Archive for November, 2005

Abortion And Risky Sex

Wednesday, November 30th, 2005

Thomas Stratmann, Professor of Economics at George Mason University, and Jonathan Klick, Professor of Law at Florida State University, came out with a study that states:

Incentives matter. They matter even in activities as primal as sex, and they matter even among teenagers, who are conventionally thought to be relatively myopic. If the expected costs of risky sex are raised, teens will substitute toward less risky activities such as protected sex or abstinence. In addition to modeling the decision making processes of teenagers, this insight is important in other contexts as well. Many public policies can be improved by recognizing the sensitivity of teenage sexual decisions to costs and benefits.

We study one set of policies in this paper. We show that increasing the cost of abortion for teens lowers the insurance value of abortion. This induces teenage girls to avoid risky sex, which will likely have the effect of lowering pregnancy rates, abortion rates, and birth rates among this group of individuals. While these positive effects alone might not justify parental involvement laws, they presumably should not be ignored in the debate. Behavior is not static, and claims based on the assumption of static behavior are flawed.

In other words, as I’ve said before, abortion subsidizes risky sexual behavior, which in turn creates more abortions.

The full study can be found here
and here.

Quote Of The Day

Wednesday, November 30th, 2005

“The current issue of The Freeman includes John Semmens’ “Wal-Mart is Good for the Economy”. It seems that many people need reminding of the simple fact that, absent force, fraud or significant external costs, profitable enterprises are that way for good reasons — they serve people best….Along these lines is the accusation that Wal-Mart’s compensation packages push many employees to rely on public health programs. All things considered, employees and employers find each other and agree to terms in light of all of their available options. Those who fret most about all of this are often the same people who routinely condemn the poorest to go to the worst (government) schools — and thereby must bear much of the blame when poor people have few good options”. —Peter Gordon, Professor in the University of Southern California’s School of Policy, Planning and Development and in its Department of Economics

Thomas Sowell On The French Economy

Tuesday, November 29th, 2005

Thomas Sowell looks at minorities in France and minorities in the United States, and compares:

Let us go back a few generations in the United States. We need not speculate about racial discrimination because it was openly spelled out in laws in the Southern states, where most blacks lived, and was not unknown in the North.

Yet in the late 1940s, the unemployment rate among young black men was not only far lower than it is today but was not very different from unemployment rates among young whites the same ages. Every census from 1890 through 1930 showed labor force participation rates for blacks to be as high as, or higher than, labor force participation rates among whites.

Why are things so different today in the United States — and so different among Muslim young men in France? That is where economics comes in.

People who are less in demand — whether because of inexperience, lower skills, or race — are just as employable at lower pay rates as people who are in high demand are at higher pay rates. That is why blacks were just as able to find jobs as whites were, prior to the decade of the 1930s and why a serious gap in unemployment between black teenagers and white teenagers opened up only after 1950.

Prior to the decade of the 1930s, the wages of inexperienced and unskilled labor were determined by supply and demand. There was no federal minimum wage law and labor unions did not usually organize inexperienced and unskilled workers. That is why such workers were able to find jobs, just like everyone else, even when these were black workers in an era of open discrimination.

The first federal minimum wage law, the Davis-Bacon Act of 1931, was passed in part explicitly to prevent black construction workers from “taking jobs” from white construction workers by working for lower wages. It was not meant to protect black workers from “exploitation” but to protect white workers from competition.

Even aside from a racial context, minimum wage laws in countries around the world protect higher-paid workers from the competition of lower paid workers.

Often the higher-paid workers are older, more experienced, more skilled or more unionized. But many goods and services can be produced with either many lower skilled workers or fewer higher skilled workers, as well as with more capital and less labor or vice-versa. Employers’ choices depend on the relative costs.

The net economic effect of minimum wage laws is to make less skilled, less experienced, or otherwise less desired workers more expensive — thereby pricing many of them out of jobs. Large disparities in unemployment rates between the young and the mature, the skilled and the unskilled, and between different racial groups have been common consequences of minimum wage laws.

That is their effect whether the particular minimum wage law applies to one sector of the economy like the Davis-Bacon Act, to the whole economy like the Fair Labor Standards Act of 1938 or to particular local communities like so-called “living wage” laws and policies today.

