Rich Kids Of Instagram is the sort of thing that just might upset the proles.
Even a Forbes staffer is reacting strongly: “the hashtag #RKOI (rich kids of instagram, for the uninitiated) is making me feel murderous.” But her solution is just to hide the evidence: get rich kids to stop using social media!
This discovery, reported by Kevin Drum is very very odd:
They examined stock market returns over the past two decades and discovered that virtually all of the excess return occurs in a series of 24-hour periods eight times a year. Take away those 24-hour periods, and stock market returns are about what you’d expect them to be.
So what are these 24-hour periods? They’re the periods from noon the day before Federal Reserve announcements until 2:15 on the day of the announcement. During those periods, stocks rise an average of about 50 basis points. That’s the red line in the chart on the right. During every other three-day period, stocks do nothing on average. That’s the black line at the bottom of the chart.
What does this mean in aggregate? Since 1994, the S&P 500 has risen from about 400 to 1300. If you remove the three-day periods surrounding FOMC announcements, it’s barely risen at all.
Huh?
Latest news and reactions at Blenderlaw (U. Miami prof Caroline Bradley).
— BBC News, spotted via boingboing’s One year of econopocalypse would pay for a civilization’s worth of science
So if we took the bailout money and gave it to scientists, I’d have my flying car?
One of the first things you learn when you study public welfare economics or public choice theory is that the private provision of public goods runs up against the problem of free riders — people who benefit but don’t pay. This is one of the core justifications for the governmental provision of public goods such as police and fire protection, and for the funding of those services through compulsory taxation. One of the things you learn later is that there is some debate over what exactly qualifies as a public good. And in some courses you also learn that rent-seeking businesses like to masquerade as suppliers of a public good in order to get subsidies they do not deserve.
Our modern experiment with gutting local, state, and now national government in the names of low taxes and privatized profit while simultaneously offering handouts to well-connected corporations provides telling reminders of each of these lessons.
The most recent of these is the Hallandale Beach lifeguard who lost his job for saving a life. Unfortunately for Tomas Lopez, he left his station in the lifeguard zone unattended in order to save a swimmer in distress in the no-lifeguard zone. As the nation now knows, Lopez got fired for that dereliction of duty (and then got offered his job back when the media howls began).
Lopez’s employer would have preferred Lopez act like the fire department in Obion County, TN that just watched while a home burnt to the ground because the homeowner hadn’t paid his household subscription fee to the local fire department.
And of course the Affordable Health Care Act’s ‘mandate’ raises similar issues, in that it tries to penalize free riders who might choose not to buy insurance, perhaps counting on public provision of emergency medical care.
Meanwhile, across the nation, we give corporate welfare to stadiums and other businesses that promise usually dubious local benefits. Here in South Florida, the latest example is Jungle Island. Once a great offbeat local attraction known as Parrot Jungle, the management sold their lovely grounds in Kendall for a development and with the fig leaf that it would be good for jobs, development, and tourism, they got the City of Miami to give them a loan not even a bank would have agreed to. They built an unattractive park in an out-of-the-way location, and overcharged to see it. Unsurprisingly it went bad, and as the taxpayers are the last to be paid rather than the first, we haven’t seen any of our money back. Instead they’ve gotten further subsidies. Equally unsurprisingly, the Jungle Island people have a proposed solution: the city should double down and give them more land and more money so they can build a hotel. At least this one isn’t going under the radar.
The moral of the story is that we need the government to support true public goods: police, fire, basic health care — but not tourist attractions. How sad we so often have it backwards.
Incidentally, to an economist, the lifeguard question is harder than it may seem: one optimal solution in a basic microeconomics textbook would probably be to charge admission to the beach and use that to pay for the lifeguard. Second-best would be to make clear where was protected and where wasn’t (which is what Hallandale Beach did), and let people choose, so long as there isn’t a risk of gratuitous rescue.
In a public welfare frame, though, we’d ask if there’s a public cost to letting people drown — if it makes us feel bad maybe it’s not worth the financial savings. Or, if we think that swimmers can’t be trusted to make good decisions about their safety, we might make a parentalist decision to provide lifeguard services whether swimmers know enough to demand them or not. Alternatively, if we think beaches are a public good and charging for them would depress their use below the optimum, then it would be wrong to charge for access them in which case it makes sense to treat lifeguarding as a public good too.
At some point during the past Spring semester I made a snarky comment during a class about one of the corporate parties in a case or a hypo, and a student challenged me to name a corporation I liked. Which seemed like a fair demand — especially as it took me some effort. In a way, that shouldn’t be surprising: in capitalism red of tooth and claw, a corporation that is liked may be leaving some consumer surplus on the table that it maybe should be grabbing and turning into producer surplus. Then again, perfect price and service discrimination is not yet possible: so, assuming I am not the absolutely average consumer even in the mythical world of free and perfect competition there ought to be some firms whose delivery of goods and services is sufficiently great as to give me some warm fuzzies.
I was reminded of this because a very pretty and inexpensive table we bought just a few years ago — from a store we will not be going back to — is showing signs of imminent collapse. To replace it we recently ordered a table from one of my favorite local companies, written before. And we recently celebrated our 23rd wedding anniversary at a fabulous local restaurant that we go to only for the most special occasions.
Of the big national firms that I deal with, the ones that I think I do the best job and are most pleasant to deal with are, in alphabetical order:
I was tempted to add Whole Foods to the list, because I love their cheese and the staff are nice, almost creepy nice, but the prices are so absurdly high that I don’t go often. Similarly, the rare times I’ve dealt with Williams-Sonoma it’s been great, but pricey. And the experience of dealing with Puget Systems to buy the computing equivalent of a noiseless Ferrari for the kids’ gaming machine (had to be silent as it would be in the family room) was excellent. The product was beautiful, indeed noiseless, and I’ve never seen such fine cabling and documentation. It really felt like a luxury product and luxury purchasing experience, but I still can’t believe how much I paid for it. Or that I’d like another one for myself.
I ought also to mention a small software company, Thornsoft, the makers of Clipmate. Not only is this probably the single most useful piece of productivity software I’ve relied on for about 20 years, but on the rare occasions I’ve had a problem and emailed support, I’ve had a prompt responsive helpful reply from the programmer himself, Chris Thornton. Great stuff.
Plus, as I mentioned recently, I’m a big fan of the Gables Stage, although I don’t know if this counts as it’s a non-profit.
Notably absent from the list above are any banks, and any electrical or air conditioning maintenance/repair companies. I don’t seem to have much luck with those.
What are your favorite national or South Florida firms, winners not just in terms of price/quality but also in terms of quality of customer service?
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