The taste buds of justice

What is justice? It’s a lofty question, up there in the pantheon of “What is the meaning of life?” and “Who let the dogs out?”. There is no great answer for that, but, essentially justice is about doing the right thing. What is right? That’s a good question.

There are three taste buds to justice: merit, need, and equality. When people make an argument for something being right they will draw on one or more of these taste buds. These criteria become especially important when groups decide to allocate goods through non-market institutions.

Here is a favorite example from Peyton Young’s book Equity: In Theory and Practice. At the end of World War II, the United States was demobilizing soldiers in Europe. Some had to be retained to fight Japan while others could come home. Which soldiers should come home first?

After debate, the U.S. Army decided to survey thousands of soldiers in the United States to identify relevant factors. There were four important factors: length of time in the Army, age, amount of overseas service, and number of dependents. Then troops completed a pairwise-comparison of each criteria like in the picture below.

You can see among the transitive rankings (90 percent of those surveyed satisfied transitivity) the two most important features to those surveyed in the United States was overseas service and number of dependents.

But, it turns out there was an important write-in candidate among the soldiers: exposure to combat. A large swath of soldiers mentioned that this should be an important criteria but the Army hadn’t considered it in their survey.

The Army devised another survey that attempted to develop how much different criteria should be weighted. You can see a sample question below and the resulting points system (from a series of questions like the sample question).

What matters most to the troops: exposure to combat and number of dependents. Put another way, what matters most is merit and need. The right thing to do regarding who comes home first involves consideration of whether you merit coming home (exposure to combat elevates you over others) and need (a child needs their parent).

So I do not have a precise definition of justice. But, I have noticed that when people talk about doing the right thing they often rely one one or more of merit, need, and equality.

Huge Prison Population in the U.S.

During some general reading on finance, I ran across the following two information-rich graphics from Hoya Capital on the U.S. prison population. On the first graph, the blue areas show the absolute numbers, and the green line shows the percent incarceration rate. A rate of 0.5% comes to 500 prisoners per 100,000 population.

This graph shows a huge rise in the state and federal prison population between 1980 and 2000. There seems general agreement that much of that increase in the prison population is due to mandatory sentencing laws, which require relatively long sentences. In particular, “three strikes and you’re out” laws may demand a life sentence for three felony convictions, if at least one of them is for a serious violent crime. Another factor was the increased criminalization of drug use (possession), in addition to drug dealing.

The graphic below shows the particular classes of crimes of which inmates of the state and federal prison systems have been convicted. The largest single category is violent crimes, but other types are significant, such as drug and property crimes, and “public order” crimes. Public order crimes include activities such as prostitution, gambling, alcohol, child pornography, and some drug charges. This graphic also includes the large number of people in local jails, most of whom are imprisoned awaiting trial or sentencing.

The total number of people under legal supervision in the U.S., including probation and parole, is over 6 million:

Source: Wikipedia

The U.S. has by far the largest official prison population in the world, and the highest incarceration rate. The following graph from Wikipedia depicts incarceration rates for several countries or regions as of 2009:

Most developed countries have incarceration rates of around 100-200 per 100,000, which is where the U.S. was in about 1970. The relatively high rate for Russia is attributed in large part to strict “zero tolerance” laws on drugs.

Again, the main driver for the high rates in the U.S. is the long sentences, driven by mandates. Wikipedia notes that there are other countries, including some in Europe, which have higher annual admissions to prison per capita than in the U.S. However, “The typical mandatory sentence for a first-time drug offense in federal court is five or ten years, compared to other developed countries around the world where a first time offense would warrant at most 6 months in jail… The average burglary sentence in the United States is 16 months, compared to 5 months in Canada and 7 months in England.” 

Policy debates on this topic continue. Obviously, we want to protect society from dangerous predators, but the direct and indirect costs to society for this level of incarceration are high. It seems like an area which is ripe for reform of some kind, though I do not claim to have a novel proposal.

Florida’s Minimum Wage Experiment

One of the more interesting results from last night’s election comes out of Florida: voters appear to have narrowly approved an increase of the minimum wage in stages to $15/hour in 2026 (Florida has a 60% requirement for ballot measures to pass, and the current vote total is just above that threshold).

Florida is not the first state to approve such an increase to $15/hour: 7 states have already done so, though no state is yet at that level. California will hit $15 first in 2022. Several US cities, such as New York and Seattle, as well as the “city-state” of Washington, DC are already at $15, but these are generally very high wage cities.

What makes Florida the most interesting of the states to try very high minimum wages is that Florida is not a high wage state. Once the minimum wage is fully phased in (in 2026), the minimum wage will be about 75% of Florida’s median wage (it was $17.23 in 2019). That’s much higher than other states: California will be the next highest at about 66%, with Oregon next around 64%. Oregon will be close to $15, but perhaps a little below, as they index their minimum wage for inflation.

