Thursday, July 24, 2014

Carnival of Doom

Via Ziki Questi’s blog, I encountered Deadpool 2.0, where an abandoned carnival nestles against an insane asylum.

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The roller coaster and Ferris wheel dominate the skyline, and the entire carnival focuses on the macabre and gruesome. Ghosts haunt the buildings.

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Up a hill, past the skeleton on the ground, up the stone stairs flanked by trees in the shape of grasping hands, stands an asylum, as abandoned as the carnival.

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Inside, lights flicker, illuminating the haphazard body or the occasional lunatic. The gentleman below has “Kiss the cook” written in blood on his toque and continues to grasp his bloody butcher’s knife.

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The medical center is no cheerier, with the blood-soaked sheet over a corpse and the message “No escape” scrawled next to the gurney.

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No doubt there was much more to explore, but the wiser part of me decided this was a good time to leave, while I was still among the living.

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Sunday, July 20, 2014


While the weather people argue whether the burst of cool (for July, at any rate) temperatures should be characterized as a polar vortex, the rest of us were just enjoying the temporary break from heat and humidity. Saturday seemed as good a time as any to pay a visit to the Antietam battlefield, in central Maryland.

The Battle of Antietam (or Sharpsburg - the Union and Confederate sides couldn’t even agree on the name of the darn thing, a la Manassas/Bull Run), held on September 17, 1862, was the first major battle of the Civil War on Union soil, is known for being the single deadliest one-day battle in the war, with over 22,700 dead, wounded, or missing. Although the outcome of the battle was inconclusive - despite far superior number, the Union forces couldn’t destroy the Confederate forces, though the Confederates ended up withdrawing from the battlefield - President Lincoln, in the aftermath of the battle and the retreat of General Lee’s forces back to Virginia, issued the Emancipation Proclamation, freeing slaves in the conflict states.

I’m not a big military history buff, and all the tactical business of moving armies around farmland bores me. However, it was a nice day for a walk, even in such a somber place.

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Maryland memorial

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Dunker Church

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Burnside’s Bridge

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Group floating down Antietam Creek

Friday, July 18, 2014

Small Worlds

I was reading The Best Science Fiction and Fantasy of the Year, Volume 7 (2013; Johnathan Strahan, ed.), minding my own business, when I came across a story called “GOOGLES (c. 1910),” by Caitlin R. Kiernan. It’s a brief, enjoyable tale of young orphans in a post-apocolyptic Steampunk world in which three children are sent to dodge packs of stray dogs in an effort to scavenge enough food for the orphanage.

Then I got to the end of the piece, where the author has a brief dedication: “For Jimmy Branagh, Myrtil Igaly, Loki Elliot, and for the New Babbage that was.” Hey, I know those people!

Thursday, July 10, 2014

The Exciting Lives of Victorians

As a follow-up to the post on John Ruskin and "The King of the Golden River," I ran across an article in The Scotsman newspaper on a movie coming out about Effie Gray, Ruskin's wife. The movie stars Dakota Fanning as Gray, and includes Emma Thompson, Robbie Coltrane, and Derek Jacobi.

Ruskin reportedly wrote "The King of the Golden River" for the then 12-year-old Gray. Seven years later, when he was nearly 30, he married her, but supposedly never consummated the marriage. She modeled for the Pre-Rafaelite painter John Everett Millais and the two fell in love. She had her marriage with Ruskin annulled and she and Millais married.

The existence of the movie shows, I suppose, that the lives of eminent Victorians can still fascinate movie-makers, if not necessarily movie audiences, a century and a half after the fact - at least, if those eminent Victorians have unusual personal lives!

Sunday, July 6, 2014

Oh, Immodest Ambition!

Just a few days ago, I noted that I had a new neighbor in Caledon Mayfair, with a modest two-story house and a useful windmill in the back. Here’s the photograph from that Journal entry:

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I return to my lodging not a week later, only to see the earlier property replaced by… well, a larger structure:

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(The two photographs are taken roughly 90 degrees from one another.) I suppose the upside to a large house on a small property is that there isn’t much lawn to mow.

Wednesday, July 2, 2014

No Free Lunches

Well, sometimes one writes a piece knowing that it does nothing for one's popularity...

Contrary to most who have written about the Hobby Lobby decision, on all sides of the political spectrum, I don't think it's a big deal. As most Supreme Court decisions have been in the past decade or so, it's a narrowly-written piece, applying to "closely held" corporations, involving a piece of the Affordable Care Act for which there is a readily-available substitute. Indeed, the majority decision suggested (though it fell short of endorsing this view) that one possible less-restrictive alternative available was to have Hobby Lobby's insurer provide the specific forms of birth control for "free" - meaning that the cost is rolled into Hobby Lobby's premiums every year. Going forward, Hobby Lobby's employees still won't have to pay for their Plan B, and the company will still pay for the 16 forms of contraception that it's always paid for.

