Wednesday, May 30, 2007

Is Suburban Sprawl Bad?

First, we need to remove the biases from this question:

1. The phrase "suburban sprawl" is the opposite of "urban suffocation" -- yet we rarely hear people ask, "Is urban suffocation bad?"

2. This question assumes a negative starting point; why not ask: "Is suburban freedom good?"

So, a more neutral phrasing would be: "What is the optimal population density?"

And most people would reply to the effect of "The optimal population density is where I am living now." No surprise there, considering that people are free to live where they please, and population density is a factor they use to select a place to live.

In other words, an equivalent question would be: "Is strawberry a bad flavor?" Or: "Is blue a bad color?" It all depends on who you ask; to each his own.

However, there are people who claim that population densities have negative externalities; i.e., my choice to live in a low-density area makes your life more miserable. Or, for that matter, my decision to live in a high-density area makes your life more miserable. Specifically: If everyone else likes low densities, then there won't be a sufficiently large demand to produce your preferred high density. And if everyone like high densities, then there won't be sufficient demand to produce low-density areas.

If everyone else likes strawberry ice cream, then there won't be a sufficiently large demand to produce your mustard ice cream.

People often use rationalizations to support mandated densities. Generally speaking, everyone feels that any added density to their neighborhood is a bad thing. And so, cities cap urban development to "preserve the character of neighborhoods". And suburbs cap development to keep out the riffraff. But if the population grows, and the law prohibits increases in existing areas, then the only place to build will be on undeveloped land further from the core. Hence, "sprawl". And, it seems like a good thing for most residents, as sprawl limits the population growth in their areas.

And so, we come to the final objection, which is: People who come to live in new "sprawling" areas really ought to live in a manner prescribed by people who live in the existing areas. Or, at a minimum, the newcomers should not live in densities that are less than existing densities elsewhere. Why? Supposedly, low densities are less efficient that high densities, and the new space hogs will use more fuel. Of course, they might also live in new fuel-efficient homes. Or they might spend less time in highway congestion (assuming that enough highways are built). Or, maybe they will have fewer children -- and therefore be less of a drain on "our resources". Or maybe their fewer children will not be enough to produce things for the rest of us.

Or maybe this or maybe that.

None of which answers the original question: What is the optimal population density? The answer is mostly likely parallel to: What is the optimal ice cream flavor?

Monday, May 14, 2007

What is The Difference Between Buyers and Sellers?

Almost none.

To illustrate, consider barter: If I give you a potato in exchange for an orange, then who is the buyer and who is the seller? Now, if I gave you a potato in exchange for a slip of paper (or a credit card number) promising an orange next week, then, in the strictest sense, I am the seller and you are the buyer because I gave you a potato in exchange for an IOU; i.e., in exchange for money.

So, this simple example shows that there are two minor differences between sellers and buyers:

1. If a potato is exchanged for an IOU then it is "sold" by me and "bought" by you -- even though this could also be thought of as bartering the potato for an IOU, or bartering for money.

2. The terms "bought" and "sold" help define the direction of the good (and its reverse; the direction of the money).

(As an aside, this also related to gambling. If we exchange the potato and the orange today, we are betting that the relative value each item will not increase tomorrow.)

In the popular culture, however, buying and selling usually have false definitions. Instead of one being seen as the mirror of the other, the buyer is usually a selfless and relatively powerless consumer battling against a "greedy" seller who can dictate terms at will.

In fact, there are three categories of buyer to seller arrangements:

1. Many-to-One. This refers to many individual buyers trading with a handful of sellers. Generally, this includes consumers trading with airlines, insurance companies, banks, pharmaceutical companies, auto dealers, etc., etc., etc. In the popular culture, this category is often thought of as the only buyer/seller relationship.

2. One-to-Many. This is where many sellers trade with a few buyers. The best examples are companies that derive most of their sales from very few customers, such as Proctor & Gamble with Wal-Mart, franchisees and and franchisers, ComAir with Delta Airlines, Tyson Chicken and McDonald's, etc.

3. Many-to-Many: Lots of sellers and lots of buyers. eBay is probably the best example, although real estate and used cars are also fairly good examples.

