### Re: Median Wages

```--- Cyril Morong wrote:
If real median wages have fallen, especially over a
long time, why would that be?

The geoclassical explanation (Henry George, Nicolaus
Tideman, Mason Gaffney, Harry Gunnison Brown) is that
rising land rent (and thus the price of land) has
absorbed most of the gains from greater productivity.

Fred Foldvary
Santa Clara University

```

### Re: paid parking a market failure?

```--- Robert A. Book [EMAIL PROTECTED]
at a time X1, they price goes up to \$Y per minute,
and everybody whose car is on the lot at that time
pays \$Y per minute until either they leave, or the
price goes down at time X2?

Yes.  In congestion pricing, every agent in the
congested space pays the same amount at that time.

And that all of
X1, X2, and Y are

For analysis, let us assume this, to show what the
efficient price is with certainty.

Part of the problem here is that the number of
spaces has to be an integer.  This means that the
marginal consumer, the marginal value, etc., are
(strictly speaking) undefined.

We can determine the efficient price if the number of
spaces is a continous variable, then relax the premise
to integers and see if there is any significant
difference.  The real world has integers: the next
apple, the next pencil.  If we rule out integers, we
can't analyze the real world.

These concepts require continuity.

Then economic theory does not apply to the real world.

When the lot is full, the price is high enough
that nobody wants to pay for a space

Nobody extra.
If we assume that people have diverse subjective
values for parking places, and so the demand curve
slopes down, then those who paid for a space have a
positive consumer surplus.  If all have identical an
marginal willingness to pay, then the price is such
that all are indifferent between parking or not, so
the lot fills up with those whose coin toss is park.

Are you assuming that
(a) the space stays empty for a while and everybody
still in the lot pays zero for that time,

Yes, so long as there is an empty space.

or (b) that the price drops a bit, and
somebody else immediately takes that space?

After the peak time, demand falls, and parkers will
leave spaces empty unless the price drops.  It does
not matter whether new cars replace previous parkers
or the old ones stay.

If you do this, I expect you will find that the
price is sometimes zero (at periods of low demand),

If it is a private lot, and parkers are willing to pay
more than zero, there being no free alternative, why
would the lot owner not charge a positive price?

Fred Foldvary

```

### Re: paid parking a market failure?

```--- Ricardo Gambirasio [EMAIL PROTECTED] wrote:
I fail to see what's so special about parking.

Parking as such is indeed not a special case.
It only illustrates the general case.

also in software,

I don't see how software, etc., are similar.
With software, shoes, etc., I pay for actual use and
also for their availability.

In the case of parking, if a city government provides
it, nobody is paying for empty spaces.
The availableness of street parking increases the
productivity of the area and increases the rentals
charged to tenants.  People pay for empty street
spaces as higher land rent or land prices.

If city-provided street parking is not congested, what
is the efficient price for parking, zero or greater
than zero?

I guess a tougher question would be:
where isn't there this kind of market failure?

Are you saying there is, or is not, market failure?

I can't see how that is any more of a waste

I don't claim it is a waste of space.
The question is whether charging for parking space
when  there is no congestion, is efficient.

problem is: where do
we find such a government?

It seems to me that is a separate question.

Fred

```

### Re: paid parking a market failure?

``` I seem to recall learning that rather than
demonstrating an inefficiency, the
presence of inventories represents a form of
insurance against uncertainty in
demand.
David Levenstam

Right, but suppose that the parking lot is an evenly
rotating economy, and the parking use is the same day
after day.  The parking lot is full at particular
times and not full other times.  There is no
uncertainty.  It is known how many cars will park at
particular times. Unlike produced goods, the number of
parking places is fixed.

Now, is it efficient to charge for a parking place
when the lot is not full?

Fred Foldvary