Despite this, so many people are in hysterics over the decision that even smart people have taken leave of their senses. Glenn Fleishman tweeted: "Corporations are people with religions who can provide men with Viagra and block women’s contraception." As that made no sense to me, I replied that this was an "absurd characterization of the case and decision." Fleishman responded with: "SCOTUS rules that women are the only gender that has sex. Men were nowhere near there at the time and have no responsibility. Hobby Lobby covers erectile dysfuntion. It does not cover (nor allow its insurers to provide) any reproductive medical help, whether for pleasure (like Viagra) or for medical necessity (cysts, etc.)." I was really confused at that point. "The only gender that has sex"? How can you construe that from what the Supremes wrote? Men have "no responsibility"? Ditto. Hobby Lobby covers "erectile dysfunction" - so what, by the way, as this has nothing to do with the religious conscious argument - but does not cover Viagra - isn't the latter a form of treatment for the former? I recommend this piece, by Charles C.W. Cooke, for a discussion of what the case was about, and why blaming the Supreme Court for the failings - intentional or unintentional - of Congress is wrong.

However, in all the nonsense written about the Hobby Lobby case, one point that I rarely see made is that the "no free lunch" dictum still applies to health care products, and no amount of mandating on the part of the government can change economic fundamentals of employers. An employee's compensation is salary plus benefits and her cost to the employer is compansation plus other costs (training, a desk and computer, cost of office space). In a competitive market, firms must pay the market rate of compensation to induce employees to come to work, and the value of that work must exceed the cost to the employer before the job is created. Even before the ACA, salary and benefits were substitutes: a firm that offers, say, health insurance benefits needn't pay as high a salary. If it weren't for the tax benefits to employers of firm-provided health insurance (which, at the corporate tax rate of 35%, allows firms to pay 65 cents for every dollar of insurance they provide employees), no rational firm would provide health insurance. Instead, firms would offer higher salaries and let employees purchase their own amount of insurance.

The ACA changes things only in as much as firms that provide health insurance are now obligated to include in the policies coverage over things, such as contraception, that were not previously an obligation. But there's no free lunch: if the average employee uses $100 per year of insurer-provided contraception, that's $100 that's comes out of the employee's salary; see the previous paragraph. Some employees are better off under the ACA - those who use more than the average amount of health care - while some are worse off. But the idea that the ACA causes firms to provide free contraception is nonsense. All it does is shift hide the cost from employees, and to create some weird cross-subsidies (men and post-menopausal women subsidize contraception, while women and, er, functioning men subsidize Viagra). The ACA doesn’t - because it can’t - create something out of nothing.

Thursday, June 26, 2014

Paris Catacombs

Courtesy of Miss Mari Moonbeam, I took a ride through the Paris catacombs. One starts by descending into the Metro:

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Archaeology is continuing even now:

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Turn right, toward the water, and find a small barge to begin your tour:

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Narration, as well as music, accompanies you on the journey.

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Sometimes the dead refuse to stay that way:

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The trip enters the great Paris sewers, smell and all:

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Finally making its way to the Theater, the home of the Phantom of the Opera:

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A most educational journey. Should you find yourself in Paris, I heartily recommend it.

Sunday, June 22, 2014

Easy Go, Easy Come

My lovely forest is gone - trees slain in their prime! - to clear the way for a new home next to mine.

The house looks charming, and the gentleman who owns it even has his own windmill. I only hope he's not one of those types who hires a chamber orchestra to play all night!

Tuesday, June 17, 2014

Competition policy and income inequality

The op-ed piece in last Sunday's Washington Post ("How American became uncompetitive and unequal," by Lina Khan and Sandeep Vaheesan)  suggests that a main contributor to income inequality, depressed wages, and lack of job opportunities is increasing concentration in U.S. industry, fostered in part by competition policy that focuses on economic efficiency over "fairness." Unfortunately, the authors have only a fuzzy grasp of the facts.

As a starting point, it's hard to tell what the authors mean by economic inequality. The piece starts by referencing the 1980s, but the next paragraph cites Piketty's Capital in the Twenty-First Century which, I've read, argues that income inequality today has increased relative to the early 20th century. (Others have critiqued Piketty's book, in particular the very premise that income inequality has increased.) However, it's an inescapable fact that merger policy fundamentally changed in the 1980s - part of the "Reagan Revolution"  - by focusing more on the economic effects of mergers, placing greater weight than before on cost-reducing efficiencies of mergers, rethinking the relationship between price and market concentration, and, as a consequence, challenging fewer mergers than before. Even as political winds shifted toward the Democratic Party, with its greater tendency to view mergers suspiciously, the fundamental approach to analyzing mergers hasn't changed since the 1980s.

What this means is that many industries have become more concentrated. This doesn't necessarily imply that these industries have become less competitive for reasons that include:
* Greater competition from foreign companies, so that U.S. concentration is not necessarily the relevant measure of concentration;
* A growing economic literature that reduced the myth of a strong price-concentration relationship; instead, studies showed that markets remained reasonably competitive until the number of firms was relatively small - markets of one or two firms certainly performed worse than they would have performed with more competition, but three or four vigorous competitors was generally enough to keep one another honest;
* Recognition that mergers could lead to significant cost reductions, a portion of which would be passed on to consumers in the form of lower costs.

