Even If You Don't Like Sports, You Might Be Paying For Them

See The Price of Football That Even Nonfans Pay by Mark Frost. From the Wall Street Journal, page D6, February 3, 2011. Cities spend tax payers money on stadiums. They don't always generated the hoped for benefits and some cities are still paying for stadiums that have be demolished. Here are some excerpts from the article:

"...the state (i.e., the taxpayers) still owes about $110 million in debt on the old Giants Stadium."

"Harris County, Texas, still owes about $32 million in debt on the Houston Astrodome, which opened in 1965 and was dubbed the "Eighth Wonder of the World." The RCA Dome in Indianapolis, which was demolished in 2008, still has about $60 million of outstanding debt and will not be paid off for at least 10 years. Even tiny Vero Beach, Fla., longtime home to Dodgers Spring Training, is on the hook for some $17 million in debt after the Dodgers moved to Glendale, Ariz., two years ago. Pima County, Ariz., taxpayers similarly still have to pay $21.3 million in stadium debt after the Chicago White Sox and Arizona Diamondbacks moved their training camps to Phoenix from Tucson."

""The problem with tearing down stadiums early isn't the debt," said Neil deMause, who co-wrote "Field of Schemes" (Bison) and blogs at a website with the same name. "It's the revenues that you're giving up by allowing teams to move into new buildings with sweetheart leases.""

"...there was nothing functionally wrong with the old Yankee Stadium, the old Giants Stadium, or many other stadiums that have been replaced over the past decade. The problem was that the old stadiums didn't generate enough luxury revenue. So New Jersey, which is about $36 billion in debt at last count, gave up about $15 million in annual tax revenue so that the Giants and Jets could be more profitable."

"The politicians spent the money that was originally intended to pay off the debt on other things. It's a common problem. Revenues get diverted to other programs and the stadium debt gets refinanced."

"The other problem is that cities often overestimate how much revenue a stadium tax will generate—and they often do it to make the new tax and the new stadium more palatable to the citizenry."

If Profits Are Up, Why Is The Unemployment Rate Still Over 9%?

See Profits Are Booming. Why Aren’t Jobs? by Michael Powell. From the NY Times, 1-9-11. Here are some of the reasons he gives as possibilties:

"More so than in the past, many American-based corporations earn a great portion of their profits overseas. And thanks to porous tax laws, these companies return fewer of those profits to American shores than in the past.

“The big American companies are really global,” said Robert Reich, former labor secretary for President Clinton. “They can show big profits from foreign sales. G.M. is making more Buicks overseas than in the United States. There’s no special pop for the United States worker.”

Key corporate sectors, too, have undergone a Darwinian pruning during the last three years. In the financial arena, a few hyperprofitable firms now stand where many more once stood.

“If you’re Goldman and Morgan Chase, and you once had to compete against Bear Stearns and Merrill Lynch, well, of course it’s easier now to show a profit,” said Daniel Alpert, managing partner of Westwood Capital L.L.C., an investment banking firm. “If you have a modest reduction in expenses, and an industry consolidation at the same time, that translates into a massive increase in earnings.”

Surviving corporate leaders drew sobering lessons from their near-death experience of 2008 and 2009, when brand-name corporations nearly ran short of the cash needed to meet payrolls.

“They found the financial system was nowhere near as safe as they thought — they no longer think they can borrow as quickly,” said Simon H. Johnson, an economics professor at M.I.T. and former chief economist for the International Monetary Fund. “So the amount of cash that they think they should have for precautionary purposes is way up.”

Interest rates are so low that traders can pile up profits by exploiting the spread between a near-zero funds rate and rates on Treasury bonds. This allows some corporations to mark profits without selling much or hiring anyone.

Desmond Lachman, a former managing director at Salomon Smith Barney who now serves as a scholar at the American Enterprise Institute, a conservative policy center, sees corporate leaders reshaping their worlds.

“Corporations are taking huge advantage of the slack in the labor market — they are in a very strong position and workers are in a very weak position,” he said. “They are using that bargaining power to cut benefits and wages, and to shorten hours.” That strategy, Mr. Lachman said, serves corporate and shareholder imperatives, but “very much jeopardizes our chances of experiencing a real recovery.”