```

### Re: paid parking a market failure?

```Robert A. Book [EMAIL PROTECTED] wrote:

I think the problem is, that idea that marginal cost
pricing is optimal is in some sense related to the
assuming that marginal cost is rising at the optimal
point.

But suppose the marginal cost curve at that point is
horizontal.  Does marginal cost pricing cease to
exist?

Recall that many authors define the
supply curve as the upward-sloping portion of the
marginal cost curve.

MC rises because MP falls.
MP falls because in the short run, one factor is
fixed.
But MC can be zero.
Textbooks also have an illustration of the Nash
equilibrium for a duopoly of water provision, where
the MC of water is zero.  In perfect competition, the
price of water is zero.  In monopoly, revenue is
profit, and is maximized where MR is zero, where
MR=MC=0.

what is the optimal (i.e.,
surplus-maximizing) price when MC is decreasing
everywhere?
-- he said it has
to be long-run average cost and that it's not
really an interesting problem.

He was wrong.  A hotel elevator has a zero MC for
another user.  The hotel prices the use at MC.
Shuttles are often user-priced at zero.  A restaurant
bathroom is usually priced at zero (but not always).
Drinking fountains have no charge.  Lots of services
are priced at zero.

Fred Foldvary

```

### Re: paid parking a market failure?

```--- Xianhang Zhang [EMAIL PROTECTED] wrote:

This would be true if it were possible to charge
different people different prices for parking based
on congestion.

It is possible, and is done in practice.
Many parking lots charge more during peak times than
in other times.  There is predictability, because the
typical usage does not vary much.

cost of admitting an extra person is NOT zero
because it requires you to drop prices which means
you lose the revenue from all the other
parkers/theatre goers.

I don't follow this.  Why does charging zero at some
times require a drop in price when the lot is full?

Fred Foldvary

```

### Re: paid parking a market failure?

```--- Robert A. Book [EMAIL PROTECTED]
5 cars come at 1pm and SIX cars at 2pm.

During that time, charge just high enough so that all
who want to park, can.  The last car in does get a
space, if he is willing to pay.

between.  But there's another possible outcome --
everyone races to be
the 9th to arrive and get the last free space.

Everybody knows the price will go up at a particular
time.  Every car there will pay the price.  The spaces
are no longer free.

I think you are
(inadvertently) assuming that there is some
non-price way of allocating spaces taht is superior
to an allocation with prices.

No, that is not a correct inference.

Is the marginal consumer the last to get a
space, or the first to be turned away?

It is the next one to get a space.  Nobody gets turned
away, because when the lot is full, there is a
positive price.

Fred Foldvary

```

### paid parking a market failure?

```1. Is it the case that if the government offers street
parking, given that the marginal cost of one more
parked car is zero, the efficient charge is zero when
uncongested and when congested, a charge just high
enough to eliminate congestion?

2.  If the answer to #1 is yes, then is it the case
that if a private parking lot charges for parking at a
time when the lot is never congested, this is socially
inefficient, and a market failure?

3.  Is cases #2 any different from a move theater
charging admission when there are still seats
available, the MC of one more viewer being zero?

4. Is it a correct proposition that government-owned
parking should use marginal-cost pricing, but private
parking may charge the average cost, without this
being labeled socially inefficient?  If so, why the
difference?  If not, is it socially efficient for
government to own all parking lots and charge MC?

Fred Foldvary

```

### Re: Katrina and the Evacuation: Market Failure?

``` The government (local, State, and
Federal)appropriated responsibility for the
Mississippi River levy system, the drainage systems,
the pumping  systems, the road ways, and the bridges,
but  apparently, they left it to the market to provide
the service of evacuating the poor and the infirm.
--- Michael Giesbrecht

Why do you think so?

The federal government is being blamed for not
sufficiently preparing and executing evacuations.
This implies the general belief that this too is the
responsibility of government.  Governments have
appropriated the means of evacuation, such as
highways, public transit, and military resources.

is this an example of market failure?

No.  The market is not operating in transportation and
in emergency services, as it has been pre-empted by
government.  Only when the highways, public transit,
and emergency services are voluntarized would the
market be culpable.

Today, everybody expects the cavalry that trots to the
rescue to be governmental.

Fred Foldvary

```

### Re: Katrina and the Evacuation of the Poor and Infirm: Market Failure?

```--- Jeffrey Rous [EMAIL PROTECTED] wrote:
I recently saw a table of murder rates through time
(maybe in Freakonomics) and, through that measure,
it  appears that we are living in a relatively low
homocide era.

Right, if you don't count the holocaust, Gulag deaths,
China mass murders, Cambodia slaughters, Rwanda
genocide, etc.

Fred Foldvary