(To make these estimates I am using 2019 median wage data from the BLS OES wage data and assuming 2% annual wage growth. This may not be exactly right, but it’s probably close enough.)

Also important to note in Florida: the median wage is not $17.23/hour all over the state. Several MSAs in Florida currently have a median wage at or even below $15 (Sebring, Florida is the lowest at around $14/hour). There will be some wage growth over the next 6 years in those areas, but still this means that the minimum wage will be applicable to roughly half the labor force.

That brings up another interesting legal question: will the minimum wage apply to salaried workers making less than $30,000 per year? The way the law is written, probably not, but logic would seem to dictate that it should. Otherwise, what’s to stop an employer from hiring an employee on a $2,000/month contract, equivalent to $12/hour for a full time worker?

The minimum wage debate among economists consumes a vast literature, and I am no expert on it, and will make no attempt to summarize it here. But Florida seems to be breaking new territory. My little state of Arkansas currently holds the “record” for a US state starting in 2021, with a minimum wage of $11/hour which will be about 67% of the median wage (and about 78% of the median wage in Hot Springs, Arkansas). Florida’s experiment will certainly give economists a new experiment to study.

Arin Dube, one of the leading researchers of the minimum wage and a strong advocate of raising the wage, suggested in a recent policy paper that a good minimum wage for Florida would be around $9/hour, given their wage distribution. That was in 2014 dollars, so we can roughly adjust that up to $11-$12 in 2026 dollars. Florida voters have chosen to go well beyond that recommendation.

Eli Dourado on the election today

Eli believes that it is likely (not guaranteed) we will know who won the US Presidential election tonight.

Esports Projected Growth

There is a YUGE election happening tomorrow. I don’t know if there will be an apparent winner before bedtime tomorrow night. In 2016, I stayed up watching the news until (to everyone’s great surprise) Trump gave an acceptance speech at 3am.

I don’t play video games. Whether you do or not, you’ll want to keep an eye on this important cultural and financial trend. Regardless of who wins the 2020 US election, people around the world will be playing a lot of video games. The following report is the work of Samford undergraduate student Erica Eades.  

Esports is a competitive level of gaming that involves players winning money. Professional esports players are typically sponsored by companies affiliated with video games. Students are becoming more and more involved in esports. League of Legends World Championship was 2019’s biggest tournament by live viewership hours on Twitch and YouTube, with 105.5 million hours.

When the pandemic reached the U.S. the sports industry shifted their focus. Many leagues were able to quickly restart their competitions in a different format as esports, which quickly transitioned its in-person events to online-only games. For many months following the pandemic esports was the only option if you wanted to watch a live competitive event.

I had an interview with Noah Hankinson, a professional eSports gamer and consultant that has conducted extensive work with the NCAA, Learfield Sports, and multiple eSports properties. Noah shared perspectives on the state of eSports and demographics.

According to Noah, the most popular game is constantly changing. Although a game may be incredibly popular one week, it could be obsolete the next. To learn what game is most popular during a given time frame, simply observe the games famous Twitch players are using. Many Twitch streamers focus on only one game, but others will focus on what is most popular at the time so that they can maximize revenue from viewership. Noah informed me that the ‘traditional’ games such as Call of Duty, League of Legends, or Rocket League are growing. These games are the most popular and have the widest reach across all eSports demographics.

Depending on the game being played, there are different rules and formats each team (or individual) must adhere to. Popular games include football and soccer, where player roles or team game plans are more well known. Many eSports are based on individual talent, much like wrestling or track-and-field. Over the years, as eSports has become more of an emerging community, college organizations have started to help push the next generation of eSports competitors.

From a social standpoint, esports are more inclusive than other sports. Men and women are able to play on the same teams and teams are made up of individuals from various demographics and ages. Esports is not just a young demographic, eSports gamers ages in America range from 12 to 60 with the average age being 33 years old.  

Many predictions have been made about the growth of the industry. As teams of eSports members populate across the country, the unprecedented growth of the competitive gaming industry continues to rise. Newzoo is the leading provider of market intelligence covering the global games, esports, and mobile markets. The data from newzoo allows them to project the esports industry esports revenue stream worldwide based on sponsorship. In 2018, the global market esports revenue was $776.4 million. The global esports revenue will probably hit $973.9 million in 2020, and $1.194 billion in 2021. 

This projected growth has made it important to maintain positive relationships with current and future partners in the industry. With increased interest in esports there is a momentum for new partners to enter the industry and increase revenue. Using the data that projected the revenue and growth can be beneficial for many esports executives and the industry as whole. It will be interesting to follow and see how the industry continues once live sports are able to resume normally. After the “at home” year that brought so much to esports, observers agree that the industry’s upward trajectory is continuing.

