The Godfather Part IV

Looks like I will be a Godfather again. A sure sign that you are growing old, the fertility rate of your friends and relatives, or perhaps an indicator of your earning potential in the near future :) The thing I regret though is I will not be again present when the baptism happens. I've only been to one of my Godchildren's baptism personally. I am optimistic about their future though, they will live in a world with higher life expectancy, higher per capita income, higher rate of technological change, more open trade, and accelerated delivery and access to information. Have a good life kids!

Profit Opportunity

Clemson just announced that it will not accept any post-season bowl invitation (the gamecocks have decided to do the same). This was a self-imposed penalty after the ugly brawl minutes before the end of the game with the gamecocks last saturday. I think it's smart on the part of the Athletic Department to jump the gun on any ACC/NCAA penalties that might have been imposed at the start of next season. Since the tigers barely made it to bowl eligibility, chances are that they were on their way to a low-payoff bowl game anyway. Remember that in a bowl invite, the schools are responsible for selling some tickets too. If the bowl game was in some place hundreds of miles away from Clemson, it might be hard to sell them all even if Clemson is one of those schools that "travel well."

By announcing the self-imposed penalty, the schools were able to do some PR work and claim upperhand on so-called value and character reputation of the institution. In the end these supposed benefits outweigh the bowl payoff and the cost of possible future penalties.

Collision Coverage

Four years ago somewhere in New York the Brookhaven Relativistic Heavy Ion Collider started operating. I'm not even going to pretend what that exactly means. Apparently has something to do with studying how the universe looked like right after the big bang by colliding gold ions...again I don't know exactly what that means and would not pretend to know :) Some fun facts: the temperature inside a collision is about a trillion degrees that's hotter than the center of the sun. It takes about 15 megawatts of electricity to run refrigerators to cool this thing down.

In Richard Posner's new book featured at slate.com he tries to calculate the cost of an event that even particle physicists say has a probability of happening so low it's nil. In theory there is the possibility that atomic particles colliding in the collider can reassemble itself and compressed itself into a strangelet and this thing can consume all matter it encounters. In Posner's book according to the slate.com review (I would like to read the book sometime) he estimates the cost of losing all of humanity at $600 trillion. Time to buy insurance? Nah, but it's a good plot for the next Bond movie: 007: No More Tomorrows. Anthony Hopkins can play the evil physicist hell bent on world domination :)

Yawtorthadin

Yet another way to ruin thanksgiving dinner. The US Dept. of Health and Human Services declared that this coming Thanksgiving would be the first National Family History Day. The idea:

"...the Surgeon General encourages them to talk about, and to write down, the health problems that seem to run in their family. Learning about their family's health history may help ensure a longer future together."

Don't families have a lot of history they want to forget when they face each other at the dinner table? :) Plus, I don't think I can wolf down turkey and stuffing while somebody was discussing his prostate exam or her stubborn rash :) Can't they just pick the day after thanksgiving? Sorry "Big Brother" I know you are all-knowing and only after our welfare but we'll take a pass on this one.

Late Adoption

Just downloaded and installed an RSS Aggregator. This facilitates my visiting of some blogs I follow. It certainly lowered the cost of engaging in this new hobby. Prediction is I will do more of it. When you think you can use the extra time for work, you discover some new distraction to spend whatever surplus time you have :)

Easy Like A Sunday Morning

I'm in the library right now in one of the terminals that I think we are not supposed to use for extended web surfing but here we go. I'm starting to build the background literature for my dissertation. It is a lot easier nowadays to do this with the academic databases here at the library. Now Google is joining in on the fun with a beta version of a search engine for scholarly work. Thanks to my usb flash memory I'm able to carry in my keychain thousands of pages of journal articles.

I remember when I first set foot in the main university library when I was a freshman undergrad. I was amazed at the amount of information located in one place. I would spend hours in the library reading stuff that had nothing to do with whatever I came there for in the first place. In many ways I'm still the same student.

Wardrobe Malfunction

Just finished watching the Clemson-South Carolina game on TV. Good game (except for the fight towards the end) for the Tigers as they defeathered the Gamecocks 29-7 and qualify for another bowl game this year. It was nice out so I decided to walk to campus instead of driving (I'm only three small town blocks from the edge of University property).

My big mistake was going out to town wearing my maroon hooded sweater....geez what was I thinking? I actually got a few stares from the sea of orange and some sympathetic looks from gamecock fans :) One guy shouted to a couple of red and maroon clad faithful walking beside me "they'll win next year!"

