The Deng [ Xiaoping] Curve

Commenter Bret Swanson at The Money Illusion has an interesting take on the economic history of China, which includes this;

Many observers will say that the worldwide supply-side tax-cut revolution began in 1981 with the passage of Ronald Reagan's Economic  Recovery Act, which was based on a bill sponsored by Congressman Jack Kemp and Senator Bill Roth and which had been in circulation since 1976. Others say it began in  1978 with the passage of Congressman Bill Steiger’s capital gains tax cut or with California's substantial reductionin property tax rates, known as Proposition 13, in the same year. Others still, with Margaret Thatcher’s economic reforms in Great Britain. But by far the largest and boldest supply-side tax-cut of the era, and maybe of all time, occurred in Communist China. 

For several years during the seventies, with poverty intensifying and the leadership in Beijing wandering aimlessly, some farmers had quietly moved away from the formal collective system. One commentator called it a “surreptitious grass-roots land reform.”... One of Deng's very first acts in 1978 was to encourage this trend, allowing farmers to raise pigs, chickens, and ducks, simple activities that nevertheless had been banned during the Cultural Revolution. Then in September 1979, at the Fourth Plenum of the Eleventh Central Committee of the  Communist Party, Deng cut tax rates on China's 600 million farmers. Dubbed the “household responsibility system,” Deng’s plan decollectivized the farms. Farmers could now lease their land from the local government for a fixed annual price. They were free to produce the crops they wanted. They were free to sell them at the market. The choice of work or leisure was also now theirs. All profits above the lease payment – in essence a lump-sum tax – were theirs to keep. The marginal tax rate paid by 16 percent of the world's population had been cut from 100 percent to zero. 

Swanson also notes that the Chinese beat Adam Smith to the invisible hand by about two millenia;

By the Han dynasty, which stretched from 206 B.C. to 220 A.D., the great historian Sima Qian had already summarized the “division of labor” and the “invisible hand,” two famous concepts of the market economy Smith would not write about until  eighteen centuries later. “There must be farmers to produce food,” Sima wrote,

...men to extract the wealth of mountains and marshes, artisans to produce
these things, and merchants to circulate them. There is no need to wait for
government orders: each man will play his part, doing his best to get what
he desires. So cheap goods will go where they will fetch more, while
expensive goods will make men search for cheap ones. When all work
willingly at their trade, just as water flows ceaselessly downhill day and
night, things will appear unsought and people will produce them without
being asked. For clearly this accords with the Way and is keeping with
nature.

She who laffs last...

We suppose that Harvard's Martin Feldstein deserved this from the insufferable Brad DeLong;

MARTIN FELDSTEIN ACCIDENTLY PROVES EITHER (I) 152 > 186 OR (II) IT IS MATHEMATICALLY IMPOSSIBLE FOR ROMNEY TO KEEP HIS TAX-POLICY PROMISES

for unnecessarily complicating the issue of Mitt Romney's income tax proposal.  Sample;

The IRS data show that taxpayers with adjusted gross incomes over $100,000 (the top 21% of all taxpayers) made itemized deductions totaling $636 billion in 2009. Those high-income taxpayers paid marginal tax rates of 25% to 35%, with most $200,000-plus earners paying marginal rates of 33% or 35%. 

And what do we get when we apply a 30% marginal tax rate to the $636 billion in itemized deductions? Extra revenue of $191 billion—more than enough to offset the revenue losses from the individual income tax cuts proposed by Gov. Romney.

As the Nabokov-phile 'Vivian Darkbloom' points out to the Tax Policy Center (originators of the claim that Romney's proposal is mathematically impossible), you can put all the fancy assumptions in your pipe and ....

'Cause the math is quite simple.  If one has a gross income of $1,000 and the government allows $200 of deductions against that, for an AGI of $800 and taxes that at the current top marginal rate of 35%, it takes in $280 in revenue.

Which is exactly the same revenue it would get by allowing zero deductions on the same income of $1,000 and taxing it at a rate of 28%.  Which is Romney's proposal, lower rates by 20% and eliminate deductions.  So simple even a Phd in economics should be able to understand it.

The Non-masked Avenger body slams Peter Orzag

Keith Hennessey drubs the wannabe pro-wrestler, Peter Orzag over the Paul Ryan proposals being insufficiently detailed;

When Chairman Ryan approaches you, a House Member, and asks for your support for his budget resolution, you might express concern about the amount his budget “cuts” Medicare spending.  Mr. Ryan can then show you a plan he has developed that meets his spending targets and assuages your concerns on the details. If you vote for his budget resolution you are not, formally, voting for the particular Medicare or tax reform plan that Mr. Ryan assumed. You are only voting for the numbers, the spending and tax levels, that would result from such a plan. And if you don’t like the details of how Mr. Ryan might implement any proposed reform, you have plenty of opportunities to withhold your support for the actual legislation when it is later developed by other committees.

