Life Is Old There

♬Friday evening
Sunday morning
All the minutes in between
Bluegrass hearts down on bar stools
Another chance to come clean
It's this city; I don't belong here
Cut my hair, change my name
And I'll stop thinkin' about what I've got to lose
And I'll start singin' of what I can gain♬
It was still dark when Simon awoke in his bunk on the airship. He took a moment for his eyes to adjust to the dim artificial lights of the cabin before looking around. Most of the crew was already awake, if they had slept at all. He sat up and slid his bare feet onto the warm, humming metal floor below him. Must be right over a steam pipe, he thought. Over by one of the massive windows he saw Milton Burke and one of the crew members immersed in a game of chess, while the pilot concentrated on the forward march of the dirigible. The black outside was slowly fading in to reveal a thick gray fog.

"What time is it?" Simon asked.

"Early," Milton said without taking his eyes off the chessboard. "Quite early in the morning, although not as early as it looks. Blasted fog came in last night, and we've been slow going all night."

"Guess we should've gotten an earlier start," Simon said as he walked over to the chessboard.

"Ha," the pilot said over his shoulder. "It wouldn't be government work if we got things done on time. That, at least, has never changed."

They had gotten an early start the day before, but the briefing on the assignment took most of the day. Instructions on how to bail out of an airship in case of emergency, combined with a leisurely two-hour lunch, managed to keep them from leaving New York until late.

"Knight to E9," Simon said to Milton's rival. "check."

"Here now, if you were waiting until now to reveal you're a chess savant the least you could do is come in on the side of the good guys," Milton said.

"Whichever side I'm on is the good guys," Simon said. "Is Debbie up?"

"Over here," Debbie said, rolling out of her own bunk. "What time is it?"

"Early," Simon and Milton said in unison.

♬It's a crime to need you
The way that I do
It's a crime to need you
The way that I do
♬So go easy
Go honestly
Go easy when you go
Well if you love me, just leave me
Go easy when you go♬
"Let's grab some breakfast," Simon said.

"Sure," Debbie said groggily.

"There any bacon? Fresh bread?" Simon said.

"Ha," the pilot said over his shoulder.

"Councilman Abraham isn't dining with us today," Milton said. "I think there's Pop Tarts and granola bars behind those drawers." He gestured without taking his eyes off the board. "We'll have coffee and tea once we land in Greenfield. Checkmate."

"OK, nobody better ask me to do any thinking or acting friendly until we land," Debbie said.

♬Monday's wishing
Wednesday's waiting
Don't you let time take its toll
December's been drowning in yesterday's dreams
The winter's been good to my soul
♬Darling, can you hear me?
Ten thousand miles away
Out on the road trying to lighten my load
From the price that lovin' you pays
♬It's a crime to need you
The way that I do
It's a crime to need you
The way that I do
♬So go easy
Go honestly
Go easy when you go
Well if you love me, just leave me
Go easy when you go
♬Go easy when you go
Go easy when you go♬



Simon and Debbie ate by one of the large windows, desperately wishing they could get a pot of hot, caffeinated beverage. Although still hazing and playing tricks with their eyes, the dim light slowly began to overwhelm the fog, allowing them to just notice the hills of West Virginia around them.

"Looks like I'm almost home," Simon said. "Strange to still think of it that way after all this time." Simon stared outside.

Debbie placed a hand on his sleeve. "If your brother John is alive, we'll find him," she said.

"Yeah," Simon said. "I don't know what I'm supposed to say when we see him. 'I'm sorry' doesn't nearly cover a thing like that."

"You'll find the right words," Debbie said. "I've been praying."

"I thought you weren't being nice until someone gives you coffee," Simon said wryly.

"I'll smack you with something later to make up for it," Debbie said.

Simon picked up his guitar. "Well, since we are no doubt over my native land now, it's only fitting I play a little ditty from Mister John Denver."

♫Almost heaven, West Virginia, 
Blue Ridge Mountains, Shenandoah River. 
Life is old there, older than the trees, 
Younger than the mountains 
Growin' like a breeze. 
♫Country roads, Take me home 
To the place I belong.
West Virginia, Mountain momma, 
Take me home country roads
♫All my mem'ries, gather round her, 
Miner's lady, stranger to blue water. 
Dark and dusty, painted on the sky, 
Misty taste of moonshine 
Teardrop in my eye. 
♫Country roads, Take me home
To the place I belong.
West Virginia, Mountain momma,
Take me home country roads
♫ I hear her voice in the morning hour she calls me, 
The radio reminds me of my home far away 
And driving down the road I get a feeling 
That I should have been home yesterday, yesterday. 
♫Country roads, Take me home 
To the place...

Simon broke off as he stared out the window.

"Something wrong, Simon?" Debbie asked.

"What was that, some kind of bird?" Simon said.

"What was what?" Debbie said. "I didn't see anything."

"In the fog," Simon said.

"I'm not sure you could see anything clearly in fog," the pilot said over his shoulder.

