Market Power

Just Who, Exactly, is the Benevolent Social Planner?

In Greg Mankiw's Principles of Microeconomics text book, he has a chapter on the allocative efficiency of competitive markets.  In that chapter, he asks readers to consider a rather fictional character:  the benevolent social planner.  The benevolent social planner is one who is all knowing, all powerful, and well-intentioned.  By "well-intentioned" I take professor Mankiw to mean that the planner's interests align with those of the general citizenry.  In other words, he wouldn't take action that would benefit himself at the expense of the little people. 

So, what people approximate the ideal of the benevolent social planner?  Forget the all-knowing and all-powerful qualities. You can count out the folks in congress on the "benevolent" angle alone.  From Peter Thiel the Wall Street Journal:

First, we tracked down Alan J. Ziobrowski, a professor at George State University’s business school who co-wrote a 2004 study that found U.S. senators’ stock picks beat the market by an average of about 12 percentage points a year during a stretch of the 1990s. Over the same period, U.S. households underperformed the market by 1.4 percentage points a year on average.

The study’s authors suggested the performance was so good, senators likely benefitted from access to inside information, such as when a company was going to be awarded a government contract, or that a pharmaceutical treatment was about to be rejected by the FDA.

Since his study, which drew wide press attention, Ziobrowski said he has heard from other researchers that the trading performance of members of Congress no longer is wildly better than the public’s stock record. He said it may be a sign that the 2004 study scared straight some Capitol Hill types.

Not only that, but the article notes that congresspeople are apparently exempt from insider-trading laws and a current piece of legislation that would supposedly correct this is "languishing."

I know that there are good people in Congress and that we, the little people, are fallible.  But this is just one of the reasons the founding fathers sought to limit the scope of government:  there's no such thing as the benevolent social planner.

Link via Tax Prof.

Faster, Please, as they say

"High Blood Pressure switch could one day be turned off."  Much faster, please.  HT Craig Newmark's Door.

Forbes.com's "Best Small Places for Business and Careers"

Here's the entire slideshow.  Here's the top 50 (there are 184 total) with links to the individual slides for those who want to go directly to their favorite small town.  Each slide shows a picture of the small city and contains some pertinent facts about it.  HT Stacey Brook who notes the conspicuous inclusion of 5 Iowa towns in the top 20, including my hometown of Sioux City, Ia. which ranks 14th.  Two other towns in which I've lived - Columbia, Mo. and Mankato, Mn., my current city - ranks 8th and 44th respectively.  Sioux Falls, SD., ranks first, which is not surprising at all considering how business-friendly the tax climate is there.  

1. Sioux Falls, SD.
2. Iowa City, Ia.
3. The Little Apple, Manhattan, Ks.
4. Bismarck, ND.
5. Logan, Ut.
6. Auburn, Al.
7. Bend, Or.
8. Columbia, Mo.
9. Fargo, ND.
10. Morgantown, WV.
11. Rapid City, SD.
12. Lafayette, In.
13. Waterloo, Ia.
14. Sioux City, Ia.
15. Dubuque, Ia.
16. Bloomington, In.
17. Ames, Ia.
18. Charlottesville, Va.
19. Corvallis, Or.
20. College Station, Tx.
21. Lawrence, Ks.
22. St. George, Ut.
23. Santa Fe, NM.
24. Greenville, NC.
25. Billings, Mt.
26. Athens, Ga.
27. Las Cruces, NM.
28. Blacksburg, Va.
29. Harrisonburg, Va.
30. Tuscaloosa, Al.
31. Coeur, d'Alene, Id.
32. Grand Junction, Co.
33. Bowling Green, Ky.
34. Rochester, Mn.
35. Johnson City, Tn.
36. Columbus, In.
37. Abilene, Tx.
38. Bloomington, Il.
39. Ithaca, NY.
40. Jefferson City, Mo.
41. Lewiston, Wa.
42. Medford, Or.
43. State College, Pa.
44. Mankato, Mn.
45. Grand Forks, ND.
46. Cape Girardeau, Mo.
47. Gainesville, Ga.
48. Eau Claire, Wi.
49. Jonesboro, Ar.
50. Champaign, Il.

"OSU AD Gene Smith could make $1.2 million a year"

That's the title to an AP article written by Rusty Miller.  It describes a new contract addendum signed by Ohio State AD Gene Smith.  Miller writes that Smith's base pay under the addendum is $800,000 with an additional $200,000 for his "media and public relation duties."  Incentives bring the potential total to $1.2 million a year.  Read the whole thing for more details.

This leads me to the rhetorical question:  how much of this pay is rent earned from the football and basketball players?

"The Most Ambitious Weather Experiment: a 1,000-Square-Mile Tornado Trap"

Popular Science story here.  Via Instapundit.

Yup, There's a Market for That - the Lingerie Football League

This brings a new meaning to "fantasy football."

 In the tunnels beneath the stadium, the locker room and rituals of the Baltimore Charm -- one of this year's expansion teams in the weird and wonderful Lingerie Football League -- offered a whole new version of pregame festivities.
For one, the players in the locker room are buxom young women wearing little more than René Rofé lingerie (tight-tight boy shorts, fringe-cut sports bras), shoulder pads, garters and small helmets with clear plastic visors across the face.

Plus this:

"The good-looking athletes, particularly in women's sports, do much better [financially] than the rest," he says. "Look at [NASCAR's] Danica Patrick, [softball's] Jennie Finch and [volleyball's] Gabrielle Reece. What we wanted to create was a league of Danica Patricks."

The beauty premium in this case is driven by the fact that men like to watch pretty women.  Yup, there's a market for that (even if some in university and activist circles may not want to admit it).  Some may call it exploitation (this is mentioned in the article on the second page), but I don't see how anyone can say that women who voluntarily join the league and who know what they're getting into can be "exploited."

Tyler Cowen quips that this is "a waste of good lingerie."  Really?

The first year was turbulent, yes, with two franchises not making it. At least one game was canceled, some coaches were dismissed (Mortaza cites a problem of dating players) and some players quit, but Mortaza said the sexiest show on turf ended its initial season in the black by "six figures."

"The NFL is projecting their lowest attendance in years, the San Diego Chargers have their first blackout since 1982," Mortaza says. "This brand is only 11 months old and got on national television two weeks ago. We weren't projecting that we'd make money until our third year. Instead, we made money our first year and should double that this season."

That sounds like an efficient use of resources to me.