Chairman Ryan has, for example, supported two different versions of long-term Medicare reform. In 2011 he proposed eventually moving all new beneficiaries into a premium support system. In 2012 he teamed up with Democratic Senator Ron Wyden to propose a variant in which traditional fee-for-service Medicare would remain as an option for future beneficiaries. The numbers in the Ryan budget plan are consistent with either version of Medicare reform, and support of the Ryan budget plan allows the Congress to negotiate later on which version of reform makes most sense. Or it would, had the Senate Democratic majority done its work and passed a Senate budget resolution instead of punting again this year.

There is therefore nothing “unserious” about specifying only a broad outline for spending or tax reforms as part of a budget resolution. In fact, it’s standard practice for the legislative process.

Newspaper, heal thyself

What is the Seattle Times thinking, as they concoct a phony 'conflict of interest' story around Port of Seattle CEO Tay Yoshitani?  The gentleman also has been named to the board of Expeditors Int'l, an international freight forwarder and logistics firm headquartered in Seattle.

Mr. Yoshitani's contract with the Port specifically allows him to sit on corporate boards, and there is surely no legal prohibition on it.  There has been no specified conflict disclosed by the Times, and they've certainly had the opportunity to ask for one, but did not;

[Port] Commissioner Rob Holland said he had a meeting Tuesday with Yoshitani and told him he'd have to choose.

"I'll tell you what I told him: He needs to make a choice between either-or," Holland said. "There's a perception problem with the public."

Tarleton and Holland's statements put them at odds with Commissioner Tom Albro, who in a letter to a group of legislators this week said that Yoshitani's dual role had been vetted by the Port's top lawyer, who did not find any impermissible conflict of interest.

But, that perception has in fact been entirely the creation of the Seattle Times and certain Democrat state legislators (who've also been unable to specify the problem  with Mr. Yoshitani's dual role).  It's the old story of the boy who murdered both his parents and then plead for mercy on the grounds he was an orphan.

It is much easier to concoct a plausible complementarity of interest theory given the known facts (the 4 Ws as they used to be known in J-schools).  The Port of Seattle owns piers and an airport (SeaTac International) needed by companies that own ships and airplanes that need facilities from which to move freight in and out.  

The Port competes with other such facilities--chiefly the Port of Tacoma, a few miles away and also on Puget Sound.  Clearly it is in the best interests of the Port of Seattle to be informed of any problems shippers might have with such facilities.  Inefficiencies that might make one's port less desirable to use.  Even to know of advantages their competitors might enjoy.

Expeditors, while not a shipping company--they don't own ships and airplanes, they merely rent space on other's vessels for their own customers--surely would be aware, more than many, of such idiosyncrasies.  How an awareness of such would be to the detriment of the Port remains a mystery.

There has been absolutely no evidence provided to this point that Expeditors Int'l has any direct business negotiations with the Port of Seattle, nor any other port authority.  They'd almost surely be too small a portion of any Port's business to matter.

Speaking of mystery...in a piquant irony, it turns out that at least one of the Seattle Times reporters (Jon Talton) happens to have a questionable second source of income himself.  He publishes mystery novels on the side, to a (no doubt) vast audience.  Which would seem to be an opportunity cost for Talton (time not being available to sharpen his knowledge of elementary business practices) that is largely borne by his employer, The Seattle Times.

[Note on rent-seeking by port authorities]  There is (as the informed reader will already know) a rich literature on the corrupting incentives of government sponsored (or, in the case of port authorities, owned) enterprises.  None of the above criticism of the Seattle Times excludes the validity of that (Public Choice) literature,  as it simply has been ignored by the Times' reporters.  So, for present purposes, we do too.

Nerd and the Gang

We're not invited to celebrate and bring our good times, but at least we can press our noses against the window of the Nobel Symposium, says Richard Baldwin;

These events – held on 3-8 September – will gather a spectacular array of inner-circle economists in Stockholm to talk about three of today’s toughest economic questions:

• Growth and Development
 (Nobel Symposium) on the 3rd and 4th;

• A public discussion on poverty and one on climate on the 5th;

• And Climate and the Economy on 5-8 September.

The list of speakers, discussants and panellists is mind-boggling, and includes: Acemoglu, Aghion, Banerjee, Barro, Burgess, Duflo, Goldin, Helpman, Karlan, Kremer, Krusell, Lucas, Mullainathan, Persson, Romer, Shleifer, Stokey, Tabellini, Van Reenen, and Vives.

This is definitely the sort of inner-circle gathering you would not have been invited to. Come to think of it, you haven’t been, but despite that you can watch and even contribute questions. This is a great opportunity for young scholars to get ideas and insights. Just tune into http://www-2.iies.su.se/Nobel2012/page_climate_tbd_java.html (it’ll be working as soon as the conference starts).

Be there, and be square! 