```

### Re: Interest rates and housing

``` Are you saying that there's a
real cycle of real estate
that takes 18 years from (from peak to peak or from
peak to trough?)?
David

That is the usual cycle, although there are
exceptions.

That
seems different from your initial contention that
the current bubble has been
caused by monetary growth.

My contention is that there are two causes, monetary
and real (including fiscal), and the causes are
complementary.  The timing of the cycle is inherent in
the nature of the real estate market for rentals and
construction.

then do you
predict a collapse of real estate prices based on
monetary or real factors, or both?

Both

Fred

```

### Re: Interest rates and housing

``` If the real estate cycle is based on government
expansion of money,
David

It is based on that and also on fiscal policy and the
inherent nature of real estate rentals and
construction.

why has it been the
same under three or four
different monetary systems?

It does not matter much to the economy why there is a
monetary expansion. In the 1830s the expansion was
caused by the state control of banks, including the
prohibition of branch banking, and with banks having
to buy state bonds, and excessively issuing currency.
The effect was similar to today's expansion of money
by the Fed.  It's essentially the Austrian-school
business cycle, with the higher-order capital goods
consisting of real estate construction.

See my paper referenced in the cycle table for further
explanation.

Fred

```

### Re: Interest rates and housing

``` If government has caused a real estate price
bubble by artificially
lowering interest rates, how can it have an 18-year
cycle,
David

Because real estate construction takes years, and
recovery from a downturn takes years.
An exception is an inflationary boom that is not a
real  economic recovery, such as the stagflation of
the 1970s. That's why there was a real estate peak in
1979.

Why does the money go
into residential real estate and not into stocks or
automobiles or other assets?

The money goes into all real estate, not just
residential.  Of course it also goes into stocks, as
with the tech boom of the 1990s, followed by the
downturn of 2001, which was not caused by real estate.
But the real-estate boom prevented the 2001
recession from becoming major.  The big depressions
have all followed real estate booms.

Fred

```

### Re: libertarian paternalism

```--- Edi Grgeta [EMAIL PROTECTED] wrote:
I am trying to decide whether it is moral for a designer to impose his
benevolent will through menu design by exploiting imperfections in how
people choose.

It is not an imposition, because the user is not forced to choose one of
the options, since another option is to exit the menu.

For example, if the designer thinks that option B is best, and people
presented with options ABC (in that order) choose A, but presented with
options BAC (in that order) choose B, then is it moral to select the
options order BAC rather than ABC or a random menu? No freedom is lost.

It is not immoral, since there is no coercion.

One situation where this question comes up is in designing 401k plans.

What exactly is the moral issue?

Fred Foldvary

```

### Re: lotteries and elections

``` On Tue, 7 Sep 2004, Fred Foldvary wrote:
Of course one has a right to complain, but what is meant is that by not
casting a ballot, one has voted to let the others decide, so if you

... You're offering a fixed coin here.  Heads I don't vote and I
can't complain because I wasn't part of the process; tails I vote and I
can't complain because I accepted the democrated process.
Eric Crampton

No. The system forces us to vote; not casting a ballot is voting to let the
others decide.  Casting a ballot not in favor of the establishment parties
implies one does not approve of the established process and parties.

others decide regardless of
whether/how you vote.

The issue is your decision, not what others do.

By refusing to vote, you deny them that legitimacy.

Refusing to vote puts one in the same set as those who are apathetic, and
the latter are the majority of non-voters.  The clear signal of disapproval
is to cast a ballot in opposition to the establishment.

Fred Foldvary

```

### Re: lotteries and elections

```--- Aschwin de Wolf [EMAIL PROTECTED] wrote:
It may be more accurate to say that at the moment of casting a ballot the
rest of the country has sovereignty over me...

No, because at that moment, I express my will as to who shall govern.
Nobody is forcing me to choose whom to vote for.
Every other voter is sovereign also.
It is only after casting the ballots that I find that the majority have
voted to deny my sovereignty until the next election.

if a
citizen doesn't vote he has no right to bitch about illegal wars or tax
n'spend.

Of course one has a right to complain, but what is meant is that by not
casting a ballot, one has voted to let the others decide, so if you later

Fred Foldvary

