Amazing New Tool

Thanks to Justin Wolfers' recent column in the New York Times on the dominance of economists, I see this amazing new data tool which gives you the number of times, or the fraction of articles in which, any word has been used in the Times since the mid 19th century. Check it out.

Above is some of its output (click to enlarge). I thought it interesting that the number of times the word nigger has occurred in the Grey Lady's articles has remained fairly constant since the time before the civil war, even though it was frequently used in fiction less than a hundred years ago (William Faulkner's Absalom, Absalom! comes to mind, as does, of course, Joseph Conrad's The Nigger on the Narcissus). Those of us who believe the word's negative power today would be greatly reduced if decent folks were socially allowed to use the word at will should be pleased to see no negative trend in mentions, though this word has always been very rare.

With regard to the race issue, here are some trends in words used to refer to the Black Man. It is interesting to note that negro fell out of favour around 1870, then came back, possibly with the Civil Rights movement, only to decline again. Around this time, black really picks up. African-American has never been too common:

Here's a spelling reform which took hold quickly: writing per cent as one word (although I and many non-Americans do not do that). This pretty much must be the result of official NYT policy as it is inconceivable that nearly everyone should adapt to a new way of spelling so fast without central direction.

Lastly, I thought it might be interesting to see if the growth of government is reflected in the mentions of POTUSes in the New York Times. There indeed does seem to be an upwards trend as judged by the fraction of articles in which the word President appears, though this trend ended around 1980. It is noteworthy that individual names have become more frequently used over time. Ulysses S. Grant is one of very few exceptions of pre-1960 presidents who could compete with post-1960 ones in terms of fraction of articles mentioning the name of the office-holder. But what happened to Obama in 2013? His name was only mentioned in 2.99 per cent of NYT articles.

 

Anyway, this is a fun tool that I suspect will amuse many, many people and lead to numerous interesting speculations.

How Much Toilet Paper Does the Average Person Consume in a Day?

Over on MarginalRevolution, Tyler Cowen had an amusing remark the other day on a figure for average daily toilet paper consumption in the USA. The article he cites has it that the average American uses 46 sheets of toilet paper in a day and Cowen thinks that is excessive. In hindsight it's hard to know what would have been my guess had I not read the article, but I believe I would have though 46 sheets a fairly good one for reasons which I will come to below.

I believe estimates of these things comes from knowing how many sheets there are on a roll and counting how many rolls are sold during a suitable time period. This become an understatement since not all Americans buy all the toilet paper they use in the US throughout the year (some travel abroad on holiday and don't take any toilet paper with them), and it is an overstatement since some of the usage is due to tourists, but if this is the way they estimate things it seems very reasonable to me.

So why might 46 sheets a day be a good estimate? I believe women and so-called "germophobes" in particular will appreciate the fact that public bathrooms are disgusting though one cannot always tell without the aid of a microscope. This necessitates the use of paper covers for persons who need to go and sit down while doing so. I counted the number of sheets required for a decent paper cover in the shared bathroom at my department and reached the figure 17. If somebody goes at the office or on public bathrooms three times in a day, that is 51 sheets that are not really used in the expected way. Not everyone works and not every day is a workday, and of course not everyone has the respect that they should have for germs, but this little calculation might go some way towards explaining the 46-a-day figure.

Toilet paper also acts as a substitute for kitchen towels or similar products, though I am not sure to what extent this drives up the average daily usage estimate since by the same token kitchen towels can substitute for toilet paper.

Anyway, this is an interesting issue because the fact that people like Tyler Cowen question the 46-a-day estimate indicates that not everyone can be equally efficient users of toilet paper. Many people would of course like to be more efficient but the nature of the issue makes it difficult to try to learn from others how to reach peak efficiency.

Put Yourself in Someone Else's Shoes

I have always suspected Oxfam of being more than just a little bit out of it and today's news story from the BBC offers a case in point. Here's the abstract from the so-called "anti-poverty" organization's report:

"Global wealth is increasingly concentrated in the hands of a small wealthy elite. These wealthy individuals have generated and sustained their vast riches through their interests and activities in a few important economic sectors, including finance and insurance, and pharmaceuticals and healthcare. Companies from these sectors spend millions of dollars every year on lobbying to create a policy environment that protects and enhances their interests further. The most prolific lobbying activities in the US are on budget and tax issues; public resources that should be directed to benefit the whole population, rather than reflect the interests of powerful lobbyists."

