Please note that my opinions are my own, and the opinions of the anyone or any institution quoted are theirs. The opinions expressed herein do not reflect the opinion of North Carolina State University, its board of directors, the College of Management or any other college, Student Media Authority, or WKNC Raleigh.

Monday, November 20, 2006


So, its pretty much obvious that everyone's major in college gives them a different lens through which to view the world, especially if that major is right for them.

This is holds even truer (word?) in grad students, I think.

My question is: why did I have to pick a major that everyone thinks *they* know something about?

Wednesday, October 11, 2006

Edmund Phelps on Rawlsianism

From the recent "Dynamic Capitalism" by Mr. Phelps in the WSJ:

"[In testing ability to grow:] In any organization of the economy, the participants will score unequally in how far they manage to go in their personal growth. An organization that leaves the bottom score lower than it would be under another feasible organization is unjust. So a new organization that raised the scores of some, though at the expense of reducing scores at the bottom, would not be justified. Yet a high score is just if it does not hurt others."

(No Child Left Behind? That's another blog article. Someone else write it. Please?)

Isn't it in our best interest to redistribute ability (scores, incomes, whatever) to allow the greatest possible chance of economic innovation rather than quality or size of that innovation? In other words, the idea goes that the more equal distribution of ability, the more absolute economic or business innovation will occur at the expense of the quality of those innovations.

In this age following record-setting growth and innovation, are there that many more to find? Shouldn't we have a lot of monkeys searching for a needle in the haystack (forgive the cliche orgy)?

A week ago I would have said yes--the absolute number of innovations is far more important than the quality (or leap) of those innovations. But I realize now, that stifles a basic incentive structure so dear to free capitalism. So my answer is an emphatic:

No! Dynamism allows those least fit to survive to perish. That's the nature of dynamism: its a constantly changing econo-scape. Business thrive, grow, die, spin-off, and birth. And we're all better off for it. Creating a greater oppurtunity for innovations is necessary for further development in any economic system, so long as its aims are a higher standard of living and increasing purchasing power.

Mr. Phelps might say its dynamism versus high-cost, concentrated R&D. As he related in the article:

"So if the increased dynamism created by liberating private entrepreneurs and financiers tends to raise productivity, as I argue -- and if that in turn pulls up those bottom wages, or at any rate does not lower them -- it is not unjust. Does anyone doubt that the past two centuries of commercial innovations have pulled up wage rates at the low end and everywhere else in the distribution?"

A Different View of Protectionism, or anti-Greenpeace (Stop Thinking Globally, for a second)

You have rights. In Hayek's version of capitalism, you have the right to lose your shirt.

Should I let you?

I think not. I have something to gain by protecting your wealth from your own destruction, even if the wealth does not change hands.

The idea goes that I should allow you to lose your shirt. Someone else gains that shirt, but is that really what happens? How do we define "cost," "gain," or "waste?"

If your own mistakes cause you to "lose your money," its a sunk cost, and your continued existence through support or subsidization would classically be viewed as inefficient.

If by some congruence of circumstance you should happen to be less risk-averse than average, and not inherently stupid as I supposed before, protecting your wealth may actually encourage some innovation.

By formulating some policy, or promoting the foundation of an institution that allows you to take on the risk of others less risk-averse than yourself, you receive rents and others gain a sense of security. Positive sum game. Period.

Wednesday, September 27, 2006

Christ's Efficiency in God's Economy, or The Greatest Economist

Referring to the entry on the efficiency of institutions, we learn that institutions exist because of some inherent cost-savings. Individual contracts are difficult and costly to negotiate.

If it is the duty of Christians to share their experience, or testify, how best would we do that? If we imagine our contracts being between the testifier (contract provider) and the audience (contract buyer) for the price of an attentive ear it and we imagine the marginal costs and benefits as scheduled below:

MC - the time required to receive testimony (t)
MB - the enjoyment of the testimony (e)

MC - the time required to give the testimony (t)
MB - the fulfillment of duty, satisfaction (s)

Then we can observe that for each contract negotiated, 2t is spent and s+e is gained. For 30 transactions, we can observe that 60t is spent and 30(s+e) is gained.

Institutionalizing the dispensation of testimony would create a situation where several could gather the experience these transactions. Given the same MC and MB for both buyer and seller, and assuming one seller three buyers are participating, we observe that for each contract 4t is spent and s+3e is obtained. Since the MC of the seller remains the same (assuming AVC=0 for each new contract) for each new buyer in the institution, we note a cost equal to that in the first example. We may safely assume that he derives great pleasure from the more people to whom he is able to testify. However, we can add new buyers in this market at no cost, increasing aggregate cost and benefit to the buyer.

Each Buyer
MC - the time required to receive testimony (t)
MB - the enjoyment of the testimony (e)

MC - the time required to give the testimony (t)
MB - the fulfillment of duty, satisfaction (s) (proportional to audience)

Then ---

Non-institutionalized, with 30 individual contracts
Unit cost analysis
Speaker: 30s/60t or 1/2 unit s per 1 unit t spent
Audience: 30e/60t or 1/2 unit e per 1 unit t spent

Institutionalized, with 30 buyers in one group contract
Unit cost analysis
Speaker: 30s/31t or ~1 unit s per 1 unit t spent
Audience: 30e/31t or ~1 unit e per 1 unit t spent

With institutionalized testimony, we receive increasing returns to scale (in fact, approaching constant returns to scale). Not only does fellowship with man give you more of God, a life of ministry to others gives you a greater reward.
A note, or caveat: "institutions" do not necessarily have to be churches. In fact, if we include the dispensation of dogma and doctrine as a negative externality in the market for testimony, we see that churches are too prolific--society suffers because of their existence--the dispensation of the spirit is not maximized, ceteris paribus.

The Reward "Then" Rather Than "Now"

"I think it may be the reason mainstream Christians look forward to the reward in the afterlife is because they do not experience Him now."

"A personal relationship with Christ supplies your spirit and gives you a bit of the eternal reward now."

"Now is not the future, nor is it the past. Are you enjoying Christ now, at this very moment? How about this one? Are you waiting for something?"

Find the Joke

McDonald's just raised the dividends on its shares to $1.

There's a joke in there about the dollar menu. I can't find it. But it's there.

Monday, September 18, 2006

Today's Thought -- What the Pope Said

OK -- so here's the situation: You're the pope... you attempt to make a point, but just like our president you say something that immediately begets a syndrome of foot-to-mouth. Here's a paraphrase:

---"Islam is founded on violence."

You apologize, but you shouldn't be surprised at the reaction. Again, you said

---"Islam is founded on violence."

This offends muslim radicals. So what do they do?

---Firebomb churches.

One point for the Vatican. Round 2...