```

### Re: lotteries and elections

```--- [EMAIL PROTECTED] wrote:
What other
reasons might people vote besides believing they can influence the
outcome?

At the moment of casting a ballot, I feel like a sovereign human being.
That is my only opportunity to be a sovereign rather than a subject of the
state.  That's worth the small time cost of casting the ballot.

Fred Foldvary

```

### Re: Private urban green space

```--- Sampo Syreeni [EMAIL PROTECTED] wrote:
... libertarians are
sure hostile to the public goods scene, because there the emphasis is on
things that *need* to be solved publicly.

Public goods means collective goods, used simultaneously by some group.
This is a completely different meaning from public as in public sector.
Collective goods can be provided by private firms or by government.
Solved publicly is ambiguous because it can mean solved by a group or
solved by government officials.

Fred Foldvary

```

### Re: Private urban green space

```--- Jeffrey Rous [EMAIL PROTECTED] wrote:
I do think that a lot of times, economists are hostile the the idea
of a public good like a park if there is some way to make the good
excludable (fenced parks in London, country clubs, etc.).
-Jeff

Economists are not hostile to public goods.
Public goods are facts to which economists apply theory like any
phenomenon.
Fred Foldvary

```

### Re: Private urban green space

``` today I had a discussion with a friend about urban planing and the
necessity of public provision of urban green space (parks etc.). Do you
know cases of private provision of urban green space and in that case,
how do they make money out of it.
Steffen

Many residential associations provide green space, as do land trusts and
proprietary communities such as Walt Disney World.
See my book * Public Goods and Private Communities *,
chapters on Arden Village, the Reston Association and Walt Disney World.
Fred Foldvary

```

### Re: [armchair] Re: spamonomics

``` Fraud is not part of the market.
Fred Foldvary

--- Ron Baty [EMAIL PROTECTED] wrote:
Fraud should not be part of the market but always has been and will
likely continue to be part of any realistic market

A pure market consists of voluntary economic acts, and theft, including
fraud, has involuntary victims, so fraud is outside the pure free market.

You are really saying that there will always be attacks on property rights;
but these are violations of rather than part of a pure market.

In a free market economy how would you eliminate fraud without
limiting the free market or changing human nature?

Of course no policy can eliminate fraud; rather, optimal policy seeks to
minimize the net social cost of fraud.

And is it not the presence of fraud, using a broad definition, that
enhances the effect of reputation in market exchanges.

I don't see why that would be the case.

Fred Foldvary

```

### Re: spamonomics

```--- Christopher Auld [EMAIL PROTECTED] wrote:
Followed closely by offers from extremely respectable officials in
Nigeria who will give me hundreds of thousands of dollars merely for
sending them my chequing account information.
One can see how the first three products are highly complementary,
but I don't see how the third relates.

The complementarity is the belief in magic, that one can create something
out of nothing, getting rich without work effort or getting something for
your body beyond the natural possibilities frontier.

This ultimately comes from parents teaching children that there is magic,
e.g. Santa Claus and the tooth fairy.  If parents would keep it real with
children, children would be less likely to belive in getting something for
nothing or something beyond the possibility frontier.

Fred Foldvary

```

### Re: increases money supply over time?

```Fred Foldvary Wrote:
The Fed buys bond and in effect pays with a check.

john hull [EMAIL PROTECTED] wrote:
To buy back bonds, it must have sold them at
some time in the past.

No.  The Fed does not buy the bonds back.  They buy bonds in the market,
just as any buyer would.  If you buy bonds, that does not imply that you
sold them previously.

I don't know anything about blue lines,

Some emails in this list in HTML have a blue line at the left.
When I reply, that verkakte blue line is still there.
I turned it off in this reply by using plain text rather than HTML.

Fred Foldvary

```

### The blue line

```

You're at the bar with your buddies, and BillGates walks in through the door. Obviously the distribution of wealth hasbecome more unequal. But do you really feel worse off?---
I'd like to know how the annoying blue line at the left gets put into email,
why one would inset it,
and whether onecan removeit in replying.
Fred Foldvary
```

