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“What happens then?”

A friend called me to catch up on stuff. He decided to play “Ask the Economist” and fired off a handful of questions. They started out with the typical finance related questions, where should I put my money etc. I had to go into the whole thing about not being an accountant or finance person, that I was studying economics. So he asks where the economy is going and I tell the only truthful answer, nobody knows. Think about it, how many of the talking heads on tv or the radio have their life savings into whatever they think is going to happen with the economy? Why aren’t all the people calling for economic ruin because of the falling dollar shorting the dollar in currency markets? They should make a fortune if they actually knew what was going on. They don’t really know they’re just taking their best guess, it’s all anyone can do.
My friend then went on to something a little more interesting. “There’s only 3 cell phone companies now, what happens when they get down to one, what then?” Like so much of economics, the answer is pretty straightforward with a little thought. If, through mergers and acquisitions there was a single cell pone service company left, what would happen to rates? What would happen to service? The conventional wisdom is that once there is no competition, the company would jack up its rates and really “take advantage” of consumers. Here’s the thing, companies have to compete with both actual and *potential* competitors. If people see that a company is really raking in the dough, you can be sure that another company will come along for a piece of the pie. The lone company has an incentive to keep rates low to prevent competitors from starting up. They will of course try to split the difference between what they would charge in a competitive market with what they can as a monopoly, but the rates shouldn’t go up as high as you’d think. If they do, it will only be temporarily, another competitor will take up the slack eventually.
What about monopolies, they’re bad right? Well, there are two different types of monopolies. The first one is a natural monopoly. this is one that has some sort of “natural” advantage over their competition such that no one else can compete with them. The second type is the one granted by governments. Natural monopolies are incredibly rare, I don’t think there can be one over the long haul. Competition always finds a way to eventually break into the market or to innovate a new product that will be a substitute for the monopolist’s product. Government granted monopolies are typically the poster children of wasteful, inefficient organizations. many argue that these are the only “true” monopolies that exist. The government will either charter a single company for some service, pass laws preventing entry into the sector, or a combination of the two. This looks pretty bad for consumers, and it is. There is a silver lining though, even if the law forbids direct competition, businesses have the incentive to pursue that potential profit. They do so by innovation, they create products that can be substituted for the monopolized product. A perfect example is cable TV. Local governments grant small scale monopolies in that area to particular cable companies. For the length of the contract, another cable company cannot compete for that market. Satellite dishes were created in order to get around the government granted monopolies. Now people have a choice, and it keeps both companies on their toes… The moral of the story is that profits are what cause companies to innovate, and it’s what, ironically, will cause companies to keep their prices in check.

Isaac

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I win…

OK, I was hoping to get about $500 from my Ebay sale. I got over $1100!! God I love Ebay, Merry Christmas to ME! The best thing is that I didn’t sell anything that I considered valuable, just some photo crap I had around. Of course I haven’t actually gotten paid for anything yet so I shouldn’t get too excited yet. The real surprise was an antique brass lens I picked up a couple of years ago for 98 bucks or so. It sold for 559 bucks! I bet a couple of “snipers” got caught in their own game. The high bidder has dropped some cash on some other lenses recently, so I’m hoping it goes according to plan. All the stuff I’m selling is obscure enough that I don’t really worry about getting ripped off, who would go to the trouble for an item that a couple of thousand people in the world know about? I did manage to sell my Olympus p-440 printer for almost 300, that was the most mainstream item I had, the rest really were obscure. Anyway, I hope that will take the sting out my weekend working…

Isaac

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Papers are up…

I went ahead and put my papers up on my website. There are a few economist types that stop by now and again. Even you non economist types might get something out of them… God, I just got through typing them up, now I’ve got finals next week and two days of work between them and me. My mom’s coming to town too, we’ll see how much work I get done, I hope I’m not too grumpy/short with her and Rick. We’ll see how it goes. I might actually have a couple of days off between the end of finals and full time work. I might go back down to Dad and Butler’s place. I’ll have to check my schedule…

Isaac

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“Besides, it gives me hope that someday techno will die and be forgotten.”

