Editore"s Note
Tilting at Windmills

Email Newsletter icon, E-mail Newsletter icon, Email List icon, E-mail List icon Sign up for Free News & Updates

April 5, 2006
By: Kevin Drum

MORE MARKETS....Tyler Cowen thinks we need more markets:

Which markets do you feel are missing? Your choice must be technologically feasible and not obviously ridiculous from the cost side....I will nominate "simply paying the tiny but time-consuming library fines of people ahead of you in line (why don't I?)."

That's it? Library fines? After making it to the Final Four, I expect deeper thoughts from GMU professors. The bar is higher than it used to be, Tyler.

Kevin Drum 3:09 PM Permalink | Trackbacks | Comments (38)

Bookmark and Share
 
Comments

The nice thing about a free market system is that some genius in a bureaucrat's office somewhere doesn't have to think up all the market niches himself. Tens of thousands of people closer to the tens of thousands of problems and potential markets will find them on their own, and we can take advantage of them if we want.

Saw some more interesting links on his site, like this one.

A bit of apples and oranges here--I'd consider a success in Japan, Italy, Germany to carry a bit more weight than a failure in Haiti. The comments point out some other issues, too.

Posted by: tbrosz on April 5, 2006 at 3:24 PM | PERMALINK

Seriously.

Corruption is extremely hard to track. How to structure a market for that? Obviously the point is that it is opperates in contradiction to market mechanisms.

Some moves have been made to commoditize pollution, but much more ought to be done.

Some families might do well to structure labor contributions according to market models - though I detest this idea. (Maybe that means I'm a free rider? I hope not!)

Posted by: Saam Barrager on April 5, 2006 at 3:26 PM | PERMALINK

My, Kevin. That's just a little snotty, no? Not like you've ever had an off-day, right?

Posted by: fishbane on April 5, 2006 at 3:29 PM | PERMALINK

Kevin

Yes Tyler's post was a little thin but c'mon. (see fishbane above)

Sour grapes over the UCLA loss?

Posted by: Martin on April 5, 2006 at 3:34 PM | PERMALINK

An actual functioning, usable market for residential real estate.

Cranky

Posted by: Cranky Observer on April 5, 2006 at 3:44 PM | PERMALINK

On certain occasions, when I am about to miss a flight, I would cheerfully up to $50 to cut to the front of the airport security line. I leave it to the experts to come up with the appropriate structure of property rights (do the people in front of me share the money? does it go to the airport? wouldn't that create perverse incentives?) to make this a properly functioning market.

Posted by: john on April 5, 2006 at 4:08 PM | PERMALINK

Let's not indirectly impugn the basketball team by associating it with Cowan. He wouldn't even make the NIT.

Posted by: Alek Hidell on April 5, 2006 at 4:12 PM | PERMALINK

Our library isn't that lame -- they're new fangled with RFID self check out and automated book return. The post office is a different story. A few months ago we had a 50 person line in which half the people were waiting to buy 2 cent stamps (machine was out). I bought a few hundred extra and handed them to the people behind me.

My new "market" would be a post office severed from congress so they could make independant moves (a stamp that says first class that works until an expiration date?) and have the ability to fire some of their more psycopathic employees.

Posted by: B on April 5, 2006 at 4:20 PM | PERMALINK

I am gonna be serious.

In water disputes, I always thought we needed a water allocation market, a way for indian tribes, off shore fisherman, ranchers and environmentaliss to equitably divy up water use.

Turn this things into a commodities futures and let treasury buy and sell according to Congressional and presidential policy.

Medical socialists could try the same thing, use government to make the market for insurance pools.

Assign each global citizen a right to use some minimum of the atmospheric carbon flux, then they can buy and sell those.


Posted by: Matt on April 5, 2006 at 4:22 PM | PERMALINK

I think there are many occasions when all of us would happily pay something to jump ahead in line somewhere, but the opportunity to do so does not exist, even though the money might be used to improve service for everyone.

Posted by: Bruce Bartlett on April 5, 2006 at 4:26 PM | PERMALINK

"Seriously.

Corruption is extremely hard to track. How to structure a market for that? Obviously the point is that it is opperates in contradiction to market mechanisms."

Mr. Barrager, you're wrong, but it's a great idea. You could set up markets a couple of different ways to identify corruption. You could have a betting system, having odds based on bets placed on a politician's likelyhood for being arrested, or (my favorite) require politicians to post bonds against corruption charges, and finance those bonds on an open market. That would not only track corruption but be a strong incentive against it.

Posted by: Walter on April 5, 2006 at 4:41 PM | PERMALINK

MORE MARKETS

I wish they would bring back corner drug stores and groceries.

Posted by: Hedley Lamarr on April 5, 2006 at 4:43 PM | PERMALINK

Matt, the water idea has me confused. We already have an allocation system. In a normal year farmers and ranchers get their 30 to 80% and residential development gets the other 115%. In a drought year farmers and ranchers get the same set volume (at least they are supposed to) and residential developments stop watering their lawns and suck down the Pleistocene aquifer by about 5 feet. If it aint broke, why fix it.