The BBC article notes certain flaws in the report, but there is a lot more to be said about it than that. According to the Oxfam study, the eighty richest people in the world have as much wealth as do the least wealthy half of the world's population (p. 3). The abstract claims that they get to this point by lobbying, but then that does not explain the trend that they are trying to establish; surely these people were as keen (or un-keen) on lobbying in 2010 as they are today. I could be wrong, but I don't believe Warren Buffett (who sits atop the list) or Carl Icahn (number three) have ever been active campaigners in Washington for the purposes of increasing their own wealth. What I believe Oxfam mean is that many of the wealthy individuals own shares in companies which belong to sectors that lobby a lot. But if you're very wealthy, you're apt to own shares in companies in a vast array of sectors.

I would like for Oxfam to put themselves in the shoes of some of the wealthy people whom they appear to target in this report. If an individual gets rich (through the stock market, industry, or whatever) by means of voluntary trade, all his business interactions are ones of mutual acceptability. Oxfam do a terrible job at explaining what is wrong with an individual amassing $1,000 or $1,000,000 or even $1,000,000,000 in this fashion. If Oxfam put themselves in the shoes of someone wealthy, knowing that the wealth was due to honest trading, I hope they would feel ashamed for singling out eighty individuals and contrasting their success with the misery of thousands of millions. Because it is not the fault of the successful ones that others are poor. If I happen to do things for which others pay well and I save my money, am I to be considered a problem and perhaps even a menace to the common good? It would seem to me that this report makes Oxfam look like an anti-rich organization, rather than an anti-poverty one.

Indeed, Oxfam have it backwards, because the richer a person can get by voluntary transactions, the better it is for humanity. This is true for two reasons: (1) to get rich means to save and to get really rich, all else equal, means to save for a long time, so having a huge pile of money is an indicator that a person can live longer, and if one person can we all can and a long life is better than a short one (Warren Buffet is way past the life expectancy of 100 years ago); (2) to get really rich means that one must have some sort of income and a higher one is better for the purposes of getting rich. To have a high income, one must do stuff that others will pay for, but for others to pay for stuff they need to appreciate it. That someone has made billions and billions must mean, then, that others have benefitted by at least that amount, otherwise they would not have given it away. And that a person can have that good an impact on others really is a triumphant achievement which should be an inspiration to all man kind.

I don't know if it is a trend or not, but I have sensed rather many "anti-rich" feelings around the Inter-Web lately and I don't like it. To the extent that somebody can get extremely wealthy by special favours from the government, that is nothing to applaud, but at least several of the wealthy individuals singled out by Oxfam do not appear to me to be well-known lobbyists. Still, if it were the case that riches are obtained through unsavoury political favours, that would be an argument for a weaker government. Instead, Oxfam appear to want governments to be more powerful. That they do not realize such basic things makes the report a travesty of research and a reason for the involved individuals at Oxfam to feel deep contrition. For shame.

PS. The BBC article mentions some reasons why inequality (i.e. not just poverty) might be a problem. The Beeb's Economics editor Robert Peston notes:

"There are all sorts of reasons why such increases in inequality are troubling, and not just for those at the bottom of the income and wealth pyramid. 

"One is that aspirational people on lower incomes have massive incentives to take on too-great debts to support their living standards - which exacerbates the propensity of the economy to swing from boom to financial-crisis bust. 

"Another is that the poor in aggregate spend more than the rich (there are only so many motor cars and yachts a billionaire can own, so much of the super-rich's wealth sits idle. as it were), and therefore growth tends to be faster when income is more evenly distributed."

This is nonsense and Robert Peston should know it. The first reason is pure speculation coupled with the notion that interest rates inherently fail to price risk. Inequality could just as easily spur the less wealthy on work more. I don't see why this incentive is any worse than what Peston suggests. Peston's "mechanism" (if one may call it that) also has the disadvantage of implying that people foolishly take on debt they cannot repay. Not likely.

