Question about majoring in econ.

An anonymous reader writes:

I just wanted to say thank you. You and Mr. ZYXWV really sparked my interest in Economics and now in about a semester I will be done with my AA and start taking my Econ classes. I’m also very happy to read that it is a very flexible degree and one that is highly sought after by employees. Is there a minor that you would recommend me taking? I’m thinking Poli Sci. I just want to be happy in what I do and make very good money.

I passed your message along to Mr. ZYXWV, and we both thank you for your kind words. However, we could use a little bit more to go on in terms of your future plans. Is there a general field you’d like to enter, or a type of work you see yourself doing? Was your AA in business, computers, something else? Let me know via the contact page or email, and it’ll help me answer your question a little better.

In the meantime, I’ve asked some former students their thoughts on the matter (because a few of my current students have also asked about majoring in econ), and I hope to cobble together some answers for you soon.


From the mailbag: “Why did Mitt Romney lose? I thought President Obama had everything going against him?”

President Obama did have a lot going against him– not all of which is directly attributable to him, but this isn’t about what is or isn’t his fault, it’s about what affected his chances at reelection. I won’t rehash everything he had going against him, but generally speaking Americans like him a lot less and approve of him a lot less than they did in 2008.

Click here to look at a really neat-o chart showing how various groups voted in 2012 compared to 2008. Obama lost support among both sexes, those under 30, those over 44, independents, whites, blacks, every education group (except those with no high school diploma), those earning $50K or more, every marital group, every ideological group, Christians, Jews, and those who self-identified as having “no religion.” A lot was going against him. He lost a lot of his supporters (~6.5 million at last count) from 2008.

It just wasn’t enough to cost him the election.

We don’t elect leaders based on whether they’re trending up or down. We elect the guys who get the most votes. And so Obama did what Bush did in 2004: try to increase his turnout. Find out who likes you more than the other guy, and get as many of them as possible to vote. Then keep your fingers crossed that the other guy isn’t as good at activating voters as you are. It worked.

Let me address the term “activating.” One of the lessons from my old government class is that campaigns aim to do three things: conversion (change minds in your favor), activation (getting people to participate/vote), and reinforcement (intensifying beliefs that you already hold). Campaigns generally aren’t very good at conversion. Campaigns generally are very good at reinforcement, even though that sometimes means reinforcing what your opponents think of you. The crux of the campaign is activation: the guys who are better at turning potential voters into actual voters are going to win those close campaigns.

And simply put, Obama’s people were better at that than Romney’s people. Obama set up more offices than Romney did in the swing states. Obama spent more than twice the money Romney spent in the swing states. And if you look closely at the top of the last map, you’ll note that Obama showed more than twice as many ads as Romney did in the swing states.

Some might argue that a 3% victory is not a mere matter of one side being better at getting out the vote. Well, no, it isn’t– there are other issues. But you’ll never convince me that Romney’s side milked every vote they possibly could out of the swing states– not when Romney ended up with slightly fewer popular votes than McCain did in 2008 (at least based on the latest results I’ve seen).

So what could Romney and the GOP have done differently? If they want to know that, they can contact me privately and pay my consulting fee.

In the meantime, my past advice to President Obama still applies. He would also do well to enact my other proposals.

On the People’s Republic of Cheaters.

Some quick thoughts on an email from Noutheteo, who should know this already, being an econ major:

“What’s with the whole ‘China is our enemy,’ economically speaking? Could you assess some of the complaints as well as the actions the nominees are suggesting taking against China?”

When they start talking about China, I generally tune out. From an economic standpoint, China’s a boogeyman, nothing more.

China “cheats” at trade? What does that even mean? Do they give us false bills of sale? Do they welch on business deals? Do they mislabel products or ingredients? Are they violating contracts? If not, then how are they cheating?

You might point out that they manipulate their currency. Let’s clarify what that means: they artificially devalue the yuan against the dollar, meaning the dollar will buy more yuan. Some people look at that and freak out because it means our trade balance with China will worsen. They worry that because we’ll be more able to buy Chinese stuff, demand for Chinese goods will rise, which will boost demand for Chinese workers, which means they’ll have more factories, etc., and China will be less able to buy American stuff, which means demand for our stuff will decline, so our factories will shut down, and our workers will be unemployed.

