#economics

Bill Gates on Thomas Piketty’s Capital in the Twenty-First Century:

I agree that taxation should shift away from taxing labor. It doesn’t make any sense that labor in the United States is taxed so heavily relative to capital. It will make even less sense in the coming years, as robots and other forms of automation come to perform more and more of the skills that human laborers do today.

Interesting point.

Sarah Treanor:

For while other countries have struck oil and then binged on the revenues, by contrast Norway is continuing to invest its oil and gas money in a giant sovereign wealth fund.

The fund, worth about $800bn (£483bn), owns 1% of the entire world’s stocks, and is big enough to make every citizen a millionaire in the country’s currency, the kroner. In effect, it is a giant savings account.

1% of all the stocks in the world. Crazy (smart).

We’ll see how this plays out in the long run, but it strikes me as smart for any “boom” town to diversify as much as possible when they can — before they can’t, and they’re screwed.

Ben Cohen:

The school accounted for $9.7 million in football ticket sales on its 2012 annual report. The four teams ranked above Stanford in the latest Bowl Championship Series standings averaged $27 million, with Ohio State topping the list at $41 million. In merchandise sales, Stanford ranked 42nd this year on the Collegiate Licensing Company’s list of top-selling schools, well behind not just Texas but also Texas Tech.

The normal revenues Stanford receives from football are so low, in fact, that its 36 varsity sports teams depend on something no other school has, or would dare rely so heavily on: an athletics-only endowment worth between $450 million and $500 million that pays out at 5.5% each year, people familiar with the matter said.

Against all odds, Stanford has become a great college football program. I went to my first game last night (the 26-20 shocking of Oregon); amazing atmosphere.

Roberto A. Ferdman on the price of beer in Germany during Oktoberfest:

Normally, beer buyers shy away from this kind of price-hike craziness. “On average, a 1% increase in the price of beer triggers a roughly .3% decline in the demand,” according the report. But Oktoberfest, it appears, is anything but average. Dating all the way back to 1980, a 1% increase in beer prices at the event has, rather incredibly, corresponded with a 0.3% increase in demand. Oktoberfest beer, the report explains, falls into the category of what economists call a Giffen paradox, whereby the demand for and price of a good increase simultaneously.

Paul Krugman lays the smack down on fellow economist Roger Farmer (who had tried to call him out for lifting his ideas):

What every economist, and for that matter every writer on any subject, needs to realize is that unless you are a powerful person and people are looking for clues about what you’ll do next, nobody has to read what you write — and lecturing them about what they’re missing doesn’t help. You have to provide the hook, the pitch, whatever you want to call it, that pulls them in. It’s part of the job.

The old: “you’re not only wrong, you’re irrelevant.” It’s a deep burn.

(And Krugman’s advice is sound. It’s a privilege to have anyone read what you write — let alone want to always read what you write. You have to earn it.)

[via Business Insider]

Speaking of Goldfinger, here’s a fun post by Matthew Yglesias on the economics behind the film:

The point being, you don’t need to approve of Goldfinger’s violent and illegal methods to recognize that he’s an economic visionary. Bond, by contrast, is an unwitting pawn being used to try to maintain some deeply misguided economic policies.

Sometimes villains just really are misunderstood.

While not quite as bad as diamonds, a lot of what goes into wine pricing seems to be largely bullshit as well:

Numerous experiments have shown that people will enjoy a table wine and a fine wine equally if they believe that they are both fine wine. Knowing that a wine is supposed to be good does literally make it taste better. The drinkers could be lying about enjoying the “bad” wine due to social pressure. However, an experiment involving a Stanford wine tasting group, a group of identical wines presented under fake price tags from $5 to $90, and a fMRI machine measuring activity in areas of the brain correlated with pleasure suggests otherwise. Drinking the same wine with a higher price tag did increase pleasure.

Also, this is a great quote:

As of 2003, Bronco processed 300,000 tons of grapes to make 20 million cases of wine, of which a quarter are Charles Shaw wines. Asked how he sells wine for the same price as a bottle of water, Franzia responded, ““They’re overcharging for the water. Don’t you get it?”

Paul Krugman for The New York Times:

Ah, you ask, but what about the people? Very good question. Smart machines may make higher GDP possible, but also reduce the demand for people — including smart people. So we could be looking at a society that grows ever richer, but in which all the gains in wealth accrue to whoever owns the robots.

The more things change…

Well, except:

And then eventually Skynet decides to kill us all, but that’s another story.