The Hayekian Wikipedia

This from the Wall Street Journal:

“Regarding Gordon Crovitz’s “Wikipedia’s Old-Fashioned Revolution” (Information Age, April 6): The genesis of Wikipedia was an economics class that Jimmy Wales took when he was a student at Auburn University. Taught by Mark Thornton, much of the discussion centered around the 1945 paper by Nobel-winner F.A. Hayek titled “The Use of Knowledge in Society.”

That paper argued that socialism with its central planning simply could not keep up with the real knowledge in society because the kind of knowledge needed to power an economy is dispersed in society and cannot be brought together with central planning, with its political arrogance. Instead, it is brought together via a price system and private property, the key ingredients of a market economy.

Mr. Wales brought that concept to Wikipedia, and that is why it has flourished. The founding truth of Wikipedia also is the truth behind the reason that President Barack Obama’s attempt at a “planned economy” will fail, as all socialist or quasi-socialist “experiments” always do.”

Now I thought this was very interesting and wished that it would go into more detail about Mr. Wales. What has made Wikipedia so successful is the spontaneous nature, which has made it more accurate than other formal encyclopedias. Hayek, in other works, show that he also believes that rules that society lives by is spontaneous. For, example think of a handshake. No “one” individual planned that this is how we should greet people, but it has evolved over time as the social norm.

We should try to model more businesses and economic policies after this!

The rest link is here.



The Future of the Internet and Economics

Sometimes on this blog, I like to take a step away from current events and talk about what is on my mind.

Economics is a growing discipline that seems to be invading all other disciplines. For example, the title of this blog comes from Public Choice Economics, which was a direct invasion into political science. At the same time, I have taken a class at George Mason University called the Economics of Religion. Both of these topics are of great interest to me along with many of the classic microeconomic problems we deal with everyday.

What is curious to me is how will the new social internet application be analyzed by Economics. Even though many Economists have blogs and are networking sites, we would imagine that it would take a while for Economists to get a full grasp on what is going on. One of the sub-disciplines I have always been interested in is the Economics of Dating and Relationships. All these sub-disciplines do is apply rational choice and methological individualism as a framework to analyze these certain areas. They also attempt to take models or simple laws of supply and demand and apply them to various things.

The internet is it’s own market. There are advertisements, spam, efficient ways to order stuff, and searches that will bring you to various producers you never knew existed. I mean the Economics of Spam would be a very interesting topic all in itself. I believe that 100% of the time the laws of supply and demand work, but if anything has ever brought doubt to my mind it is spam. Who buys stuff off of spam emails? After doing a quick search I found those guys over at Marginal Revolution have talked about it. But this proves my point the internet has revolutionized research and it will revolutionize Economics.

On a worse note, Economics has made a turn towards the math. I, in fact, could possibly be barred from being and economist due to my weakness in math (as I was rejected by the GMU Ph.d Program). With Economics’s turn towards math will that reinforce the view of the economist as a savior not as a person who studies how man acts? I, of course, believe we should move more towards the latter, but only time will tell.


Stop the Outsourcing… to robots?

First, this from

Robots are stealing American jobs. In a 76,000-square-foot zone of the 832,000-square-foot Zappos warehouse in Shepherdsville, Kentucky, 72 robotic “drive units” organize and deliver shelves of goods—from argyle socks to handbags. People remain in charge (for now), because it takes human dexterity to pack items into a box for shipping. But the bots still have plenty to do, picking up the slack on boring tasks like shifting inventory.

The droids roll at 3 miles an hour, navigating via barcodes stuck to the floor and commands from a central server. And they’re buff, able to lift half a ton.”

and from Reuters:

” A vending machine that bakes fresh pizza in minutes for a few euros has got Italian chefs in a whirl before it hits the streets in the coming weeks.

The bright-red “Let’s Pizza” machine uses infra-red rays and technology developed at the University of Bologna to knead flour and water into dough, spread it with tomato sauce and a choice of topping, and cook it — all in less than three minutes.”