I don't know of any evidence to support Peston's other assertion either, that wealth inequality makes growth sluggish, though it could be that I am ignorant. It would seem to me that "idle" wealth ought to be invested or lent against interest. Still, even if the assertion is true, it does not speak against income inequality because if everyone got a lot richer, there would still be no point in buying more than X yachts or motor cars. By Peston's logic, inequality of wealth only means that we're approaching a GDP plateau a little less quickly.

Some Notable Quotables

Willaim Somerset Maugham once said that "the ability to quote is a very serviceable substitute for wit". Here, in no particular order, are few quotations from some of my recent and not-so-recent readings.

"What is called the existing distribution of income is simply a set of retrospective data at a given point in time. These data are generated by an ongoing process in which buyers choose among alternative products available at varying prices, and the sum total of these prices paid during some time span become various people's incomes. The question is not what to decide, as to whether specific retrospective data are justified, but rather who shall decide what prospective transactions are justified on what terms in an on-going process."

From Thomas Sowell's Knowledge and Decisions (p. 77). People respond to incentives and tinkering with income distributions means changing those incentives. Economists mainly know this, but among non-Economists there is need for constant reminders. He goes on to make the Hayekian point that those who wish to change the distribution by imposing different prices are unlikely to appreciate the information which the former prices transmitted. This is a great book for laymen who wish to gain an understanding of Economics, but it's a nice read also for professional Economists.

Here's an unrelated quotation:

"Unfortunate is the king who has only one head! In guarding it with all his power he only shows the first upstart where to strike."

From Montesquieu's Persian Letters (Letter CIV). This is a remarkable book, though some of the exchanges between the Persian travellers in Europe and their many mistresses get a tad lewd. The problem of marginalism and punishment is lucidly described, too:

"A Persian who, imprudently or by mischance, draws upon himself the displeasure of his prince, is sure to die; the slightest fault or the slightest caprice reduces him to that necessity. But if he had attempted the life of his sovereign, if he had intended to betray his towns to the enemy, he would have atoned as before by losing his life; he runs no greater risk in the latter case than in the former.

"And so, under the least disgrace, death being certain and nothing worse to fear, he naturally applies himself to disturb the state, and to conspire against the sovereign - his only remaining resource."

This is from the previous letter of the very same book. I cannot vouch for the historical accuracy as I am too ignorant on the subject, but Economists are sure to appreciate this titbit, as well as many others.

Back to Economists for the last quotation in this instalment:

"In everyday usage, unfortunately, competition is used in a very personalized sense. One football team competes with another; one brand of cigarettes attempts to gain the customers of another. Competition can be 'cut-throat' - a contradiction in terms to the economist. Perhaps the best single warning to the student with regard to the use competition is this: economic relationships are never perfectly competitive is they involve any personal relationships between economic units."

George J. Stigler, The Theory of Price, p. 24.

Dopey Popey

Pope Francis I has reacted to accusations of Marxism in a book of interviews entitled This Economy Kills. Pope Francis has lamented the "unjust" and "evil" economic system before, notably in the Evangelii Gaudium (in Chapter 2, Section 1), a veritable deluge of vituperation directed at a "system" he does not even name. (So maybe it is the socialist aspects of the mixed economy he dislikes, although the common impression seems to be that it is the free market.) It would help if he outlined some arguments rather than an array of assertions (because that is exactly what he does, read for yourselves and see), but I guess job security obviates the requirement to think (or maybe that's actually a requirement in the business of organized religion).

To counter the Pope's vapid and vacuous assertions, here's some actual substance on the benefits of trading freely:

1. Your appendix is about to burst, but trade is restricted so your best substitute for a doctor is your local butcher. Or, you need a spanner to fix your shower, but because free trade is bad, you should not get one made in China but have to pay a lot more for a domestic one - and why stop there? Why not force you to make the spanner yourself? Is free trade conducive or not to life and prosperity in these instances?
2. You live in Haiti and it is truck by a magnitude-7 earthquake. But free movement is restricted so you cannot go to the US (say) but have to suffer cholera and homelessness instead. If this is an instance of "this economy" killing, it surely can't be the free market part of it.
3. You work for a penny a day in some Bangladeshi factory. Your employer is a Western multinational, but is thrown out of the country because "this economy" apparently "kills". What happens to your job and wages? Do you go to the domestic firm which pays $25 an hour plus benefits? I bet there is no such firm, because if there were then that's where you'd have been working in the first place.