Too Much Quippery

If it's Tuesday, it must be ESPN's Gregg Easterbrook trotting out his schtick;

In 2005, your columnist chatted at a cocktail party with Don Shula, asking him if there was any fundamental football innovation yet to be tried. "Someday," Shula said with a twinkle in his eye, "there will be a coach who doesn't punt."

Actually there was one in the NFL back in the 1970s who had some success doing not only that, but preferred to use his placekicker (Efren Herrera) as a wide (no pun intended) receiver; the expansion era Seattle Seahawks' Jack Patera.

Patera's team had a weak defense, but a future Hall of Famer in receiver Steve Largent.  He reasonably figured it made sense to keep the defense off the field whenever possible, so,often eschewed punting on fourth down and short yardage in favor of handing the ball to the likes of running back Sherman Smith

He also had the onside kick in his playbook and regularly used it if they noticed the opposing team's receiving team 'cheating' on the kick-offs.

All of which Easterbrook is touting now as novel play calling.

Four More Years!

The Seattle Times Jon Talton (a published writer of mysteries, but his biggest mystery is how he ever got a job writing about economics) thinks Romney hasn't a prayer if, It's the economy, Stupid;

...for the reality-based community, Republicans face a challenge running on the economy as they gather for their convention in Tampa.

The economic challenge is this: The GOP is essentially running on a platform that would be George W. Bush's policies on steroids. Yet we already know that the biggest causes of the Great Recession and its lingering pain were the very deregulation and financialization of the economy that the Republicans promise to double-down on. As for the federal deficit and rising debt, Mr. Bush inherited a surplus and turned it into the red with wars, tax cuts heavily tilted to the wealthy, Medicare D that was unfunded and didn't require Big Pharma to bid for the lowest prices, and the costs of the recession. The 2000s were a lost decade for the middle class.

While the last 3-1/2 (aka, the Obama years) have been just peachy?

The typical household income for people age 55 to 64 years old is almost 10 percent less in today’s dollars than it was when the recovery officially began three years ago, according to a new report from Sentier Research, a data analysis company that specializes in demographic and income data.

Across the country, in almost every demographic, Americans earn less today than they did in June 2009, when the recovery technically started. As of June, the median household income for all Americans was $50,964, or 4.8 percent lower than its level three years earlier....

What's bad for the Seattle Times...

Is bad for America...sez the editorial page of...The Seattle Times;

The Newspaper Association of America said it would appeal the Aug. 23 decision [of the Postal Regulatory Commission], which was opposed by individual papers, including The Seattle Times, the commission's own public representative and companies in the industry.

U.S. Sen. Maria Cantwell, D-Wash., and other members of Congress were on record against the proposal. After the commission's 4-1 vote, Cantwell was quoted as saying, "This decision does nothing to solve the Postal Service's problems and does great harm to the newspaper industry."

Senator Cantwell being up for re-election and not caring if the Seattle Times endorses her, of course.

The Cherry Orchard (again)

Chekhov never knew it could get this complicated down on the farm;

Similar to the 2009 crop, this year's large harvest pushed cherry prices downward, although not quite as far as in that recessionary year. That's likely because the cherry market is larger now, with new supplies flowing into Asian markets, such as South Korea.

Nevertheless, at least one farmer chose to leave a significant chunk of his cherries on the tree as a result of lower than expected prices.

"I can't afford to pick it," said Scott Sandum, owner of 3Z's Ranch, set in the scenic hills above Lake Chelan in the town of Manson. "That's pretty sad, especially when you look at the quality that's in the tree."

Well, sad is as sad insures, thanks to the government crop insurance program that dates to...(you guessed?) The New Deal;

Insurance policies are sold and completely serviced through 16 approved private insurance companies. Independent insurance agents are paid sales commissions by the companies. The insurance companies' losses are reinsured by USDA, and their administrative and operating costs are reimbursed by the federal government. 

Of which, Mr. Sandum (in the Seattle Times piece) seems well aware;

"I'm hoping to make enough money off of my insurance to pay for this year's growing costs," Sandum said. "[Those] are between $25,000 and $30,000."
In contrast to this year, Sandum grossed $350,000 in 2011 from his 20 acres of cherry trees.

Desmond O'Rourke, founder of Belrose Inc., a fruit market-analysis company based in Pullman, said it's unusual for growers to voluntarily not pick their fruit, but notes that it happened in 2009. "If these large crops continue, it could become the norm," he said.

Too much food.  Fortunately we're insured! 

Silver lining

Every hurricane might not have one, but Isaac offers some hope of relief to the drought stricken midwest;

Arkansas rancher Don Rodgers said his area is short 17 inches of rain this year. He said even a couple of inches from Isaac would make a significant difference because he would have water for his cattle and might be able to grow some forage for this winter.

"I'm very sorry for the people in the path of this hurricane. I'm just praying we can get some of the benefit from it up here," said Rodgers, who lives in Crawford County, a rural area near the Oklahoma border.