### Re: Too many choices

```--- [EMAIL PROTECTED] wrote:
He says that as the number of choices we have grows (for products) we
become less happy,

Is he just guessing, or is there evidence for this?

that it is too hard to know which toothpaste, for example, to buy.

That seems ridiculous.  People tend to settle on one brand and stick to it.

All of this affluence and choices has made us less happy.

Another conclusion from thin air?
Could it not be something like less satisfactory relationships, or worry

It seems that as we become freer to
pursue and do whatever we want, we get less and less happy.

What data makes it seem so?

What do list members think of this?

Where's the evidence?

If people are too affluent, could they give some
of their money away and become happier?

This is in fact what many of them do.

Fred Foldvary

=
[EMAIL PROTECTED]

```

### Re: why aren't we smarter?

```--- [EMAIL PROTECTED] wrote:
American Jews tested below average on Army intelligence tests conducted
around the turn of the last century (1900)

I suspect this was not a pure IQ test but had a bias towards education, and
at that time, American Jews, especially recent immigrants, many not have
been so well educated, and now they are.

I do wonder about the meaning of IQ tests. I test out in the top 1% of
the IQ distribution but have been singularly unsuccessful.  Although it's
anedotal, I know many other unsuccesful high IQ people as well.  Clearly
high IQ and success don't automatically go hand in hand.
David Levenstam

Success in what?  Many high-IQ persons do not have wealth as their highest
goal.  Also, chance falls equally on the high and low IQs.
Fred Foldvary

=
[EMAIL PROTECTED]

```

### Re: Why is a dollar today worth more than a dollar tomorrow?

```--- John Morrow [EMAIL PROTECTED] wrote:
By the way, there have been times and places where the measured real
interest rate was essentially zero; I think this happened in Japan in
the 1990s.

So the question is, why at the zero rate was there not greater demand to
borrow?  The answer may well be that the expected future inflation and real
interest rates were highly uncertain, and the transaction costs of getting
and exiting from a loan were high, and there was a high level of risk
aversion.  What counts is not just the cost of borrowing but also the
expected return on the borrowings, and if business conditions are bad, then
the demand for loanable funds may be low because of uncertain earnings or
asset appreciation.  The inflation part of the nominal interest has to be
paid in actual dollars, and so high rates of inflation may well deter
demand.  A low real rate of interest induces more borrowing, other things
equal, but with higher inflation and greater business uncertatainty, other
things may not be equal.

Fred Foldvary

=
[EMAIL PROTECTED]

```

### tax credit for housing?

```--- Tigger [EMAIL PROTECTED] wrote:
I support an alternate way for the gov't to support housebuying:
50% tax credit on house payments (interest and principle), with
some lifetime maximum (\$2, 3, 400 000?).
Tom

This tax-credit subsidy will add to demand and further increase the price
of housing, which then requires a bigger credit.  The credit reduces tax
revenue, and so for a given budget, other taxes get increased, so the
result is further distortion of prices and a greater excess burden on the
economy.  This treats the symptom rather than cure the cause.

Fred Foldvary

=
[EMAIL PROTECTED]

```

### Re: Why is a dollar today worth more than a dollar tomorrow?

```--- Marko Paunovic [EMAIL PROTECTED] wrote:
OK. Then, as long as the expected profit from building a factory is
higher than zero, I would not lend the money at zero interest rate.

If at a zero rate of interest, the quantity of savings exceeds the quantity
of borrowings, savers would earn zero interest.  Borrowers would just pay
lender would earn a wage for engaging in the lending business, but the pure
interest rate would be zero.  The reason the interest rate is positive is
that at a zero rate, the quantity of funds demanded for loans exceeds the
quantity of loanable funds from savings, so this scarcity drives up the
rate just as with other prices.

Fred Foldvary

=
[EMAIL PROTECTED]

```

### Re: Real wages constant since 1964?!

``` If you measure wages in desk calculators instead of dollars, I'm sure
they've gone up substantially!  ;-)
--Robert

And if you measure wages in units of a real-estate price index, they have
gone down substantially!
Fred Foldvary

=
[EMAIL PROTECTED]

