Practice Good Theory

I like this constitutional check from Britain. The Army Act is only ratified for a year at a time From Wikipedia ... that the maintenance of a standing army in time of peace, unless with the consent of parliament, is against law. Each session therefore the text of the act had to be passed through both Houses clause by clause and line by line. The Army Act, on the other hand, is a fixed permanent code. But constitutional traditions are fully respected by the insertion in it of a section providing that it shall come into force only by virtue of an annual act of parliament. This annual act recites the illegality of a standing army in time of peace unless with the consent of parliament, and the necessity nevertheless of maintaining a certain number of land forces (exclusive of those serving in India) and a body of royal marine forces on shore, and of keeping them in exact discipline, and it brings into force the Army Act for one year.

According to the Wikipedia , " After founder Jimmy John Liautaud graduated second to last in his class ... [his] father lent him $25,000 to start his own hot dog business. If the business was successful, Liautaud would own 52% of it and his father would own 48%. If it failed, he would join the Army. ]..., he decided to open a sandwich shop... He started baking bread in his mother's kitchen, bought the most expensive meats from Dominick's, and had family members vote on the best four sandwiches (out of six) he created. The first Jimmy John's opened in a garage in Charleston, Illinois on January 13, 1983 with used equipment and no menu or outdoor advertisement, simply selling the four sandwiches and 25-cent Cokes. After giving samples out around town, his business began to thrive. He especially catered to college students at Eastern Illinois University; and part of that success came from his willingness to deliver to dorms, which many other local establishment...

Studying the history of a subject gives one a deeper perspective on the subject. The NOT PC blog has a nice graphic, showing the " Family Tree of Economists (click here) " A good book on the subject is "The making of Modern Economics"

News reports say that China -- supplier of over 95% of the world's "rare earths" -- is curtailing these exports. Since rare earths are used in devices that have military uses, this got me wondering if China is simply the cheapest producer or if it actually has a lock on geological deposits. Via the Wikipedia , I found detailed information in a USGS report (2010-5220 ). Most rare earths are in more abundant supply than gold, platinum, silver or mercury. Indeed, their average concentration in the earth's crust is higher than copper. However rare-earths are more dispersed than copper, so areas with high concentrations -- making mining economical -- are more rare. Still, they have been mined all over the world. "Until 1948, most of the world's rare earths were sourced from placer sand deposits in India and Brazil....Through the 1950s, South Africa took the status as the world's rare earth source. Through the 1960s until the 1980s, the Mountain Pass ...

Some government bonds (called TIPS) compensate the lender for changes in the CPI. For instance, if you lend $100 to the government, and the CPI goes up by 3% when it is time to repay, you will be paid $103 (a falling CPI has the reverse effects, within certain ranges). If a TIPS bond has a yield of 2% and inflation is expected to be 1% a year, we would expect people to want at least 3% (2% + 1%) yield on a regular (non-TIPS) government bond. In other words, the difference between the yield on TIPS and the yield on regular government bonds is the "implied" rate of inflation (i.e., the rate assumed by a decision-maker who considers both types of bonds and is open to buying either). Of course, market actors are simply making their best guesses; in retrospect, the assumption may prove to be wrong. This chart shows the yields for (5-year constant maturity) TIPS (red ) and Treasuries (blue) . The next chart shows the spread between the two, which is the "implicit" annua...

This post is a bit of "extrapolation fun". What is the unemployment rate going to look like when the U.S. faces the next Presidential election in 2012? First, we have to answer another question. is this (largest and deepest post-war) recession qualitatively similar to other post 1940 recessions?... or, does this recession (and the Great Depression) have certain special characteristics that make them different? Ordinary recession, but huge scale: If it is just a question of scale, "dumb" extrapolation should give us a pretty good guess. Here's a chart I posted earlier , taken from from the excellent Calculated Risk blog , with my scribbles added. The blue rectangles to the right are the future. The red line shows the current recession. The time it took to (apparently) bottom has only been matched by the recent "dot.com"recession (the dark brown line ). It has taken about two years for unemployment to climb (downward in the chart) by 6%: i.e., from...

( Click here for the Slide-show version ) Here are two sample headlines: " Half a million more people employed " " Half a million more people unemployed " Can both are true? Yes, they can. Read on to understand how. To compute an unemployment rate, we ask: how many people want to work (how big is the "labor force"?) how many of them cannot find work (how many, of the labor force, are unemployed) This graph shows the total population of the US, broken down into four groups: first (between the top-most blue line and the red line), we have children (under 16 years) and people in the military or in prison, etc. next (between the red and green lines), we have civilian adults (16+) who do not want to work today. They could be going to school full-time, or retired, or stay at home parents, etc. finally, we're down to the "civilian workforce" (the green line) or civilians (16+) who want a job and are either employed or unemployed. Of these ,...