The Economics of Being Traded

There’s always a really bad trade in baseball that we can talk about. Babe Ruth was traded to the Yankees for cash. Others include the 1991 trade where the Baltimore Orioles sent pitchers Curt Schilling, Pete Harnisch and outfielder Steve Finley to the Houston Astros for First Baseman Glenn Davis.

In 1990, the Boston Red Sox traded first baseman Jeff Bagwell to the Houston Astros for pitcher Larry Andersen. We all know how that worked out. One is on the way to the Hall of Fame. In 1997, he Seattle Mariners trade pitcher Derek Lowe and catcher Jason Varitek to the Boston Red Sox for closer Heathcliff Slocumb. A few World Series wins later, Boston is laughing all the way to the bank.

How would you feel if you were traded for 10 baseball bats?

For now, Odom is headed to the Laredo Broncos of the United League. They got him Tuesday from the Calgary Vipers of the Golden Baseball League for a most unlikely price: 10 Prairie Sticks Maple Bats, double-dipped black, 34-inch, C243 style.

History (as well as the difficulty of getting from the minor leagues to the big show) will probably tell us that neither team will suffer from this deal. But if this guy ends up playing at the caliber of a Bagwell, Schilling, or any of the aforementioned players in the lopsided trades mentioned above, this will be the trade of the century.

Is Rice the Next Unleaded Gasoline?

So, if a supply problem with something as benign as rice were to take place (real or perceived), would it raise the price of Chinese food and other Asian cuisines?  Sam’s Club and other outlets that sell in bulk have already put a limit on the amount of rice someone can buy.  Furthermore, most of the Chinese places I know of are not huge chains.  They are mom-and-pop restaurants who don’t rely on a huge supply chain to get their resources in.  They go to places like Sam’s to get what they need.  Furthermore, a lot of these places are buffet style and go through rice like crazy.

I remember when a Chinese buffet was about $5.00.  It wasn’t that long ago.  Now those same establishments are charging around $8.00 per person (before the rice shortage).  You can probably expect to see the typical Chinese buffet go up a couple more dollars in the near future.

The supply of the basic staple in the diets of millions of people around the world just took a dive.  What’s next?  I am not sure what caused this as I have not spent too much time reading about the problem.  But we can safely say that it didn’t happen overnight.  Something caused this issue.

Our Tax System Explained: Bar Stool Economics

I was trolling around Google for some economics stuff and came across this gem.  If you want to see a very lame response to it (basically someone trying to act intelligent, but failing miserably), see the post on Daily Kos.

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.

The fifth would pay $1.

The sixth would pay $3.

The seventh would pay $7.

The eighth would pay $12.

The ninth would pay $18.

The tenth man (the richest) would pay $59.

So, that’s what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. ‘Since you are all such good customers,’ he said, ‘I’m going to reduce the cost of your daily beer by $20.’ Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free.

But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his ‘fair share?’

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings).

The sixth now paid $2 instead of $3 (33%savings).

The seventh now pay $5 instead of $7 (28%savings).

The eighth now paid $9 instead of $12 (25% savings).

The ninth now paid $14 instead of $18 (22% savings).

The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

‘I only got a dollar out of the $20,’declared the sixth man. He pointed to the tenth man,’ but he got $10!’

‘Yeah, that’s right,’ exclaimed the fifth man. ‘I only saved a dollar, too. It’s unfair that he got ten times more than I got’

‘That’s true!!’ shouted the seventh man. ‘Why should he get $10 back when I got only two? The wealthy get all the breaks!’

‘Wait a minute,’ yelled the first four men in unison. ‘We didn’t get anything at all. The system exploits the poor!’

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.

Professor of Economics

University of Georgia

For those who understand, no explanation is needed.

For those who do not understand, no explanation is possible.

The Economics of Gas for Guns

First 450 people who show up at Cleveland’s convention center with a working handgun will get a $100 gas card.

(1) Who in their right mind would spend money on a gun, only to surrender it for a gas card? With gas being around $3.00 a gallon, that’s only one tank of gas in my Chevy Avalanche. The answer to the original question is: Not any law-abiding citizen with any interest in self-preservation would take part in or support such a program.

(2) Will known criminals show up and turn their weapons in, risking the chance of getting their fingerprints lifted from weapons that may have been used in a crime? Probably not. Then again, programs like this are more than likely ‘no questions asked, no I.D. required’, which is even more of a facilitator, and doesn’t help the police solve crimes that may have been carried out with that gun.

(3) If we stipulate those two items, then the primary source for the guns that are turned in could very well be through theft. Getting guns out of the hands of criminals is a good idea. Nobody is arguing that. But programs like this entice more crime than they solve, and create revolving door of crime.

(4) Anti-gun people are creating incentive because they can’t get around the Second Amendment, and desperately need to do something to prove their worth to the community.

Let’s look at the vicious cycle. Anti-gunners can’t come into our homes and take our guns, so they do so by proxy via theft and incentive.

Let’s say Johnny Criminal does turn in his gun. Unless he’s renounced crime all together, and parted ways with his criminally-minded friends, he’ll need a gun sometime soon. This creates the need to steal again. (Remember that convicted felons can’t legally purchase firearms).

Johnny Criminal breaks into a home owned by a law-abiding gun owner, then turns the guns in at the next city-sponsored buyback event. When Johnny needs a gun, he’ll just go steal another one. You see where I’m going with this.

People who run local governments and municipalities will do everything they can to entice those people who don’t or can’t think for themselves. This is a prime example.

Boston tried a gun buyback program for $200.00 each in 2006. There are countless other programs out there like this, and it just seems to me to be throwing money into a black hole. Those spending money on these programs can’t measure the impact the programs have. I think these programs are designed to make the weak and uninformed feel strong and confident.

