Worthwhile Canadian Initiative

Men: Nature's Second Sex

Pity the poor male springbok. As soon as he reaches sexual maturity, he is pushed out of the herd by the dominant male. Alone on the plains, he is easy picking for lions, leopards and cheetahs.

The best survival strategy is to team up with other young males and form a bachelor herd. It's safer, but still lonely. Hence a bachelor springbok will repeatedly challenge the dominant male, risking injury and death.

It's not easy being the dominant male, either. Dominant male springbok are so busy mating with females, stopping members of their harem from wandering off, and fending off challengers that they have no time to eat. After a short period of dominance, they are so weakened by their efforts that they, too, become easy pickings for predators.

Labour supply, lions and elephants

For instance, on the planet Earth, man had always assumed that he was more intelligent than dolphins because he had achieved so much—the wheel, New York, wars and so on—whilst all the dolphins had ever done was muck about in the water having a good time. But conversely, the dolphins had always believed that they were far more intelligent than man—for precisely the same reasons.  - Douglas Adams, The Hitchhiker's Guide to the Galaxy.

Time can be divided, approximately, into time spent eating, sleeping, caring for others, playing, relaxing, making love - all the things that make up "leisure" - and time spent in activities that generate things to consume, or earnings to buy things to consume. An individual faces a trade-off between leisure and consumption, as shown in the diagram below the fold:

What is an "excess demand for money"?

I know what it means to say there is an excess demand for apples. And I know where to look to see whether there's an excess demand for apples. I go to the apple market, where people buy and sell apples for money. If I see that it is hard for people who want to buy apples to find someone who wants to sell, and easy for people who want to sell apples to find someone who wants to buy, I would say there is an excess demand for apples.

Draft notes for teaching Intro Money

I always suffer self-doubt when I teach the Money part of Intro Economics. Perhaps I'm over-thinking it, and it would be better for my students if I told myself to shut up, and just give them some simple clear story. But how to get it simple and clear, yet not horribly wrong or incomplete?

I'm writing these notes mostly for myself. (To try to organise my thoughts, because I don't actually use notes when I teach.) But I might as well do it in public. Read at your own risk. Because I haven't got it right yet.

Do Japanese emission controls contribute to global warming?

Japan has one of, if not the, strictest emission control regimes in the world. Upon purchase, when a car is three years old, and every two years after that, each car must undergo a rigorous and sometimes costly Sha-ken inspection. These ensure that it meets tough emission standards and is in sound mechanical condition.

Sha-ken makes it expensive for Japanese car owners to keep an older car on the road. Yet these regular inspections, combined with other factors - congested roads that ensure most cars have very low mileage, a relatively temperate climate, underground parking - mean that a five or seven year old Japanese car is typically in excellent condition. The net result is that Japan exports used cars at low prices to Australia, New Zealand, India, South Africa, Botswana, Zambia, and just about every country where right-hand-drive (RHD) cars are used. 

Universities, Public Funding & Entrepreneurship: The Consequences of Risk

Alex Usher of Higher Education Strategy Associates asked some interesting questions in his morning blog post.  The world of university funding in Canada is changing – there is more money overall for universities but governments have been paying a declining share of university operating budgets with the remainder coming from tuition and assorted sources of research and contract funding.  Indeed, a lot of new government money is targeted towards capital projects or new student support programs rather funding what faculty often see as core teaching and research functions of universities. 

Aspiring to asbestos

On the way back from the Zambezi river crossing, the driver told me of his life's ambitions: he wanted to be middle class, to give his children a good start in life, and to have an asbestos roof.

In this country, he told me, there are two types of roofs: metal and asbestos. Asbestos is much better because it doesn't get hot in summer, and it's quiet - it doesn't rattle when the rain falls on it. Asbestos is also more expensive than metal, and that means it's higher status.

Hot potatoes and hot yams

Money (the medium of exchange) is an asset. But the demand for money is different from the demand for any other asset. Here is an (inadequate) parable that tries to explain why it is different.

A monetary policy target can only be defeated by a better monetary policy target

"Monetary policy can cause bad things to happen in financial markets, which can cause bad things to happen in the rest of the economy. Therefore NGDP targeting is wrong."

I made up that quote. But if I had to summarise M.C.K.'s long article in two short sentences, that is how I would do it.

Inheritance

Well, Ontario has a new finance minister – Charles Sousa – and according to the Toronto Star: “Charles Sousa, the two-term Mississauga South MPP who finished fifth in last month’s leadership race, will succeed the retiring Finance Minister Dwight Duncan at the treasury. An affable former Royal Bank executive, Sousa inherits a $11.9-billion deficit that the minority Liberals hope to eliminate by 2017-18.”  As far as inheritances go, I suppose I would prefer to be on the receiving end of a few thousand acres of rolling English countryside and Downton Abby rather than an 11.9 billion dollar deficit.  No doubt, the new minister has been briefed on what is coming down the pipeline.  The most recent Ontario quarterly finance update provides a lot for him to chew on.