"It looked..." Simon said. "Must've been nothing. Just a trick of the light, that's all." Of course Simon didn't at all feel it was a trick of the light, but he had learned not to be too trusting of his own senses. Still, it had not been his niece that he saw scrolling in and out of the fog.
♫Country roads, Take me home 
To the place I belong.
West Virginia, Mountain momma, 
Take me home country roads
♫Country roads, Take me home  
To the place I belong. 
West Virginia, Mountain momma,  
Take me home country roads♫
Simon looked out again. Nothing.

"How much longer to Greenfield?" Simon asked.

"Fog looks like it's finally going to lift, so we should be there in a few hours," the pilot said. "Just have to get over this little ol' mountain, and Greenfield's at the bottom of the other side."

"Sounds good," Simon said. A motion caught his attention, and he found himself staring out the window of the airship again. Something was definitely moving out there... at least Simon hoped so. As he stared, the movement finally became clear to him. Something was flying beside them. Something alive. A creature trying to hide in the mist.

"What is it, Simon?" Milton asked. "What do you see?"

Simon struggled to make sense of the creature he was seeing, if creature was even the best word for it. His first impression was of a giant insect, like a dragonfly with wings interspersed across its whole body. But then they didn't resemble wings so much as great fluttering leaves extending from a twisted stalk. The front end of the creature had leg-like protrusions and what seemed to be a gaping maw filled with teeth, surrounded on all sides by a flower's stamen. Yet these protrusions seemed to move and turn, watching every direction with a dozen eyes on the ends. The creature flew, and yet didn't; it almost seemed to float or swim through the fog, as if the air were too thick for the creature to fall. The more he strained to see it, the more it resembled a bizarre sea monster pulled out of its natural habitat. It even seemed to fade in and out of visibility, the mouth gulping as it disappeared like an otter surfacing for air. Simon's mind simply lacked the categories to comprehend what he was looking at.

"Debbie?" Simon whispered. "Can you see it?"

"I... I don't know," Debbie whispered back.

"Don't lie to me, if it's all in my head you have to tell me."

"There might be something," Debbie said. "I'm just not sure."

Simon rubbed his eyes and it was gone. He looked all around, finally leaning against the window in order to look up beside the airship's massive balloon.

A giant train of scales, bark, and arachnid legs swooped down past the window. Simon jumped back.

"What was that?" Debbie exclaimed.

"Ha," the pilot said, "I'm tellin' ya, the fog does things to the eyes. I swear I've seen a canary the size of a Honda in fog like this once. Turned out a kid had let a helium balloon fly. Wasn't even yellow!"

"It went under us," Simon said. "Milton, check the other side."

"Alright," Milton said, "but I have to say that I get nervous when 'creative types' start seeing things. Calm and rationality are always called for." Milton looked out the window on his side, squinting. "There's something out there... difficult to make out. Could be anything, really."

"How fast are we going," Simon said. "Slow enough a child's balloon could follow us for ten minutes?"

"Not hardly," the pilot said.

Simon and Debbie went to look out Milton's window. "It was down there," Milton said, "but I can't see it anymore."

The whole airship shook violently for an instant, sending everyone standing to the floor.

"What the f..." the pilot said, interrupted by another shake. The pilot looked at his controls. "We're losing altitude!"

"What in blazes is going on here?" Milton said.

"I think we're gonna find out," Simon said, looking out the window. The creature was looping around from above them, and was now swimming straight for the window. "Get down!"

The glass shattered and wind buffeted everything that wasn't bolted down. Debbie and Milton slid toward the front of the descending craft as Simon grabbed hold of the chess table. For just a moment, Simon looked up.

Its mouth was nearly circular, and huge. The creature could have swallowed Simon in two bites if it wanted to. The eyes peered around the mouth from all sides, twisting and curling against the force of the wind. It seemed to be coated in some sort of mucous or sap. The legs began to grab hold of the side of the cabin and flexed. It might have been trying to pry it open. Like a clam shell, Simon thought.

Just then, the creature seemed to gasp for air and faded out of sight. Treetops began to rustle past the window.

"I'm setting us down," the pilot shouted. "Hold on!"



It was light out when Simon awoke on the floor of the airship. His side hurt, and it took him a moment to remember what had happened. "How long was I out?"

"About a minute," Milton said, grabbing Simon through the shattered window and pulling him out. "Whatever that was, it's coming back. Run!"

Simon looked up. The long, worm-like creature was winding up and down in the sky, slowly turning around toward them.

"Wait a second," Simon said, climbing back into the ruined airship.

"Simon!" Milton shouted. "This is not a game!"

Simon glanced around the cabin. Two of the crew lay dead from the crash. His eyes stung from sweat and his head throbbed. "Ah!" Simon exclaimed as he spotted his guitar, safe in its case, by the opposite window. In an instant he emerged from the airship with his guitar in his hand. "I can't leave it. Let's go!"

"Will somebody give me a hand?" the pilot shouted. He was trying to walk, but the blood covering his right leg made clear he wasn't going to move fast.