At the same time, firms were rethinking their businesses. Cheap computing power and, later, the ubiquity of the Internet allowed firms such as Wal-Mart to revolutionize bricks-and-mortar retailing and Amazon to do the same with on-line retailing. Manufacturing firms could use just-in-time inventory to reduce costs and cheaper transportation allowed firms to conduct business over longer distances. Instead of many small-scale retailers serving local markets, a small number of large retailers served markets across the country. Instead of the "big three" U.S. car companies dominating the domestic market, foreign competitors made substantial inroads, resulting in cheaper and more reliable models (and forcing the U.S. firms to step up their game).

Of course, this transformation of the economy had losers as well as winners. Greater overseas competition in manufacturing meant that labor unions were under pressure to agree to wage reductions, and (not coincidentally) higher U.S. manufacturing costs, including labor costs, have meant job losses to overseas competition. Wal-Mart's growth has meant a reduction in "mom and pop" retail operations; even if the net result in employment was about a wash, as some studies have shown, the average wage at Wal-Mart is lower than the jobs it replaced. Bear in mind, however, that a small number of workers have lower wages while a large number of consumers - mainly lower-income consumers - have access to goods at lower prices. 

Khan and Vaheesan have a number of examples of anticompetitive behavior in particular industries, some of which are better than others. They mention the tech industry agreements to not poach workers. It's hard to quantify how much this affected wages, but it's certainly an example of an anticompetitive agreement that harmed workers (and, arguably, consumers as well). On the other hand, they claim that consolidation in the health-care industry has led to huge markups in the price of services. While it's true that some hospital mergers have been found to have led to higher prices - indeed, the FTC has challenged a number of hospital mergers (back in the 1990s, the agency lost those cases routinely; now the agency has a good track record of winning such cases) - much of the wacky pricing of hospital services is the result of efforts to cross-subsidize various parts of the business. For example, the requirement that hospitals take all comers for emergency services means that the cost of indigent patients be borne by patients of means - and their insurers.

In cable markets, another area mentioned in the article, operators such as Comcast and Time Warner Cable have certainly made out well, largely because of lack of competition. However, this lack of competition has not arisen through mergers - most cable mergers involved non-overlapping service areas, and where there have been substantial "overbuilds" (areas served by two cable operators) the FTC has ordered divestitures of the overlap areas - but because historical franchise agreements with local governments and the natural monopoly nature of utilities (including cable) have limited competition. Some parts of the country are lucky to have Verizon's FIOS service, or Google fiber-optic service, to compete with the local cable monopoly, and DirecTV has been a somewhat more distant competitor for much of the country, but there's no denying that cable prices are out of control. (Consumers get more for their higher prices - remember the days of just a handful of cable channels and no DVRs? - but still, this is an area that begs for more competition.)

Corporations certainly have an incentive to reduce competition, and mergers are one potential way to do so, but big companies have a much easier way to limit competition: enlist the government. Large firms are often in favor of  costly regulations because such regulations impose disproportionately high costs on small firms. A firm with a national footprint can afford a big legal department, to hire people full-time to handle regulatory compliance issues. Smaller firms are at a disadvantage. Furthermore, firms that induce the government to impose barriers to entry (regulatory or otherwise - a patent system that awards patents willy-nilly serves as an effective entry deterrent) can enjoy higher returns.

The sad truth is that the golden years of the U.S. economy are behind us. There are a lot of reasons for this. Much of the post-World War II boom was driven by the unique confluence of pent-up consumer demand (because of wartime shortages) and a decades-long increase in women's labor force participation: people wanted stuff and more people became available to make and sell stuff. We value thing such as cleaner air, workplace safety, consumer product safety, and social safety net programs (including a minimum wage), all of which have value but come at the expense of productivity. Government has gotten big and highly regulatory. Whether the pendulum has swung too far in the direction of regulation is a topic for another time, perhaps, but it's clear that there is no going back to the competitive conditions of the 1950s - including the dominance of U.S. manufacturing.

I don't want to leave the impression that regulation is necessarily bad - indeed, cable providers and the like probably should be regulated more than they are - nor that competition policy is unimportant. We want to be on the lookout for mergers to monopoly or near-monopoly. We want to look for widespread non-poaching agreements such as the one the technology companies had in place, just as we want to maintain our lookout for price-fixing agreements. And I agree with Khan and Vaheesan that the competition agencies should block mergers rather than okay complex settlements to deals. For the most part, however, what government should do to foster a healthy business - and hence healthy jobs - climate is to create conditions for entrepreneurs to take advantage of profit opportunities (including government's crucial role in protecting property rights) and then, to the extent possible, get out of the way. 

Saturday, May 24, 2014


Sometimes I think we're just living on top of a giant ant colony. One day the ants will run out of space, tunnel too much dirt, and everything - houses, roads , people - will fall in.


The little buggers are everywhere, especially at this time of year.