University retention and males

Carleton University admits more male students than females. But it graduates more female students than males. Why? What, if anything, can and should we do about it? (I don't know.)

The public access data is here. (Datacubes is a lovely tool, but it takes a little time learning how to use it.)

You can see there's a difference from the public access data. I can also get access to Carleton internal data. Except I can't seem to access it from home, so what follows comes from memory:

Is Economic Growth Really Ending?

Robert Gordon has argued in his recent NBER paper “Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds” that growth rates have slowed and we are reverting to very low historical growth rates and indeed a period of economic stagnation.  However, what I find intriguing is that an examination of some long-term data for Britain provides conflicting results that quite frankly puzzle me. 

Simple models and the macroeconomics of price controls

I hear that Argentina has imposed [update: economy-wide] price controls. I know next to nothing about Argentina, but I have spent some time thinking about the macroeconomics of price controls.

I can easily build a simple macroeconomic model showing that price controls are a good thing that can make everybody better off.

I cannot build a simple macroeconomic model showing that price controls are a bad thing. I don't think anyone else can either. Unless they assume the government price controllers are stupid. But that doesn't mean price controls are not a bad thing.

My guess is that price controls may be a good thing in the short run but will be a bad thing in the long run. I can explain why I think that, but I can't build a model to show that. That's the trouble with models.

Can government intervention ever be sufficiently sensitive?

In South Africa the signs of AIDS are subtle, but ever present. Dispensers with free condoms in every university washroom. A red AIDS ribbon painted on the wall of the Knysna hospital. Another on the entrance to the Muizenberg cemetery, where wooden crosses and flowers in plastic bottles mark the resting places of those who die young, and are much missed.

Condoms are simple, cheap and effective weapons against AIDS. The South African government has developed its own brand, Choice, which is given away for free. In Cape Town, for example, the government aims to distribute an average of 104 condoms per year for every man over 15. The problem is, people don't like them. The government-issue condoms are seen as low status. People complain that they are too small, or that they aren't reliable.

(Why) Is inflation finally falling?

This post is premature. It's too early to say for sure. And I don't have any real answers to explain this (possibly non-) event. I'm trying to fit together a number of things that have been puzzling me.

Baboons’ deathly rational calculus

 

Baboon checking out the buffet at Storms River Mouth restaurant

Baboons are rational. They minimize the effort required to attain a given number of calories or, alternatively, maximize the amount of calories obtained from a given amount of effort. Given a choice between spending hours searching for fruit and seeds, or scarfing some left over potato chips, they’ll take the leftovers every time. Once they learn that humans keep bananas and other delicious food lying around in their kitchens, they break into homes, or enter through any open window, and pilfer anything edible.

Their behaviour can be explained by a rational model of crime: steal if the benefits of doing so are greater than the expected probability of getting caught times the anticipated penalty if caught.

Toilets, Governments and Incentives

In my morning newspaper, I came across a hardware store flyer advertising a great new innovation – toilet with pump!  Essentially, along with your regular toilet, an additional water storage tank and pump is installed that allows you to store recycled water used from your sink, tub, or shower and then use it when you flush. 

What's wrong with drinking in public?

In Canada, outside of Quebec, it is illegal to drink alcohol, or even have an open container of alcohol, in a public place. Public drinking is banned throughout the US also. A number of other countries do not have such laws – in the UK, one can buy a bottle of beer in a pub and drink it on the street.

The optimal regulation of alcohol involves a trade-off.  Higher taxes, restrictions on sales and laws banning public drunkenness go some way towards preventing alcohol abuse. At the same time, excessive restrictions impose unnecessary costs on ordinary, responsible, citizens, and may have unintended consequences. 

What is going on with the Bank of Canada's balance sheet?

From zerohedge: Mark Carney Leaves Canada With 'Stealth QE' Rising At Fastest Pace Since 2009:

As Mark Carney steps aside from his role at the Bank of Canada to undertake all manner of easy money in the UK, we thought a reflection on the 'stealth' QE that he has been engaged with, very much under the radar, in the US' neighbor-to-the-north was worthwhile. It seems quietly and with little aplomb, Carney's BoC has grown its balance sheet by over 21% YoY - the most since 2009. If that was not enough to make someone nervous, the quantity of Canadian government bonds on the BoC's balance sheet has grown at a remarkable 46% YoY! All of this has taken place during a time when 'supposedly' the Canadian economy has been reasonably strong and foreign demand for debt high. With Canada's CAD267bn debt due in 2013, we suspect this 'stealth' QE will continue to rise.

Sure enough, something is going on. [Updated - maybe Operation Twist?]

[Updated again - JP Koning has the scoop in the comments]

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