That’s a quote from my friend Jenny. It reminds me of something I thought of a while back. There were a lot of electronic based groups that became popular in the late 70’s and early 80’s. Almost all of them are gone now, the only one that I know of that is still around is Depeche Mode. I think the reason they survived is because they were the only ones to really understand all of the ramifications of that type of music. I once read, or heard (hell I might have made it up, but I don’t think so. I’ve been looking for the source of this for quite a while and can’t find it, but it sounds true) that at the end of least one of their concerts, Depeche Mode set up their sequencers and drum machines and left. The music kept playing and playing until a roady finally pulled the plug. To me, that shows an almost Zen like understanding of the nature of that music, and it’s one of the reasons they have been so successful at it for so long. Techno, in my mind has taken the next step, it is an almost soulless endeavor with little need for human touches. It features prominently in most of my purgatory dreams…

Isaac

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Oh how I love Ebay… and 70’s music!?

Usually i get into treasure hunting mode on Ebay, but I am now hooked on selling my crap there. I have almost two days to go on my auctions and I’m at 445 bucks for six things. I’m looking for at least 500, but we’ll see, tis the season after all!
I realized that I had London Calling, The Police, The Best of Blondie, and The Best of Bowie in my car changer. Apearently I’m on a real late 70’s kick. I’m thinking about taking the compliation disc I have in the other slot and putting in Marqee moon by Television or maybe a Patti Smith album. I got to thinking what I remember listening to at the time and what I owned. I have a strong rememberance of the Cars, the Knack, and Blondie on the airwaves. Along with my Beach Boys albums I also owned a handful of Kiss albums (Dynasty, Alive II, and the Ace Freahley picture album), and I think I had (have?) at least one Bee Gees album (Tragedy perhaps?). I’m talking 1979 folks, I know there’s at least a couple of you that read this that were around then, what do you remember music-wise? One of my favorite memories is skating at the roller rink (no kidding) listening to the Disco Duck and Rapper’s Delight. Yeah, I’m old school…
Another confession, I always enjoyed disco music. I was too young to really understand the backlash, later in life I laughed about the whole scene (bell bottoms, leisure suits, lots o’ hair, etc) but still enjoyed the music. It was always a thrill to hear Ring my Bell, anything by Donna Summer, or even Don’t Leave Me This way. Part of it was just the rarity of hearing it on the radio, the stuff just disapeared for 15 years. We’d laugh about it in college (1990-94), but we’d call it a guilty pleasure… It’s really too bad that crap like the You Light Up My Life got more airplay in the 80’s than Donna Summer, my guess that the people that were actually in the disco scene wanted it to go away for some reason. There’s got to be a good book in that story…

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Technologoy backwardsness…

I had to run some errands at school, and I was struck at how backwards some people are. I had to get some immunizations and I had no clue which ones I needed. Dad scanned my records and emailed them to me. I show up at the clinic and the lady asks for my records. I tell her they are on my computer and she rolls her eyes and says in a not so nice voice “Well, I’ll need to SEE the records to know what to give you.” I whip out my laptop and show her. “I didn’t expect you to have a computer with you..” she says. I then have to show her how to scroll down the email etc. She becomes enamored with my little iBook and starts asking questions. “Is that compatible with an IBM?”
“Well, you can run the same programs on them if you buy the right software, like Office”
“You mean I could type something up, put it on a floppy, and put it in this machine?”
“Err, Macs don’t have floppy drives…”
“Then how do you move files?”
This went on for several minutes. Luckily she got bored rather quickly and let me go. I then had to drop off a dual well cassette deck at a professor’s office. He had paid me for it a while back, but I was just getting around to delivering it today. He wasn’t there, so I asked the secretary if she could let me into his office. “What’s that?” she asked.
“Oh it’s a cassette deck.”
“Is he borrowing it?”
“Actually, he bought it, I’m just bri…”
“Wow, that has two places for cassettes? So you can play two at the same time?”
“Err, no, it’s so…”
“Oh, you mean you can record from one to the other? That’s SO neat!”
I’m not making this up, where have these people been? Right, I’m supposed to be finishing a paper…