```

### Re: Real wages constant since 1964?!

```--- john hull [EMAIL PROTECTED] wrote:
Why are we better off today?
(Better products  two wage households would be a
start, I guess.)

Better products, yes, but not necessarily two-wage households.

If the price of housing goes up substantially, a spouse may be induced to
work for wages, but after paying for the increased cost of real estate,
extra taxes, and child care, the family may not be better off.

When the wife goes to work for money wages, it looks like the GDP has gone
up, but she is substituting commercial child care for her home child care
that does not show up in GDP, so the per-capita increase in GDP is
exagerated.

Fred Foldvary

=
[EMAIL PROTECTED]

```

### Re: Why is a dollar today worth more than a dollar tomorrow?

``` On 2003-12-05, john hull uttered:
For some reason, I can't get it straight in my head why the risk-free
rate of interest would be higher than zero.

The easiest example I know of is, would you be happy saving all of your
income for the next year, without receiving a formidable compensation?
Sampo Syreeni, aka decoy - mailto:[EMAIL PROTECTED], tel:+358-50-5756111

That does not explain it, because many folks would save SOME of their
income even if the interest rate were zero.
Fred Foldvary

=
[EMAIL PROTECTED]

```

### Re: Why is a dollar today worth more than a dollar tomorrow?

```--- Marko Paunovic [EMAIL PROTECTED] wrote:

In a risk-free
world I can't fail.

Risk-free interest is quite different from a risk-free world.
We need to assume the usual risky world, but a loan that is sure to be
repaid and with the interest sure to be paid, which US treasury bonds
currently come close to.

Fred Foldvary

=
[EMAIL PROTECTED]

```

### Re: Inflation-Free Currency

```--- john hull [EMAIL PROTECTED] wrote:
Some sources of info claim that
currencies can be made to be resistant/immune to
inflation.

Yes, if the unit of account is an hour of unskilled labor or a commodity.

If we use an
Hours model, then the currency is worth 1 hour of
(anybody's) labor _or_ \$10 in terms of real dollars.
Next year, it is worth one hour or \$9.70, let's say,
in real dollars.  So if the value in dollars is
declared by fiat, then it needs to be changed

The local currency unit is still the hour, so it does not matter how hours
exchange with dollars or euros.  They are trading an hour of labor for a
pound of carrots regardless of the exchange rates with fiat money.

Fred Foldvary

=
[EMAIL PROTECTED]

```

### Re: Why is local currency good or bad or neither?

```--- Sampo Syreeni [EMAIL PROTECTED] wrote:
On 2003-10-30, Fred Foldvary uttered:
So basically this is a response to credit constraints.

Another reason people may be inclined to use local currencies is that the
narrow circulation and informal accounting usually associated with them
make it difficult to collect taxes on the associated transactions. At
least in some cases we can analyse local currencies as instances of tax
evasion.

So why not just use federal paper dollars for that?

Another common reason why local currencies are used is unemployment. When
people are unable to earn a living on the open market, they'll have to
rely on friends and neighbours for help, which easily leads to reciprocal
trade in services. That can easily spread and give rise to a new, local
currency when bilateral trade no longer suffices. From this perspective
local currencies can also be a means to circumvent labor market
rigidities.

Again, why not just use federal cash?

What I can't fathom is
why these people engage in indirect trade, use what is essentially money
and even compete, but still think that it's somehow more neighbourly or
human to do all this in an alternative currency.

What is more neighbourly is the local organization and the relationships it
fosters.  The use of LETS or local currencies is incidental to this.

Fred Foldvary

=
[EMAIL PROTECTED]

```

### Re: financial leverage

```--- Tyl [EMAIL PROTECTED] wrote:
I don't see how bond
would be a loser if interest rates goes higher since I
will locking in a bond that yields a higher coupon rate
than the borrowed rate.

If you can borrow money at a lower interest rate than what the bonds pay,
and you hold the bonds until maturity, then yes, you will have a profit if
the inflation rate has not risen to offset the after-tax gain.  If the
interest you pay on your borrowed funds is tax-deductible but the interest
you receive is not taxable, so much the better.
Fred Foldvary

=
[EMAIL PROTECTED]

