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Thursday, August 23, 2007Local Sheriff Needs More SchoolingButler County Sheriff Richard Jones apparently slept through his Econ classes in school. I am making this assumption based on the stupid comments he had in yesterday's paper: Sheriff Takes On High Gas Prices (well...this was online, but it was probably printed somewhere, right?). It reports that Jones wrote a letter to Ohio Attorney General Marc Dann asking him to carry out an investigation into the rising prices and whoever is behind it. I agree!!! Go get those dastardly people who are behind the rising prices. ARREST THEM AND SKIN THEM ALIVE!!!!!!!! HAHAHAHAHA!!!!!! wait...what? really? You and I are the ones responsible? How? Oh. Supply and Demand huh. So you are trying to tell me that because I am demanding more gasoline, the prices goes up. Oh. Well, I was just kidding about the arresting and the skinning. heh heh. Anyway, the best quote of the article goes like this: I would like to know why the people of this great state and country seem to fall victim to the whims of whoever grabs at any possible catastrophic event to justify higher gas prices," said Jones. "All the while major oil companies continue to post record profits.Back to School Time!!!
 , by Thomas Sowell. Maybe then he'll learn how the world works. Subscribe to the DIA FeedLabels: Cincinnati, Economics, Gasoline, Politics Thursday, August 16, 2007Sub Prime Mortgage: Who's to Blame?There has been an awful lot of talk lately about the sub-prime mortgage "crisis" that is going on in America. People across the country are defaulting left and right because they can't pay off their mortgage! This is bad. But I am a bit confused about the whole thing, because I can't figure out who is to blame...but I have my suspicions. First, lets define the term. From Wikipedia: Sub prime lending, also called B-Paper, near-prime, or second chance lending, is a general term that refers to the practice of making loans to borrowers who do not qualify for the best market interest rates because of their deficient credit history. {generally a credit score < 650}This is inherently not a bad thing. It extends credit to people who couldn't normally get credit. It becomes a bad thing when people don't pay their loans. It's not that difficult. So the other day I read this news story. It talks about how Democrats are taking on the mortgage problem, and offering ways to fix it. This is a good thing. Ideas are good. Unless they are bad ideas. Then they are bad. Now, before I continue, you should know that I don't like politicians. Almost all of them. I think they are greasy liars who are only looking out for themselves to keep their jobs (probably like most people...but I try not to be that cynical). These particular politicians have put the entire weight of blame on the lenders...100%. The ENTIRE sub prime meltdown is their fault, because they are unscrupulous corporate jerks. I am sure some of the blame should fall on them. There are probably some devious people who run devious lending institutions, trying to get people to default on their loans. Probably not many though. I would say most of the blame has to ride on the homeowners. And it could all be fixed with a little personal responsibility: DON'T GET A LOAN YOU CAN'T PAY BACK!!!!! That's not so hard. I wish I had a bigger/better house. But I wouldn't be able to pay for it...so I couldn't do it. It doesn't really take smarts really...just common sense. If I don't pay my loans...I will be in a lot of trouble. Senator Christopher Dodd, the Chairman of the Senate Banking Committee, recently came out with a list of things he wants to see enacted into law: End prepayment penalties - the fees paid if a borrower chooses to pay off a mortgage early.Let's go through those.