The full effect of the Fair Labor Standards Act of 1938 was postponed by the wartime inflation of the 1940s, which raised wages above the level specified in the Act. Amendments to raise the minimum wage began in 1950 — and so did the widening racial differential in unemployment, especially for young black men.

Where minimum wage rates are higher and accompanied by other worker benefits mandated by government to be paid by employers, as in France, unemployment rates are higher and differences in unemployment rates between the young and the mature, or between different racial or ethnic groups, are greater.

France’s unemployment rate is roughly double that of the United States and people who are unemployed stay unemployed much longer in France. Unemployment rates among young Frenchmen are about 20 percent and among young Muslim men about 40 percent.

There is no free lunch, least of all for the disadvantaged.

As I said before, and it deserves repeating, the more competitive the market, the less government regulations, and the more free the market is to move with supply and demand, the better life is for minorities, low skilled workers, and the disadvantaged. Comparing minorities under the European, more regulated form of capitalism, and minorities under the United States, less regulated form of capitalism, is a glaring example of that.

Quote Of The Day

Tuesday, November 29th, 2005

“If the alternative is between living in a poor developing country mired by poverty, corruption and inefficient political and market institutions, and a wealthy market capitalist society that rewards human capital investment, the most intelligent residents of developing countries usually incur the greatest opportunity cost of remaining in their country. They are also the most likely to have the means required to leave. Therefore, the most productive individuals in developing countries are likely to be the first to immigrate to the U.S. As this brain drain continues, the cost to progressively less intelligent individuals remaining in the developing country increases. As Tyler notes for Mexico (and most Latin American countries), the first immigrants to the U.S. earn incomes sufficient to send money back to their relatives and friends remaining in Mexico (or other Latin American countries) so they can make the trek to the U.S”. —Mark Steckbeck, economics professor at Hillsdale College

Privatizing Water Services In Argentina Saved Lives

Monday, November 28th, 2005

Economist Alex Tabarrok, writing in Marginal Revolution blog, quotes from an abstract to, “Water for Life: The Impact of the Privatization of Water Services on Child Mortality“, by Sebastian Galiani, Paul Gertler and Ernesto Schargrodsky in the February 2005 issue of the JPE.

The abstract states:

While most countries are committed to increasing access to safe water and thereby reducing child mortality, there is little consensus on how to actually improve water services. One important proposal under discussion is whether to privatize water provision. In the 1990s Argentina embarked on one of the largest privatization campaigns in the world, including the privatization of local water companies covering approximately 30 percent of the country’s municipalities. Using the variation in ownership of water provision across time and space generated by the privatization process, we find that child mortality fell 8 percent in the areas that privatized their water services and that the effect was largest (26 percent) in the poorest areas. We check the robustness of these estimates using cause-specific mortality. While privatization is associated with significant reductions in deaths from infectious and parasitic diseases, it is uncorrelated with deaths from causes unrelated to water conditions.

The paper can be found here. Alex Tabarrok has more.

Quote Of The Day

Monday, November 28th, 2005

“No one has a greater stake in various school-choice plans, including vouchers, than blacks have, even though school choice is not specifically racial. Social Security is not a racial policy either, but economists who have studied it have long described it as a system that transfers money from black men to white women, given the different life expectancies of these two groups.

Minimum wage laws have long had an adverse effect on the employment of blacks, especially young blacks, who are more likely to be looking for entry-level jobs. These are the kinds of jobs most often reduced or eliminated when the minimum wage set by the government exceeds what those jobs are worth to an employer.

This is a pattern found in countries around the world, so it is not even peculiar to the United States, much less to black Americans. But its impact on black Americans is especially harsh.

Few policies have had more devastating local impacts on blacks than severe restrictions on the building of housing under “open space” laws, which lead to skyrocketing prices for homes and apartment rents that take up half the incomes of low-income households in many California communities.

Almost invariably, such communities are controlled by liberal Democrats — and blacks have been forced out by high housing costs. The black population of San Francisco, for example, declined by 18,000 between the 1990 census and the 2000 census, even though the city’s total population rose by more than 50,000 people.