These profits, however, may not be as large as they seem. Justin Fox, editorial director of the Harvard Business Review Group, dices the question of productive corporate profits still more finely in a recent column. He figures that pre-tax domestic corporate profits exclusive of the financial sector are the best measure of the “underlying health of business in America.”

He’s not terribly impressed. Profits for these companies “repeatedly topped 12 percent in the 1950s and 1960s,” he writes. But in the third quarter of 2010, this sector’s share of national income stood at 7.03 percent.

Some economists, conservative and liberal, divine forbidding portents in all of this. If profits and employment no longer rise and fall together, they worry, then an already strained social compact will grow yet more frayed.

Market bulls applauded in November when the Conference Board revealed that consumer confidence was on the rise. But David Rosenberg, an economist at the investment firm Gluskin Sheff, noted that this increase owed entirely to the optimism of higher-income Americans, who are feeling better and better."

31% Of Americans Cheat On Their Spouses--About Finances

See Is Your Partner Cheating On You Financially? 31% Admit Money Deception. It seems selfish to cheat. If there is any circumstance in which people might not follow their own self-interest, it would be with their significant other. Yet many people admit to doing it.

A related post from last Sept. was Should You Break Up With Your Fiancé If They Have Too Much Debt?

This cheating undermines trust in the relationship. One woman says she does not tell her current husband about the child support she gets from her first husband that she puts in a secret bank account.

Here are some excerpts:

"Among both offenders and victims, the leading money crimes were hiding cash, minor purchases and bills. Meanwhile, a significant number of people admitted hiding major purchases, keeping secret bank accounts and lying about their debt or earnings.

“A third of the population admits to not being honest with their spouse,” says NEFE chief executive Ted Beck. “That is a big number. These indiscretions cause significant damage to the relationship.”"

"Among couples impacted by financial infidelity, 67% said the deception led to an argument and 42% said it caused less trust in the relationship. Perhaps most alarming, 16% of these respondents said the money lie led to a divorce and 11% said it led to a separation."

"According to the survey, over half of all financial cheaters admitted hiding cash (58%) or minor purchases (54%). NEFE’s Beck says this is particularly concerning, as small lies often compound over time to become increasingly larger and more harmful deceptions. Of the offenders, 30% have hidden a bill, 16% have hidden a major purchase, 15% had a secret bank account, 11% lied about their debts and another 11% lied about the amount of money they earned."

Want Your Kids To Visit You When You're In A Nursing Home? Then Be Rich

See Do We Really Only Care About Ourselves? What Makes People Give? Economists Say Charity Almost Always Has Strings Attached from ABC News. They talked to Steven Levitt and Stephen Dubner, authors of the books Freakonomics and SuperFreaknomics (links to their Amazon pages are below).

Here is an excerpt:

"What the "SuperFreakonomics" duo found at retirement homes surprised them.

"If you're a parent in a nursing home, the best predictor that your child will show up is if you, the parent, are quite rich," Levitt said. "Children of rich parents are much more likely to show up in nursing homes than are children of poor parents."

But even that wasn't a guarantee.

"If you didn't have to compete against your brothers and sisters to go and get the bequest, you didn't show up at the nursing home," said Levitt.

It may sound depressing to think that's what drives us, but as Dubner said, "It would be depressing if we were all just cruel and selfish all the time, but we know we're not."

Americans donate $300 billion to charity every year, according to Giving USA 2009. Clearly, we are incredibly giving. So what gives? Is this pure altruism or does something else motivate us to give?"

The whole question of how selfish or altruistic we are is one of the more important issues in economics. We normally assume people act on their self-interest. We may be altruistic, but how much?

They also mention that good looking people raise more money for charity than average looking people. People like the benefits of giving, like when a college names a building after them. So what sometimes looks like an altruistic act might be motivated by self interest. And if people are altruistic, how come we never have enough kidney donors?

They also give a different view on the famous Kitty Genovese murder and the question of whether or not 38 people watched her get killed and did nothing.

Freakonomics: A Rogue Economist Explores the Hidden Side of Everything

and

SuperFreakonomics: Global Cooling, Patriotic Prostitutes, and Why Suicide Bombers Should Buy Life Insurance.

Small Changes In Growth Rates Add Up Over Time

In my macro courses we read a chapter in the book "The Economics of Macroissues." The chapter discussed how nations with common law systems, where property rights are better protected than in nations with civil law systems, have higher growth rates. I pointed out to my classes that even a small difference in growth rates ends up causing a very big difference in per capita incomes due to the annual compounding effect.