My problem with politician's ideas is that they all require more law and more regulation instead of teaching people to not be idiots. I wish I ruled the world...everything would be so much better. Subscribe to the DIA FeedLabels: Banking, Economics, Subprime Lending Saturday, April 7, 2007Are Record Stores Disappearing?I was pointed to this article the other day from the NY Times. It is written by guest writers who happen to be the owners of a once popular record store. The article attacks the Recording Industry (RIAA) for ruining the CD and, by association, music in general. The article wasn't all that well written (this coming from me!) and kind of haphazardly addressed different things, but there were a few things I found interesting. Despite the major record labels’ best efforts to kill it, the single, according to recent reports, is back. Sort of.This statement I agree with, although I'm not so positive that the record labels wanted to kill the single. The single has always been a major sales tool in record sales. The single is what gets played on the radio and it is what gets people into the stores to buy the album. I do agree that during the cassette tape and CD era, singles were not major players in the music industry (except for radio of course). Back in the ancient days of 45's, singles were pretty big. I don't know why...maybe that's all kids could afford after they spent their money on coke and bubble gum at the Pony Keg. But now in the age of digital music, the single is HUGE. If you look at the numbers from iTunes, WAY WAY WAY more singles are purchased than albums. A lot of people like spending $1 for the one song they like instead of $15 for the CD. So I don't really attribute anything the RIAA did as being good or bad for the single. It's just the evolution of music. Later, the authors make one of my least favorite arguments: But instead, those labels delivered the death blow to the record store as we know it by getting in bed with soulless chain stores like Best Buy and Wal-Mart.Why are they soulless? Because they make the CD's that most of the country's population wants to hear inexpensive? Isn't that a good thing? Aren't lower costs better than the higher costs that it takes to run a pretentious independent record store? They are for me. And apparently they are for most everyone else...this is why the record store went out of business. Don't blame the RIAA (who, by the way, could probably be run better by two dolphins and a magic eight ball. Oh, and one person to write down the dolphins decisions. From what I hear, dolphins have poor handwriting.), don't blame the record labels, don't blame Wal-Mart and Best Buy, and don't blame Napster and iTunes. If you want to be really arrogant, blame your customers for "falling for it". but most of all, blame yourself for refusing to adjust to the new marketplace. Overtime there have been MANY industries that have had major changes and sometimes certain occupations become obsolete. Almost the entire horse and buggy industry was wiped out by automobiles. The steam engine industry was almost completely wiped out by better and more efficient engines. BOO to the automobile for putting people out of business!!! BOO to internal combustion engine creators for ruining lives!! I just tire of these old "you are ruining my industry and making me obsolete" arguments. Evolve with the industry, cut your costs, create value...but don't cry when you get passed up by more efficient and better run companies. Thoughts? Thursday, April 5, 2007NCAA Coaches Get PaidI was reading a post over at The Sports Economist about NCAA Coaches pay. It has been in the news lately because of all the coaches changing (or not changing) jobs. I thought his post was very well written, and interesting. Here is the part that was most interesting: The average I-A football team earns about $15 million a year in revenue; the average N.F.L. team earns about $160 million. How can a college coach create as much value as an N.F.L. coach?Actually that is a quote from someone else, Andrew Zimbalist. I don't know who that is. Anyway, I think that is a very interesting point that I had never thought about before. How is it that schools are able to pay the head coach that much money? Bob Stoops gets paid over $3 million and Billy Donovan is about to sign a new extension down in Florida. He will probably make somewhere around $72 million dollars a year. That's how much in demand that guy is right now. I guess it is easier to pay your coach $4 million in a big program that brings in a lot of revenue if you don't pay your employees. So I actually do understand where they get the money. College sports are a coaches game. The coaches are the draw. Bob Huggins created all kinds of news (and revenue) in his one year at Kansas State. He will do the same next year at West Virginia. There are just very few players that are bigger than the coaches, and even if they are it is only for a few years. It's a coaches game...so the best ones get paid the most. Makes sense to me. I'm glad we worked this out together. Anyone have any thoughts on this? Sunday, March 4, 2007Walter Reed HospitalI hate to keep talking about it...check that...I love to keep talking about it, but does anyone really think that the Uncle Sam knows how to run a successful hospital? Does anyone really think that the US Government would do as good a job providing health care as a private hospital would? I doubt it. In case you don't know what is happening...Walter Reed Hospital has been under heavy criticism for unsavory conditions. Conditions like rats and mold and other lovely things like that. Walter Reed is a hospital for injured soldiers and it is federally run. As you know, I am of the opinion that anything