might be used to make a socialization case, but if healthcare is not a public good, the argument for complete socialization fails because socialization would enter us into monopsony from oligopoly and even neo-classical economics predicts that oligopoly outcomes are better than monopsonistic outcomes. The question becomes, then, how is a government monopoly better than a private industry monopoly in the market for a non-public good?

At least this post by Tyler Cowen over at Marginal Revolution is. He links to a post by Arnold Kling about oil prices over time. It’s all pretty interesting, but confusing as hell.

It seems my macroeconomic intuition isn’t as bad as I thought it was, as I have held for along time essentially the same opinion as Milton Friedman. I’m sure he’s got much better reasons than mine, and probably some data to back him up, but it’s nice to see I’m not totally off base.

If you ever wanted to learn a quick lesson about consumer choice, go read this and have yourself a drink.

If you’d rather take a look at some issues regarding US scientific competitiveness, read this Tabarrok post over at Marginal Revolution. It’ll be a lot more interesting than the above, I promise.

Lastly, if you’re interested in the economics of obesity (yup, you heard me right) there’s this lovely Bruce Bartlett piece from NRO.

ENJOY!

Arnold Kling points to this , the end of which has a nice little hypothesis on why a lot of folks find economics repugnant.

Apparently the WTO has ruled against US cotton subsidies. McArdle’s analysis is pretty much right on, so I’ll let y’all read for yourselves. Rulings like this are the best hope for the world’s developing economies, let’s hope things keep moving this way.

It seems that Paul Allen has apparently squandered away nearly a third of his wealth, mainly through bad investments in unproven technology markets. Now he’s apparently doing the smart thing and diversifying his portfolio, and pursuing a sensible investment strategy. Not that he’s not already wealthy, but anybody has to invest sensibly to maintain wealth, as a finite fortune, however large, will only hold up to consistent losses for so long. He’s also apparently developed new discipline with his investing:

The best prospects got a 30-page report that went to Vulcan’s investment committee. For those that made the cut — just 30 in 2003 — the advisers compile 300-page reports, complete with forensic accounting and background checks on management. Only then could a company get money from Vulcan; just a dozen or so did last year. “We’re just so much more thorough, meticulous, demanding, and focused now than we were just a few years ago,” says Allen.

Hopefully his basketball team can develop something similar, albeit in a different arena.