"Simon, grab him!" Milton shouted. The two of them picked the pilot up by his shoulders, and along with Debbie and two other crew members, they ran.

The ground was uneven and overgrown. The nearby trees were sparse, and after what he saw on the airship Simon was not at all confident tree cover could protect them. They made their way toward a thicker patch of forest in the vague hope they would be harder to spot. Unless it smells its prey, Simon thought. For all I know those "eyes" can smell blood. Simon and Milton tried to keep up with the others, but neither was particularly athletic and the pilot was fading in and out of consciousness.

"Come on, Simon," Debbie shouted over her shoulder. She looked back. "Come on!"

"Hey there!" A voice yelled from the tree line. "This way! Over here!"

"What the ..." Milton began.

Debbie screamed and Simon instinctively dropped to the ground, bringing the pilot and Milton with him. He looked up to see the creature pass within a few feet of their heads, rising again for another pass.

"Go!" Milton yelled, starting to get up. "Leave him!"

"No!" Simon said, lifting the pilot's shoulder. "Help me!" They got up and headed for the voice in the woods.

"Rod!" the voice shouted. "Rod, we need you, now!"

The three of them were only a few yards from the treeline, but the creature had turned and was coming in from the side. Simon knew they weren't going to make it. We should have left him, Simon thought. He knew it would all be over soon. Sorry, John...

A figure came bounding out of the woods with inhuman speed. His foot found a stump and he lept into the air, drawing an arm back and over his head. "AAAARRRGGHH!" he yelled as he raised a tomahawk over his head and threw it directly into the mouth of the creature. The creature jerked away, letting forth a ghastly noise--it made Simon think of a whale's song in the first instant, then of the terrible, inhuman shriek of the ghouls--before fading away. There were blue flashes all around the weapon as it passed through the disappearing creature before the tomahawk fell to the ground.

Simon, Milton, and the pilot reached the trees and were immediately aided by a lean, red-bearded man--the one who had been calling to them earlier, Simon presumed. "Let me take a look at him," the man said. "Are you two OK?"

"We'll live, provided that thing doesn't come back," Milton said. "I'd like to thank our rescuers, what's your name?"

"Hi, I'm Eli Keim," the man said, shaking Milton's hand. "But if it's the hero you want to meet, that would be Rod."

Eli gestured at the man who had just retrieved his weapon and was now walking back to them. He was very tall, greater than six-and-a-half feet. He wore his hair and beard long, but without a mustache, like an inky black lion's mane. His eyes were bright green, with bushy brows above them. As he approached them, he embraced Eli warmly, then turned to look at the newcomers.

"Well, it's a good thing we were out here when you guys crashed," Rod said. "I mean, that was a crash, wasn't it? I don't know much about flying contraptions."

"Yeah," Debbie said. "That was definitely a crash. Did you kill that thing?"

"That?" Rod said, chuckling. "Not a chance. Look." He pulled a nail out of his pocket and held it up to his tomahawk. They clicked together for a moment, magnetized, before the nail slid and fell to the ground. "Barely even nicked him. I think I'm losing my touch. We probably shouldn't linger."

"Their friend's hurt pretty badly, we should take him home," Eli said.

"Is it that bad?" Rod said. "You know the preacher doesn't take too kindly to strangers, especially on the Lord's Day."

"He's bound to notice I'm missing, anyway," Eli said. "And this man really does need our help."

"Then let's get him what he needs," Rod said, picking up the injured man in his arms. "Where were you folks headed, anyway? We haven't met any outsiders in... well, I guess it's coming up on two years now."

"Rod? Milton Burke, PhD," Milton said, shaking Rod's hand. "We were on our way to meet some survivors in Greenfield. We're organizing a provisional government now that the crisis is over."

"Survivors? Survivors of what?" Rod said. "We don't get much in the way of news up here. Greenfield is just down the mountain, though, other side of the mines."

"You guys didn't notice the little zombie apocalypse we had last year?" Simon said.

"Is that what they were, zombies? I figured the city folk had finally lost their manners completely," Rod said.

"Rod likes to play the country bumpkin," Eli said. "We knew something was up, but figured it wasn't a good idea to send people away just for an explanation of why shrieking murderers were coming up the mountain."

"How did you all manage?" Debbie asked.

"Rod," Eli said. "Without him Gibeah would've been wiped off the map."

"Not that we're on most maps to begin with," Rod said with a grin. "Listen, I'll take this fellow over to the doc's place, you guys go in to church so Eli can get him."

"You want us all to go to church?" Milton said.

"Well, I'm pretty much the only one not there most Sundays," Rod said. "Preacher will be wondering where Eli is anyway, and the townsfolk wouldn't take kindly to strangers milling about while they're at chapel."



The crash survivors heard music dying down as they approached the old chapel doors.

"Will we be disrupting the service?" Simon asked.

"A hand grenade couldn't break Phineas's concentration when he's about to preach," Eli said. "Just grab a seat in the back. I'll find the doctor and we can go over there after the service."

"If it's all the same to you, I'll wait outside," Milton said. "I'm not much of one for religious rubbish."