Isaac

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Coming down to the wire…

Ok, my math paper is done and my macro paper will be done tomorrow (dammit!). I just realized that my first final is next monday! GAHHH! I’m really going to put most of my efforts into the math course, it’s the only one I’m in jepordy of failing. I should put some time into the macro one too, I’m still pretty fuzzy on the Austrian and real business cycle theorists…
OK, as if I needed another thing on top of grad school, work, photography, and music to take up my time, I’m getting interested in aikido again. Talking to my cousin Beth has got me chomping at the bit to give it another try. I last went 4 or 5 years ago and I hadn’t gotten very far but I’ve always loved the techniques. I figure i could probably go twice a week if I organized my time better. like not staying up till 2AM and getting up at noon… I’ll have to think about it. I’ll also have to think about which dojo to go to. There are two within driving distance. The lovey dovey, softer style of ki-aikido over in fairfax, or the more traditional AAA (Akido association of America) sanctioned style over in Arlington. i went to the Ki-aikido dojo for a couple of months, but maybe I could go to both and at least try both styles…

Isaac

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Paper time…

OK, Geoffrey sent back his thoughts on my math paper. I was afraid that it wouldn’t make any sense mathematically, it turns out that it almost makes sense, but not quite. I’ll take that… With any luck I’ll be finished with that today and can devote the majority of my time trying to learn to mysteries of game theory to get ready for the final.
I had a sudden, interesting thought about my macro paper, but I’m not sure if I’m brave enough to put it in there. I’m looking at the macro economy as a scale free network. In a nut shell, a scale free network is one in which the nodes of the network are not randomly connected, but some are more connected than others. Nodes with more connectivity can assume greater importance than the ones with less. Well, in the US, the Treasury department (and more specifically the IRS) has, by far, the highest number of connections in the economy. Every citizen and every (leagal) business is connected to it, so it’s potential for impacting the economy is enormous. Usually the most attention is given to the Federal Reserve, there’s an entire school of macro economic theory predicated on how the central bank controls the economy, it’s called moneterism. To suggest that the IRS is potentially more powerful than the Fed to another economist is roughly akin to arguing that George Wallce was a good governor, or perhaps that Saddam Hussain was an effective leader of Iraq. There may be some truth to the statement, but there will be a predictable, and understandable reaction to it. I’m not sure I want to be that provocative in my very first semester….

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Wanna buy some photo gear?

OK I put some of my photo junk up on ebay. I’ve got a half frame camera (with a spring wound motor drive!), a grip for a Leica M6, an old Japanese rangefinder, and an old funky brass barreled lens up for auction. NO? I didn’t think so… I’m taking in my new/old 5×7 camera and a handful of lenses in tomorrow for Yamaguchi-san to do his magic. With any luck, I’ll be able to shoot with this camera by winter break… I hope to get some decent pictures of my cousin (and you will sit for me Beth!) and it would be nice to have these lenses available. I won’t actually be using this particular 5×7 camera, have a different one in mind for that, Oi! I hope to use some lenses from around 1913-1920 to bring some of that old fashioned charm into the pictures, we’ll see how it goes.

Isaac

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Math econ is going to kill me…

I just looked at the review sheet for the upcoming math econ final. I could very well be fucked. I failed the midterm (missed a “C” by 3 points) and this next one looks even more difficult. I’ve never been so worried about failing a class before. Of course I’ve never had so much riding on classes before. Well, don’t plan on seeing or hearing much from me in the next several weeks. Hmm, if I can crank out the macro paper this weekend and I don’t have many revisions to do on the math paper (HA!) I’ll have several weeks to study. Maybe a “C” isn’t out of reach….

Isaac