Heavy rain, especially if the storm pushes into the Ohio River Valley, would improve traffic on the Mississippi River, where low water levels have been a problem for weeks, National Weather Service hydrologist Marty Pope said. Pope said any rise in the river would help clear clogged shipping channels, which have caused temporary closures.

"If that happens, it would help us out quite a bit," Pope said.

The low water levels also have prompted companies to reduce loads on barges carrying goods ranging from grain to gasoline, which can mean big losses for shippers.

Another confirmation that Adam Smith knew of what he spoke in his Diamond-Water Paradox; location, time and circumstance matter in valuation.  A glass of water has very different meaning to someone stranded in the Sahara than to someone whose basement is flooded.  

Grisham's Law?

No such thing as bad publicity?  Maybe not for book review servicers;

When Ms. [Ashly] Lorenzana [authoress of Sex, Drugs and Being an Escort] found GettingBookReviews.com, $99 seemed reasonable. But the review did not show up as quickly as she expected. She posted a long, angry accusation against Mr. Rutherford and his service on several consumer sites, saying she had received better treatment from a reviewer whom she had hired for $5. (“You could tell that the person had really spent a few minutes checking out the information about my book and getting a feel for it before just diving into writing a meaningless review.”)

Mr. Rutherford refunded her fee, but his problems were just beginning. Google suspended his advertising account, saying it did not approve of ads for favorable reviews. At about the same time, Amazon took down some, though not all, of his reviews. Mr. Rutherford dropped his first name in favor of his middle name, Jason, so that people who searched for him through Google would not automatically see Ms. Lorenzana’s complaints.

These days, Mr. Rutherford is selling R.V.’s in Oklahoma City and planning a comeback in that narrow zone straddling what writers want and what the marketplace considers legitimate. ....

Mr. Rutherford tried to start another service, Authors Reviewing Authors — a scratch-my-back-and-I’ll-scratch-yours approach. Authors preferred receiving over giving, however, and that venture failed. Now he is developing a service where, for $99, he blogs and tweets about a book — he has 33,000 Twitter followers — and solicits reviews from bloggers and regular Amazon reviewers. No money is paid to the reviewers, so Google has approved ads for the service.He says he regrets his venture into what he called “artificially embellished reviews” but argues that the market will take care of the problem of insincere overenthusiasm. “Objective consumers who purchase a book based on positive reviews will end up posting negative reviews if the work is not good,” he said.

In other words, the (real) bad reviews will then drive out the (fake) good reviews. This seems to underestimate, however, the powerful motivations that writers have to rack up good reviews — and the ways they have to manipulate them until a better system comes along.

“It’s a quagmire,” Mr. Rutherford conceded.

Breaking news!

The New Deal is very old hat for one Seattle dairy--it keeps their home delivery service going;

Home milk delivery saves me time and trips to the grocery store. But what I didn't expect is that it's saving my family money, too.

We pay $2.79 for a half-gallon of 2% local, farm-fresh milk. This is 70 cents less than what we were spending on a comparable product at our neighborhood store. 

In the 21st century doctors have no memories of making house calls, but the milkman survives!  For which, Smith Bros. can thank FDR (and Alger Hiss, speaking of the evil men do living after them, who got entry to government thanks to the Agricultural Adjustment Administration) and the cartelization of the dairy industry all the way back in the 1930s.

The only way Smith Bros can compete price-wise is because almost every other producer of dairy products has to sell through a government controlled scheme that keeps prices artificially high.  Smith Bros is exempt from that because it is a cow-to-consumer operation that can 'cut out the middleman'--by being the middleman itself.

As has been often said, a government program is the closest thing to eternal life there is.

Kampaign Kick-off

It's the season!  A prime example of how not to become President of the United States; be the first messenger to bear the bad news to the electorate;

On balance, President Obama may be advocating policies that are more progressive within cohort, but no one can say for sure, in part because we don't know all the details of Romney's tax and entitlement plans. Nor do we know how the President's plans to curb entitlement spendings will work even in principle, let alone in practice.

But the real problem with both sets of policies is the burdens they impose on our children. The U.S. currently has a fiscal gap of $211 trillion, where the fiscal gap measures the difference between all projected future spending commitments (including servicing the debt) and all projected future tax payments -- all valued in the present. This fiscal gap is calculated based on CBO projections and grew by $6 trillion last year! This is the true measure of the government bill we are passing to our kids. Spending more on oldsters or taxing them less means hitting youngsters with a higher lifetime net tax bill.

That's Larry Kotlikoff, who says he'd like to be POTUS to put a stop to America's child abuse of several decades now.  His claim is that our ongoing policy of taking savings and investment from young productive Americans to give ever larger consumption to older (and richer) Americans has resulted in lower capital stock, and thus lower incomes for those who are young today.  Presumably resulting in lower consumption when they become the oldsters relying on the beneficience of the next generations.