"Neither are two thirds of the people in there, so you won't be alone," Eli said. "But I'm afraid it's not all the same to me. Like Rod said, we'd rather not have strangers poking around unobserved."

A man's voice began to echo from inside the chapel.

"OK, he's started," Eli said and opened the chapel door gently.

Simon followed Milton and Debbie and the others into the musty chapel. The congregants were standing, so they slipped in and slid into a back pew mostly unnoticed. Eli went ahead several rows and disappeared into a pew. Simon could barely see him whispering to a bald headed man up ahead. The bald man seemed quite displeased, shaking his head several times before entering the aisle and walking out the back. He gave the visitors a stern sideways glance as he passed them.

"You may be seated," the voice came from the front, and they all were. Simon wanted to just let his mind wander, but the short, robed preacher had a rich, commanding voice pouring over his tuft of beard. He removed his reading glasses and began to speak, and Simon couldn't help but listen.

"Beloved brothers, the words of Abraham weigh heavily on me this day. The Lord reveals to His servant what He intends to do, and the man is terrified by what may come. And so I am likewise terrified of what may come upon us, upon this very people.

"Ye all know, for ye be not outsiders, what we have seen in these latter days. How men took on the manner of beasts; how they ascended this mountain, as if to set themselves against the anointed; how they came upon us and misused us, and how many of our number were lost to their plague and madness; how we saw with our own eyes the curse on God's people carried out when He said 'ye shall eat the flesh of your sons, and the flesh of your daughters shall ye eat';  how the Most High God raised up a judge among us to repel the evil; how the evil of that unholy city below us has laid silent. And we have felt no pity, nor ought we.

"And yet the sins of that city were not so unlike the sins of these two cities. And now, I fear, like the sin growing among us. The iniquity is on the heads of your leaders, as in the days of Korah. I know that many of ye here have been adulterous, running after foreign gods, and listening to the voice of prophets ye have not known. Ye are falling away from your faith, and I do not know if I wish to catch ye.

"Yet catch ye I must, for that is my duty. How can I refuse when Abraham pleads for the lives of those who are not his own? He pleads for Lot, yes, but for many more besides. 'Peradventure there be fifty righteous within the city: wilt thou also destroy and not spare the place for the fifty righteous that are therein?' For such a number, Abraham seeks protection. And again, 'Peradventure there shall lack five of the fifty righteous,' and again 'Peradventure there shall forty be found there,' and thirty, and twenty, and ten. 'I will not destroy it for ten's sake' saith the Lord. Thus does Abraham plead continually for even this small number.

"We know what doth happen: the house of Lot is sent away, and in his absence the cities are destroyed utterly. There were not ten souls worth saving in such a place. And, perhaps, this was so in that other city, given over to the plague and the curse. How many of our number remain true? If ye do not turn, how long can we last before a new plague is born? How long before we, too, are eating the flesh and drinking the blood of our children, partaking in such an unholy communion? For it is a communion the beast-men embraced: a communion of murderers, of adulterers, of witches, of devils. 'Take, eat: this is my body.' So when the devils feast on devils, they do confirm their testament together.

"This table," he said, stepping toward a table and remove a cover over the bread and wine, "is not for such a covenant. If ye would come to this table to confirm your testament with Him, neither I nor any man will stand against ye. But so that I might catch ye, remember that ye cannot commune with God and with a devil. If ye have practiced any such thing, then this body and blood are a curse upon ye, upon ye and all who abide with ye. The jealous husband cannot abide another lover, but will throw the adulteress and her lover alike into the pit. Take us not into the pit, but come to the heavenly manna which leaveth no man hungry. And let us ask for His guidance. Amen."

The whole congregation stood and began to file toward the tables at the front, singing as they walked.
♫Guide me, O Thou great Jehovah,
Pilgrim through this barren land.
I am weak, but Thou art mighty;
Hold me with Thy powerful hand.
Bread of heaven, 
Feed me now and evermore♫



Don't miss next month's episode, The Devil's on his Way.
Check out this episode's songs:

Go Easy  by David McMillin
Take Me Home Country Roads by John Denver
Guide Me O Thou Great Jehovah by William Williams

Love Constraining to Obedience, or just Social Pressure?

On Monday, I was on my way to campus when I saw something disconcerting. As I was waiting at a stoplight to turn left, the oncoming traffic was just starting to cross the intersection when a minivan going about 10 or 15 started crossing traffic. It just slowly rolled out into the intersection. Fortunately the cross traffic was aware enough to stop as this van just rolled on by. I got a look at the driver: an older man who looked like he was either so drunk I couldn't explain how he got himself into the car, or so tired I couldn't explain how he managed to avoid drifting into a ditch.

At this point I knew it couldn't end well, but he managed to get through the intersection without crashing, so I didn't worry about it. I was on my way to a lunch meeting, anyway, so why bother thinking about it?

