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July 31, 2005

Enterprise and Government in Harry Potter

A long time ago (30 or 35 years) I attended some sessions on film and ideology at a week summer conference sponsored by the Intercollegiate Studies Institute. At one session they screened Frank Capra's Mr. Smith Goes to Washington, and then the faculty panelists, with help from the audience, proceeded to thoroughly trash Capra for left-wing, anti-capitalist, populist bias. I sat and frowned and fumed, but the session ended without me having the courage to defend Capra. What I wish I had said was that Capra may have been a left-leaning populist; his economics may have been all wrong; but if that's all you say, you miss the main point. The main point of Capra is loyalty, and persistence, and courage and good-humor. One can reject Capra's implied economics and still love his movies.

Well on the night of Friday, July 15, 2005, with my wife and daughter, I hung out at the local Border's book store with a huge crowd of other fans, waiting until the stroke of midnight to be allowed to purchase Harry Potter and the Half-Blood Prince. Similar scenes played out all over the country, and in other countries as well. Apparently the book, like its predecessor, is setting all kinds of sales records.

And analyses have begun to appear about Harry Potter's economics and politics. (The July 15, 2005 Wall Street Journal ran a piece suggesting that Dumbledore is Winston Churchill and Voldemort is Adolph Hitler.) They too miss the main point.

The main point is that the leading heroes of the Potter books display loyalty, and persistence, and courage, and good-humor. And the characters are constructed as real people who we come to care about. And the books are well-written. And plot matters too--you need to find out what's going to happen next.

Still, if you want to play the socio-political-economic interpretation game with the Potter books, I suggest the following facts might be relevant. Two of the minor heroes of the books, Fred and George Weasley, are successful entrepreneurs. The heads of the governmental Ministry of Magic are at best ineffectual, dishonest, pompous buffoons. And the seed money for Fred and George's successful enterprise is provided by that most famous of venture capitalists: Harry Potter.

[Details on WSJ article: Jonathan V. Last. "History According to Harry: Appeasement Fails with Warlocks Too." Wall Street Journal (Friday, July 15, 2005)]

July 30, 2005

Economics and Physics

Economists have sometimes been accused of physics-envy, but that is an utterly misleading accusation. Anyone who knows modern physics will testify that physicists care about experimental evidence, about bringing their theories into conformity with the experimental evidence, and very little about rigorous theorems and analytical lemmas. What economists really suffer from is mathematics-envy.

Blaug, Mark. "Not Only an Economist: Autobiographical Reflections of a Historian of Economic Thought." In Reflections of Eminent Economists, edited by Michael Szenberg and Lall Ramrattan, 71-94. Cheltenham, UK: Edward Elgar, 2004, p. 90.

We economists like to think of our science as akin to physics in its mathematical rigor. Quite by accident, while pursuing some research on stochastic processes, I obtained in 1995 a detailed description of the research being done by tenured and tenure-track members of the Harvard University physics department, ranked that same year in a National Research Council survey as the top physics department in the United States. Analysis of the research
summaries indicated that ten of the 41 active faculty members were working exclusively on theoretical inquires, six on a combination of theory and experimentation, and 25 on essentially experimental projects (which, of course might have implications for theory). This set me to wondering: how does the pattern in physics compare with what one might find in my own economics speciality? To find out, I examined all the articles published in volume 12 (1994) of the International Journal of Industrial Organization - a high-quality journal in whose founding I played an indirect role. Of the 31 articles, five were exclusively empirical-statistical, one was a mixture of theory and econometrics, one was a case study, and 24 consisted of theory alone with no more than anecdotal real-world foundations. Thus, Harvard physics research and research in the eoncomics of industrial organization, at least as reflected in the not atypcial IJIO, are almost mirror images of one another - physics preponderantly empirical, industrial organization preponderatntly theoretical.

Scherer, F.M. "An Accidental Schumpeterian." In Reflections of Eminent Economists, edited by Michael Szenberg and Lall Ramrattan, 386-399. Cheltenham, UK: Edward Elgar, 2004, pp. 396-397.

July 24, 2005

A Case For School Vouchers in Nebraska

Create a marketplace

The solution to the impasse between Omaha Public Schools and the coalition of suburban school districts is to dissolve all school districts and declare each school an independent entity. Then issue vouchers to students and let them and their parents pick the schools of their choice.

There would be another round of consolidation, just as there was with the Baby Bell telephone companies. But it would be market-driven instead of being dictated by political boundaries.

The beneficiaries would be students and parents who would be free to pick schools offering the best educational value with no restrictions due to place of residence.

That's real school choice.

Robert Ranney, Omaha

Source: Omaha-World Herald Public Pulse section, July 17, 2005.

July 23, 2005

Protecting Sugar Industry Doubles Consumer Price for Sugar

RUSSELL ROBERTS: “The bottom line is the price of sugar in the United States is about double what it would be outside the United States in a freer market. That means higher profits for sugar farmers and it means higher prices for U.S. consumers."

"And it's not just, of course, for the sugar you sprinkle on your grapefruit. It's for anything you consume that uses sugar: ketchup, all kinds of processed foods, candy that has higher prices that we don't see the higher price of sugar hidden in those higher prices.”

