If only every one were so rational

A quick and dirty exposition of why trade, sweatshops and what can be done about it is much more complicated than most people think.

One topic I have found lacking in the literature is a serious discussion of the implications of Fair Trade. Well-intentioned, of course. But beneficial...probably not. Again, I haven't found any sort of significant analysis, but the reasoning goes like this:

Fair trade sells an almost identical product for a higher price, the higher profits going to the farmers. The idea (again, as I understand it) is that this model will eventually overtake free trade coffee (for example) and so better the lot of all third world coffee farmers. This is all well and good except for two points

1. The demand for more expensive coffee must constantly increase, otherwise producers would find themselves providing too much supply and so be forced to either not sell their product or sell it at a lower price anyway.
2. So far as consumers are purchasing Fair Trade coffee, they are not purchasing free trade coffee, which, necessarily (since they aren't producing Fair Trade coffee), is produced by the poorest farmers. So, in order to help the poor, one must not purcahse their goods...?

The really big question in the above is whether or not the market demand can be altered so as to absorb the same amount of coffee at a higher price. So the real question is, "Do/can people care enough so that they will support an artificially high price?" Even if this can be answered in the positive, there remains another critical issue:

3. Say that the ideal coffee price is achieved and all of the coffee producers are receiving their "fair wage" (whatever that may mean). What's to stop a producer from lowering his price just a little bit so as to capture more of the market? And so on and so on until the producers are making the minimum at which they are willing to produce coffee. It's a simplistic argument, but the response to it would require some sort of global coffee cartel. Not impossible, but very unlikely.

Ultimately, I'm inclined to believe that labor-driven agriculture (as opposed to capital-driven) is probably not the best way to expect a nation to develop itself and that attempts to distort the market to this effect will be largely ineffective.

But, to be honest, I would like to be wrong.

Can you blame your parents for everything?

My favorite econ blogger responds to some of the recent discussion among the media "intellectuals" regarding the heredity of IQ, inequality, and the role race might play in those. While the debate has been going on (recently) since this, the end of it (to my satisfaction) is found here.

I also find the lofty claims to advancing truth in the face of political correctness and despite the danger of controversy in the Slate article obnoxious. Obviously the topic makes for fiery discussion and so ups the readership interest. So, I suppose it's served its purpose.

Damn, probably shouldn't link to it.

Why we can all get along!

Here is a fantastic post from a conservatice blogger about torture. It makes several excellent points:

1) The government is fallible, hence even given the best intentions horrific wrongs will be committed.

2) The constraints given in many torture hypotheticals (the ticking bomb) are such that lacking those constraints the presumed answer (that torture would be justified) is no longer reasonable.

3) There is no relationship between hypotheticals and how we should set policy.

So...useless

After listening to a fascinating interview with this interesting guy, and going to two talks given by this absolutely fantastic scholar and lawyer I decided to give student activism a chance again. Not that either one explicitly called for it, but I was beginning to feel that even if one can't control events, small differences can accumulate themselves and evolve into significance...perhaps.

However.

Why must student groups be so frustratingly useless? Went to the University's Amnesty International group meeting and was hopelessly depressed by the almost complete lack of competence, leadership, direction, and purpose.

The people were...nice, but are never going to light any fires. And, instead of directing their energies to useful things like local issues that could, MAYBE be altered by their efforts, they organize a letter writing campaign to the president of Indonesia demanding the release of political prisoners.

He. Doesn't. Care.

And, instead of organizing some silly event where there will be bands and a poetry slam, why not try to organize an event to donate resources to Victims of Torture, provide publicity for the (locally) growing problem in human trafficking, or work on decreasing the number of prostitutes that are minors. There are so many local issues that could be addressed. Instead, they show a movie about Abu Ghraib. Perhaps that wasn't a bad idea. I was stunned when some people at the meeting had to have what Abu Ghraib was explained to them.

It is needless to say that I will not be doing anything with or for them. My spirit for activism can't survive another such blow.

However, I have been exploring the idea of a group/organization I would like to put together. It wouldn't be an activist group (I'm afraid I have neither the will nor the time to do justice to such an effort), but I hope that it would make the world a little better place. At least more interesting. I will give you more when I see it materializing.

I am programmer, hear me roar!!!

Just had to let the world in on the primal satisfaction I derived from solving the programming issue that had been confounding me for almost two hours.

And it turned out to be little more than three lines of code.



What am I doing?

Why we use math...

Paul Krugman, in this older paper, provides some excellent insights into why math and models are a necessary (or at least appropriate) part of modern economics.

The paper also happens to provide an interesting biography of selected parts of development economics and how it has been altered by the changing methodology of economics itself.

I knew it!!

Turns out that women are racist:

"Another clear gender divide, this one less expected, emerged in our findings on racial preferences, reported in a forthcoming article in the Review of Economic Studies. Women of all the races we studied revealed a strong preference for men of their own race: White women were more likely to choose white men; black women preferred black men; East Asian women preferred East Asian men; Hispanic women preferred Hispanic men. But men don't seem to discriminate based on race when it comes to dating. A woman's race had no effect on the men's choices.

So far I've been lucky enough to slip by. Read the rest of the article here.

Best Part of College!!!

Time for the new schedule! Yay!

-Intro to Mathematical Economics

-Sequences, Series and Foundations

-Applied Linear Algebra

-Theory of Statistics 2

-Women in Modern America

..wait. What?

Next semester is going to suck!!!

Telling it like it is

Here is a good discussion about taxes and the truth (or at least what approximates it in economics). Very interesting points about the wealthy and taxes.