“Directed Technical Change,” D. Acemoglu (2002)

A Fine Theorem

If I increase the supply of something, its price should go down. And if I decrease the supply, its price should rise. Some markets do not seem to follow this pattern, however, with skilled labor in the US since 1970 being a famous example. As the percentage of college-educated workers has risen the U.S., the premium paid to the college educated has also risen. How can this be? One hypothesis is skill-biased technical change: the innovation that has occurred over the past few decades, computers included, has been complementary with the skills of educated workers. When might we expect innovation to complement certain factors?

An old and incorrect answer, previously discussed on this site, is that innovation will replace “expensive” factors of production. If labor is dear, for instance, firms will try to invent machines to replace labor. This intuition is wrong: in competitive markets, all factors are paid…

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Bringing Labor together

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HT: sinclair davidson

Kill the IPCC: After decades and billions spent, the climate body still fails to prove humans behind warming

Financial Post | Opinion

The IPCC is in a state of permanent paradigm paralysis. It is the problem, not the solution

The IPCC has given us a diagnosis of a planetary fever and a prescription for planet Earth. In this article, I provide a diagnosis and prescription for the IPCC: paradigm paralysis, caused by motivated reasoning, oversimplification, and consensus seeking; worsened and made permanent by a vicious positive feedback effect at the climate science-policy interface.

In its latest report released Friday, after several decades and expenditures in the bazillions, the IPCC still has not provided a convincing argument for how much warming in the 20th century has been caused by humans.

[np_storybar title=”IPCC models getting mushy” link=”http://opinion.financialpost.com/2013/09/16/ipcc-models-getting-mushy/”]In the next five years, the global warming paradigm may fall apart if the models prove worthless. Keep reading.
[/np_storybar]

In the 1990’s, the world’s nations embarked on a path to prevent dangerous anthropogenic climate change by…

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Britain is a world leader in exporting creeps » Nick Cohen

The British recruits who have joined Isis are not exceptions. They flourish in a culture in which it is so commonplace to offer support to authoritarian regimes and movements that few bother to condemn it.

Free speech ought to mean the freedom to challenge and criticise in all except the most tightly defined circumstances. Instead in Britain tolerance has become indifference; a lazy desire to live in our comfortable bubbles.

The dominant culture views vigorous criticism as rude or insensitive – or, to use that popular and completely meaningless school-prefect putdown, “inappropriate.” More often that not, criticism is taken down and used as evidence of the critic’s failings, his or her obsessions and phobias.

We cannot be bothered to challenge fanatics. We say we don’t want to ‘force our views on others’ – as if argument were physical coercion. And if those others leave England to enslave Kurdish women, or applaud kleptomaniac dictators, we are not responsible. We never concerned ourselves with their affairs, nor argued with them for a moment.

Many poisonous plants have bloomed in this dank climate.

via Britain is a world leader in exporting creeps » Spectator Blogs.

25 years ago today in East Berlin

Andrew Atkin explains how housing affordability has been destroyed in New Zealand.

Must R&D be sacrosanct – beyond question?

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More on Cunliffe’s Great Leap Backwards

The NZ Classical Liberal

Yesterday I noted that David Cunliffe’s recent speech on the economy contained very little beyond populist twaddle aimed at painting himself as the champion of the ignorant and defender of the bewildered. I did not, however, devote much energy to pointing out specifically where and how Cunliffe was wrong.

Cunliffe seeks to exploit the credulity of those who haven’t the foggiest notion of how an economy actually functions – those dissatisfied by the Labour Party’s refusal to once again advocate for a command economy.   And to fuel their fervour, Cunliffe threw his listeners plenty of juicy post hoc ergo propter hoc fallacies and more than a few straight out factual errors in support of their shared delusion that economic freedom has been bad for the economy.

But if Cunliffe’s case against the economic reforms of Roger Douglas in New Zealand, Margaret Thatcher in the UK and Ronald Reagan in the…

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Bryan Caplan on the pathologies of poverty

Bryan Caplan drew up a nice list of factors that contribute to poverty

  • alcoholism: Alcohol costs money, interferes with your ability to work, and leads to expensive reckless behaviour.
  • drug addiction: Like alcohol, but more expensive, and likely to eventually lead to legal troubles you’re too poor to buy your way out of.
  • single parenthood: Raising a child takes a lot of effort and a lot of money.  One poor person rarely has enough resources to comfortably provide this combination of effort and money.
  • unprotected sex: Unprotected sex quickly leads to single parenthood.  See above.
  • dropping out of high school: High school drop-outs earn much lower wages than graduates.  Kids from rich families may be able to afford this sacrifice, but kids from poor families can’t.
  • being single: Getting married lets couples avoid a lot of wasteful duplication of household expenses.  These savings may not mean much to the rich, but they make a huge difference for the poor.
  • non-remunerative crime: Drunk driving and bar fights don’t pay.  In fact, they have high expected medical and legal expenses.  The rich might be able to afford these costs.  The poor can’t.

Caplan argues that there is an undeserving poor if they fail to follow the following reasonable steps to avoid poverty and hardship:

  1. Work full-time, even if the best job you can get isn’t fun.
  2. Spend your money on food and shelter before getting cigarettes and cable t.v.
  3. Use contraception if you can’t afford a child

The Feed the Kids Bill still leaves their parents to go hungry!

The Feed the Kids Bill that has been reintroduced into the new New Zealand Parliament still contains no provision to feed the parents who are too poor to make their children breakfast.

Why are these hungry parents not invited for breakfast as well? No parent would have breakfast if their children was to go hungry. Both the parent and child must have gone hungry that morning, perhaps morning after morning. There is no other charitable explanation.

The Bill aims to set up government funded breakfast and lunch programmes in all decile 1-2 schools. The cost is $100 million a year – including food, staffing, administration, monitoring and evaluation.

Lindsay Mitchell was on the money when she wrote:

Even parents reliant on a benefit are paid enough to provide some fruit and modest sandwiches daily.

An inability to do so is a symptom of a greater problem requiring scrutiny – for the sake of their child.

“The ‘income management’ regime provides a response to genuinely hungry children.

It may interest you that even Labour advocated for extended income management in its election manifesto.

Their 2014 ‘Social Development’ policy paper proposed, “…allow[ing] income management to be used as a tool by social agencies where there are known child protection issues and it is considered in the best interests of the child, especially where there are gambling, drug and alcohol issues involved.”

Hungry children is a child protection issue. Parents who fail to feed their children should come to the attention of the child protection authorities. Those on the benefit should be subject to income management  because they clearly are spending their money elsewhere.

On the Left, there is a refusal to discuss the role of addiction and incompetent parenting in child poverty. The 2014 election manifesto of the Labour Party is a welcome departure from that tradition of denial.

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