But I look at that same situation and say: “Oh good! Those morons in China are making it easier for me to buy their stuff, and shooting themselves in the foot while they’re at it.” As Chinese goods become less expensive due to yuan devaluation, my income rises in a real sense: either I can buy more of their stuff than I could before, or I can buy as much Chinese stuff as I did before, but I can spend the extra savings on other, non-Chinese stuff I wanted to buy. It’s the old income effect at work.

“How’re they shooting themselves in the foot?” you might ask. Well, by devaluing the yuan, they’re making it harder for themselves to buy stuff from other countries. If that’s a good idea, then I recommend keeping an eye on China’s devaluation so that you’ll know what percentage of your cash you should burn. After all, they’re somehow enriching themselves by making it harder for themselves to buy stuff, right? You should follow suit.

But what about the jobs lost? Well, yes, we lose some jobs in some industries because the Chinese have decided to essentially give stuff away at a cut rate. But the consumer savings leads to greater demand for other products, and those are the industries that grow. It’s not a perfectly fluid transition, but the transition does occur in real life. It occurs whether we’re talking about losing jobs to China, or to women entering the workplace, or to immigrants, or to new technology. Somehow, our country keeps getting richer despite all these job losses the demagogues flip out about.

What throws cogs in the works? When folks don’t want to adapt to the transition, and refuse to do so, and get laws passed to protect themselves from the transition. Read “The Petition of the Candlemakers” (or watch the old Simpsons episode in which Burns blocks the Sun) to see where that can land us.

In short, Obama and Romney are nearly equally horrible on this matter, and the conventional wisdom is stupid.

Two weeks out.

From the mailbag:

Can you do a post of a break down of the election thus far, because it looks like a possible 2000 repeat (only in regards to the popular vote not winning the Electoral vote)? Also a comparison to how people view the popular vote then and now (based on the fact that it’s now flipped) for all of us who were too young to remember the hype? Also, 10+%lead Obama has in Maine, but the 4-6% lead Romney has in Maine’s 2nd district (thus a split vote) would be worth mentioning.

You can find more thorough breakdowns of the election elsewhere, but I’ll say this: unless something changes dramatically in the last two weeks (it’s happened before), an Obama victory might just be the most underwhelming in recent American history, something like Ford’s victory over Reagan in the ’76 primaries.

Why? Because if Obama is re-elected, it probably will be with far fewer electoral votes and a lower percentage of the popular vote that he received in his first election. Only two Presidents have pulled that off: Wilson in 1916, and FDR in 1940 and 1944. However, given the size of their prior victories (Wilson 1912: 435-88-8; FDR 1932: 472-59; FDR 1936: 523-8), there was almost nowhere to go but down.* That wasn’t the case with Obama; he “only” won 365-173– a big win, sure, but one that left room for improvement. But Obama won’t win that many electoral votes this time. If he wins with, say, 300 electoral votes, then yes, he’ll have won, but it’ll feel like he just missed getting voted off the island. That’s not exactly empowering, and it’s not a pro-Obama mandate. Combine that with a GOP-controlled House and enough Republicans in the Senate to sustain filibusters, and Obama will be a lame duck the second he completes his victory speech.

(By the way, feel free to check back in a few weeks when Obama tops 55% and wins 400 EVs. This post’ll still be here and you’ll be welcome to poke fun.)

You’d have to do some research to get a thorough sense of how people felt about the popular vote in 2000. Here’s how I remember it:

In the last few days before the 2000 election, it looked like George W. Bush would barely win the popular vote and Al Gore would barely win the electoral vote and thus the Presidency. I seem to remember some Democratic commentators defending the Electoral College, or at least criticizing it while “ruefully” acknowledging that we were stuck with it. When Gore won the popular vote and Bush won the electoral vote, then the Electoral College was completely illegitimate, and Al Gore really won the election, and the hunt was on to find three electors who’d switch their vote from Bush to Gore, and so on.

In 2004, if 50,000 or so votes in Ohio went the other way, Kerry would’ve been President despite losing the national popular vote, and all of a sudden the Electoral College would’ve been a good idea all over again.

This year, if Obama wins the electoral vote despite losing the popular vote, you won’t hear many Democratic complaints. You also won’t hear many Republican complaints, since they generally don’t mind the Electoral College to begin with.

In 2001, the National Popular Vote Interstate Compact was proposed. In short, states that join the compact will automatically give their electoral votes to the presidential candidate who wins the national popular vote. It’s been passed in a few states, but it doesn’t go into effect until enough states (worth 270+ electoral votes) join it and Congress approves it. I think states would be foolish to trust each other in this compact, because I can see the states ignoring the compact and casting their votes however they wish. Congress would be virtually powerless to stop them.