the government can do, private enterprise can do better. (on a side note...I don't actually believe that. For example, I don't think private enterprise should raise an army...but the basic premise is true I suppose) Doing activities like running a non-filthy hospital probably isn't that hard actually...it just depends on your incentives. My guess is that the incentives that are available for the Walter Reed staff aren't very good...this the decrepit conditions. Luckily our Congress is up in arms about this demanding that something be done. I'm sure people will be replace and then replaced by other government employees who have the same incentives. Not much will change in the long run. I'm jaded though...maybe I'm not the person to listen to on governmental issues. I just generally assume that any central government will mess it up, whatever it happens to be. The furor over the hospital will die down and Congress will move on to some other non-important topic to fight over. Like their involvement in Major League Baseball's steroid "controversy". That is a great example of Congress doing the right thing. Heck, even France doesn't get involved in the Tour de France's doping scandals...AND THAT'S FRANCE!!! eh...I just get cranky when I read about stuff like this. Our brave soldiers suffer because some politician wants to keep his job instead of finding out the best possible way to provide care for the solders. This is why I am jaded. Labels: Economics, Government, Privatization, Walter Reed Tuesday, February 27, 2007Mistresses in ChinaSo I was reading some random news stories today and I came across this one: "Stand-in mistresses sought to take wife's abuse". This, of course, caught my eye. Basically, over in China it is acceptable (kind of) to have mistresses and to have them shack up at one of your other places of residence. So one wife found out about her husband's affair and is threatening to beat up the mistress. Makes sense so far...but here is where it gets odd. The husband has placed a personal ad requesting that a lady take the beat down in substitute for his real mistress. More than 10 people had applied for the job, the newspaper said. The "successful" candidate would be 35 and originally from northeastern China and would be paid 3,000 yuan ($400) per 10 minutes, it said.I think this is hilarious. Amazing and hilarious. I always wonder what people will think of next. I PROMISE this will turn into some sort of small industry of girls (probably dudes too) who whore themselves out, only it's just physical abuse here. Here is the paragraph that really caught my eye though: Many Chinese businessmen keep mistresses in second homes, a trend banished after the Communists swept to power in 1949 but which has made a comeback with market reforms in recent decades.This brings up a number of questions:
Thoughts? Labels: China, Economics, News Saturday, February 24, 2007USPSI have a question. I am hoping someone can answer me. I would appreciate comments/conversation on this topic if anyone is willing. My question is this: Should the United States Postal Service be privatized? I was reading a really interesting article put out by the Cato Institute. In it, a number of people were asked this very question. One of whom is the Postmaster General, Marvin Runyon. His comments were about what you would expect them to be: don't privatize the USPS, let us privatize ourselves. I would say that is pretty much the same thing. The USPS can't privatize themselves though...they have to ask permission to do pretty much everything. In other articles I have read there seems to be a question of what, if anything, privatization would do. Most economists say it would force the USPS to play by the same rules that regular companies do. For example, The USPS has turned a profit a number of times. When it does make a profit it does not have to pay any taxes that a regular profitable company has to pay. When it doesn't turn a profit, it evens the books by using federal tax money...your money. If the USPS were privatized I think it would force it to immediately improve efficiency (yes, I realize this is not a particularly original though..but it is true). Obviously it is not currently running efficiently because it rarely turns a profit. Privatization would eventually rectify that problem. Of course, a major problem with getting this done is to get it past the USPS federal employee union. All USPS employees are guaranteed their jobs, they certainly wouldn't want that to be in jeopardy. It will be interesting to see what, if anything, happens with the USPS. I think it needs to be done...to save my tax money and to be more efficient. Higher efficiency would free up more people to be more productive elsewhere. This is one of the early lessons of economics...scarcity. The scarce product here is labor. Another impact of privatization would be the new competition for first class mail. Currently the USPS has a legal (read: governmental) monopoly on first class mail. If the market would open up then the other carriers (UPS, FedEx, etc...) would want to get in there, driving prices down. These parcel carriers would also now have someplace to diffuse their costs and this would also drive down the prices for package shipment. None of this would happen right away probably, but the growing pains (read: higher prices) would be worth it in the long run. I doubt much will happen with this though...probably at best there will be some sort of semi-privatization, a la Fannie May. That would be better than nothing, but still would not be the ideal position that we as taxpayers deserve. I am interested in your thoughts on this. Labels: Economics, Privatization, USPS
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