After I had the chance to turn, I kept going for a bit over half a mile when I noticed the very minivan about a block and a half ahead of me. I figured he must be doing OK, but then I saw him start to drift. Slowly, drifting. To the left. Into oncoming traffic. About two seconds later, bam! He slammed into a northbound car in the northbound lane. He wasn't going fast at all, but the speed limit was 25 so the other car might have had a bit of speed. In any case, it didn't look like anyone was likely to be injured, but it was a car crash nonetheless.

My immediate response? I turned at the first available street to avoid the scene. I had somewhere to be. It didn't look like anyone would need my help. Sure, I was a witness, but there were probably plenty of others, right? And anyway, how ambiguous is a head on collision when one of the cars is in the wrong lane? I just didn't want to deal with it.

After about a block, I realized I couldn't just keep going as if nothing had happened. I had to at least see if my assistance or testimony might be of use. I looped around and found a place to park, then walked over to the scene. The cops were already there (they drive up and down that street quite a lot, really), and the driver of the other car was out of the car and seemed to be OK (the car itself was pretty banged up). At the direction of an officer I lined up with several other witnesses and waited. The driver of the minivan was out cold, it turned out, although whether that happened before the crash or not I have no idea.

As it turned out, the cops didn't need more than two witnesses, so they sent the rest of us on our way. I could have kept driving and nobody else would have been the worse for it. But something in my mind prevented me from doing so. I'm not exactly known for my strong sense of civic duty, nor for feeling burdened by social custom. And it's not like there's a Scriptural command to help assign blame in routine traffic incidents.

So why did I go back? I honestly don't know. But I'm not sorry I did.

Clean Bill of Health?

Every economist on the blogosphere seems to be offering an opinion on the health care reform bill. I'd be happy to give some general opinions if you are interested, but I tend to favor Tyler Cowen's recent comment:
I recall the passage from Herodotus, where he writes of a group (I can't remember which one) which debates all major policy issues both sober and drunk, both reasonably and full of irresponsible passion.  That's not my personal model, nor do I wish to see it in the comments.  So I'll wait just a wee bit, and let others get both their celebrating and hand-wringing out of their systems...
So instead of offering my own rantings on the subject, here are some links providing the thoughts of economists whose opinions I listen to. I don't agree with all of them, but I think they're all worth hearing out if you care about this issue.

Paul Krugman on the surprise political win for the Democrats

Greg Mankiw on libertarian versus communitarian goals

Jodi Beggs gives an even handed (and thorough!) opinion

James Hamilton talks about the purpose of health care reform

Bryan Caplan chimes in

Rick Saenz (thanks for the link, Kelly P.) would like everyone to get a little perspective

UPDATE: A Point and Counterpoint on the bill at Economics and Ethics.

Truth Claim of the Day

Communism is to modern liberalism roughly what racism is to modern conservatism.  Conservatives claim to be free of racism and progressives claim to oppose communism, but both groups have a lot of skeletons in their closets.
Please, discuss. The context can be found here.

Friday Video Extravaganza

I don't always post videos, but when I do, I prefer to hit the jump.










Monday Post Missing

... due to excessive celebration. Happy spring break, everyone.

From the Lectern: Weeks 7 and 8

This post is a bit overdue, and that's not even counting the fact that I didn't post last week's lecture. I think it's OK, partly because I doubt anyone reads these (their mostly for storing lecture notes) and partly because last week's lectures make very little sense without this week's lectures. So I'll try to keep it as brief as I can, and get to the key ideas of the last two weeks.

Now that we understand consumer behavior pretty well, we need to try understanding firm behavior. This is a bit more difficult, because very few of us have ever had to think like a producer. The key to understanding the choices and behavior of firms is to keep in mind the goal of any firm: maximizing economic profit. This is not the goal that will be discussed in most business meetings. MBA will gather around a table and start talking about increasing their revenue, or increasing their market share. But let's be clear: the easiest way to get more market share is to drop your prices to essentially zero; the easiest way to increase revenue is to sell bigger, fancier, and more complicated stuff. But firms don't all do these because their are costs involved, and what firms really care about is total revenues minus total costs. They care about profit.

Another thing we need to be clear on is that profit does not mean profit on the accounting ledger. This is due to the fact that economic costs are not the same thing as accounting expenses. Economic costs have to take into account the total opportunity cost of every input used to produce the goods. Even if you own your own building, by using it yourself you are giving up the chance to rent it out and bring in money that way. This doesn't show up on your accounts, but it does affect your decision. Similarly, your entrepreneur has to expect a certain return on his risk in order to be willing to take a risk on it (rather than something else). That's a cost that affects firm decisions, but it definitely doesn't show up in accounting. So when we talk about costs, we always mean opportunity costs; when we talk about profit, we're always going to be talking about profit above and beyond the opportunity cost of the entrepreneur, or economic profit.

So to figure out profit, we need to figure out costs. And to figure out costs, we first need to figure out how we can go about making stuff in the first place. Now, I could go into a long, detailed account of why production in the short run (that is, so short that you can't change every input; you've signed some contracts that are currently binding) looks the way it does. But I won't. There are really two key ideas that determine what production looks like, and therefore what costs look like.