Russell Roberts on PBS News Hour, “FARMERS DIFFER OVER CAFTA” July 20, 2005.

July 22, 2005

Leapfrog Technology

Third world countries can leapfrog. They skip telephone lines and go right to cellular.
George Morton in Michael Crichton, State of Fear, p. 565.

July 21, 2005

Cable about to "get leapfrogged"

We're playing offense, not defense when competing against the Bells," says Brian Roberts, chief executive of Comcast, the country's largest cable operator with over 21 million subscribers.

The technological arms race is further evidence that television is entering a new content- and feature-rich era. Early signs of this transition were the introduction of TiVo and other digital video recorders and video-on-demand services that enable viewers to watch shows whenever they want.

But many more new products and services are in the works by businesses using Internet technology to combine the functions of TVs, computers, the Internet and telephones. Cable has to make sure it doesn't get leapfrogged. "This is about totally changing this industry," says Lea Ann Champion, senior vice president of phone giant SBC Communications Inc.

Internet technology poses a challenge to cable primarily because it raises the possibility of virtually unlimited television content. The TV service that telephone companies like SBC Communications plan to offer will transmit channels the way Web pages are transmitted off the Internet; only those requested will be beamed to the set. Advocates of this approach talk of a day of massive amounts of content appealing to niche markets, like programs in numerous foreign languages and archived episodes of "My Mother, the Car."

Cable systems, by contrast, typically transmit every channel they offer at once to every subscriber. The cable box, often built into the TV, acts as a filter to select which of the channels from this stream is seen on the set. If a certain channel isn't part of the cable company's feed, the customer can't get it. Current technology limits this stream to about 400 channels, depending on how many are high-definition.

Internet technology, meantime, also promises to make it easier to combine features of the Internet and television, giving viewers the ability to, say, record shows on their home digital video recorders by clicking on a Web browser in their office.

The other threat to cable from the Internet comes from companies ranging from giants like Microsoft Corp. to start-ups like Akimbo Systems Inc. that are enabling consumers with high-speed Internet connections to download content off the Web onto computers or set-top boxes connected to their TVs. Here too, the amount of possible content is nearly unlimited. Computers with Microsoft's Media Center software, for example, can show thousands of online movies on a TV screen from such online sources as Movielink and CinemaNow. Late last year, Akimbo began selling a set-top box with an Internet hookup that offers TV content from 125 providers in 50 categories, including video Web logs, or blogs.

So far, consumer response to these download services has been lukewarm, partly because viewers haven't been bowled over by the quality of the content. But demand might pick up as more players start moving additional content from the Web to the TV, notably TiVo Inc.; a venture of SBC and satellite-TV company EchoStar Communications Corp.; and start-ups DaveTV and Brightcove Networks Inc.

Until recently, the cable industry has had the reputation of being a technological laggard. Satellite rivals were the first to introduce a wide range of products, including digital channels, high-definition programming and digital-video recorders.

But lately, as competition has intensified, the cable industry has become more innovative. Cable operators have sunk tens of billions into upgrades and were much faster than phone companies, for example, in launching high-speed Internet connections, which has turned into a huge business. Most major cable companies now are launching phone service, using Internet technology similar to what many phone companies are using to get into TV.

Source: Grant, Peter. "Cable Operators Rush Services To Keep Edge." THE WALL STREET JOURNAL (July 21, 2005): B1 & B8.

URL for complete article:,,SB112191275980091783,00.html

July 20, 2005

Medical Studies Frequently Not Confirmed

According to a study published in the July 13, 2005 Journal of the American Medical Association (JAMA) by Dr. John Ioannidis, almost a third of the medical studies included in his sample, were eventually either contradicted by subsequent studies (16%) or else required significant modification. (One media report summarizing the study appears at:,0,2629446.story?coll=ny-health-headlines)

This is only surprising in the face of the certainty with which the media and parts of the medical establishment, totally embrace each new study as it appears. Perhaps the tentativenss, and revisability of medical research argues for allowing patients more choice in their treatment?

July 19, 2005

Free to Choose

. . ., you are free to choose your way, quite free to turn your back on the prophecy!


Dumbledore speaking to Harry in Harry Potter and the Half-Blood Prince, p. 512.

July 18, 2005

Ethanol Wastes Energy

Cornell ecologist David Pimentel and Berkeley professor of civil and environmental engineering Tad W. Patzek have published a study that shows that, for corn, 29 percent more fossil energy is used in ethanol production, than the energy yielded by the ethanol output. In the Cornell web summary Pimental is quoted as saying: "There is just no energy benefit to using plant biomass for liquid fuel. These strategies are not sustainable." See:

Pimentel and Patzek's study was published in: Natural Resources Research (Vol. 14:1, 65-76).

July 15, 2005


Sometimes I read, or observe, or remember something that I believe might be of value to others; sometimes a datum that has significance about how the world works, or maybe how to make the world better. I thought a blog might be an efficient way to record and communicate, so I'm giving it a try.


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