4. One-to-One. This is where two separate entities work almost exclusively with each other. It's not common, but labor unions come to mind. Companies buy labor from a single union local, and the union local sells labor to that single company (although its influence is usually industry-wide).

For some reason, popular sympathies are neutral in Examples (2) and (3) -- but lean heavily towards the buyer in Example (1) and the seller in Example (4).

For example, in (1), consumer boycotts against specific companies are often considered appropriate, but company boycotts against specific consumers are never considered appropriate -- and are in fact illegal. The only exception to this, when the rules are actually reversed, is where the seller has a total monopoly; i.e., the seller is the government. In that case, boycotts against the seller are extremely illegal (just ask the IRS) and boycotts against individual buyers are the law ("affirmative action" is a good example of a single-seller government might boycott whites, males, etc. once a quota is reached).

Objectively, though, the differences that exist between any traders are related to market conditions (e.g., scarcity, preferences, alternatives, etc.) and have nothing to do with who the "buyer" and who the "seller" is. But when politicians speak to the "many", they use the language that the "many" understand; i.e., the speak to those in Example (1), where there are a lot of people in the "many", and nothing unites them better than inciting them against a common enemy -- and an "enemy" that is very easy to identify.

Thursday, May 10, 2007

Is Racial Profiling Morally Acceptable at Airports?

If anything, "racial profiling" is morally required at airports.

Of course, there are a couple of caveats here:

1. Since "race" is just a cultural abstraction, what we really mean is that it profiling on appearances should be required.

2. "Profiling" does not mean "arresting" or "punishing" or "guilty!" or any other emotionally-charged term that is intended to make a point by lies and/or hyperbole.

3. "Profiling" refers to "give extra scrutiny".

All inspected people at airports fall into one of four categories:

1. True Positives. These are people who are correctly deemed as being dangerous, and are therefore kept from flying. All security precautions, machinery, and procedures are intended to catch these people -- but have any true positives actually been caught? If they were, they were not publicized .

2. True Negatives. These are people like you (I hope), me, and almost everyone else: Innocent and are deemed as innocent. Walk through the metal detector, and go to your gate.

3. False Positives: These are people who are flagged as being suspicious, but are really innocent. They are (we are told) flagged because of their suspicious behavior; e.g., buying a one-way ticket with cash and no bags, for instance. Theoretically, this group also includes the "flying imams" of Minneapolis, whose behavior was consistent with terrorism, but actually posed no threat.

4. False Negatives: People who clear security and then crash planes into skyscrapers; Mohammed Atta is a famous false negative.

The problems with airport security and profiling are related to Categories (3) and (4). Specifically, false positives and false negatives are errors that, in an ideal world, would be zero. That is, in our perfectly-calibtrated world, only Categories (1) and (2) would exist.

The trouble is that (3) and (4) cannot be eliminated together; in fact, when one category is reduced, the other will need to increase. Specifically, the best way to eliminate (3) is to clear everyone through security. Put another way, if no one is stopped, then no innocent people will be stopped.

And the best way to eliminate (4) is to stop everyone. If every last passenger is carefully screened, then we know (by definition) that bombers and hijackers will be screened, too.

However, neither of the above is practical. It isn't practical to automatically clear or screen everyone (unless passengers would be willing to pay much more for air travel, in both time and money).

Therefore, a balance has to be found between minimizing Errors (3) and (4). But no matter which balance is found there will be problems: Either too many innocent people will be screened or not enough bombers and hijackers will be screened. So, the best approach is to minimize Error (4) to the point where any additional additional reduction would create a disproportionate rise in Error (3). That is, a 1% error rate in allowing hijackers on planes might be better than a 0.9% error rate if that means screwing up the system but good. do we decrease the Error (4) rate without making thousands of travelers even more upset over airport delays? The answer (as you might have probably guessed) is to pre-screen people based on their likelihood of trying to blow up a plane. Put another way, at a given level of "passenger inconvenience", the probability of a disaster is lessened by profiling. Or, put yet another way, if profiling were to be discontinued, one of the error rates will need to go up: Either all passengers will have to go through more arduous security delays (without any added security), or more planes will be blown up. Take your pick.