How's this for a bumper sticker;

As a candidate for the Presidency (see www.kotlikoff2012.org andwww.americanselect.org), I've put generational equity front and center. With the help of some of the best economists in the world, I've designed policies that eliminate our fiscal gap, without pulling the rug from beneath the elderly.

As I say on my site, "Our Kids Are Us." Unfortunately, for the two [major] parties, it's "Our Toys are Us." 

How to tell if you're a racist

Maybe Matthew M. Chingos and Paul E. Peterson have a metric for those who oppose vouchers for students of low income families;

—a voucher offer [for a NY elementary private school] is shown to have increased the [college] enrollment rate of African Americans by 7.1 percentage points, an increase of 20 percent ....

If the offered scholarship is actually used to attend private school, the impact on African American college enrollment is estimated to be 8.7 percentage points, a 24 percent increase (Table 4).  This corresponds to 2.8 percentage points for every year the voucher was used.

....Among African Americans, 26 percent of the control group [those not winning a voucher]  attended college full-time at some point within three years of expected high-school graduation.  The impact of an offer of a voucher was to increase this rate by 6.4 percentage points, a 25 percent increment in full-time college enrollment (Table 5).  If the scholarship was used to attend a private school, the impact was about 8 percentage points, an increment of about 31 percent ....

...In the absence of a voucher offer, the percentage of African American students who attended a selective four-year college was 3 percent.  That increased by 3.9 percentage points if the student received the offer of a voucher, a better than 100 percent increment in the percentage enrolled in a selective college—a very large increment from a very low baseline.

That's from their evaluation of;

...the privately funded New York School Choice Scholarships Foundation Program (SCSF), which in the spring of 1997 offered three-year scholarships worth up to a maximum of $1,400 annually to as many as 1,000 low-income families with children who were either entering first grade or were public school students about to enter grades two through five.   A recipient could attend any one of the hundreds of private schools, religious or secular, within the city of New York. 

According to the New York Catholic archdiocese, average tuition in the city’s Catholic schools, the city’s largest private provider, was estimated to be $1,728, which was 72 percent of the total per pupil cost of $2,400 at these schools (compared to total costs of more than $5,000 in the public schools). 

Which had to be 'privately funded' because when Mayor Rudy Giuliana tried to use taxpayer funds for the experiment, he ran into strong opposition from First Amendment absolutists concerned about separation of church and state.

Or so, they said.

Resistance is futile

Now the Apple Empire owns 1 and 0?

The jury found that various Samsung products violated Apple patents covering things such as the "bounce back" effect when a user scrolls to the end of a list on the iPhone and iPad, and the pinch-to-zoom gesture that users make when they want to magnify an image. Samsung was also found to have infringed Apple patents covering the physical design of the iPhone.

"Today's verdict should not be viewed as a win for Apple, but as a loss for the American consumer," Samsung said Friday night after the ruling. "It will lead to fewer choices, less innovation, and potentially higher prices. It is unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners, or technology that is being improved every day by Samsung and other companies."

Apple had no immediate comment.

Lucrative licensing feesThe ruling could lead to higher licensing fees, which companies pay one another to use proprietary technology. Such higher costs could eventually raise consumer prices and send more profits to Apple should it choose to license its technology.

"Clearly Apple is the winner here in financial terms, with things coming from licensing down the road," said Al Hilwa, a technology analyst with International Data.

He predicted the net effect would be price increases for consumers. "Someone has to swallow these licensing fees," he said.

Is the real loser the reputation of Thomas Penfield Jackson who ruled that Apple was not a competitor to The Monopoly in US v. Microsoft?  Or, perhaps, the not so dynamic duo of Paul David and Brian Arthur who made their careers claiming that Microsoft would use their 'lock-in' to bring all technological progress to a halt?

Call it, Gregoire Youth

In politics a little self-awareness (or historical perspective) is a dangerous thing;

The U.S. Departments of Education and Health and Human Services announced the nine successful states today. Thirty-five states, Washington, D.C., and Puerto Rico applied for the grant, which is designed to help states improve early learning and development programs for young children.

“This is very welcome news and helps us further give our children every possible tool that they need to excel in today’s world,” said Gov. Chris Gregoire. "Washington’s application shone because it was a truly collaborative effort. We brought together public and private partners in early learning and K-12 to improve school readiness for all children in Washington and the Washington way proved successful. The early years of a child’s life are the most important. It is our responsibility to embrace, support, and nurture that understanding.”

“This incredible opportunity means that the more than 73,000 children who start kindergarten in Washington each year will hit the ground running,” said Department of Early Learning Director Bette Hyde. “We were bold and ambitious in writing our application, and we will be equally ambitious as we use these funds to build the early learning system our children deserve.”

“If kids get the high-quality early learning opportunities they need, that sets them up for greater success when they reach the K-12 system,” said Washington State Superintendent of Public Instruction Randy Dorn. “Moving WaKIDS to scale will give our teachers the data they need, and make parents true partners in their child’s education from day one.”