About a year ago, Paul Krugman mentioned that the per capita GDP since 1980 has grown 1.95% in the US and 1.83% in the EU. But we should also remember that small differences in growth rates compound over time. If per capita income was 20,000 in both the US and EU 29 years ago, the per capita income (or GDP) now would be 35,015 in the US and 33,839 in the EU, a difference of $1,176. Maybe not a big difference. But after 100 years the US income level would be 12% higher. After 200 years it would be 26% higher.

The table below shows how much per capita income would be at various rates after 100 and 200 years. Assume we start with a per capita income of $1,000. If we grow 2.0% per year, after 100 years it will be $7,245. At 2.1% per year, it would be $7,791 or about $700 more. That is how much that little .1% matters. The difference over 200 years is about $11,000. After 100 years at 2.5% per year, per capita income would be $11,814. That is $4,000 more than the 2.0% rate. Small differences in growth rates add up to big differences over time.

Per Capita Income After 100 and 200 Years At Various Annual Growth Rates (Starting With $1,000)

The Recession Cleaned The Air, Another Example Of How Life Is Full Of Tradeoffs

One of the first things I teach each semester is how there is no free lunch. If you want more of one thing you have to give up something else. This is usually when I talk about scarcity, opportunity cost and the production possibilities frontier.

The recession has been painful for many people. But the air is probably cleaner than it otherwise would have been. See Recession Special: Cleaner Air from last Sunday's NY Times. Here are some excerpts:

"emissions of global warming gases in the United States are down.

According to the Energy Department, carbon dioxide emissions peaked in this country in 2005 and will not reach that level again until the early 2020s."

"“The recession has led to a smaller economy, less activity and less energy consumption,” said Revis W. James, director of the Energy Technology Assessment Center at the Electric Power Research Institute, a utility consortium.

Electricity consumption had been growing at a rate of 1 percent to 1.5 percent a year, but the recession brought on the steepest drop in decades. When demand fell, the utilities cut back on the use of their least-efficient generating stations, the ones that emit the highest amounts of carbon dioxide per kilowatt-hour."

Milton Friedman vs. John F. Kennedy

Yesterday was the 50th anniversary of Kennedy's famous inaugural address. You might have noticed that Google commemorated it. Many writers have commented on it this past week. Below are the first two paragraphs from the introduction to Friedman's 1962 book Capitalism and Freedom. Friedman won the Nobel Prize in Economics in 1976.

"IN A MUCH QUOTED PASSAGE in his inaugural address, President Kennedy said, "Ask not what your country can do for you - ask what you can do for your country." It is a striking sign of the temper of our times that the controversy about this passage centered on its origin and not on its content. Neither half of the statement expresses a relation between the citizen and his government that is worthy of the ideals of free men in a free society. The paternalistic "what your country can do for you" implies that government is the patron, the citizen the ward, a view that is at odds with the free man's belief in his own responsibility for his own destiny.

The organismic, "what you can do for your 'country" implies tht government is the master or the deity, the citizen, the servant or the votary. To the free man, the country is the collection of individuals who compose it, not something over and above them. He is proud of a common heritage and loyal to common traditions. But he regards government as a means, an instrumentality, neither a grantor of favors and gifts, nor a master or god to be blindly worshipped and served. He recognizes no national goal except as it is the consensus of the goals that the citizens severally serve. He recognizes no national purpose except as it is the consensus of the purposes for which the citizens severally strive.

The free man will ask neither what his country can do for him nor what he can do for his country. He will ask rather "What can I and my compatriots do through government" to help us discharge our individual responsibilities, to achieve our several goals and purposes, and above all, to protect our freedom? And he will accompany this question with another: How can we keep the government we create from becoming a Frankenstein that will destroy the very freedom we establish it to protect? Freedom is a rare and delicate plant. Our minds tell us, and history confirms, that the great threat to freedom is the concentration of power. Government is necessary to preserve our freedom, it is an instrument through which we can exercise our freedom; yet by concentrating power in political hands, it is also a threat to freedom. Even though the men who wield this power initially be of good will and even though they be not corrupted by the power they exercise, the power will both attract and form men of a different stamp."