We better get Obama on this! How could we ever keep inefficient human in place of these robots that do not even work for wages. And you thought outsourcing to lower wages was bad. Okay, enough joking around. It is time to wake up, people. Businesses using low cost robots to replace humans is a good thing in the long run. In the short-term there will be problems because of employees having to retrain. This is the natural progression of society. We become more and more efficient. If you do not believe me, get off your computer because it destroys jobs. Then go get a feathered pen made by hand, some parchment also made by hand and write me a letter. That way the jobs lost to computers and emails will not suffer.

Technology has made us wealthy and to be against outsourcing is to be against technology.


Published in: on April 6, 2009 at 12:38 pm  Comments (1)  
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America’s Traffic = USSR’s Bread Lines

I have written about this before, but the fact that you can get on almost any road and not have to pay a cent means that the road is socialized. This is related to how people want to treat health care or how they distributed bread in the Soviet Union. The whole idea is that the government absorbs and distributes. Over at The Infrastructurist they discuss this very point:

“There’s a huge free lunch of additional carrying capacity in our road system that could be used if we managed demand slightly better. Currently, we ration traffic capacity the same way the old Soviet Union rationed bread–by having everyone wait in line. It’s a wasteful way to allocate bread, and it’s a wasteful way to allocate scarce road space at rush hour. Pricing the roads to reduce peak volumes even slightly–by encouraging those with flexible schedules to take the trip at some other time, go by another mode, or forego the trip altogether–makes the system work better for everyone else and actually increases its capacity.

The technology for implementing road pricing is already in hand and has been implemented around the country through “fast pass” electronic tolling. Large scale demonstrations of road pricing have had a significant effect on congestion in London and Stockholm.”

Of course, over here we should support a completely private system. There is no reason why this could not be done privately. In many places, like L.A., there are private roads. The reason why people do not see these roads in many other places is because it is very hard for a private company to compete with a public project. The consumer is paying for both the public road and the private fees to use the road. If the system was completely private, people would have more disposable income to spend on these roads. Not to mention, that there would be varying price systems. This is a very good article. The private roads are broken and we need to come up with a solution.

The rest is here.


Published in: on March 11, 2009 at 4:09 pm  Leave a Comment  
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CVS’s Bold Plan for Healthcare

It has always been said that the best inventions come from the private sector. As Adam Smith put it, the division of labor matched with the fact that a person will want to do the least amount of work and make the most money will encourage innovative efficiencies. Now the CEO of CVS has his own innovative idea. This from Business Week:

“What does (CEO Tom) Ryan intend to do with his drugstore empire? His goal, he says, is to help transform America’s expensive and often ineffective health-care system. Seeking to take advantage of President Barack Obama’s commitment to health-care reform, Ryan wants to use CVS’s vast prescription database and burgeoning network of in-store clinics to treat patients with chronic diseases and help keep them out of the hospital, where most medical costs are incurred. “I don’t think our health-care system is broken,” Ryan says. “We are just spending too much, and it’s unproductive.”

Ryan believes CVS could help solve this problem and, in the process, boost its own bottom line. As a pharmacy benefit management company, the Caremark unit handles drug coverage for large employers and health plans, negotiating discounts with drugmakers. It owns a treasure trove of prescription drug data, as does CVS. The merged company is thus an info tech Goliath, filling or managing more than a billion prescriptions a year. It can use that information to figure out which customers require a gentle reminder to come in for a refill. As a result, customers would buy more drugs, make ancillary purchases in the store, and maybe even visit the clinic. Ryan’s challenge is convincing CVS customers that such refill reminders aren’t just marketing tactics. He is encouraged that the Obama Administration recognizes the importance of drug compliance and will support private sector initiatives. As debates over health-care reform heat up this spring, Ryan will argue that his aggressive strategies also make good medical and economic sense.”