Parents aren't 'true partners'  from 'day one' without a government agency supervising it?   Yeah, there's an idea with a great pedigree.

Everything for the State...

Even the playboys and their toys aren't immune from Italy's regrettable political tendencies (remember, this is the country that once put Sophia Loren in prison for tax evasion);

A crackdown on luxury goods combined with budget cuts that have pushed Italy deeper into its fourth recession since 2001 are souring demand for sporty cars and other symbols of the country’s carefree lifestyle. The number of secondhand high- performance cars exported from Italy nearly tripled to 13,633 vehicles in the first five months of 2012, from 4,923 a year earlier, according to auto industry group Unrae.

“Italy is one of the strongholds of supercars, and those vehicles are now disappearing from the streets,” said Giuliano Noci, associate dean of Milan Polytechnic’s business school. “This has a huge symbolic value and shows how deep the crisis is.”

The exodus reflects weaker overall demand for supercars in the home of Ferrari and Maserati, Fiat SpA (F)’s most profitable brands. Sales of super-luxury cars in Italy are forecast to plunge 47 percent to 593 vehicles this year from 1,116 in 2008, according to IHS Automotive, which predicts that sales won’t return to pre-crisis levels before 2016.

It's an easier law-enforcement gig than most; 

...supercar-owners are being scrutinized in efforts to flush out tax evaders. Since December 2011, Italian authorities have conducted dozens of raids in wealthy areas, including the ski resort Cortina d’Ampezzo and Portofino on the Riviera. The officials stop supercars to check whether their owners declared sufficient income -- and paid enough taxes -- to support their lifestyles.

Near Venice last month, financial police arrested a 44- year-old man driving a Ferrari F40 for not paying 8 million euros in taxes since 2006. In a July sweep in the northern town of Bergamo, police found that the driver of a 200,000-euro Ferrari F131 had evaded 3 million euros in taxes since 2007.

“Many Ferrari owners want to get rid of their supercars after the financial police came to one of our events near Rome and checked every driver,” said Fabio Barone, who heads the Ferrari owners’ club Passione Rossa. One of the members put a Ferrari 458 up for sale for 143,000 euros after buying it for 224,000 euros last year, he said.

Diogenes, try Evanston

Northwestern economist Charles Manski says, beats me;

I study what happens when one strips away the strong preference assumptions made in empirical research and maintains only the reasonable assumption that people prefer to have both more income and more leisure. Then revealed preference analysis takes a form similar to that originally studied by [Paul] Samuelson [in the 1930s]. I find that one cannot obtain sharp predictions of time allocation under new policies. Indeed, one cannot predict whether labour supply would increase or decrease in response to changes in tax rates.

I then explore the identifying power of adding assumptions that restrict the population distribution of preferences. As in my past research, I find it illuminating to begin with weak assumptions and then to characterize the identifying power of stronger assumptions. (See Manski 2007 for a textbook exposition of the approach.) My generic finding is partial identification of the preference distribution. Rather strong and implausible assumptions are needed to make sharp predictions.

Thus, we really do not know how labour supply responds to tax rates. This conclusion will comfort neither conservatives nor liberals. Yet our society deserves to be aware of what we do not know.

No report on whether the professor showed up for work this morning.

Yo no sé mucho de arte

But that didn't stop her from trying to produce what she thought she'd like;

An elderly parishioner has stunned Spanish cultural officials with an alarming and unauthorised attempt to restore a prized Jesus Christ fresco.

Ecce Homo (Behold the Man) by Elias Garcia Martinez has held pride of place in the Sanctuary of Mercy Church near Zaragoza for more than 100 years.

....The woman, in her 80s, was reportedly upset at the way the fresco had deteriorated and took it on herself to "restore" the image.

BBC Europe correspondent Christian Fraser says the delicate brush strokes of Elias Garcia Martinez have been buried under a haphazard splattering of paint.

The once-dignified portrait now resembles a crayon sketch of a very hairy monkey in an ill-fitting tunic, he says.

....The fresco is not thought to be very valuable, but has a high sentimental value for local people.

The jawbone of one who knows one

If it's true that one's breeding is shown in how one conducts oneself in an argument, the taxpayers of California should be asking themselves if they want to support the teaching of their children to the standards of Berkeley economist (and former Clinton Administration Treasury Dept. official) J. Bradford DeLong;

MORE LIES FROM NIALL FERGUSON: FIRE-HIS-ASS-NOW DEPARTMENT
....Fire his ass.Fire his ass from Newsweek, and the Daily Beast.
Convene a committee at Harvard to impose proper sanctions on this degree of intellectual dishonesty.[1]
There is a limit, somewhere. And Ferguson has gone beyond it.

Speaking of shouting, 'liar, liar, pants on fire', Prof. DeLong would seem to be shading the truth a bit with this late disclaimer;

UPDATE: Not that I claim to know what the proper sanctions are, you understand. But we should be inquiring into what they are.