The Electoral College isn’t going anywhere. You’d have to get 2/3rds of Congress and 38 state legislatures to ratify an amendment replacing or abolishing the Electoral College. That means that just 13 states can stop it. There are certainly more than 13 states who want to keep it.

Oh, and Romney might win one of Maine’s electoral votes. There’s your mention.

*Wilson’s electoral vote dropped for another, stranger reason. In 1912, he won about 42% of the popular vote but won a huge electoral victory because the Republicans were split between Taft and TR. In 1916, Wilson improved to almost 50% of the popular vote but just barely won the electoral vote because this time around, the Republicans were united and won more states.

About you.

An anonymous reader e-mails: “I want you to write a whole blog post about me. I know it may be tough, but you can do it.”

Well, here’s what I can tell you so far:

Based on the spacing and font of the message I received from you, you use a Mac or some other Apple device to read my blog. Statistically, that means there’s a roughly two-in-three chance that you prefer Pepsi to Coke, but will take RC over either of them. You spent an inordinate amount of time searching my blog for posts that contain the terms “octothorpe,” “capitalism,” “school,” “nougat,” and fourteen other terms that make me think it’s been too long since your last trip to see the kind men in white jackets. The time you spent typing the message (my stat program logs the time between clicks) strongly suggests you have stubby fingers and freakishly long humerus bones.

There’s more: you have a supernumerary feature that you’re too embarrassed to mention to anyone. You’re fluent in two languages, but one of them will go extinct in less than fifty years– and for a second there, you were worried that it might be your fault. It won’t be. You learned to read at age two, but you wasted it reading romance novels from grocery stores. You hate creamy peanut butter. You like ketchup on your steaks, which you always order well-done. You never believed in Santa, but you do believe in ghosts and hope to be the first person to walk on Jupiter. You refuse to sit in rocking chairs because the motion reminds you of the open sea. Your eyes change color when you’re asleep. You know six fractional approximations of pi that are accurate to six decimal places, but you think spiders are insects and you think Roger Moore was better than Sean Connery.

But to say much more than that would be presumptuous, since all I have is the one e-mail to go on.

On the referee lockout.

“Danford” writes:

Being an Econ man and all I would like to know your opinion on the refs lock out in the NFL. Are the owners being greedy??? Or are the refs asking to much to work 16 sundays a year??? Also do you feel it’s affecting the game??? I would just truly appreciate if you wrote a blog on this issue.

I don’t think the owners were being greedy. The owners didn’t want to pay more, and didn’t think they had to pay more to maintain a particular level of officiating. They found out the hard way that they were wrong, at least when it came to how happy the players/coaches/fans were with the officiating. I don’t know whether the lockout affected the owners’ revenues, and I don’t know whether any statistical analysis has shown the replacement refs to be worse than the real refs.

It has affected the game– there hasn’t been this much whining by the players, coaches, and fans since the ’87 strike. What a bunch of ninnies.

But again, there’s nothing greedy about thinking you can afford to pay no more than you have to for anything. If you use a coupon at the store, are you being greedy? If you shop around for a good price, are you being greedy?

I don’t think the refs were asking for too much… but that’s because the owners obviously ended up willing to pay them more, if I understood the terms of the cease-fire correctly. You’re not asking for too much money if somebody’s (eventually) willing to pay you. If nobody’s willing to pay you, then you asked for too much.

Here’s what really matters: the Bears were 2-1 with the replacement refs. If they do worse now that the real refs are back, then the real refs are overpaid.

By the way, stop using so many question marks, they don’t grow on trees.

Yet another mailbag post about the Libertarians.

An anonymous reader e-mails this mess o’questions:

Predict the future! Ok, well maybe just give us your best guess. Do you see the possibility of a third party becoming president within the next 50 years? Are we stuck with either a Dem or Rep or could we see a Libertarian one day? Or I guess, perhaps another party as president? I ask because, while I lean heavy as Libertarian, I’m registered as a Republican and don’t know if registering as a Libertarian would simply mean I get to vote less without much say in who’s running the show? (And yes, I know: If everybody thinks my way, of course we’ll never have anything other than Dem/Rep. So do I take the leap?)