For sure, free markets are not perfect, but these are some thought experiments which at least make the argument that a free economy is far better than the Dopey Popey makes it out to be. He, on the other hand, seems to think that a litany can replace reason if only expressed forcefully enough. If he listened to me, I would challenge His Holiness to name a single country that has gone from misery to prosperity without a large measure of economic freedom.

The Pope today decried the mockery of belief, saying that "one cannot provoke, one cannot insult other people's faith, one cannot make fun of faith" (then what have Charlie Hebdo's readers been laughing at?). Notice that again he offers no argument. Notice also that he himself insults when he laments economic freedom without argument. What the Pope insults in these instances is the faith in reason, which is really the only sacred faith.

Abysmal

A recent Quartz article by Miles Kimball and an anonymous woman economist asks how big the sexism problem is in economics. The answer the authors give is that it is pretty big indeed, yet their solutions do not include the obvious one (obvious, that is, thanks to the late Professor Gary Becker, before whom it was not obvious at all) of exposing the profession to more competition. After all, in the absence of competition, inefficient (i.e. sexist) organizations can repercussionlessly remain inefficient (sexist). Competition would not solve everything, because maybe "tastes" for sexism are strong enough, etc., but it is one "remedy" (if there is a problem) which should be immediately obvious to an economist and yet is not even discussed in this very poor article.


The authors are responsible for many additional shortcomings. An introduction is supposed to be eye-catching, but theirs mentions a recent list of influential economists made by The Economist Magazine which apparently does not include a single woman. Yawn. I would personally not want to be on a list dominated by folks active in making policy as is the case with this list. But the absence of women is pretty poor evidence that there is a sexism problem in the profession. Blacks dominate basketball, Jews dominate Nobel prizes, and shorter-than-average persons dominate Hollywood, yet to infer that these sectors suffer from discrimination would surely be a great error.


If proportionate representation is not to be expected in general, why should the Economics profession be any different? The authors say that very many little things can jointly create very important difficulties for women, which is true (of course, very many little things can jointly create big differences anywhere), but the examples of little things they cite are incredibly poor. Here's their first one:

"New female economics PhD's have to worry about what to wear during the job market: skirt too low vs. skirt too long, vs. just right"

This is apparently written in all seriousness. I guess trousers are also an option, and I guess this problem mars female careers in every profession, because every profession has job interviews, though they are probably more important than average in Economics. Still, nobody really is too incompetent to dress. If the authors differ, why do they not also mention the worry that a woman (or a man, why not?) might forget to dress at all and show up naked. This would not make their point more absurd because nothing can make their point more absurd. Can anyone really imagine that such an idiot exists who, having just obtained her PhD in Economics, somehow has not learnt what skirt length is appropriate for professional occasions and cannot wear trousers.


The authors have six more points, all better than the one above (which is not saying much), but none of which pertains to economics in particular, so why are they seemingly trying to make a point that economics in particular suffers from a sexism problem? They conclude the list with an uneconomical recommendation:

"Fostering awareness of issues like these, and a hundred others of the same ilk, is one of the biggest things that can be done to improve women’s lot in economics."

Fostering "awareness" (by mandating classes or what?) would necessarily eat away at the time economists can devote to research or teaching (because "fostering awareness" takes time and time, after all, is scarce). This tax on time is especially pernicious if the problem is not all that great to begin with, an issue on which the authors thoroughly fail to convince. Kimball and anonymous also say that sexists often do not realize that they are sexists, so my insistence that I am no part of the "problem" would hardly help me avoid the unnecessary "fostering".