Running on Fumes

Friday afternoon has come and gone, we’re now into the evening, and I am just now writing a product review. I nearly cast dispersions on our blog name, “Economists Writing Everyday”! It won’t be a lengthy product review and my wit-producing engine is bereft of gas. It’s been that kind of week. I am torn between reviews of booze and theology …

There is something wonderful about the charm of making classic cocktails and also putting a twist on them. My favorite drink is an Old Fashioned and I like the weight of a quality glass, the large ice cube (I’ll have to check out Jeremy’s recommendation!), the quality of these cherries, and I enjoy experimenting with different bitters that put a twist on the classic cocktail. For example, my recent favorite combination involves black walnut bitters and chocolate bitters. Your mileage may vary.

One wonderful treasure that I discovered this summer was the series of books, “The Ancient Christian Commentaries on Scripture“. The 29 volume set is a whopping $1,499 on Amazon. But, you can start small and buy the different books piecemeal. These books provide a wealth of insights from the Church Fathers. The commentary on the book of Acts added a new dimension to my summer Bible study (maybe the subject of a future blog post).

Do not let the brevity and unremarkable quality of this product review undermine the wonderful products I’ve linked to. They are great and if you have someone in your life that loves theology and an Old Fashioned perhaps they might like some of these products too.

The Sabbath

According to a recent CDC Report on the mental health effects of COVID-19 lockdowns, 1 in 4 young adults (ages 18-24) have had suicidal ideation. Even before COVID-19, many of you may also know about the so-called “deaths of despair” that refers to the rise in mortality among middle-aged white men starting in the late 1990s from suicide, overdose, chronic liver disease or cirrhosis.

With so much existential anguish, my book review is on a slim little book called The Sabbath by Abraham Joshua Heschel. The book is packed with zeal for a day Heschel calls, “a palace in time”,

“The seventh day is a mine where spirit’s precious metal can be found with which to construct a palace in time, a dimension in which the human is at home with the divine; a dimension in which man aspires to approach the likeness of the divine. For where shall the likeness of God be found? There is no quality that space has in common with the essence of God. There is not enough freedom at the top of the mountain; there is not enough glory in the silence of the sea. Yet the likeness of God can be found in time, which is eternity in disguise.”

Heschel divides the world into two categories: space and time. Both are means to understand God. The toil that we experience happens in space and allows us to better understand God as Creator. But, Heschel spends more pages writing about time.

In thinking about time, there is a tension because Genesis 2:2 reads, “On the seventh day God finished his work,” Exodus 20:11 reads, “In six days the Lord made the heaven and earth.” How is it possible to finish making heaven and earth in six days but not to be finished until the 7th day? The rabbi’s resolved this tension by stating that menuha was created on the Sabbath. Menuha is not an object that we create that can be grasped in our hands. Heschel states menuha means something akin to “tranquility, serenity, peace, and repose”. God created an architecture in time and menuha is the special attribute of the seventh day.

The fact that God blessed the seventh day, and not the other days, should hint that the seventh day is special. What this means is that time is not homogeneous —some time is different than other time. So it seems there is time for creating and time for remembering that we were created. On the seventh day we remember our relationship with God, that remembrance is a refuge from a fury of sound and distraction. What is more, this remembrance carries us through the rest of the week.

This was a great joy for me to think about The Sabbath today. It was also a reminder. If you are like me and still trying to find your groove amidst Coronavirus, consider setting apart one day from the others. Create a palace in time, a time that is different from all the other time. Remember, time is not homogenous. Your palace will look different depending on your position in life but it should be restorative and help you to remember and be grateful.

At one point, Heschel asks, “. . . is there any institution which holds out greater hope for man’s progress than the Sabbath?” I do not know. But, genuine rest — not diversion — seems necessary in the tensions of our present moment.

To Understand the Pandemic, Look to History (Economic History)

As the holiday shopping season gears up, Joy has invited us to suggest some books that you might give as a gift (or read yourself!).

I have one very strong recommendation: Werner Troesken’s 2016 book The Pox of Liberty. Unfortunately the publisher did not foresee the renewed interest in pandemics due to COVID-19, so you might have to settle for an electronic version of the book right now (though you might have better luck with the publisher than Amazon).

The Pox of Liberty – A Book Review By Dr. Price Fishback - Foundation For  Teaching Economics

Tragically, Troesken passed away two years ago. Many of us would love to hear his thoughts about the current pandemic. The beauty of this book is that we can still learn from him even though he is no longer with us, not only about pandemics of the past, but possibly with lessons for our current health crisis.