Right now, every Representative and all but two Senators are members of the two major parties. Forty-nine of the fifty state governors are members of the two major parties. That means it’s pretty darn difficult for third-party and independent candidates to win, even in areas as small as congressional districts. Now consider that to win the Presidency, a third-party candidate would have to win pluralities in enough states to win a majority of electoral votes. That’s unlikely to happen in the next 50 years.

The most electorally successful third party was Teddy Roosevelt’s Progressive “Bull Moose” Party in 1912– but the circumstances were different from any likely to occur in the next 50 years:

1. The progressive movement was roughly 20 years old at the time, and was far more widespread than the libertarian movement is today.

2. Small-p progressive Democrats and Republicans had already won office at many levels, which may have made the idea of voting for an official Progressive Party more palatable. There aren’t too many Democrats and Republicans bragging about how libertarian they are today.

3. The Progressive Party’s candidate in 1912 was the Bull Moose himself, Teddy Roosevelt. Voters could see him as President because they had already seen him as President, from 1901-1909. The modern equivalent would be if Carter, or either Bush, or Clinton, or Obama announced that he was joining the Libertarian Party and running for the White House. But that’s unlikely to happen either because of the 22nd Amendment (which prevents Clinton and Bush 43 from serving again) or because the single-termers were single-termers because America got sick of them (Carter and Bush 41). So the presidential candidate of the Libertarian Party can’t replicate the advantage of TR’s prior experience as President.

Also keep in mind that despite the advantages Teddy had that the LP doesn’t have, he still lost. It was a three-way race, and he split the Republicans while attracting few Democratic voters.

In terms of replicating Teddy’s experience, the Libertarian Party‘s best shot is to find a libertarian who has already held elective office– say, the former two-term Governor of a southwestern state– and get him to run. But the libertarian movement might be better served to work within one (if not both) of the two big parties, and drag both of them towards libertarian beliefs. We’ve seen that happen before, with late-19th/early-20th century progressivism. Any failure to win elections should not dissuade libertarians from trying to change the hearts and minds of members of both major parties.

To answer your question about how you should register: I’d say it depends on how involved you want or hope to be in the politics of the Libertarian Party of Florida. If you want to vote in Libertarian primaries, then register LP. If you’re okay with not voting in LP primaries, then I say register with one of the major parties and vote for the most libertarian candidates you can find.

(All this reminds me: if the Koch brothers were really smart, they’d give millions of dollars to Jill Stein, the Green Party candidate.)

The jilting of Ron Paul.

An anonymous e-mailer e-mails anonymously: “How much did Romney’s alienation of grassroots and Ron Paul voters at the RNC hurt the GOP’s chances of winning this time around?”

Hard to say. If it did hurt the GOP’s chances, it hasn’t shown up in the polls yet. So I’m not sure the grassroots/Paul voters are all that alienated.

Neither libertarians nor Tea Partiers are part of Romney’s natural constituency, but there seemed to be an effort to court them. Look at some of the stars of the convention. Rand Paul is the scion of the GOP’s libertarian wing. Clint Eastwood is libertarian. Mia Love, John Kasich, Scott Walker, Ted Cruz, Chris Christie, Rob Portman, Paul Ryan, and Marco Rubio are (for now) darlings of the Tea Party. Ron Paul, even though he chose not to speak and refused to endorse Romney, was the subject of a tribute video.

Maybe it was all lip service, maybe it shows that the GOP is actually starting to trend toward economic conservatism. Either way, the poll numbers suggest (again, for now) that the libertarians and Tea Party are no more upset with Romney than they were heading in to the convention.

I think that in those states where the election is close, the Tea Partiers and libertarian-leaning Repubs will probably hold their noses and vote for Romney. Getting Obama out of office will seem too important to do otherwise. In the states that are strongly Democratic or strongly Republican, you’re more likely to see them vote for Gary Johnson in hopes of pushing the Libertarian Party towards 5% of the popular vote, which would mean matching funds in 2016.

It might be really interesting to see what happens if Romney’s numbers and the GOP’s congressional numbers don’t match. Say Romney sinks in the polls, but the GOP is a lock to keep the House and looks likely to take over the Senate. Maybe some of those libertarian-leaning Republicans start thinking “Congress can stonewall Obama till 2016, so I’m voting for Johnson or writing in Ron Paul.” Obama wins, the Republicans take over Congress. Then in 2016, the GOP puts up someone the Tea Party actually likes, and someone the libertarian GOPers can tolerate better than Romney.