The time is long overdue for both blacks and Republicans who are trying to appeal to blacks to focus on policies in terms of their actual effects on blacks — and to stop calling things “civil rights” when they are not”. —Thomas Sowell

A Compromise On Abortion I Would Accept

Wednesday, November 23rd, 2005

Radley Balko, writing in Fox News, discusses a compromise on abortion I would accept:

While it’s unlikely that the Founding Fathers anticipated the abortion debate, they did give us a framework around which to govern on issues just like it — highly emotional, high-stakes issues that go to the core of one’s personal values and beliefs. They rightly recognized that the federal government is far too unwieldy and clumsy to deal with such delicate matters. These issues are best legislated by the states — or, better, by cities or counties. We can then choose to live under laws that most reflect our values. We vote with our feet.

Line-drawing is a police power. And the Constitution’s framers correctly concluded that police powers ought to be reserved for the states, not the federal government (note: several more recent Supreme Court justices seem, sadly, to disagree). The best solution to the abortion debate, then, isn’t Roe, which even many abortion-rights advocates will concede is bad law. But it isn’t a pro-life amendment or a federal ban on abortion, either.

The best solution is robust federalism. Forgo Roe, and let each state set its own policies on abortion. Those for whom abortion is an important fundamental right can live in areas where abortions are widely available. Those adamantly opposed to any and all abortions can live in jurisdictions that ban the procedure. People like me could live in communities where our tax dollars won’t be funding abortions.

Contrary to claims from abortion-rights advocates, overturning Roe wouldn’t make abortion illegal. In fact, it wouldn’t change much at all. Abortions are already difficult, if not impossible, to obtain in many communities. This is in part because of the restrictions the Supreme Court has allowed states to impose after Roe, but also simply because there are not always doctors willing to perform them. But even under a Roe reversal, states would still be free to make their own laws pertaining to the procedure in ways that align with their own values.

Federalism allows people with divergent beliefs to hold on to those beliefs, but at a minimal cost to those who disagree. In today’s mobile society, a politic more amenable to your values and beliefs could be but a tank of gas away.

This solution isn’t perfect. Many people don’t have much choice in where they live, and many don’t have the means to leave. But then, that’s especially true when the federal government is making the laws. It’s much easier to leave a town, county or state than it is to leave the country. Likewise, the Supreme Court would need to word its decision in such a way so that it was very clear on the point that not only isn’t the federal government authorized by the Constitution to guarantee an abortion, but that it isn’t authorized to prohibit abortion either.

Perhaps the most pertinent criticism of the federalist solution is that people with strong beliefs about an issue like abortion aren’t content with applying those beliefs only to themselves and their immediate communities. Pro-lifers want it inscribed into federal law that life begins at conception, with no exceptions. Abortion-rights advocates want federal tax dollars to pay for abortions for the poor, despite the fact that some of those tax dollars come from citizens with moral objections to the procedure.

True believers, then, would never accept a federalist solution on a volatile issue like abortion. They’d rather impose their own values on everyone else. But after three decades of poisonous abortion politics, perhaps it’s time the rest of us considered it.

Jane Galt has more.

Quote Of The Day

Wednesday, November 23rd, 2005

“Among Hispanics, there is little change in popularity from a grade point average of 1 through 2.5. After 2.5, the gradient turns sharply negative. A Hispanic student with a 4.0 grade point average is the least popular of all Hispanic students, and has 3 fewer friends than a typical white student with a 4.0 grade point average.” —- Roland G. Fryer, Jr. and Paul Torelli, An Empirical Analysis of ‘Acting White’

Europe Vs. USA In Treatment Of Minorities

Tuesday, November 22nd, 2005

The economist writes:

In America, the education levels, English-language skills and intermarriage rates of immigrant groups rise over time. So do income, home-ownership and political representation. This is the natural course of assimilation. But it does not seem to work in Europe. Some European countries (including France) do not collect ethnic-based statistics, so hard evidence is tricky to come by. But most indicators of second- and third-generation assimilation in Europe are disquieting. There are few North African or Turkish representatives in French or German politics. Most young men arrested after the French riots have been sons or grandsons of immigrants from the 1950s or 1960s. The murderer of Theo van Gogh, a Dutch film-maker, was described by the chairman of a parliamentary commission as “an average second-generation immigrant”. Europe, it seems, has done less than America to assimilate the children and grandchildren of newcomers. Why?

