Marginal Revolution

Oil price speculation

There's lot of talk about curbing speculation in energy markets.  Simon Johnson has an excellent post on this topic:  He writes:

1) They are trying hard to talk up the market, with regard to global growth.  At the same time, the hard data continue to disappoint.  Naturally, this causes volatility in oil prices.

2) They claim to see no link between their failure to converge on climate change/environmental policies and what happens to energy prices.  The extent to which industrialized countries’ effectively control carbon emissions will have a big impact on the longer-run demand for oil.  Flip-flopping on this issue discourages investment in the energy sector (regular and alternative), and thus directly and indirectly contributes to oil price volatility.

3) The very cheap money policies of leading central banks, including the Fed, the Bank of England and arguably also the European Central Bank, lower the funding costs for big players who want to take large positions in commodities markets.  Essentially, we are providing the credit that makes big speculative positions possible.  Add to this mix a “too big to fail” attitude and a “yes we can, recapitalize through trading profits” deal with policymakers, and you see why major financial firms are likely to place huge commodity bets in the months ahead.

...The true speculators here are your elected representatives.

Thanks for bearing with me

I have many, many hundreds of emails to go through.  I will get you the freedom chapter and my apologies for the delay, it will still take me some days.  I prefer to respond personally to each email rather than farming this out to an assistant.  Your patience is appreciated.  I am pleased that they will be doing a third printing of the book this Monday.

Assorted links

1. Fischer Black, futurist.

2. Robin Hanson's theory of academia.

3. EconomistsdoitwithModels, from Harvard; stickers are here.

4. The naming of Jane Jacobs Way.

Vaticanomics

That's the clever title they gave my piece at the WSJ.  It is a look at the recent papal encyclical, which is full of claims about economics.  There is plenty there to object to, but I didn't think it nearly as "left-wing" as did many other market-oriented commentators.  In fact I was surprised how positive or at least neutral it was about markets, once you cut through some of the rhetoric.  It was pro-micro-credit, it repeatedly noted that globalization can have a positive side, and it stressed the idea that businesses are, in the right setting, capable of doing a lot of social good.

One excerpt:

We should probably not expect too much to come from the encyclical's call for more state power.

Most of the encyclical, appropriately, expresses a desire for ethical conduct. The importance of ethics for civilization is obvious, but of course good ethics, consistently applied, are hard to come by. People are very good at ethical and psychological compartmentalization, and so it is possible for them to offer the church nominal authority over the ethical realm while continuing their dubious economic behavior.

Another:

Although it was just issued, the encyclical already feels dated. Globalization is one of the main concerns in the document. Yet because of the financial crisis, international trade has been falling apart. The real worry is not how to manage the economic globalization we have but how to stop the world's rapid deglobalization, which is at a pace that matches the collapse of trade in the 1930s. For better or worse, economic rather than ethical factors will determine the outcome here.

The end of my piece covers what the Encyclical should have discussed, namely the importance of the non-Christian nature of China and India and what that means for the future of the world.

The English-language text of the encyclical is here.

My favorite things Nevada

I am flying there tonight, to speak at www.freedomfest.com.  But yikes people, this is a tough one.  I never finished Walter van Tillburg Clark's The Ox-Bow Incident and what else can I think of?  Wikipedia tells me that Curtis Hanson, who directed L.A. Confidential, is from Reno.  Does Wayne Newton somehow enter this equation?  The Killers are OK.

How about this?

1. Movie, set in: Viva Las Vegas, with a number of strong runner-ups, including Ocean's Eleven, Leaving Las Vegas, the still under-rated Casino, Diamonds are Forever, Showgirls, Austin Powers (partly, I recall), and you might even squeeze Godfather II into the category.  Catch this erotically supercharged clip of Elvis singing to Ann Margaret.  Wasn't Them set in Nevada?

2. Song, set in: Viva Las Vegas, with Las Vegas, by Gram Parsons and Emmylou Harris, as runner-up.

3. Architecture book, set in: Robert Venturi, Learning from Las Vegas.

The state has excellent food, but overall I come no further.

The bottom line: You tell me.  If you're wondering, I've never gambled, although I have visited the city four times.  I genuinely cannot understand why so many other people find gambling to be an appealing pastime.  It's negative expected value!  There are so many positive expected value things to do.