Friday, February 1, 2008

A test in economics

One popular economic professor writes the following. Find a mistake in his reasoning. You have one minute. Seriously, it's easy.

"But there is a silver lining to this cloud and indeed it seems that consumers will fare okay in this world of growing fraud, even if we feel increasingly harried.
Think just for a moment about what fraud means. Fraud means that the seller is lowering costs, raising revenue and enjoying higher profits.
In the short run that is bad for the customer. But in the long run it means there will be more suppliers and more competition for our business and thus lower prices.
Take the proverbial cheat auto mechanic. Maybe half the time he will charge you even when he hasn’t done any useful fixing. But in the long run that extra revenue will draw about twice as many auto mechanics into the industry to compete for your money. Yes, they will be ripping you off half the time but prices will fall by a roughly proportionate amount.
In the long run, you, as a consumer, will do okay. You pay twice as often as you ought to, but as a consolation each time you pay only about half as much."

Thursday, January 31, 2008

VK is my hero

Seriously. Vaclav Klaus, the president of the Czech Republic, probably the best economist ever, is my secret hero. I would not dream of revealing this to the public, but one has to be courageous.
He is my hero because he is not only able to say something very popular and "populistic" in Czech Republic, but to position himself so that he cannot be wrong!
There are the following options: First, there might be no climate change and no need to protect the environment (and climate). In this case VK is a winner, because he told us so.
Second, the climate change is coming, but it will be manageable. In this case, VK is also right, because current suggestions are mere first attempts that will almost surely be replaced by some other, more effective, mechanisms. In that case, he wins, because he criticizes current mechanisms as expensive and inefficient.
Third, he is wrong, and humans will fail and our mighty civilization will fall. In that case, who cares who was VK.
There is also the sweet cherry on the top - he is against most people, against "media" and other "conspirators".
Honestly, I don't believe how he could possibly loose. I have to admire him. You should too.

Wednesday, January 30, 2008

Mud cookies and biofuels

I though that behind the increase in prices of food was primarily bad season (in several countries), but it is certainly possible that botched attempts to save the planet by 5-10% of biofuel caused it.
In any case, the consequences are terrible:
"It was lunchtime in one of Haiti's worst slums, and Charlene Dumas was eating mud. With food prices rising, Haiti's poorest can't afford even a daily plate of rice, and some take desperate measures to fill their bellies. Charlene, 16 with a 1-month-old son, has come to rely on a traditional Haitian remedy for hunger pangs: cookies made of dried yellow dirt from the country's central plateau.

The mud has long been prized by pregnant women and children here as an antacid and source of calcium. But in places like Cite Soleil, the oceanside slum where Charlene shares a two-room house with her baby, five siblings and two unemployed parents, cookies made of dirt, salt and vegetable shortening have become a regular meal.

Needless to say, this is happening while 32% of Americans are obese.

Tuesday, January 29, 2008


If you really believe that our modern civilization has made a significant progress in terms of law & justice, read this.

Sunday, January 27, 2008

Slow progress and multitasking

At the beginning of my PhD, and especially after I clarified my research ideas, I was hoping for fast progress. As usual, it did not realize. I had a couple of alternative explanations (topic is bad, research is difficult, I'm not smart enough, I'm not working hard enough).
After some thinking, I found out that the problem is concentration and multitasking. I'm not talking about working on one idea in the morning and on the other in the afternoon (and writing a blog in the evening), but about solving a model and say, talking to your friends over IM and reading a newspaper. The multitasking killed my ability to focus, to remember and to work hard.
There is a research why, but I'm still looking for how to reverse the process.