Market For Cheating

I think I witnessed my first attempt at cheating by a student last week. This person had his notes right below his seat! He was stealing a glance at these notes after quickly checking if I was looking towards his direction. Does he think I can't see what he's doing? This kind of evidence though won't survive the honor code violation proceedings, apparently cases of his word against my word are loaded in favor of the violator (there goes your deterrence effect). I ended up standing by his side the last five minutes of the quiz to deter what he was doing.

Gary Becker way back in the 60s wrote about the economics of crime. He basically makes the point that it is not the severity of the fines that prevents crime from happening but the overall "expected punishment." This expected punishment (probability of being caught multiplied by the fine/punishment) should equal the benefit that the offender puts on committing the crime. So some crimes do happen, some get deterred. Some crimes are deemed "efficient crimes" where its cost to society is lower than the benefit to the offender. But if we want to lower criminal acts, we have to set expected punishments high.

There is a vibrant market for cheating. Just search the internet for sites that offer term paper writing services. A columnist for Slate.com reviewed some of these services. Cases of academic dishonesty will continue. The only way to curve it is to increase expected punishment. But we don't see a strong move towards increased prosecution and punishment. Is it possibly an efficient crime?

The Moral Hazard of the Story

Moral Hazard is a classic problem in insurance. It's when the insured decides to take more risks after entering into an insurance contract with the insurer. The reason is because sometimes the payoff for letting the insured event occur is greater than its cost. So they behave more recklessly. The problem is everywhere. Sam Peltzaman from the University of Chicago wrote about how seatbelt laws lead to more accidents as drivers drive more aggresively (now would you predict that more SUVs are involved in head-on collisions?). Welfare benefits that result in more money by having children while unemployed is another one. IMF coming to the rescue of developing countries lead them to engage in more irresponsible macroeconomic policies.

It boils down to what happens to the cost of engaging in certain behavior after the insurance is bought. If the amount of the coverage is more than the amount of the damage then it becomes a subsidy for risky behavior, the price of risky behavior just went down so he consumes more of it. This is why we see insurers under insure all the time. Some risks are left uninsured when the potential moral hazard is too high. I'm looking at my external hard drive with all the backup files in it. Why do I have this itch to hit my laptop with a hammer? Or wish for those Windows meltdown? :)

End Game

One more class to teach tomorrow and this semester is over for me (after I submit their grades on Monday anyway). At least I was able to accomplish some goals for this semester (Yeh right, like i have a white board with "Goals for the Semester" on it). Closing of one semester though just opens up a new can of worms. I got to polish up my dissertation topic, have the committee's final say on it. Got to think about preparing for the job market, man, this sounds so careerist :) Actually, I like it more when the school is in session at least there is a subconcious knowledge that you have to be in your office on campus working. During breaks I'm just all over the place with all the distractions. The less distracted amongst thee shall finish thy degree.

The Cavalry Has Arrived!
The backup system arrived this afternoon. I think our building is the last stop for FedEx because they always deliver my packages minutes before 4:30PM. I'm reformatting it to NTFS. It's basically just an external hard drive with 80GB capacity. It's about 4 times bigger than my laptop's hard drive. I'm wondering if I should start leasing the real estate to other graduate students here. With department issued computers in their offices, I'm sure they can use some extra storage.

Basketball Protectionism and Free Trade

Recently, the Department of Justice of the Philippines ruled that certain players claiming to be Filipino-Americans (Fil-Ams are US born players whose fathers or mothers are of filipino descent) playing in the Philippine Baskestball Association were actually fake Fil-Ams. Deportation proceedings are now underway. Although this is a victory for the natural-born basketball players who have been lobbying for the removal of the fake Fil-Ams from the league (and I support deporting those who have violated immigration rules by presenting fake documents), I think in the end the losers are the fans and Philippine basketball in general.

The recent development will delay, if not make difficult, opening up of Philippine basketball to players from the rest of the world. If there is one thing economists agree on it is that free trade and open markets are good things. The Philippines used to be the best in Asia in basketball up until the 60s. I believe if Philippine players are exposed to more and more competition from outside be it Fil-Ams or players from other countries the skill level will increase. Only really skilled filipinos will play and others can be employed elsewhere where they can be more productive. The entertainment value for the fans will also increase. Look at Europe where players from all over the world can play, now they can compete head to head with the best of the NBA, a lot of European basketball players are skilled enough to make it to the US pro league. Protectionism retards industries by sheltering them from competition, closing Philippine basketball to foreign players will only preserve mediocrity.