Tom Ryan is the CEO of CVS. This would be a great idea that instead of having people running to hospitals they could come to these in-store clinics to get cheap reliable advice. This goes along with one of my own personal ideas of creating a fast lane at the ER. You would sign over the fact that this person is a nurse or a physicians assistant and that they will not give you a thousand tests you do not need. The CVS platform to me is similar in the fact that it will keep some people out of the ERs and doctors offices that do not need to. The insurance companies should sign on to this also as it will save them lots of money.

The rest is here.


Published in: on February 16, 2009 at 1:29 pm  Comments (1)  
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Zoombak Personal GPS

The right to privacy has always been an issue and the use of technology can sometimes encroach upon that. This next product plays into my first law which, I need to work on the wording, but basically that people have the need to control everything. Now they can control their kids and anything else they want to track.

“A safety zone is a personalized virtual boundary around a location that you’ve chosen. When your car enters or leaves an active safety zone, you can be alerted via email and/or text message (your choice.) You can create up to 10 safety zones, all of which can be active simultaneously at any given time. Safety zones can be quickly and easily turned on and off via

Zoombak’s location history allows you to see where your car has traveled for the past hour, day or week. Your location history will be available for your review on for up to 7 days.”

Of course this could be used for perverse incentives like the paparazzi using it on celebrities vehicles and things. This is my favorite:

“Mike C. — Schenectady, NY USA

“I personally love this product. I did a lot of research and found this to be the best device out there. I use it all the time. It’s great for teenagers who are traveling or to update myself on my spouse who works all over the state. I highly recommend this product.”

AKA make sure my wife isn’t cheating. Do we see this as a problem? They are so small and compact anyone could put this on anyone and stalk them. Or is this a positive invention? I mean, I personally think that this is really good for your dog if it were to get lost.

The website is here.


Published in: on December 2, 2008 at 10:59 pm  Leave a Comment  
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The Future of Internet-based Phones in Europe

It has always been the easiest and most powerful way to break a regulation by using technology. Since the political process is full of so much rent-seeking, it is very hard to get a politician that wants to deregulate. He would have to have some other powerful interest group who probably but may not have perverse incentives for the deregulation.

Technology is also good at finding ways to make certain things more efficient. I overheard a conservation today talking about the quickly changing way on how you registered for classes. First, you stood in line and once you got up there you would grab a card that would represent your seat in that class. Second, he claimed that you used the phone and today you use the computer. This saved a lot of time and hassle.

When it comes to the technology of phones and cellular phones it is still costly to make international phone calls, but things like Skype and Vonage have made this much easier. They use internet instead of phone lines to make calls. They bridged the technology phone gap. Of course, cell phone companies do not want you to be able to do that and this would eliminate their international market. This from International Herald Tribune:

“European Union regulators are looking into whether mobile phone operators who block customers from making inexpensive wireless calls over the Internet are breaking competition rules.

The European Commission, the EU antitrust authority, has sent questionnaires to phone companies asking what “tools” they use to “control, manage, block, slow down or otherwise restrict or filter” Internet-based voice calls.

Some mobile carriers have blocked services that use voice-over-Internet protocol, or VoIP, which allows users to make calls over the Web. Companies may be seeking to stop customers from accessing applications, like eBay’s Skype, to defend voice revenue from the less expensive Internet services, Carolina Milanesi, research director for mobile devices at Gartner, the research company, said.”

Surprisingly, the European regulators are coming to the rescue of a industry that is efficiently beating another industry. Now I do not know all of the details of this and I do not know how the company is able to keep their customers from using these. I am just surprised the cell phone companies haven’t lobbied the EU to get these to be banned everywhere and the EU would go along with it.

We would expect without Europe meddling in the competitive market, some cell phone industry would come along and allow the users to access these services and then everyone would switch to this phone/internet industry. That would then force these companies to do the same.


Published in: on November 12, 2008 at 7:38 pm  Comments (1)  
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A New Presidential Voice

barack-obamaOver the past 50 years, Presidents have reached the American people through the most convenient and far-reaching mediums available. This began with radio broadcasting, later came television. Before long, Presidents were giving Saturday morning radio addresses, and occasionally a televised press conference.