First of all, as we go from hiring 2 workers to hiring 3, or 4, or 5, etc, the first thing that happens is adding more workers makes each of the previous workers more productive. This is because as we hire more workers, we can rearrange the way we do things, giving each worker a specific job that, when combined with the work of everyone else, takes advantage of what we call specialization of labor. The workers can do as a group more than they could if they each tried to work through the entire production process individually. This just means that (because the whole is greater or more productive than the sum of its parts) we get increasing returns to hiring workers initially.

Eventually, though, we'll run out of new ways to specialize, and our workers will be faced with the fact that we only have so much of other inputs. Whether there's only so much space, or there's only so many machines, we eventually crowd our fixed inputs and face diminishing returns. Hiring more workers still increases output, but not as much as the last worker. At some point things could get so crowded that adding workers actually decreases output, because the new worker can't do anything and just gets in the way of everyone else trying to work.

These two assumptions mean that the extra cost for producing one more unit of output (if we're talking processed corn, one more ton/bushel/grain of corn) will be falling for the first few units; our workers are getting more and more productive, but we are probably paying the same for each additional worker. At some point, though, marginal cost has to start rising again as each worker provides less and less extra output (but we pay the same for the work). I could go on about how this connects to other measures of cost, or costs in the long run, but if you're interested you should really read the Krugman and Wells textbook.

The trick here, though, is that this doesn't quite tell us what decisions a firm is going to make. To do that, we need to see what the market they are in looks like, so Wednesday we started looking at a model of perfectly competitive markets.

Several conditions need to be met in order for the market to be well described by perfect competition. First of all, there need to be many firms, so many that no one firm has any influence on the market price, regardless of what they do. This means firms will be price takers, or they'll just take the market price as given. Competitive firms also need to produce a standardized product; they might differ in some sense, but the key is that buyers see the goods as perfect substitutes. No buyer cares whether he gets Farmer Norm's processed corn or Farmer Maynard's processed corn. Corn is corn. This says that the demand curve for any particular firm's product will be equal to the market price for any possible level of output. These two assumptions together imply that the extra revenue for each additional unit of output is always the same as the market price, or P=MR.

This is important, because if the goal of the firm is to maximize profit, the firm has to produce every unit where the additional revenue is greater than the extra costs of production (and produce no units that cost more than the revenue they bring in). The firm will decide to produce its output where MR=MC, which we refer to as the profit maximizing condition. If the firm is perfectly competitive, this condition says that firms keep increasing output until their marginal costs (which remember are rising because of diminishing returns) reach the market price, P=MC.

We also assume that all firms have the same access to resources, information, etc, so that their costs will all look about the same, and that if firms want to enter or exit the market, they are free to do so (at least in the long run). These conditions will be important to see later on.
More perfect competition in two weeks. Have a great spring break!

In Defense of Economics

This is primarily a response to this WSJ article by George Mason University economist Russ Roberts. I'll divide my thoughts on the points into three broad categories.

Il Buono

First, the good points. Russ Roberts has a knack for asking good questions, particularly questions about broad, philosophical issues. In many ways, the most important questions the government is wrestling with right now look a lot more like "Do we want to be more like France with a bigger role for government, or less like France?" and less like "Which paradigm is the 'right' way to think about the boom and the bust?"

Roberts also has a sharp wit, enabling him to illustrate the problems he sees with his opposition in enlightening ways.
The defenders of modern macroeconomics argue that if we just study the economy long enough, we'll soon be able to model it accurately and design better policy. Soon. That reminds me of the permanent sign in the bar: Free Beer Tomorrow.
Finally, Roberts really seems to understand why economics, and particularly macroeconomics, is so difficult.
If economics is a science, it is more like biology than physics. Biologists try to understand the relationships in a complex system. That's hard enough. But they can't tell you what will happen with any precision to the population of a particular species of frog if rainfall goes up this year in a particular rain forest. They might not even be able to count the number of frogs right now with any exactness.
We have the same problems in economics. The economy is a complex system, our data are imperfect and our models inevitably fail to account for all the interactions.
I often prefer to class epidemiology, climatology, and macroeconomics together. All three study highly complex systems, which we don't even come close to fully understanding, and do so using whatever observations of the system we manage to get. Compared to these disciplines, progress in physics, chemistry,  engineering, and even psychology is a walk in the park (and believe me, it's not).

Il Brutto

When faced with the issues and weaknesses discussed above, Roberts concludes that "we should expect less of economists." In other words, getting useful answers is hard, so maybe we shouldn't try. Now, biology and medical science have made precious little real progress against cancer in the last thirty years or so, but I doubt Roberts would argue we should expect less from cancer researchers. Why he feels comfortable taking such an odd position toward others in his discipline I am not really sure.