Pieces of Me

I'm testing image posting in Blogger (via Hello from Picasa). What better picture to post than my brand new shredder =) I bought this Fellowes Shredmate a couple of days ago (Under $20 at Wal-Mart-didn't I mention I love Wally World?). I'll say it chews like a champ! Guaranteed to inspire the Enron accountant in you. Better than any of the four big shredders I retired in one day 3 years ago. The footprint is about the size of a standing shoebox. This makes the opening quite narrow but folded junk mail, adult-video club invitations, unsolicited credit card checks, and pre-approved credit cards fits in conveniently. My shredded identities filled three garbage bags! I feel sorry for future historians, they will never know what I charged to my credit card in June of 2002.

Hip To Be Square

I finally decided to stop living dangerously and taking extreme risks. I've had a lot of close calls. I have been a daredevil too long and the potential cost of this behavior is getting too high. Nothing lasts forever. I resolved to commit myself to this new more prudent lifestyle. My freewheeling days are over. Every man knows what I'm talking about...

I decided to buy a backup system for my computer! As I travel through the information highway I will not ignore the signs anymore. Back it up, Baby! =)

2066 Vision St.

2066 Vision St. was the Manila apartment address I shared with my two brothers, sister, and aunt when we were all in college (the older of my two brothers was working already). I still am hoping that someday that will be the title for a sitcom on Philippine TV :-) We had an interesting time during those days. My brother was an architecture student so the walls of the apartment was decorated with sketches and unfinished floor plans, my sister was working on a biology degree while my aunt was in medical school. We did not have a TV since our father thought it would be a distraction (obviously right), we did have a stereo though and I bought a newspaper everyday (at the end of every semester I will sell the old newspapers to the recycling shop and have enough money for all of us to watch a movie). We were on our own and we ran the household. We did not exactly sing Kumbaya everyday but we all got along real well.

We had a neighbor who was a retired journalist of the famed Manila Times. We called him "Manong" a generic title in filipino for an older man. He regaled us with his tales from his newswriting days and international trips as he covered the Labor and Foreign Affairs beat. Every afternoon and sometimes until late into the night my brother and I would sit outside the apartment door and observe the residents of Vision St. We dealt with the humid Manila air by drinking copious amounts of ice cold San Miguel Beer (most of the time drinks were on "Manong"). To this day I still wonder how my brother was able to save so much of his allowance (even if it was smaller than mine) and afford to buy me beer and sometimes tickets to the movies.

Manong had a sister, and in the mornings they run some sort of a Philippine version of the breakfast diner that served the student population of Vision St. In the makeshift diner you can buy Philippine breakfast of rice porridge, rice noodles, eggs, and fried fish ($0.25 worth of meals would be enough to get you through the day). If you wake up late, then tough luck, because they run out of food to serve by 10 am. Manong and her sister were kind to us, treating us as if we were their nephews and nieces. I vowed that when I get my economics degree I will come back one day and treat them to a nice meal in one of Manila's fine restaurants. It was not to be, they died only months apart after they both suffered heart attacks. I was a couple of semesters away from my degree.

Now that I live on my own in a small college town, in an apartment all to myself, my mind wanders back to those days in Vision St. Sometimes I think of sitting on the steps of my apartment entrance and watch people walk by but it's just too cold...

Drunk Aliens

In a New York Times story, a recent ruling by the US Supreme Court states that DUI convictions of permanent residents can no longer be used by INS as reason for deportation. The issue was a DUI conviction is not equivalent to a "crime of violence," the justification for removal proceedings. The US Supreme Court states that a "crime of violence" has more requirments in terms of the mental state (i.e. premeditation) of the person committing it in contrast to a DUI conviction which can be interpreted as due to negligence.

Deep Market

While browsing for a birthday card at the local Hallmark store this morning, I run into a birthday card that's made specially for...your manicurist! I thought we in the Philippines had a wider selection of Hallmark cards with all the extended family members we keep in touch with but we don't have cards for manicurists.