Among others, one of the most prominent reasons are,

The work advantage

Work is the archetypal social activity. It provides friends and contacts beyond your family or ethnic group. If you start your own company, it pulls you further into the society around you. And here is a striking difference between Europe and America. Unemployment in France is almost 10%. Among immigrants or the children of immigrants, it is at least twice and sometimes four times as high. In contrast, unemployment among legal immigrants in America is negligible, and business ownership is off the scale compared with Europe.

The second big motor of integration is home-ownership, especially important in the second and third generations. This gives people a stake in society, something they can lose. Thanks to cheap mortgages and an advanced banking system, half of Latinos in America own their own homes. Britain, after its council-house sales and property booms, also encourages house ownership. In contrast, most of the blocks in the French banlieues are publicly owned.

Between them, a job and a house help to create not only more integration but also greater social mobility. Latinos supported America’s turn towards assimilation because they feared the trap of Spanish-language ghettos. But the banlieues are full of people who have grown up without jobs, or any hope of getting a better income or a better place to live. For them, integration is a deceit, not a promise.

A job and a house will not solve everything. The father of one of the July 7th London bombers owned two shops, two houses and a Mercedes. But if you want to know why second- and third-generation immigrants integrate more in some countries than others, jobs and houses are a good place to start.

Again, economy matters, and the european economic model is not only bad for economic growth, but especially bad for minorities.

Quote Of The Day

Tuesday, November 22nd, 2005

“”Liberals” seem have been renamed “progressives” these days, but for some reason they still seem to be hostile to freer trade–although Gene Sperling is a refreshing exception. As a liberal/progressive economist, this hostility to trade has long pained me. Frankly, I don’t see anything “progressive” about protectionism”. —Alan Blinder, the Gordon S. Rentschler Memorial Professor of Economics at Princeton University and Director of Princeton’s Center for Economic Policy Studies Links Added To The Website

Monday, November 21st, 2005

In addition to an improved comments section and a new RSS feed, I have also added links to the right hand side of the website, right under ‘Recent Comments’. For those of you that don’t know what links are, they are basically a method to link and save some of your more memorable online posts, whether they are newspaper articles, blog posts, or whatever else you find interesting online. If the posts are not important enough to blog about, yet somewhat important, I will post them to links, and give you the option to read further. They should be updated on a daily basis.

For my readers that read through RSS, provided you have updated your rss feed to my new and updated feedburner feed, the links will be provided through rss as well.


Bill Cosby Was Correct

Monday, November 21st, 2005

Bill Cosby, in a speech he gave last year to the NAACP, said:

50 percent drop out rate, I’m telling you, and people in jail, and women having children by five, six different men. Under what excuse? I want somebody to love me. And as soon as you have it, you forget to parent. Grandmother, mother, and great grandmother in the same room, raising children, and the child knows nothing about love or respect of any one of the three of them. All this child knows is “gimme, gimme, gimme.” These people want to buy the friendship of a child, and the child couldn’t care less. Those of us sitting out here who have gone on to some college or whatever we’ve done, we still fear our parents. And these people are not parenting. They’re buying things for the kid — $500 sneakers — for what? They won’t buy or spend $250 on Hooked on Phonics.

Predictably, some people disagreed with his statement, but economist Alex Tabarrok took it upon himself to find out if Cosby was right, this is what he found:

I was curious so I went to Table 2100 of the Consumer Expenditure Survey and found the following for 2003:

Average income of whites and other races: $53,292.
Average income of blacks: $34,485.

The survey then lists expenditures on a wide variety of goods from eggs and fish to books and televisions; to do a proper comparison we would have to correct for income and other demographic variables but some figures just jump out at you, including this:

Expenditures on footwear by whites and other races: $274
Expenditures on footwear by blacks: $440.

Chalk one up for the good Dr. Cosby.

Arnold Kling has more.

The Bill Gates Few People Know

Monday, November 21st, 2005

The Adam Smith Institute writes:

We don’t usually praise of Bill Gates. We don’t use his operating system, and we think he has held back technological innovation and trapped computer users into a dependency treadmill, requiring them to upgrade constantly into ever more memory-hungry systems. We don’t like his marketing methods, or the uses he makes of his market dominance.