They continue by demanding "equal pay for equal work". One might infer from their discussion that they are not keen on bargaining between labour-market parties:

"It is typical in academia that a tenured professor who receives a competing job offer and can credibly threaten to leave gets a big raise. By comparison, professors who seem unlikely to jump ship end up underpaid. But given gender inequality on the home front (and the male-female wage differential for spouses), it is a lot more credible that a male professor can convince his wife to move to another city than that a female professor can convince her husband to move."

(What does "underpaid" mean here? Unwillingness to offer your labour elsewhere means that you must accept lower compensation; that is appropriate market payment.) The authors stress greater gender equality across society as a "remedy", apparently taking for granted that men and women are somehow "naturally" equal (contrary to what physical inspection suggests). There are actually certain biological facts which indicate (though do not prove) that this is false. For instance, women bear children and men do not. This could potentially create significant differences between male and female attitudes to their offspring, as well as in general behaviours pertinent to successful mating.


For instance, it would be in a man's evolutionary interest to have many kids with many different women, but it would not be in his interest to take care of any of them. Women have it in their interest to (sometimes) screen out such men, but to the extent that everyone makes mistakes it would seem natural for women to have somewhat stronger bonds with their offspring (on average), since they, unlike men, cannot physically abandon their children until birth, which may well manifest itself in household production.


I do not mean to say that these forces are necessarily strong enough to create these tendencies. I only wish to highlight the possibility that men and women are not "natural equals" (which Kimball and anonymous fail to do). I also do not mean to say that there is no sexism in the Economics profession (or elsewhere). Maybe there is or maybe there isn't. But if the authors want to establish that there is a problem that is particularly pernicious in economics, they do a very bad job at it, as well as at finding good solutions, which should include exposing universities to more competition (say, by reducing government funding of them).

A Simple Model of Free Speech

In light of the very tragic and gruesome attack on Charlie Hebdo Magazine today, in which at least twelve people are dead because a few others have taken offence at drawings, I wonder how great the expenses are, which the government will incur in protecting cartoonists and others from people who prefer to kill  rather than talk, before free speech begins to be restricted. Here is a simple model:

• Protection is costly, so ceteris paribus, the more protection is needed, the more appealing prohibitions on free speech become.
• People will tend to speak more freely when they do not pay the full cost associated with the protection which they want when peevish murderers are out to take their lives.
• So, governments limit the freedom of speech in order to economize on protection costs.

I am not aware of any outright limitations on free speech which have coincided with greater protection costs, but hints of that come from the barring of Robert Bruce Spencer and Pamela Geller from travelling to the United Kingdom. Mr. Spencer and Mrs. Geller are essentially unwelcome in Britain because of what they say. This model is upsetting because it hints that free speech is only possible while the nitwits are sufficiently mild-mannered.


Here is how free speech might be made to last even among plenty of world-record holders in cantankerous behaviour: Privatize security and law. Under a system of private law, individuals would pay providers of legislation a fee and if they desire legislation which is costlier to enforce that fee would be higher than if they desire cheap-to-enforce legislation. Other individuals might desire different legislation. The providers would work out agreements amongst themselves which outline how disputes between their clients should be settled, etc. This is all in David D. Friedman's valuable book The Machinery of Freedom, the first edition of which is available for free from his website.


Under this system, if an individual behaves in a way which others decide to find sufficiently annoying to want to kill him, he would demand additional protection services and because his protection agency has to agree with other protection agencies on terms to be upheld in times of conflict (since conflict is a lot more costly than peaceful bargaining), the threatened individual will tend to pay the full social cost of being annoying (or funny, really).


Sure, some individuals may decide to keep their mouths shut (and thereby not be so funny anymore) rather than pay more. If the sentiments among the humourless nitwits are strong enough, it might be that speech is highly restricted. However, speech remains free in the sense that it is accessible, albeit at a price. Of course, the more popular is one's humour, the likelier it is that one will pay that price. I can't imagine that the humourless murderers would really force up the price of free speech for a long time, though. If one take a look at the world and compares to how it was hundreds of years ago, one gets the impression that the murderers in Paris today are getting increasingly rare. This of course proves nothing, but one may hope the long-run trend continues.