We send greeting cards because we want to maintain smooth personal relationships and we think it's costly to lose these networks (okay, love is a reason too), plus we get some utility out of doing something nice. Even with the increase in manicure shops run by people of Vietnamese descent, it seems like there's still a shortage of manicure services. I say, it's hard to find a good manicurist and it's valuable to maintain this relationship, personal or professional. So we buy them cards and Hallmark is there to provide the service. With the entry of DHL (they've been present before but looks like they are more serious now) into the package delivery service I guess we are not going to see special greeting cards for the FedEx man anytime soon.

Give Me Liberty Or Give Me...

Took this quiz from a link at Flyingroc. I guess most of my professors would be glad to know.

You Are a "Don't Tread On Me" Libertarian

You distrust the government, are fiercely independent, and don't belong in either party. Religion and politics should never mix, in your opinion... and you feel opressed by both. You don't want the government to cramp your self made style. Or anyone else's for that matter. You're proud to say that you're pro-choice on absolutely everything!

What political persuasion are you?

Towards A Man Friendly Mall

Men and women are different when it comes to shopping. They like to shop, we don't (at least in general that's how i think of it). I wonder if during our hunting and gathering stage they liked to visit every tree and shrub and tried every berry while men just went after one game :) My two favorite brick and mortar stores are Wal-Mart and Best Buy. If Best Buy is not carefull it might just even be Wal-Mart. I guess that disqualifies me as a metrosexual.

Sometimes though one cannot avoid the shopping trip with the girlfriend. I have two stages I go through when we go on a shopping trip: Ambivalence, and disinterest :) There's a sequence here, two hours of her trying on clothes and looking at all shops and stores she likes (for some reason I'm supposed to become a qualified judge of fine clothing here and on what dress looks good on her) followed by 5 minutes of going where I want. Then it repeats until the mall closes. For some reason the memory of tagging along with my Mom on grocery and shopping trips as a little kid comes to mind, back then I get an ice cream cone or a treat every time the sequence ends. I think an ice cream cone every time the sequence ends is still a good idea :)

A suggestion to all dress shops. Provide a nice cushioned chair, a reasonable selection of magazines, an internet ready computer, complimentary drinks. This way men would at least not object to staying there for an hour. It might even boost your sales. Restaurants have high chairs for kids to attract families to eat out. Malls should do the same.

Famous Lawyer On Economics

David Boies is perhaps one of the best lawyers around. He represented Gore in Gore v. Bush, Napster against the recording industry, the Department of Justice (DOJ) against Microsoft, and IBM against the DOJ. He's got a colorful resume, read his Courting Justice. A sentence in his book would make any economist happy and me personally about my decision back in college not to pursue a degree in law (I blame movies like The Firm, and A Few Good Men for that momentary lapse :)).

"I had concluded during my first two years of law school that many legal questions were primarily issues of economics. One of my fellow students at the graduate school was William Baxter, already a highly regarded professor of law at Stanford, who had reached the same conclusion was spending a year at Yale."

Travel Cost

(Somewhere in Maryland, Nov 8.) The entry of new discount airline Indepepence Air brought down airfares to certain destinations coming out of GSP. At the last minute, I was able to buy a cheap ticket from US Airways via Hotwire.com. Aint competition great? The discount is again 50% of the going rate.

As usual I was the lucky guy selected for "special security screening" at the airport. I don't mind profiling at all, I think it is more efficient than having to subject every passenger to an entire body cavity search. Less welfare is sacrificed that way. I'm curious though about the likelihood models they use. I guess being 25-40 years old, flying alone, going to DC with all my electronic gadget in tow sends alarm bells ringing somewhere. Airlines object to higher levels of security because it turns away those marginal air travellers who think the cost of 2-hours each way of security related delays is more than the cost of just driving say 300-400 miles. Right now I don't want to think about the long line of passengers waiting to be screened in DCA.

I was able to get a cheap rental car too online. The AVIS guys gave me a Pontiac Vibe, I thought they should rename this model the Pontiac Vibration. The steering wheel starts to vibrate as soon as you go over 60 mph. Well, as Michael Corleone said in The Godfather "It's the price you pay for the life you choose."

The Day After

I'm glad the election is over...now we can concentrate on more important things like the NFL, college football, and the Fall TV schedule :) I was getting tired of the never ending news coverage of the campaign. They could have handed me the $500 million or so they spent and I would have been glad to flip the coin for them.