Troesken brings his broad knowledge of economics, history, and demography to examine the history of smallpox, typhoid fever, and yellow fever, as well as the policy responses. Broadly Troesken asks: why has the US historically been one of the richest countries in the world, yet so bad at fighting infectious diseases?

I won’t spoil the whole book, but he argues that the answer to both questions can be found in the US Constitution. The liberties protected in the Constitution allowed for the US economy to be among the best performing in the world, but made it hard for the federal and state governments to address pandemics. It’s a trade-off, or rather multiple trade-offs, as Vincent Geloso has put it.

We can see this clearly in the differences between the US and European responses to COVID-19: European countries were able to close their borders which spared many central and eastern European countries from the first wave of the current pandemic (though it does look like this may have been a temporary reprieve, as Czechia, Poland, and others are now seeing dramatic increases in COVID-19 cases). In the US, the virus has slowly spread from state to state, seemingly sparing no one in its path despite varying public policy interventions (including mostly unenforceable travel restrictions). We don’t know what the future holds for COVID, but the constitutional factors at play that Troesken described for smallpox 100 years ago seem to still matter today.

On a personal note, Troesken was a professor of mine in grad school (he spent one year at George Mason University, though most of his career was at Pitt), and he was a big influence on me, especially his teaching style. While I respected his work greatly, I was always puzzled by his interest in infectious diseases. What was the relevance of this topic for understanding the modern world? Well, in 2020, we all found out. And now we miss Werner even more.

Gen Z reads The Complacent Class, Review #2

Another one of my undergraduate students has written a review of The Complacent Class. His name is Vinny Russo and he’s going on to great things. Here’s a link to the first review published earlier by a different student.

For the simple are killed by their turning away, and the complacency of fools destroys them

Proverbs 1:32

When I read the Bible, I see God disrupting the lives of his people and moving them. People get moved as punishment, as well as for a reward or rescuing, including Adam and Eve’s expulsion from the garden and the Jew’s exodus from Egypt. Good things come from the movement of Israel and its people. The United States needs movement, too. Although I wouldn’t wish for a modern-day abusive Pharaoh to force us into some kind of exodus, I do think that Americans can learn from Tyler Cowen and his manifesto for mobility and taking risks. The future of America depends on it.

“Economists see migration as a kind of investment. You give up something in the short run, namely the home, job, friends, and conveniences, in the hope of achieving something different and better somewhere else. In the beginning, the move is not supposed to be easy, but it’s a sign of hope, faith in the future, and a belief that a new start can lead to something grander and more glorious.” – (Cowen, Page 24). After joining the military right out of high school, joining a Christian Missions agency, as well as coming to Samford University in Birmingham, Alabama for Undergraduate studies (I am from New York City), I can very much relate to this quote. Every move was difficult in its own way, but the growth in and from the process is invaluable. Should everyone enlist in the military, become a missionary or go to Samford? No. Can most Americans, after completing High school, go to school or find a job in a city other than the one they grew up in? Yes. If more 18-year-olds did this, they would be richer and their actions would boost production in the United States. If you have not done so already, take a leap of faith and pursue your God-given dream, or read Tyler Cowen’s The Complacent Class. Both can change your life. Thanks for reading!

Good Old Lemons

This post doesn’t have a darn thing to do with economics, statistics, or finance. This is a post about citrus storage.

There are problems with buying citrus.

  • If you get a big Sam’s Club size bag of limes, then they start going hard and thin-skinned by the end of a week.
  • A bag of grapefruit? There’s usually one in the bag that’s goes moldy almost immediately and you know what they say about one bad grapefruit spoiling the bunch.
  • Mandarins shrink and get hard to peel.
  • Lemons – even if you refrigerate them – get soft and un-zest-worthy.

There is a solution. Now, our lemons and limes last upwards of 6-8 weeks with hardly a symptom of age. Mandarins don’t shrivel and grapefruits remain edible. No, silly goose, the answer isn’t free markets and the price system.

Maybe it’s all of the additional vitamin C that I’m getting. Maybe it’s the warm and fuzzy feeling of money well spent. But I’m now excited each time that we purchase citrus. And I get a cozy feeling of satisfaction whenever I see a nice lemon that definitely should not still be any good.

The answer is really simple. You too can achieve such amazing results. All you have to do is:

  • Rinse your citrus under water, rubbing gently to remove any invisible bad-guy germs. In reality, you’re probably getting rid of mold spores.
  • Place the wet citrus into a ziploc bag, seal, and refrigerate. The refrigeration further retards the growth of any unwanted spores. The sealed bag prevents too much air flow and drying.( I don’t bother refrigerating grapefruit and oranges because I eat them quickly enough).

That’s it. You too can have 8 week old limes and lemons that you bought on sale or in bulk that are nearly as fresh as the day that you purchased them.

Enjoy!