That said, he has an admirable record on charitable works. He intends to give away 90 per cent of his $51bn fortune, continuing thereby the excellent tradition in which those who make a lot of money use it generously to benefit others. Andrew Carnegie is one of the exemplars of that policy.

Yesterday Mr Gates pledged the largest single donation to the quest to eradicate malaria, a disease that kills up to 2.7 million people a year, many of them children, and many of them in Africa.

Bill Gates has rightly targetted an area in which money applied now can start saving lives now, and save millions more in future. There is much dubious science out there, spread largely by non-scientists who urge us to spend billions and to curb economic growth in pursuit of something whose cost in human lives is unquantified and may even be negative. Bill Gates has put his money to back something that will save lives now. Malaria is one of humankind’s oldest enemies. As with smallpox, its days are numbered.

Wow. Maybe he is not as bad as I originally thought.

Quote Of The Day

Monday, November 21st, 2005

“Regarding U.S. policies towards Latin America, there is a double standard everywhere you look. It is crystal clear where Lula, Chávez, Kirchner, Vásquez, etc. want to go. Many ideas and policies of Marx, Lenin, Stalin, Mao, Castro, and Che Guevara are being rediscovered and openly applied by them, while U.S. foreign economic policy continues to sail down a third way between capitalism and socialism. No wonder such little respect is shown towards Washington. Free trade, yes, but not regarding sugar or shrimp or steel or lumber or whatever deep pocket lobbyists want to keep out today. Private enterprise and the right to work, sure, as long as the interests of American unions are safeguarded by “fair trade”, which includes a “level playing field” (unaffordable wages and working conditions) and “no child labor”, even if the real alternative for many of those youngsters is begging or prostitution, rather than going to school.

A hundred years ago, 50% of Americans worked in agriculture and no one in Washington dared to tell farmers that their children could not help in the field or that going to class was more important than food on the table. Most Latin Americans still work in agriculture. Thinking how your great-grandparents would have reacted if Washington tried to apply to them its current foreign economic policies will help understand how Latin Americans see those deceitful policies, displayed as “fair trade””. —Carlos A. Ball, editor of AIPE, a Spanish-language news organization based in Florida, and adjunct scholar with the Cato Institute

Please Update The RSS Feed For This Website

Sunday, November 20th, 2005

I have changed RSS feeds from WordPress default to feedburner, this allows me to include del.ic.ous links and Flickr photos to my feed.

Please update your feedreaders to this new feed for this website.

Quote Of The Day

Saturday, November 19th, 2005

“While it’s perfectly legitimate to criticize my decision or the conduct of the war, it is deeply irresponsible to rewrite the history of how that war began. Some Democrats and anti-war critics are now claiming we manipulated the intelligence and misled the American people about why we went to war. These critics are fully aware that a bipartisan Senate investigation found no evidence of political pressure to change the intelligence community’s judgments related to Iraq’s weapons programs.

They also know that intelligence agencies from around the world agreed with our assessment of Saddam Hussein. They know the United Nations passed more than a dozen resolutions citing his development and possession of weapons of mass destruction. And many of these critics supported my opponent during the last election, who explained his position to support the resolution in the Congress this way: “When I vote to give the President of the United States the authority to use force, if necessary, to disarm Saddam Hussein, it is because I believe that a deadly arsenal of weapons of mass destruction in his hands is a threat, and a grave threat, to our security.” That’s why more than a hundred Democrats in the House and the Senate — who had access to the same intelligence — voted to support removing Saddam Hussein from power.

The stakes in the global war on terror are too high, and the national interest is too important, for politicians to throw out false charges. These baseless attacks send the wrong signal to our troops and to an enemy that is questioning America’s will. As our troops fight a ruthless enemy determined to destroy our way of life, they deserve to know that their elected leaders who voted to send them to war continue to stand behind them. Our troops deserve to know that this support will remain firm when the going gets tough. And our troops deserve to know that whatever our differences in Washington, our will is strong, our nation is united, and we will settle for nothing less than victory”. —President George W. Bush, In A Speech Commemorates Veterans Day