What's Wrong with this Argument?

Are Americans Lazy? Fortune magazine at CNN Money thinks we are. Like many of their articles it seems as of late, it is surprisingly ideological rather than factual. The argument is essentially this: U.S. workers are lazy given by increased amount of leisure time (such as sleeping, days off, hours of work per week, etc). His argument is based on a very good paper out of the Boston Fed and is not one that those authors are making. So the question is, why does increased leisure time NOT equal laziness? Hint: Leisure is a normal good. I’ll leave comments open for a few days if anyone has a suggestion, then I’ll leave the answer in a comment before closing them.

Also, you may also notice a rather misleading sentence that is carefully ambiguous in its wording:
Economists see it happening already, attributing some of the surprising flatness in Americans' real total compensation of the past few years to the presence of millions of global workers competing for jobs.

Which economists? Why real total compensation and not earnings? Interestingly, part of the reason this is misleading is part of the reason the leisure = laziness argument is wrong.

Zimbabwe, Price Controls, and Socialism

Zimbabwe has arrested 7,500 since the enactment of price ceilings on many necessities on the convoluted logic that this is will curb inflation. While there are many lessons in this story, there are three big demonstrations of economic principles at play here in the story.

1. The story demonstrates the shortages created by price ceilings (Qd>Qs).
   
   
2. The price ceilings fail because black markets replace the legal markets, so you never actually get a reduction in price anyway:
   
   The price cuts have left shelves bare of corn meal, meat, bread, eggs, milk and other basics that sell for at least five times the government price on a thriving black market. Local beer became the latest item to disappear Monday. Acute shortages of gasoline have crippled commuter transportation and prevented manufacturers delivering diminishing stocks to retailers.
   
   
3. This is a demonstration of how ultimately socialism must resort to totalitarianism, that the idea we can have social freedom without economic feedom is flawed (See here for Nobel Prize Economist Milton Friedman explanation of this).
   
   "Some are ... saying they will not supply goods and services but we say you will," Mugabe said, according to state television.
   
   

FDA claims more lives...to its own benefit

It's hard to argue that the FDA does anything but kill sick people for the sake of politics. Here is a sad update on a legal case against them, provided by Alex Tabarrok at Marginal Revolution. Below is the cut and paste from the link:

Last year the Abigail Alliance won a stunning decision from the DC Circuit Court of Appeals that dying patients have a due process right to access drugs once they have been through FDA approved safety trials. Here's a sad update from Kerry Howley writing in the Aug/Sept. issue of Reason Magazine (not yet online):

After last year's ruling in the alliance's favor, the FDA argued that the group no longer had legal standing to sue it, since none of the patients who had signed the original affidavits were still members. They were all dead.

Benjamin Franklin and Self-Interest

B. Franklin has been my favorite historical persona since my 5th grade history report, and in light of an upcoming trip to Philadelphia I have returned to a biography on him written by Walter Isaacson. In it he describes what economists mean when we talk of self-interest and how it benefits society better than I think I ever could have. Here is the excerpt:

A fundamental aspect of Franklin's life, and of the American society he helped to create, was that individualism and communitarianism, so seemingly contradictory, were interwoven. The frontier attracted barn-raising pioneers who were ruggedly individualistic as well as fiercely supportive of their community Franklin was the epitome of this e of self-reliance and civic involvement, and what he exemplified became part of the American character.

A great description of self-interest and its results for society!

The Charity of the Uncharitable

There is a famous paper by economist Gordon Tullock on why people vote for taxes that carry out actions one could do on their own, known as "The Charity of the Uncharitable." To restate this, Tullock asked why people would vote for a $100 tax to support some transfer to the poor instead of giving the $100 of your own free will to the poor (or some other charity). After all, either way it costs you $100, but the taxes force everyone (not just yourself) to give $100 to the poor. Why force others to be charitable when they may need that $100 for their own survival or charity of their own choice?

Tullock believed that since people innately realize, even if they don't acknowledge it, that their democratic vote doesn't matter. It is extremely rare for any election to be decided by one vote, thus usually your vote doesn't change the outcome. Given this, you are less likely to vote your true preferences and satisfy what he called internal dissonance, which is internal conflict between wanting to be charitable and simultaneously wanting to be greedy. Since your vote doesn't matter, you may as well vote for the tax to satisfy your charitable side but then privately behave greedily, allowing you to satisfy two conflicting desires.

The reason I bring this up? Scientific American reports that research has found that the brain responds the same way to paying taxes that directly fund charity as it does when money is being given to charity. Perhaps this is the biological proof of Tullock's theory. If you read the article, you will also see that people give less to charity individually than they do when paying taxes. It is however, not a definitive study, as it has several limitations many of which are mentioned in the article.

Quantity Supplied and the Deathly Hollows

CNN reports on the retail competition side of producing the final Harry Potter book in a way that closely describes the supply curve discussed in principles. Also, this demonstrates the move to zero economic profits of a perfect competition. As the price falls (they use the term "discounting" but this is not quite correct) notice that some bookstores choose not to sell the book. This is a movement along the supply curve.

Why Tastey Animals Live Forever

What is the difference between Lions, Elephants, and Tigers from Chickens, Pigs, and Dogs? The former 3 cases you aren't allowed to own and they are going extinct, the latter 3 cases you are allowed to own and have a thriving population. In class, I gave several examples of how private property rights can save endangered animals (recall Lobster Fishieries in New England vs. Port Lincoln, Australia; the Black Rhino in Africa which can also be found on page 39 in your textbook). The Wall Street Journal reports a new case with Bison, where decades of conservation regulations barely kept the species from going extinct, recently assigned private property rights to ranchers has caused the Bison population to grow dramatically over just the last few years.

My thanks to Mark Gillis for the link.