Not happy with the title. “Jilting” might not be the right word, but I had the Granny Weatherall story in mind, so there it is.

On the GOP ticket.

An anonymous reader asks: “How do not so Conservative candidates like Romney/Ryan get picked with such huge influences like the Tea Party movement?”

How did the GOP end up with a seemingly moderate or weak conservative ticket in spite of the Tea Party’s influence? I assume you’re referring to economic conservatism, because both candidates are socially conservative (Ryan solidly, Romney squishily).

First, math: Tea Partiers do not constitute a majority of Republicans. But this alone doesn’t explain it, because moderates (e.g., Romney, at least during most of his career) also do not constitute a majority of Republicans.

Second, the Tea Party is relatively new, which means their favorite guys need to gain experience and exposure before they can reasonably be expected to make a worthwhile run for the White House.

I think that four of the GOP hopefuls could reasonably be called Tea Party favorites: Ron Paul, Michele Bachmann, Herman Cain, and Rick Perry. Ron Paul was too libertarian and too much of a longshot to get much support from the rest of the GOP. The other three had fatal flaws as campaigners (aside from their other flaws): Bachmann looked and acted like an alien in a human costume, Cain was sunk by a sex scandal, and Perry was the worst debater on Earth. From the Tea Party’s perspective, it was a hastily and shoddily assembled field.

So most of the Republicans who were in a stronger position to run for President weren’t Tea Partiers, and never faced any real pressure to rein in government spending, thus they don’t have very conservative voting records on economic issues (Ron Paul’s the exception). But in 2016, there will probably be more Tea Partiers ready to run for President– either to succeed Obama or to challenge Romney in the primaries.

In-state vs. out-of-state.

An anonymous reader e-mails: “I was accepted into an out of state university and decided to go there this fall. But now I’m having second thoughts. Should I stay in Florida instead? Why did you decide to pick Clemson instead of staying in state?”

This question is eerily similar to one posed by a former student five or six years ago. Out of sheer laziness, I went through my old e-mails, found my response to the eerily similar question, and made some minor changes. Here’s my warmed-over response:

The short answer is that I always knew I wanted to leave Florida, partly because I wasn’t really happy about moving here in the first place (when I was 8). I think it was a bit of leftover Yankee snobbery– which was ironic since I would end up bunking just a few hundred feet from the home of John C. Calhoun.

The longer answer: when I was a freshman in high school, a lot of my classmates already knew where they wanted to go to college and what they wanted to do. I knew that most of them would change their minds, but at least they had plans. And I figured it was better to have a plan that might change than to have no plan at all. So I decided to picked a career and a school and go with them, unless and until a better idea occurred to me.

I’d heard of Clemson because they had a good soccer program, even though I knew I wasn’t going to play soccer in college. I also knew they had a good engineering program (at the time, the plan was to be an engineer), and I had a couple of friends from Virginia who would probably attend. Then my cousin’s best friends got accepted there, and one of my 11th grade teachers said she was an alumna, and so on. It became my default college.

While I did apply to several other schools (none in Florida), I never really considered going anywhere else. The clincher was that Clemson offered me a full scholarship before any other school had even sent an acceptance letter.

In retrospect, not applying to Florida schools was very risky: what if I simply couldn’t afford to go out-of-state? Never mind, I wanted to leave, and that was that. But if I were in high school today, I’d definitely apply in-state because there are two incentives to stay in Florida that are stronger now than they were back then:

1. Florida’s universities are increasingly reputable. Bigger applicant pools have allowed them to select better students and attract better professors. To be frank, this is partly a byproduct of the strong athletic programs.

2. The Bright Futures program makes it more likely that successful Florida students will attend Florida schools.

If you stick to your decision to leave Florida, I can almost guarantee that come October, you’ll feel homesick and think about going back (I did; midway through my freshman year I applied to UF and FSU). When you feel those pangs, ignore them. It’s not that Florida is a bad place; it certainly isn’t. But it is important to live away from home for a few years, partly to challenge yourself, partly to cultivate your independence, and partly to build an appreciation for the home you left behind. You can always return later.

Whatever college you choose, once you’ve made your decision, don’t waste a second worrying about the other colleges you could have attended. If you work hard and keep the grades up, those other colleges will still be there for grad school or your doctorate.

I hope it helped the first time around, I hope it helps this time around.