Would You Pay $250,000 To Get Your Friends' Respect?

This is the question rasied by the article Is Law School a Losing Game? (from the NY Times) The article discusses how law school graduates are having a harder time finding good paying jobs as lawyers. In the last 10-15 years many more students have graduated but law firms have cut their staffs. Some students end up tens of thousands of dollars or even hundred of thousands of dollars in debt to pay for law school. The schools seem to fudge the numbers as to how many of their graduates actually get jobs. Many students don't make anything close to a six-figure salary.

But here is something interesting about one student, who is now $250,000 in debt:

"Mr. Wallerstein, for his part, is not complaining. Once you throw in the intangibles of having a J.D., he says, he is one of law schools' satisfied customers.

"It's a prestige thing," he says. "I'm an attorney. All of my friends see me as a person they look up to. They understand I'm in a lot of debt, but I've done something they feel they could never do and the respect and admiration is important.""

That seems like alot of money to pay to get respect. It just does not seem necessary for the price to be that high.

Tough Professors Are Better For Students In The Long Run

See One Measure of a Professor: Students' Grades in Later Courses: Course sequences may indicate instructors' strengths, but colleges find the data hard to tease out. It was in the Chronicle of Higher Education (it might only available to subscribers but I'm not sure).

The research shows that although tougher professors don't give out as many A's and B's, and their student evaluations are not as good, their students do better when they get to upper level (junior and senior level) classes.

It can be hard to find this out. A study like this needs "ceteris paribus" conditions. That is, all other factors have to be held constant (something discussed in the first chapter of probably all principles of economics texts). For example, if good students intentionally take tough profs, then we can't be sure why they did better later. Was it because they were better students or because the profs were tough and upheld high academic standards?

But at the Air Force Academy, here is why they have "ceteris paribus" conditions:

"All students at the academy are required to take a common core of 30 credits. No matter how much they might hate Calculus I, they still have to take Calculus II. Most course sections are small—about 20 students—and students have no discretion in choosing their sections or instructors. Finally, every Calculus I section uses the same common tests, which are graded by a pool of instructors. (One instructor grades Question 1 for every section, another instructor grades Question 2, and so on.)

All those factors make the Air Force Academy a beautifully sterile environment for studying course sequences.

Mr. West and Mr. Carrell (the economists who did the study) didn't have to worry that their data would be contaminated by students self-selecting into sections taught by supposedly easy instructors, or male instructors, or any other bias. They didn't have to worry about how to account for students who never took the follow-up courses, because every student takes the same core sequence. And they didn't have to worry about some instructors subtly grading the tests more leniently than others."

Sitting Too Much Can Damage Your Health, But Taking Breaks May Help Offset The Effect

A few days ago the news media reported on a newly published study that said that:

"Spending lots of free time glued to the TV or computer screen can hurt your heart and shorten your life, no matter how much exercise you get when you're not riding the couch, a new study suggests."

See Too much TV time may hurt your heart by Anne Harding. The research was done by Emmanuel Stamatakis, Ph.D., an epidemiologist at University College London. The article also says:

"Why is sitting harmful? It's not entirely clear, but animal studies have shown that prolonged sitting slows down the action of an enzyme (lipoprotein lipase) that breaks down fats in the blood, such as cholesterol and triglycerides. When the enzyme activity slows, levels of those substances climb. This is a "very plausible explanation" for the findings, Stamatakis says."

It concluded with "Stamatakis and his colleagues are now investigating whether getting up and walking around or even just standing can help counter the ill effects of sitting."

But just today another article came out about research which says that taking breaks will help. See Taking Short Breaks From Sitting May Help Waistline and Heart: Even a little more activity spread through the average workday boosts health, study suggests by Alan Mozes.

This research was done by Genevieve N. Healy, of the Cancer Prevention Research Centre at in the School of Population Health at the University of Queensland in Herston, Australia.

""This research suggests that even small changes to a person's activity levels [as little as standing up regularly] might help to lower cardiovascular risk. These changes can be readily incorporated into the person's day-to-day life [including the work environment]. Stand up, move more, more often, could be used as a slogan to help get this message across.""