Didn't he just say that the 'proper sanction' would be to 'fire' Prof. Ferguson?

It almost makes it beside the point that Ferguson has support for his claim from several Obama Administration cabinet members, that the ACA has made numerous assumptions that probably won't  turn out to be valid.
UPDATE;
Seems we weren't the only ones to notice 'Mad Dog' DeLong's ranting;

First prize goes to Berkeley professor Brad DeLong, whose blog opened with the headline “Fire-His-Ass-Now.” “He lied,” rants DeLong. “Convene a committee at Harvard to examine whether he has the moral character to teach at a university.” My own counter-suggestion would be to convene a committee at Berkeley to examine whether or not Professor DeLong is spending too much of his time blogging when he really should be conducting serious research or teaching his students. For example, why hasn’t Professor DeLong published that economic history of the 20th century he’s been promising for the past six years? It can’t be writer’s block, that’s for sure.

à votre santé

Means, so's your old man in la politique Anglais?

Andy Burnham, Labour’s shadow health secretary, called on the Prime Minister [David Cameron] to “get his priorities right” and concentrate on the NHS [National Health Service] at home, rather than chasing profit abroad.

However, it has now emerged that Gordon Brown’s [Labour] government set up a profit-making arm called NHS Global to “maximise its international potential… and bring benefits back to the UK taxpayer”.

....Anne Milton, the public health minister, accused Labour of “campaigning against its own policy”

“Andy Burnham has jumped on every passing bandwagon - now he is attacking the ability of hospital doctors to raise money for NHS patients,” she said. “It is clear that Labour will stop at nothing to score a political point, even if it means damaging patients.”

There's something about Harry

Which Israeli scientists can't...er...put their fingers on yet.  But they worry;

Dr. Jacob Ronen is in the sperm business. Among other things, as head of Cryobank Israel, the country's largest private sperm bank, he guarantees that his stable of superior donors includes only tall, twenty-something ex-soldiers whose sperm has passed rigorous genetic testing.

But finding such super sperm isn't as easy as it used to be. Only 1 in 100 donors makes the cut. A decade ago, it was 1 in 10.

It's not just first-rate sperm that's in short supply. All of Israel's half a dozen or so sperm banks are scrambling to keep their liquid-nitrogen freezers stocked.
Simply put, the quality of Israeli sperm is falling at an alarming rate, and no one's sure why.

Something in the water?

"People in Israel are getting quite a load of estrogen," said Laurence Shore, a retired hormone and toxicology researcher at the Kimron Veterinary Institute near Tel Aviv. "I don't think it's a good idea to expose children to such high levels of estrogen."

....[fertility researcher Dr. Ronit] Haimov-Kochman is looking into water quality. As a tiny nation with a shortage of water, Israel reclaims much of its used water and sewage, which is processed, used in agriculture and may find its way back into groundwater.

The water, she said, has been found to contain traces of ethinyl estradiol, a synthetic estrogen used in birth-control pills, which gets into the water through the urine of women taking the pills.

"You can't clean this from the water," she said.

From little acorns grow...

It got in on the ground floor, and pace Friedrich Hayek no one planned it that way. It just emerged from man's selfish nature, as most things that really benefit us, do;

Some 80 percent of all U.S. commerce is carried on pallets. So widespread is their use that they account for, according to one estimate, more than 46 percent of total U.S. hardwood lumber production.

....There is a whole science of "pallet-cube optimization," a kind of Tetris for packaging; and an associated engineering, filled with analyses of "pallet overhang" (stacking cartons so they hang over the edge of the pallet, resulting in losses of carton strength) and efforts to reduce "pallet gaps" (too much spacing between deckboards).

The "pallet-loading problem" — or the question of how to fit the most boxes onto a single pallet — is a common operations research thought exercise.

Pallet history is both humble and dramatic. As Pallet Enterprise magazine recounts, pallets grew out of simple wooden "skids," which had been used to help transport goods from shore to ship and were, essentially, pallets without a bottom set of boards, hand-loaded by longshoremen and then, typically, hoisted by winch into a ship's cargo hold.

Both skids and pallets allowed shippers to "unitize" goods, with clear efficiency benefits: "According to an article in a 1931 railway trade magazine, three days were required to unload a boxcar containing 13,000 cases of unpalletized canned goods. When the same amount of goods was loaded into the boxcar on pallets or skids, the identical task took only four hours."

Adam Smith famously said that he rarely saw much public good emerge from those who professed to work for it.  In contrast to those who work for selfish reasons (like being able to load and unload cargo more quickly and easily), but are led as if by an invisible hand to promote that which was never their intention.

And, as the article (first published in Slate) makes clear, no one has a reason to prevent further innovation;

Last year, Ikea abandoned wooden pallets in favor of a low-profile system called "Optiledge." The system consists of one-pound "load carriers," little ledges with feet that are placed under stacks of boxes and then held in place with giant bands. The benefit, says the company, is that the system, which is one-way and 100 percent recyclable, can adapt to the dimensions of the load being carried, rather than vice versa. It's also lighter and takes up less space.