Roberts reaches this conclusion after stating that he no longer believes in the value of macroeconomic statistical studies.
I've started asking economists if they can name a study that applied sophisticated econometrics to a controversial policy issue where the study was so well done that one side's proponents had to admit they were wrong. I don't know of any.
Of course, if Roberts can name a particular study, any study,  that forced one side of a controversial policy issue to admit they were wrong, then I would consider this challenge meaningful. But of course he won't be able to, any more than I could meet his challenge. It doesn't work that way. Changing people's opinions and beliefs, especially when the validity of their life's work (and possibly their income) may be on the line, doesn't come suddenly, no matter how good the work.

Il Cattivo

My main complaint, however, is not that Roberts exaggerates his conclusions. It's an article for a newspaper, not an academic journal; reaching a broader argument with the essence of one's conclusions requires a degree of drama, and while I find it kind of annoying at times, it's not unreasonable.

However, some of Roberts comments are not designed so much to get his message across as they are to solidify his position of superiority relative to those who disagree with him.
When the debate is over $2 trillion in additional government spending vs. zero, we've stopped being scientists and become philosophers.
On its own, the above comment could seem innocuous enough; after all, Roberts could be arguing that economics should be more like philosophy. But this is difficult to reconcile with previous comments like the following:
After all, most sciences make progress.
So while Roberts seems to be in favor of economists admitting to being like un-scientific philosophy, he doesn't portray this fact positively. After all, his conclusion is that we shouldn't expect so much from such an un-scientific discipline.

Roberts seems pretty comfortable slighting alternative methods of uncovering truth. He relates Ed Leamer's description of "faith-based" econometrics, because faith is the opposite of science. He offers other lines designed to subtly accuse economists in general, and particularly macroeconomists, of self-importance and hypocricy:
It makes you wonder why people call it the Nobel Prize in Economic Science.
If economics is a science, [...]
Admitting that publicly is the first step toward respectability.
The last sentence, especially, indicates that economists are not currently respectable. If they'd like to be, they should listen to Russ Roberts and admit their own ignorance. It reminds me of a scene from the movie There Will Be Blood in which the main character, Daniel Plainview,in order to get on the good side of a corrupt preacher, first must admit in front of the congregation that Plainview has abandoned his son. Why Roberts thinks un-scientific and disrespectable economists should take the advice of a fellow un-scientific and disrespectable economist I do not know.

In general, I feel that Russ Roberts falls flat in the article precisely because he offers no respect to those he doesn't already think deserve it. If you come to the article agreeing with him, then you're fine. But if you come to it disagreeing with him, or remain somewhat unconvinced at the end, then he doesn't seem interested in your opinion anyway. Roberts isn't alone in this; he essentially is the Right-Wing counterpart of Paul Krugman: both bring up interesting topics, but in the end only manage to preach to the converted.

Teaching Philosophy

What follows was written for an award application I turned in last week. In order to prove how awesome I am, they wanted to see a statement of my teaching philosophy, and I have no idea if this was the kind of thing they were looking for. At the very least, it was probably not something they've seen before.



Students are in the process of becoming who they will be for the rest of their lives. Although they sometimes don't realize who that is yet, I believe this means they should be shown the dignity of who they are and are becoming all the same. First and foremost, my students are adults. They have chosen to attend my classes, whether at the guidance of parents and councelors or at their own discretion. As a teacher, I want how I teach to be shaped by the goals the students have when they make this choice. As an economist, I know that these goals really fall into three broad categories: consumption, productivity, and signaling.

Students might be in my classes because they think it will be fun. Maybe they see economics coursework as part of the ``college experience.'' Perhaps they've noticed that economics comes up in every nightly news broadcast, or that every political and business decision has an economic element they'd like to know more about. In any case, some students come to my classes purely for their own enjoyment, information, and satisfaction; they've come to consume economics. What these students really want out of the course is real world examples, something that connects the abstract essence of economic thinking to the complex experience of life. They want me to be honest when I'm simplifying reality, and they want me to tell them when what we talk about is a good guide to understanding the world and when it's not.

Beyond their own enjoyment, students might actually come to college to learn something, to make themselves more productive. They want to improve their thinking skills so that they'll make better employees and better employers after they graduate. They are hoping that what they learn from me will help them get better, higher-paying jobs, and retain those jobs over time. These are the students who want to see how decisions are made, how to compare costs and benefits, and what sort of factors they need to consider when dealing with problems. They want to be able to look at a situation and understand not only which things they can see are really important, but also what important considerations may remain unseen. The theoretical building blocks of economics help these students translate bewildering real world problems into intellectually managable models. And of course, they need to translate the answers the models give back into real world solutions.

Finally, some students are already a cut above the rest. What these students really want is to be able to prove their skill, to signal to the job market their true abilities. They take economics courses because they're challenging. They hate grade inflation because it makes it harder for them to demonstrate their talent and effort. What these students need the most from me is honest grading and rigorous academic standards. They want me to expect a lot from them, because they know they have a lot to give. They want an A in Principles of Microeconomics to mean something.