Dave Brubeck, Economist

Okay, he isn't an economist. But he is one of my favorite musicians and composers. He did say something related to economics, though, in a recent Wall Street Journal article. See Ranching's Loss, Jazz's Gain. Brubeck has been in the news lately because he celebrated his 90th birthday on Monday, Dec. 6. Here is the quote:

"Mr. Brubeck also has taken heat for prospering in a profession that isn't supposed to pay well. "It never has," he responded dryly. "My wife Iola and I were always very careful with our money. When I started out, Joe the butcher in our San Francisco neighborhood would ask me weekly if I wanted beef bones for our dog. He knew we didn't have a dog. I'd take them to make soup. I'd also go to the farmer's market to pick up discarded fruits and vegetables. We saved every penny.""

Here are some links so you can watch and hear some of his music performed:

Take Five

Blue Rondo à la Turk

The saxophonist is Paul Desmond. Eugene Wright on base and Joe Morello on drums.

Okun's Law

In my macro classes when I talk about how the unemployment rate falls when GDP increases (because greater output usually requires more workers), I usually say something like "but we probably need at least some minimum increase in GDP to see the unemploymet rate go down." This where Okun's Law might come help out. See Mr. Okun Saw This One Coming: Jobs Report Follows His 'Law'.

This is the key passage:

""Okun's Law," as it came to be known, has been tweaked over the years, and now states that for every two percentage points the economy grows above its long-term trend annually, unemployment falls by a percentage point.

Most economists peg the economy's long-term trend rate at about 2.5%, which is roughly where economists polled by The Wall Street Journal estimate growth stands in the current quarter.That means, according to Okun's Law, that the economy isn't growing fast enough to bring down unemployment."

See also Arthur M. Okun from the Library of Economics and Liberty.

And Is Okun’s Law Really Broken? By JUSTIN WOLFERS.

Thrift Might Be Okay Nowadays

See In a tough economy, old stigmas fall away. For example, more people are using layaway, even the wealthy.

"The old stigmas are the new realities," says Emanuel Weintraub, a New York-based retail consultant. "Now, people don't have a problem saying, 'I can't afford it.' It's a sign of strength."

Here is some evidence:

"Store-branded groceries now make up 22 percent of total sales, up from 20 percent before the recession, according to The Nielsen Co. The private-label business is worth $500 billion a year, so even a 2 percentage point change means $10 billion."

"At an Aldi location in Chicago on a recent evening, shoppers didn't care that the only recognizable brands were the Splenda sweetener, a Butterball turkey and a few kinds of candy.

Six no-name grocery items - macaroni and cheese, potato chips, cream cheese, sour cream, olive oil and guacamole - cost about $10. The same six brand-name items cost $22 at the nearby Dominick's."

"New research from American Express found that the super-affluent, which it defines as those who put at least $7,000 a month on their credit cards, spent 24 percent more on fast-food last spring than the year before. They spent 12 percent more on fine dining."

See an earlier post, Frugal Is The New Sexy.

Does Wealth Make Us Happier?

In my micro class, the last chapter we covered dealt with incomes and wealth. The question "does money buy happiness?" is perennial. Matt Ridley wrote a column about some new happiness research recently in The Wall Street Journal. See Wealth Makes Us Happier, But Why? Here is an exerpt:

"As Buddhists have long recognized, attaining our desires doesn't seem to bring satisfaction, just further restlessness. This is no surprise to evolutionary psychologists. Natural selection shaped human nature to be ambitious, not to settle for contentment. The person who kept striving to be successful left more offspring behind than the Epicurean hedonist.

So the pursuit of happiness turns out to be as frustrating as hunting the holy grail. Forcing people to be jolly seems to be counterproductive. Having children, which we do to make ourselves happy, generally makes us a bit unhappier in practice.

If you ask people whether suffering a disabling accident would make them unhappy a year after the event, they say "of course." But if you ask people who were disabled in an accident a year before if they are unhappy now, they say "no." For some people at least, happiness almost seems to have a thermostat: After good or bad things happen, we return to our own personal levels of contentedness.

Nonetheless, people say they've been getting slowly happier. In 45 of 52 countries, happiness has risen during the past 30 years. This coincides with people getting richer. Contrary to myth, rich countries have slightly happier citizens than poor countries. Of course, it's possible to be rich and unhappy, as many a celebrity deliciously reminds us. A study done in the 1970s bolstered the cheering (for the rest of us) notion that rich people are not necessarily happier, but it has since been challenged by larger statistical samples, especially in the work of Betsey Stevenson and Justin Wolfers at the University of Pennsylvania.