I don't get Ralph Nader, his main reason for running he says is that because the two parties are too much alike. I wonder if he have read about the Median Voter Theorem. They will always be alike Ralph! A strategy to be more different than your opponent is a strategy for losing. Of course both parties start at the extreme end of the ideological continuum to get their party's nomination, then in the general election they move to the center to get the median voter and win the election. The republicans this time around have a more attractive bundle of issues for the median voter, much like Bill Clinton had to offer during his two terms. The base will always be there. It's the center that's always up for grabs.

Test of Market Efficiency

As of 2:45pm today. The Iowa Electronic Markets have the following price quotes for the Presidential Vote Share Contract:

Symbol Bid Ask Last Low High Average
KERR 0.497 0.508 0.500 0.495 0.510 0.505
BUKERR 0.482 0.501 0.488 0.485 0.521 0.498

The above might predict the votes share in the popular vote count but it does not give us any indication of the electoral votes allocation.

I can't get through Tradesports.com. Hmmm.

Update: as of 4:11pm: Tradesports.com contracts are also moving towards Kerry:
Candidate: Bid/Ask/Last

PRESIDENT.GWBUSH2004 48.0 49.5 48.0
PRESIDENT.KERRY2004 51.6 52.0 52.0

Slate.com also has some exit poll numbers showing a narrow Kerry lead.

Update 2: as of 4:28pm
Dow Industrial is down. Closer look will show defense contractors are getting hit (Boeing, United Tech, Honeywell), drug companies too (Merck, Pfizer), and oil (Exxon-Mobil)

Update 3: as of 5:20pm
Biotech stocks are also rallying with expectations of increase in federal funding for stem cell research. One such listed firm: StemCells Inc., it's stock price has been climbing from just $1.46 on July 30, 2004 to $4.28 close of market today. Volume of trading went nuts from just an average of 4.1 million shares daily to 59.7 million today.

Update 4: as of 7:41pm
Perhaps one of the most interesting state ballot initiative: Abolishment of the use of mini-bottles in SC bars: Yes 58 No 42.

Update 5: as of 11:38pm
Not looking good for Kerry. Tradesports.com quotes: Candidate/Bid/Ask/Last
Bush: 73.4/74.5/74
Kerry:27.2/27.5/27.1

Forrest Gump In Me

At the eve of what could possibly be a historic US presidential election I got to thinking about all the stuff that happened over the years. I can tell my grandkids: I saw Michael Jordan play, win 6 championships, and retire, I watched everynight as Mark McGwire and Sammy Sosa demolished baseball's homerun record. A couple of years later Barry Bonds retired their records as well. I watched John Elway's consecutive Superbowl wins. I saw a US president impeached and watch the senate trial unfold everyday.

I was in the US when a president got elected while losing the popular vote. I was in DC when 9/11 happened and walked 4 miles that day to get home. I got to shake the hand of the oldest US senator to serve. I watched and cheered Michael Vick the two years he played college football. I watched on TV when the Boston Red Sox finally broke the curse of the Bambino. At two separate occasions, I was as close as ten feet from two Philippine presidents :)

I rolled over and totalled a car in the most dangerous interstate in the US and only needed a Band-aid for a finger cut. I scooped from our frontyard the very first pyroclastic materials from Mt. Pinatubo. It was in my lifetime when they cloned a sheep, when they mapped the human DNA. If I will have kids and grandkids, I am sure they will witness more amazing things in their lifetime.

Be More Like the Brits

A recent working paper by Baier, Dwyer, and Tamura (BDT) presents some more evidence on the importance of geography and institutions on the income level of countries. They use the Philippines throughout the paper to illustrate their point. After reading a few papers on economic growth and development, I can say the Philippines is a frequent example. I guess economists point to the country as one with having all the advantages and yet has been lagging behind its neighbors since the 60s. It's a puzzle to most.

BDT illustrates that if the Philippines have the geographic location of the United Kingdom, the Philippines' labor productivity would be 28% of what the US have instead of just 7%. Productivity of Philippine capital would also slightly increase from 25% of the US to 26%. But any country's geography is unchangeable. BDT also shows what the impact of changing Philippine institutions would be.

If Philippine institutions are more like the UK's, Philippine labor productivity would jump to 75% (from 7%) of the US, and capital productivity would be 58% (from 25%) of the US. Imagine a Philippines like this. This shows that the kind of institutions (i.e. laws that pertain to property rights) in a country has a far stronger impact than just geography. Now how do we change Philippine institutions?