Put that kind of thinking toward solving the entitlements crisis?

Kodak wait-a-moment

The bigger they were, the harder they bargain;

[Eastman] Kodak, which has lost more than $600 million so far this year, began an auction of 1,100 digital patents last Wednesday. It had been scheduled to designate a winner on Monday ahead of a Manhattan Federal Bankruptcy court hearing on August 20.

The company, a photography pioneer that has been unable to adapt to the shift to digital imaging, would use the money from the sale to pay back investors. It has borrowed nearly $700 million in bankruptcy financing.

It is unclear how much the patent sale will raise. The Wall Street Journal reported on Friday that Apple Inc, Google Inc and Microsoft Corp made bids, but they were significantly below Kodak's estimates for the patents' value. Kodak said early in 2012 that an outside firm had estimated the value of the portfolio at $2.2 billion to $2.6 billion.

Go...anywhere, young man

The best of Berkeley (Brad DeLong should listen to this man, who is a doctor (Phd) too);

Compared with Europeans, Americans tend to live farther from their parents and siblings. They are less attached to their neighborhoods and less familiar with their neighbors. But there are also advantages to mobility: If the economic conditions in a region aren't particularly good, Americans tend to look for better opportunities somewhere else. By contrast, Italians and other Europeans tend to stay put. They give up career opportunities and higher salaries to be close to their parents and friends.

Among Americans, however, there are large differences, with some groups much more willing to move than others. At the time of the Great Migration in the 1920s—when more than two million African-Americans abandoned the South for industrial centers in other regions—less-educated individuals were more likely to migrate in search of better lives. Today, the opposite is true: The more education a person has, the more mobile he or she is. College graduates have the highest mobility of all, workers with a community-college education are less mobile, high-school graduates are even less and dropouts are the least mobile of all. 

What could be done?  Well, maybe make the unemployed more mobile by using their unemployment benefits to fund it.  Pay them to move to where there are jobs, not to stay in place where there are none, or few.

(Thanks to Prof. Craig Newmark for the pointer)

Crowdfunding

The good news is, we've landed safely.  The bad news is, we're in Syria, out of fuel and they don't take credit cards;

There is also the small matter of European Union sanctions on Syria that make buying jet fuel, let alone on credit, a little complicated.

Authorities at the Damascus airport told the crew that they could not accept credit cards because of the sanctions — cash only. So as a "precaution," an Air France spokeswoman said, the crew asked the passengers how much money they happened to have in their wallets to help pay for fuel.

One woman aboard said the passengers rounded up 17,000 euros, or about $21,000.

"The pilot asked the passengers in first class to get their cash together. Everyone started to collect money, and they managed to collect 17,000, but the pilot in the end didn't take anything. They resolved the problems with the Damascus airport," said a passenger speaking on France-Info radio and identified as May Bsat.

In the end, the airline managed to settle the bill without help from the passengers, and the plane took off two hours later to spend the night in Cyprus, where the troubled Cypriot banks still take credit cards. The plane landed safely Thursday in Beirut, which apparently had calmed down sufficiently in the interim.

An Air France spokesman apologized for the inconvenience Friday and declined to say how the airline paid, or how much.

While it was the first time Air France had resorted to a request for passenger cash, it wasn't the first airline to do so. Hundreds of passengers traveling from India to Britain were stranded for six hours in Vienna last year when their Comtel Air flight stopped for fuel, and the charter service asked them to kick in more than 20,000 pounds, about $31,000, to pay for the rest of the flight to Birmingham, England.

We wonder if there isn't a lesson here for all those pretending to be appalled by Congressman Paul Ryan's straight talk abut entitlements.  When you're out of money to meet your promises, you have to improvise. 

Classic car market weakens?

Uneasy lies the head that wears the crown of late night comedy;

NBC insiders tell me The Tonight Show went  through ”downsizing” today and that 20 staffers lost their jobs. Others tell me the number is more like 25, and producers were forced to take pay cuts or lose their jobs. I’ve also learned that Jay Leno took what is being described as a “tremendous” pay cut to “save as many people’s jobs as he could”. Leno’s Tonight Show is consistently the #1 late night talk show in both households and demographics, except for some anomalies when Leno does get beaten. And that’s despite the fact that the network’s primetime ratings have been dismal for many years or that Leno himself was harshly criticized by the media for that January 2010 standoff with Conan O’Brien. Even so, The Tonight Show has been and still is a cash cow for NBC. So what happened to merit the downsizing? “I don’t think ad sales are off. I just think the people who bought this company, Comcast, wants to go through everything at NBC and get their money back,” an NBC insider tells me. 

The Tonight Show is older than Medicare, and not immune to change.  Hmmmm.