What is it about prosperity that brings happiness? Rather than having more "stuff," it is probably the freedom that wealth buys, letting us make choices about our lifestyle—where to live, who to marry, what to wear. The political scientist Ronald Inglehart argues that the big gains in happiness come from living in a society that frees you to be yourself—"

Another interesting article is The pursuit of happiness: Author seeks to take its measure and find where people are most content. It quotes former University of Chicago psychologist Mihaly Csikszentmihalyi. He said "Without dreams, without risks, only a trivial semblance of living can be achieved."

Some earlier posts on happiness:

Does Or Can Money Buy Happiness?

Interesting Book: Stumbling on Happiness

Does Money Make You Mean?

I wonder if you can be mean and happy at the same time.

Robot Journalists-A Case Of Structural Unemployment?

In macroeconomics, the definition of "structural unemployment" is usually something like "unemployment caused by a mismatch between the skills of job seekers and the requirements of available jobs." One example is when machines replace workers. Now there is a company that has created computer programs that will look at the statistics in the box score of college basketball games and then write a story about it. If any sports writers lose their jobs, they will be structurally unemployed.

See When the Software Is the Sportswriter by Randall Stross of The New York Times. It explains how StatSheet, the company involved, does it: "it just uses template sentences and a database of phrases that numbers about 5,000 for now." Here is one story written by the computer software based solely on the statistics of the game:

"Ohio State has already started living up to monumental expectations with a good first game. On November 12th on their home court, the Buckeyes waxed the Aggies, 102-61. The game lacked a lot of drama, with Ohio State up 52-25 at halftime and never letting up.

Ohio State was able to win by overpowering North Carolina A&T in rebounding and assists.

Ohio State used a big advantage on the boards to win the possession battle with 60 rebounds to 22 for North Carolina A&T. Ohio State spread the ball around and got 24 assists compared to 8 for North Carolina A&T.

Deshaun Thomas was the leading scorer for the Buckeyes with 24 points in 20 minutes. Jared Sullinger contributed 14 big rebounds.

Ohio State has incredible expectations for this season, and this victory over the Aggies was a good start.

When we look to our next game, we see a tenacious team in Florida on November 16th."

Some researchers at Northwestern University have been working on this, too. It was mentioned in a The Robots Are Coming! Oh, They’re Here
. by David Carr. Sportswriter King Kaufman had some interesting observations in the comments section.

This is okay as long as computer programs can't write blog entries:)

The Robots Are Coming! Oh, They’re Here

Who Was Alex P. Keaton's Favorite Economist? Milton Friedman

Click on the following video link to find out:

Who Was Alex P. Keaton's Favorite Economist?

You will only have to watch a few minutes to find out. It is from the 1980s sitcom "Family Ties." Michael J. Fox played Alex Keaton. In this episode he tells another character that Milton Friedman was his favorite economist.

Friedman came up in macro recently while discussing the money supply and the differences between Keynesians and monetarists.

Here is what IMDB has to say about the show:

"A couple who were ardently leftwing political activists in the sixties face the problems of raising a family with children who have strongly conservative views."

Click here to go to the IMBD page about the show.

Were The Pilgrims Capitalists Or Socialists?

See The Pilgrims Were ... Socialists? from The New York Times. There seems to be some controversy. One story has them owning property in common and not doing well until they went with private property. Not everyone agrees with that version of history. Here is what seems to be the most interesting thing from the report:

"Historians say that the settlers in Plymouth, and their supporters in England, did indeed agree to hold their property in common — William Bradford, the governor, referred to it in his writings as the “common course.” But the plan was in the interest of realizing a profit sooner, and was only intended for the short term; historians say the Pilgrims were more like shareholders in an early corporation than subjects of socialism.

“It was directed ultimately to private profit,” said Richard Pickering, a historian of early America and the deputy director of Plimoth Plantation, a museum devoted to keeping the Pilgrims’ story alive."

So when you eat turkey tomorrow, you might really be celebrating that great American institution...the corporation. Makes me feel real patriotic.

This part was interesting too.