And if we're going to open up environmental quality to trading markets I have to ask -- will it be open to time travelling people from the future? On one hand they have a sincere stake in allocation and protection and leaving them out of the equation would be pretty short sighted, but on the other hand they could have knowledge about future market trends which would make their trades fundamentally unfair.

Posted by: B on April 5, 2006 at 4:57 PM | PERMALINK

Some jurisdictions already have this, but conjestion-based tolls on toll roads need to be better utilized.

Posted by: Keith G on April 5, 2006 at 5:24 PM | PERMALINK

Fasttrack payments for commuter lanes.

Posted by: ogmb on April 5, 2006 at 5:38 PM | PERMALINK

1. Federal class size reduction equalization credits: rural districts should be able to afford the same class sizes as as the affuent public schools.

Greenhouse gas emission reduction credits.

Automobile mileage (fuel efficiency) reduction credits.

Posted by: JamesP on April 5, 2006 at 5:50 PM | PERMALINK

New copies of old board and video games, through the magic of color laserprinting.

Posted by: Kimmitt on April 5, 2006 at 5:56 PM | PERMALINK

You see, B, the markets factor in your futuristic thinking, which is why I have so much confidence in them, the markets I mean.

Posted by: Matt on April 5, 2006 at 5:58 PM | PERMALINK
New copies of old board and video games, through the magic of color laserprinting.

How does color laserprinting help make copies of video games?

Posted by: cmdicely on April 5, 2006 at 6:15 PM | PERMALINK

How does color laserprinting help make copies of video games?

Well, first off, it takes one hell of a lot of toner and paper, but.....

Posted by: Keith G on April 5, 2006 at 6:21 PM | PERMALINK

"). I bought a few hundred extra and handed them to the people behind me."

Wow. Considering the pass-along good karma from that, you probably should be on a stamp . . .

"How does color laserprinting help make copies of video games?
Well, first off, it takes one hell of a lot of toner and paper, but...."

: )! I spent way too much time as a kid trying to figure out how to make an interactive flip book . . .

Posted by: Dan S. on April 5, 2006 at 6:43 PM | PERMALINK

John says: "On certain occasions, when I am about to miss a flight, I would cheerfully up to $50 to cut to the front of the airport security line. I leave it to the experts to come up with the appropriate structure of property rights (do the people in front of me share the money? does it go to the airport? wouldn't that create perverse incentives?) to make this a properly functioning market."

oh they already have...and I'm not just talking about separate lines for first class passengers.
here in NY there is a helicopter service complete with security screening at the helipad which flies you from downtown directly to your gate at JFK.

Posted by: Nathan on April 5, 2006 at 7:10 PM | PERMALINK

I would pay MORE for a airline flight (especially the short ones like LA to Vegas) where the flight attendants kept out of my face with their drinks. If I want a drink on a one hour flight I should bring it on the plane myself and keep the aisles clear for the bladder-challenged.

Posted by: terri on April 5, 2006 at 7:21 PM | PERMALINK

Let's see.

I'd like a market in organs for donations. I believe (and I know you guys don't) that it would increase the number of available organs and reduce the time people would wait for organs, and the price would be less than the cost of dialysis, etc.

Posted by: jb on April 5, 2006 at 7:26 PM | PERMALINK

How about a market in lame ideas from tenured, state-funded college economics professors too cowardly to put their money where their mouth is and face the job market on a regular basis like most Americans do?

Posted by: Tom DC/VA on April 5, 2006 at 8:09 PM | PERMALINK

I think Tyler is at least mostly a believer in the efficient markets hypothesis. If so, he should agree that it's extremely difficult to think of market opportunities that have not yet been exploited and are not prohibited by law. A person could build an entire career out of just one such idea. I think it's a little harsh to criticize him for failing to come up with one on the spot for a blog post.

Posted by: FXKLM on April 5, 2006 at 8:23 PM | PERMALINK

Good one jb. At least make the value of donated organs tax deductable.

Posted by: Saam Barrager on April 5, 2006 at 8:30 PM | PERMALINK

I recall an article in the NY Times a few years back about companies that would send people to wait in line for you. They charged by the hour.

Posted by: Xboy on April 5, 2006 at 9:11 PM | PERMALINK

I'm going to make my 100 million off a cheap motion sensing robotic sprinkler designed to distinguish between the neighbors cat and my own. It's all in the marketing.

Posted by: B on April 5, 2006 at 9:51 PM | PERMALINK

I'm going to make my 100 million off a cheap motion sensing robotic sprinkler designed to distinguish between the neighbors cat and my own. It's all in the marketing.

Be easier to put a short-range ID chip on your cat's collar, and design the sprinkler to ignore it. Plain motion-sensing critter sprinklers are already on the market. If your cat and the other one have a thing going, you're on your own.