It was only a matter of time before the Internet became part of the mix. In fact, the Internet has the potential to become the singular medium of communication. Recent Presidential candidate and now President-elect Barrack Obama is perhaps the greatest politician to employ the Internet to his advantage. Before the election, Obama amassed the greatest Internet following and information of any politician in American history. Just some figures include:

-4 times as many “MySpace” friends as rival John McCain

-3 million Facebook supporters

-10 million email addresses

-text-messaging as a means of informing supporters

As you might expect, most of the Internet usage lies within the age group of 18-29 year olds. This generation is the first Internet-boom generation, and Obama is expected to continue to capitalize on this.

So far, President Obama has established a website dedicated to the transition between the Bush and soon-to-be administrations. Many speculate this is to deal with the national Presidential approval rating. For those who haven’t heard, it’s at 16% (a historical low).

While the social-economic impacts of this innovation are debatable, this will obviously help Obama maintain a following by many of his closest supporters and provide Americans with an even more personal connection to the Presidency (even if it is simply an illusion). I have to applaud the Obama camp for this accomplishment. I see this working out favorably for the future administration, and I expect Internet usage to become a staple of future Presidents and candidates on the campaign trail.


Published in: on November 11, 2008 at 2:18 pm  Leave a Comment  
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Airlines are Entrepreneurs too.

Not that the airline industry has been innocent from government help and like I mentioned before Europe has called the U.S. to deregulate the ownership laws. The airlines are not waiting around for a bailout this time. They are, in fact, innovating like any good industry would when troubling times come. This from the International Herald Tribune:

“The passenger beside you is playing poker on an online gambling site. His wife is chatting on her mobile phone while the children fire off text messages and tune in to pay-per-view satellite TV. Your overpriced drink sits on a tray table embellished with advertising, while the cabin crew, working on commission, moves up and down the aisles peddling theater tickets and DVDs along with traditional duty-free goods – for home delivery.

The idea is part of a frantic quest by airlines for new ways to maximize earnings amid a financial crisis that is hurting demand after oil prices climbed dramatically over the past two years. With little control over most of their costs, the airlines are increasingly charging passengers for elements once covered by their tickets, while low-cost carriers are spearheading efforts to find new things to sell in the air.”

This will hopefully attract more people to fly but more importantly will set up a price structure. Certain levels will have certain prices and so will certain features. Duty-free stuff will be offered along with many other features. I personally hate flying so anything they can do to make it more pleasant would be great.

The rest is here.


Published in: on October 16, 2008 at 10:36 pm  Leave a Comment  
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Hookers Go High Tech

Just like in every industry, if there is a problem, someone will fix it. As long as there will be profits to be made, entrepreneurs will do their thing. Hookers are no different. This from Aphrodite Projects:

One of the main concerns of contemporary urban sex workers, even in areas where prostitution is legal, is violence. Each sandal will have an audible alarm system, which emits a piercing noise to scare off attackers. The shoes are also outfitted with a built in GPS receiver and an emergency button that relays both the prostitute’s location and a silent alarm signal to public emergency services. Where there are problematic relations with law enforcement, i.e. most places, the shoes will relay the signal to sex workers’ rights groups, such as PONY in New York, COYOTE in Los Angeles, or SWEAT in South Africa.”

They really do not look like sandals.

The shoes come with video artwork that features pink roses, rock doves, the Cypriot landscape and other imagery related to Aphrodite. These videos can later be personalized by the wearer. A video overlay with a phone number, email address, and other customizable graphics is included for promotion. The shoe also has a speaker in the back of the heel, which plays audio tracks of environmental phenomena associated with Aphrodite: the sound of the ocean at Petra tou Romiou (Aphrodite’s birthplace), the waterfall from the Baths of Aphrodite in Cyprus, the cooing of pigeons and other birds. Audio and visual media, such as new heel tones, will be downloaded from the Platforms website, in a similar manner to downloading cell phone ring tones”

There you go, hookers are safer with the use of technology! The rest is here.