Others think the same way. [here...] [here...] [here...] and [here...] These programs don’t work and aren’t measurable, but your tax dollars are feeding the frenzy of a feel-good measure that ultimately makes others look good.

The Economics of Blogging

From BlogWorldExpo:

Over 12 million American adults currently maintain a blog.
More than 147 million Americans use the Internet.
Over 57 million Americns read blogs.
1.7 million American adults list making money as one of the reasons they blog.
89% of companies surveyed say they think blogs will be more important in the next five years.
9% of internet users say they have created blogs .
6% of the entire US adult population has created a blog.
Technorati is currently tracking over 70 million blogs.
over 120 thousand blogs are created every day.
There are over 1.4 million new blog posts every day.
22 of the 100 most popular websites in the world are blogs.
120,000 new blogs are created every day.
37% of blog readers began reading blogs in 2005 or 2006 .
51% of blog readers shop online.
Blog readers average 23 hours online each week.

So, what are the economics of this?

Let’s stipulate that blogs exist because of readers (customers). Without them, there would be no need for blogs. Let’s also stipulate that all bloggers want people to read their stuff. Why set up a blog if you and your mother are going to be the only ones reading it? Now … on to the numbers.

Look at a blog in terms of a car dealership. Let’s even replace the term ‘blog’ with ‘car dealership’.

There are 12 million car dealerships in America that are open and ready to sell you a car. There are currently 147 million potential car buyers out there, but only about 57 million of them drive cars.

Over 120,000 new car dealerships are going into business every day, and 1.4 million new cars are being produced to be shipped out to the car lots in hopes that someone will buy them (every day). What this means is that the supply is going way up, the opportunity for the dealerships to differentiate themselves from each other is getting more and more difficult, and eventually there will be so many car dealerships that some won’t even get a look when someone drives by in their car they bought down the street from a guy selling the same vehicle.

There are probably 50-100 “popular” blogs out there. Unless the world comes to an end, these sites will probably remain popular. The other 120,000 sites that come online every day will need to work to set themselves apart from the rest. Every second that passes, this task becomes harder and harder to accomplish.

Furthermore, the value (economics) of each blog post becomes lower because everyone has one already. There is no demand. And if there were demand, people can go create their own. What is the incentive to go to “blog X”to read information about a topic that I can find on “blog Y”?

I would also like to know the net (not gross) number of blogs coming online every day. There has to be some blog-attrition factored in somewhere. This is a staggering number and I’m too tired to think about it.

The Economics of Renovating the Dead

As someone who lived in Houston for many years, I had the opportunity to see some events at the Astrodome. Houston Astros baseball and the occasional monster truck show were the most frequent things I went to when I was a kid. There was also Houston Oilers football, the short-lived USFL, the Houston Livestock Show and Rodeo, and a host of other events that went on there over the years.

But with the development of the state-of-the-art, multi-use Reliant Stadium for football, and Minute Maid Park for baseball, the use of the Astrodome has dwindled over the years. It has essentially become an eye sore that just happens to sit right next to the beautiful Reliant Stadium. And the Astrodome is 42 years old.

Members of Commissioners Court have been reluctant to order the razing of the dome because of the sentimental value it holds for those who attended their first sporting events there or took in a major game.¹

A lot of people in Houston are opposed to demolition due to sentimental value. But sentimental value only goes so far. The dome is 42 years old. It certainly doesn’t hold the history of a Yankee Stadium. This structure doesn’t even resemble the dome when it was the primary sporting venue of it’s time. It’s just bad business to keep pouring money into something that has outlived the initial purpose and goal.

Yet some people are trying to keep the old stadium alive. The good news is but it looks as though the plan may fail. The “plan” is to spend about half the cost of a modern stadium to renovate this old, run down building.

I watched a game between the Houston Gamblers and the San Antonio Gunslingers from 1984 the other night on ESPN Classic from the Astrodome. Even then, the dome looked like it needed a lot of upkeep. The field was in terrible shape, and the overall look left something to be desired. (and that was 24 years ago).

The dome should be demolished and the pieces auctioned off (like they did for Astroworld). The dome is an archaic part of a by-gone era. As much as I like to preserve history, this thing needs to go. The $450M price tag to renovate it could be spent in better ways.

1. http://www.chron.com/disp/story.mpl/metropolitan/5259827.html [↩]

The Economics of Getting Screwed

As hard as I try, it’s sometimes difficult to support our government. One might think (and hope) that the government would do every thing within reason to help out those brave men and women who serve on the battlefield. When they fail at that, it’s not a pretty situation. When the slap in the face is so blatantly obvious, it pisses me off.

When they came home from Iraq, 2,600 members of the Minnesota National Guard had been deployed longer than any other ground combat unit. The tour lasted 22 months and had been extended as part of President Bush’s surge. ¹

So goes the story of 2,600 heroes in the Minnesota National Guard. As far as the rules go, National Guard troops who are deployed for 730 days are eligible for education benefits under the G.I. Bill. This means help in financing that Bachelor of Science degree, or that MBA. It’s the least the government can do, right? Problem is, some pencil-pushing accountant who thought that it would be cool to show how much money we can save had the orders for these troops drawn up for 729 days (one day less than is required for benefits).

“It’s pretty much a slap in the face,” Anderson said. “I think it was a scheme to save money, personally. I think it was a leadership failure by the senior Washington leadership… once again failing the soldiers”

Meanwhile, our friends at the GAO discovered that the entire country is getting screwed by a different class of bureaucrat by way of first-class upgrades on flights around the country … at a cost of MILLIONS. (oh yeah … because they thought they were entitled to it). Perhaps some of our elected class in the House and Senate can get off their collective asses and get something done about this. Perhaps?

1. http://www.wcsh6.com/news/article.aspx?storyid=71741 [↩]