The people in Category (3) are apparently less concerned about either of the above choices than they are about being singled out as a false positive. They say: "Profiling should cease, and other people should be singled out, too." Never mind that they will still be singled out -- what matters to them is that they will no longer need to feel envy of people in other groups that are waved through. That is, to lessen their sense of envy, everyone else must also be inconvenienced and/or more planes must crash. Adding huge costs to flying to ameliorate envy: Is that defensible? Sacrificing lives to ameliorate envy: Is that the moral solution?

Incidentally, profiling does not require that everyone from one group (say, people in Islamic garb) be singled out to the exclusion of everyone else. In fact, a (non-random) mix of checks would be better; if "looking Muslim" is the only way to get stopped, then hijackers would learn that they can get a free pass onto a plane by not "looking Muslim" -- as they did on 9/11. A probabilistic approach would be best; a completely random screening procedure, as stated above, is not only dangerous, but also ridiculous.

Monday, May 7, 2007

Why Do People Tell Jokes?

First, let's define "joke" as not being a one-liner, or a brief witticism. Instead, it's referring to the interminable story that places an enormous demand on the audience's patience in exchange for a "punchline" that is intended to evoke laughter. It's debatable whether anyone really enjoys being at the receiving end of this treatment, unless they wanted to acquire a new joke to repeat to others.

There are several reasons why people find jokes annoying:

1. They are often not funny.

2. It is hard to know when the joke ends, requiring the listener to provide interim false chuckles when he thinks the joke might be ending.

3. Even if the punchlines are funny, they are rarely worth waiting for.

4. They demand that you pay attention to someone who you would otherwise be ignoring.

So, why do people tell jokes?

1. To feel acceptance by others, as displayed by the audience's laughter -- although their laughter (and occasional clapping) might just be a display of relief that the joke has mercifully ended.

2. To compete (or, rarely, to exact revenge) against others who might also be telling jokes.

3. To affirm their membership in the "guy's club"; women never tell jokes. And the louder the laugh, the more you are in the club.

4. To become the center of attention without any effort beyond repeating things.

5. To break the silence at social functions; i.e., some people prefer jokes to staring quietly at the floor.

Some other time, we will need to explore why women don't tell jokes.

Thursday, May 3, 2007

How Do Labor Unions Work? What Benefits do They Bring?

Labor unions exist to gain above-market benefits by eliminating competition through coercion. Without unions, any employer who is unsatisfied with employee demands can simply hire replacement workers who are willing to work for less.

Union coercion can either be through formal laws ("closed shops", "prevailing wage laws", etc.) or through informal intimidation (pickets, violence against "scabs", threats to shut down other businesses, etc.) -- but coercion is nevertheless necessary because there are many people who are very willing to work for much less than union wages.

The monopoly-power status of unions enables them to compel employers to pay their members more than they would have otherwise. That is, there's a transfer of wealth from the employers to the employees. This makes for good populist rhetoric, but no one outside the union benefits -- and many people are harmed. Specifically, unions do not create affluence; affluence can only be created by abundance -- and unions do not create abundance. In fact, the reduction in competition reduces abundance and therefore makes everyone outside the union worse off.

Relatively speaking, even union members derive little benefit from unions. This is because unions "re-divide" the wealth pie without making it bigger, and most of our affluent living standards come from the size of the pie, and not how the pieces are distributed. For example, the luxuries that we (including union members) take for granted were all generated outside of unions; in fact, union work rules interfere with such progress. Specifically, central heating, air-conditioning, electricity, plumbing, cell phones, medicines, computers, etc., etc., etc. are the products of innovation and individual initiative, and not of unionized labor forces. And the areas which are union-dominated, such as American-made automobiles, have lower quality than the innovative non-union competition.

Internationally, the recent rise in living standards in countries such as Korea, China, and Singapore was created by free trade -- which is one of the main things that unions try to stop.

But their public-relations is generally very effective. They portray themselves as fighting for the every-man, but the every-man has benefited mostly by the absence of unions, and not their grabbing of a bigger piece of the pie.