Posted by: tbrosz on April 5, 2006 at 9:54 PM | PERMALINK

I want a market in votes. There is no reason whatsoever for the artificial anti-market prohibition on vote-buying.

Currently, the rich buy whatever congressional seats they want, but they do it through massive political contributions and gi-normous advertising campaigns, "think tanks" which orchestrate what events become news in the media, or simply buying vast media chains. All the money the rich spend to buy the political system simply goes into the pockets of advertising firms, political professionals, and big media.

If the rich were forced to buy the votes directly from the voting public, a clear market in votes would allow much of that money to filter down to regular people. Also, it would be much more cost-effective to buy the votes of poor people, who would set their price lower, than those of wealthier people; somebody making $100,000 a year is hardly going to be influenced by the prospect of an extra $100 for voting one way or another. But if a candidate were buying votes from poor people, it would also be cost-effective to have at least a poor-friendly image, if not substantive poor-friendly policies; this would probably lower the price per vote. Such incentives with regard to buying the votes of poor people might alter candidates' images, making them project a less business-friendly and more socially responsible public face. Though this might of course have little to do with their actual policies.

Less controversial version: how about just a market to get people to vote, regardless of who they vote for? Set up public corporations to pay people to come to the polls (to reimburse them for their time, the way we do with jury duty). This could be a market-oriented system which would be authorized to pay different sums in different districts with the intent of maximizing the vote each year. Vote-enhancing corporations could be paid according to a rise or fall in the number of votes from the previous year's total.

Actually, on reflection, I've decided this is a stupid idea.

Posted by: brooksfoe on April 5, 2006 at 9:59 PM | PERMALINK

Tbrosz -- The RFID chip is too easy and if I just wanted a motion sensor system I'd pick up a couple parts at the local hardware store.

Mine will have a fish eye lense and multispectral sensor. It will have some standard presets, but for the 10 year old computer geek it will have a computer interface through which it can be iteratively trained for terrain and an individual cat's agility. The high end version controls a zone sprinkler system. It will also have sensitivity in the near infrared so it can be billed as a water conserving lawn spinkler -- identifying stressed grass before it wilts.

Posted by: B on April 5, 2006 at 10:15 PM | PERMALINK

B:

Now you're starting to sound like NASA. Why pull something that works off the shelf when you can make a career out of building a new one?

Posted by: tbrosz on April 6, 2006 at 12:13 AM | PERMALINK

Actually I'll be working with some folks at NASA this summer. Not on this though. The NASA project will use lasers and fewer cats.

Posted by: B on April 6, 2006 at 1:03 AM | PERMALINK

I would pay $2 to who ever most closely guesses the exact time and date of the PERMANENT retirement of one, George W Bush.

Based on an original idea by Jim Bell that was later stolen by the Pentagon and rebadged as PAM ( Policy Analysis Market's )

Help send Bush to www.stiffs.com pledge here or at yr nearest really political website.

Posted by: professor rat on April 6, 2006 at 4:34 AM | PERMALINK

The whole making markets proposals underscores one basic rule about soceities: markets don't just spring into existence automatically. There has to be some system to regulate them, track them, etc.

Lots of examples:

1) Lots of pollution markets - in Carbon dioxide, sulphur, nitrogen oxides - have been proposed or established. The toughest thing: measuring the output. It's possible to do on a few hundred big power plants, extremely difficult on millions of cars or farms.

And of course, a huge incentive to cheat.

Which is why in the end the basic simplicity of just setting an efficiency goal on motors, or banning certain substances outright is easier. You can check on motors once a year (emissions tests) or check that a substance is just not used at all.

2) Markets require elaborate legal systems to govern behavior. Property law, contract law, etc. All that stuff that we take for granted in the US - but we notice when it's not perfect, like in real estate.

Forgetting that basic rule - you have to have rules - made the economists look like fools in the deregulating 90s. Over and over again (Russia, Argentina, Africa, etc.) they proposed and got deregulation, and we got chaos.

3) Which leads to another observation - if a sociologist and an economist both make a prediction, bet on the sociologist. Because in psychological tests, people don't act like the assumed perfectly rational beings. And that's the bed rock of micro-economic theory.

Posted by: Samuel Knight on April 6, 2006 at 9:38 AM | PERMALINK

How about a market for early retirement for politicians? How much would you have paid to see Tom Delay gone several bad pieces of legislation ago? For that matter, how about just flat out vote buying. We can't seem to elect people who put the public good first, but maybe we can buy a few key swing votes.

Posted by: Common Sense on April 6, 2006 at 11:00 AM | PERMALINK

measuring pollution doesn't necessarily have to be done only on output. it can be done on the production side as well.

Posted by: colorless green ideas on April 6, 2006 at 8:14 PM | PERMALINK




 

 

Read Jonathan Rowe remembrance and articles
Email Newsletter icon, E-mail Newsletter icon, Email List icon, E-mail List icon Sign up for Free News & Updates

Advertise in WM



buy from Amazon and
support the Monthly