Of course, the students I've outlined above are an abstraction from reality. Most students are motivated by a mixture of the three, and they may not even be sure which ones matter to them the most. I need to provide all of the benefits to all of my students, and let the individuals sort out which parts are most useful to them. Many students aren't thinking these things about my class as much as they are about their entire program of study, so I need to keep in mind what their backgrounds are like and where they plan to go after my course is over. But by beginning with these principles, I believe I can respect the interests and desires of my students and provide them with the education they are really looking for.

Truth Claim of the Day

Nature is not as rational (or should we say "simple") as we might like it to be. Nor is monotheism... 
Please feel free to comment. The context is an interesting post at Enchanted Postmodern.

Your Esteemed Author Is Officially...

 
That is all.

The Sonnschein Pipe

So, at this point you may have noticed the new header image. I enjoy estate pipes (my collection is currently sitting at 15 pipes), and this particular one, the latest addition, has a fascinating story behind it.

The pipe has metal fittings and a hinged cap, and is quite large. There's no stem, which I might remedy at some point, but I don't really mind. I don't plan to smoke this one.

You see, this pipe is around 200 years old. Inside the bowl there is a note that reads as follows:

'this Pipe was given to my grandfather (born 1811) William Sonnschein, and he said it was given him by his grandfather so that would make this pipe at least 150 years old (in 1910)
     Frank Eckert  --- grandson of William Sonnschein
Note initials on silver lid "A.S"'

I received this pipe as a gift from my wife's grandmother, who had received it from her grandfather, Frank Eckert. According to the note, he received it from his grandfather William Sonnschein, who received it from his own grandfather (presumably the "A.S." of the initials). So while I don't quite follow the math that dates the pipe to the 1760s, it's still been in the family since Jessie's great-great-great-great-great-great grandfather. Which is pretty great.

So I'd seen this at Jessie's grandmother's house before, and I was an instant fan. She's been downsizing her possessions, and I jokingly told her that if no one had spoken for the pipe I'd throw my name in. I felt kinda bad when she actually decided to give it to me, as I had sort of thought she would want to keep it as decoration until she dies (I know I would). But at this point I'm just grateful. It might be the oldest thing we own (I have a couple of ill-repaired 19th century Bibles, and one of them was published in 1811), and is definitely the piece I would take with me to the Antiques Roadshow. It's similar in shape to the Hungarian meerschaum-style metal pile found here (3rd down), although the lid is simpler on the Sonnschein pipe. It's simply classy, which is how we role at Metadoxy.

By the way, all photos, including the header, were taken by the magnificent and ever-professional Jessie. For more examples of her handiwork, check out here Etsy shop.

The Cabinet of Dr. Caligari

What makes a good story can be learned from a good sandwich. The bread is the plot: it holds everything else together, and without it there is no sandwich. It can range in quality from wonderbread to a nice focaccia from Panera or beyond. But if the bread is what's filling you up or giving the sandwich flavor, you're doing it wrong. Similarly with a good story, you need fascinating ideas to explore (the meat), characters you care about and identify with (cheese), good dialogue (dressing), and great artistry and atmosphere all around (the veggies).

The point of this allegory is that I recently decided to Netflix a number of movies I've been meaning to see for years, but never got around to. One of the first of these is The Cabinet of Dr. Caligari, a silent film from 1920. Dr. Caligari was one of the first horror movies and one of the first to employ a twist ending, mostly because it was one of the first movies ever made.

The story is pretty straightforward by  today's standards. The mysterious Dr. Caligari brings his sideshow attraction, the somnambulist Cesare, to an exhibition / fair in a small town. Our hero, Francis, and his friend Alan go to see the show, and Cesare predicts that Alan will not live to see the morning, a prediction which ultimately comes true. A murder mystery! (not that mysterious) The twist ending is somewhat telegraphed, but only because this movie was so influential that it's been reused about 5,000 times by now. Suffice it to say that in the German Expressionist world of deep shadows and crooked doorways, not everything is as it appears.



But the plot isn't what makes this movie work, and it's certainly not the characters, who are all fairly one-dimensional. What makes this movie so influential is (to use my allegory) the vegetables. It's precisely the crooked doorways, twisting paths, and general visual aesthetics (plus some pretty creepy music) that have made this one of the most influential movies of all time. For example, I had always wondered why Tim Burton's version of Batman's enemy The Penguin (from 1992's Batman Returns) looked so jacked up freaky. After the first appearance of the character Dr. Caligari, I instantly thought "he looks kinda like Tim Burton's Penguin... Ooooh!" Actually, a lot of Tim Burton's work is influenced by German Expressionism in general, and by Dr. Caligari in particular. Remember the movie Edward Scissorhands? While Edward's leather costume is reminiscent of something else, his overall look is very much like Cesare, who is also a sympathetic, childlike, and somewhat haplessly destructive character.



So I liked the movie. I'd recommend it to anyone who wants to see how a good story can be propelled with lots of atmosphere and a minimum of dialogue. I'm not a big fan of expressionism, but the ability of a movie like this to draw the viewer in (despite all the technical limitations) is impressive. The directors of our modern summer blockbusters would do well to take a few notes from director Robert Wiene's notebook.

 

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