"The competing versions of the story note Bradford’s writings about “confusion and discontent” and accusations of “laziness” among the colonists. But Mr. Pickering said this grumbling had more to do with the fact that the Plymouth colony was bringing together settlers from all over England, at a time when most people never moved more than 10 miles from home. They spoke different dialects and had different methods of farming, and looked upon each other with great wariness."

"“One man’s laziness is another man’s industry, based on the agricultural methods they’ve learned as young people,” he said."
"Bradford did get rid of the common course — but it was in 1623, after the first Thanksgiving, and not because the system wasn’t working. The Pilgrims just didn’t like it. In the accounts of colonists, Mr. Pickering said, “there was griping and groaning.”"

"“Bachelors didn’t want to feed the wives of married men, and women don’t want to do the laundry of the bachelors,” he said.

The real reason agriculture became more profitable over the years, Mr. Pickering said, is that the Pilgrims were getting better at farming crops like corn that had been unknown to them in England."

Adam Smith vs. Ace Ventura

Well, sort of. See 'Liar Liar,' 'Nutty Professor' Director's Life Has Taken Quite The Turn. It is about Tom Shadyac who also directed "Ace Ventura: Pet Detective." He stopped liking what was going on in Hollywood. Here is an exerpt:

"So he sold his Pasadena mansion and most of his possessions, moved to a trailer park in north Malibu and began work on his documentary "I Am." What's "I Am" about? It's about how human beings are too competitive, about whatever is hard-wired in our brains that makes us want to work against each other rather than cooperate."

That last part, about competition and cooperation, is something that "neuroeconomics" studies.

Earlier this year, I attended a lecture by Paul Zak, a neuro-economist from Claremont Graduate University, at the Mind Science Foundation. He has studied how our behaviors are affected by the presence in our brains of a chemical called oxytocin, which can affect how generous we are. The more oxytocin you have have, the more generous and empathic (or sympathetic) you are. So he calls oxytocin "the moral molecule." It helps us identify with others and understand their feelings and situatons. Oxytocin can also increase when people trust you or are generous to you.

What does this have to do with Adam Smith? He wrote a book called The Theory of Moral Sentiments. One point he made there was that we are able to sympathize with other people by trying imagine what they are going through. This is directly related to oxytocin. In September 2009, I had a post on this called Science Proves That Adam Smith Was Right Over 200 Years Ago (sort of). That will provide you with more details.

To watch a lecture by professor Zak (very similar to the one he did here in San Antonio), go to The Moral Molecule.

Oxytocin also facilitates trust. Economies need trust because not everything can be put into a law, a contract or be monitored. Your boss can't watch you every second to make sure you don't slack off on the job. We trust banks and our pension funds not to take the money and blow it all in Vegas. We trust our government officials not to accept bribes. Yes, we have rules and regulations against these things. But if we had to have a rule for everything and if everyone was being watched constantly, it would be too costly to our economy. Trust helps quite a bit.

Here are two articles about professor Zak's lecture from the San Antonio Express-News:

Emerging field offers insight into human virtues

Humans release ‘niceness' chemical

More information about neuroeconomics can be found at:

Neuroeconomics Explained, Part One

Neuroeconomics Explained, Part Two

Click here to read the latest findings from the Center For Neuroeconomics Studies

Rare Video Interview Of Karl Marx

It provides some interesting insights into his theories. It is about 4 minutes long.

Click here to go to the You Tube page that has it

Coming Soon To A Theater Near You: Night Of The Living Shopping Zombies!

See Making Ads That Whisper to the Brain from this past Sunday's New York Times. Here is the opening:

"WHAT happens in our brains when we watch a compelling TV commercial? For one thing, certain brain waves that correlate with heightened attention become more active, according to researchers who have used EEGs, or electroencephalographs, to study the brain’s electrical frequencies."

"Neuromarketers" are studying what happens to people's brains when they look at ads and watch commercials to see how they react unconciously. This will allow them to find out what we all really like, deep down. It is hard for us to express in words our unconcious desires. Now the companies will be better able to figure out what we like. Will this make us all happier? Who knows. Maybe companies will make less of what we don't want and more of what we really do want.

The article goes on to ask:

"But should we worry that a technique that probes subconscious brain patterns might be used to unduly influence consumers, turning them into shopping robots without their knowledge and consent?"

Some feel that neuromarketing should be regulated to prevent "brand washing." Other experts think that neuromarketing may not be that affective and will not turn us into shopping zombies.