```

### Re: Why is local currency good or bad or neither?

```--- Burns, Erik [EMAIL PROTECTED] wrote:
and also of e-gold (which is still around:
www.e-gold.com), all of which use tokens rather than dollars (which are
tokens too).

Gold is not a token.  Gold is a real commodity.  Tokens are substances of
little intrinsic value which can be exchanged for something of real value,
like a ticket to a movie, or like fiat paper money.  What we call coins
today are really tokens rather than true coining of precious metal.

these always seemed to me to be ADDING a step to transactions
rather than making them easier.

What step does it add to exchange in terms of gold ounces rather than
dollars?  It is a step to translate from dollars to gold, but if you reckon
in terms of gold ounces, then the extra step is to translate to dollars.

and the argument that e-gold solves the fiat
money problem is, to me, false because you're stuck with gold's value
being determined by a market that's priced in ... dollars.

The fiat problem is the arbitrary inflating of the amount of currency,
which does not take place with gold.  Gold's value is relative to
everything else, not just dollars.  Those who had their money as gold
during the past couple of years are not crying.

Fred Foldvary

=
[EMAIL PROTECTED]

```

### Re: Why is local currency good or bad or neither?

``` People also often suffer from a confusion between income and money.
They tend to think of the two as synonymous, that anything not received
in money isn't income and therefore isn't taxable.

Precisely. If we drop the distinction, we can for instance easily see
that
all sex is actually prostitution of one kind or another.
Sampo Syreeni, aka decoy - mailto:[EMAIL PROTECTED], tel:+358-50-5756111

No, prostitution is sex in exchange for money or goods, when there is no
emotional or relational benefit from it.  If one obtains psychic income
from sex, one has not really prostituted oneself.
Fred Foldvary

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[EMAIL PROTECTED]

```

### Re: gold rush

``` What do you feel is the main reason why there has been such a steep rise
in the price of gold in recent times?
Chris Macrae

One reason is that Chinese residents are now able to buy gold, where it was
formerly more restricted.  Also, I have read that the government of China
is buying gold.  Also, the price of gold was depressed for so long that
once demand rose, others took note and bought.

Fred Foldvary

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[EMAIL PROTECTED]

```

### Re: intellectual property

```--- Barney Hamish [EMAIL PROTECTED] wrote:
How does the market decide that the _thought_ creation belongs to the
creator as you state?

The publisher includes a contract with the book that states that the seller
agrees not to copy the book, and not to transfer it to anyone unless the
next owner also agrees not to sell the book.  It would be like a covenant
that goes with the book.

Fred Foldvary

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[EMAIL PROTECTED]

```

### Re: immigration: net gain or net drain?

```--- Bryan Caplan [EMAIL PROTECTED] wrote:
All it claims is that immigrants reduce wages.
But this is by definition balanced by the extra surplus enjoyed by
employers.

If the surplus is general to the economy, then is it not the case that in
industries with competitive markets for labor and capital goods, and with
substantial competition in the goods markets, providers of labor and
capital goods earn their marginal products and firms have zero economic
profits, so the surplus goes to land rent?  If so then it is not employers
qua firms who get the surplus, but the landowners.  Firms which rent their
premises would get no surplus from being employers.

Fred Foldvary

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[EMAIL PROTECTED]

```

### Re: Horses and Subsistence Farming

``` The issue is marginal productivity, not average productivity.  The
subsistence scenario is one where the supply curve of laborers is low and
fat.  The demand curve may rise to great heights, but eventually if falls
down to meet such a low supply curve.
Robin Hanson  [EMAIL PROTECTED]  http://hanson.gmu.edu

Even when horses increase marginal productivity, that may not lift farmers
above subsistence.  If they don't own the land, they pay rent to a
landlord, who might be able to absorb the wealth above the subsistence
level, if there is no free land available of that quality.  Every farmer
gets a horse, but that is to achieve, rather than rise above, subsistence.
Fred Foldvary

=
[EMAIL PROTECTED]

```