And the Nobel Prize in Economics goes to:

Elinor Ostrom of Indiana University and Oliver Williamson of Berkley.

Elinor Ostrom has challenged the conventional wisdom that common property is poorly managed and should be either regulated by central authorities or privatized. Based on numerous studies of user-managed fish stocks, pastures, woods, lakes, and groundwater basins, Ostrom concludes that the outcomes are, more often than not, better than predicted by standard theories. She observes that resource users frequently develop sophisticated mechanisms for decision-making and rule enforcement to handle conflicts of interest, and she characterizes the rules that promote successful outcomes.

Oliver Williamson has argued that markets and hierarchical organizations, such as firms, represent alternative governance structures which differ in their approaches to resolving conflicts of interest. The drawback of markets is that they often entail haggling and disagreement. The drawback of firms is that authority can be abused. Competitive markets work relatively well because buyers and sellers can turn to other trading partners in case of dissent. But when market competition is limited, firms are better suited for conflict resolution than markets.

Stimulus and Jobs

From the Wall Street Journal:

"Rarely in politics do we get such a clear and rapid illustration of a policy failure."

Barley Planting Time

The ultimate homebrew experiment begins today. I planted barley in my backyard. If all goes well, I'll be making homebrew beer, using only home-grown ingredients, sometime in the winter of 2011.

First of all, it's hard to get small quantities of barley seeds. When you do find them, they usually are not of a variety that is traditionally used for malting. I was able to get a small sample here; it's a 5 gram sample, about 100 seeds. So the idea is that next summer I'll harvest enough seeds to plant next fall, and the following summer I'll have enough to make a batch of beer (and enough left over to plant for the next crop).

Still on the to-do list for this project:

1. Obtain and plant some hop rhizomes.
2. Develop yeast-ranching technique.
3. Get some unmalted barley and practice malting.

I think step 2 may be the most challenging, but it helps that I have a microbiologist in the house. Then again, there are probably more homebrewers who raise yeast than there are who malt their own barley.

The barley I planted is the Klages variety. I'm growing it using biointensive techniques, so I hope a 100 square foot bed will produce enough to make a five gallon batch of beer. If the yields are not what Jeavons leads me to expect, I might need to plant 2 x 100 sq. ft. beds.

I also want to try some Maris Otter, but I think it may not grow so well in this warm climate.

Too bad I'm not playing SCA anymore. They'd eat this stuff up. Of course, someone would be bound to point out that even in the Middle Ages, specialization had progressed to the point that farmer, maltster, and brewer were distinct occupations.

First-Year Grad Student Wins Nobel Prize in Economics!

No, not really. But this post on Greg Mankiw's blog made me snort coffee out of my nose!

"The surprise choice of first-year graduate student Quintus Pfuffnick for the Nobel Prize in Economics drew praise from much of the world Friday even as many pointed out the youthful economist has not yet published anything in scholarly journals."

Who knew that economists could do satire?

An Intuitive Explanation of Bayes Theorem

I found this essay incredibly helpful.

As the author says, "When you are finished reading this page, you will see Bayesian problems in your dreams."

"You can't say that."

At the UN, the Obama administration backs limits on free speech.

Clunkers in Practice

Today's Wall St. Journal points out that "cash for clunkers" hasn't been a great success, despite the administration's claims. New car sales for September are down 25% from a year earlier. Some 700,000 cars were sold in the summer under a program that gave buyers $4,500 to do what they would have done anyway. All the program did is steal those sales from the future, exactly as critics predicted.

The basic fallacy of cash for clunkers is that you can somehow create wealth by destroying existing, productive assets. The journal quotes Henry Hazlitt's classic "Economics in One Lesson," but Hazlitt was borrowing from Frédéric Bastiat's "Parable of the Broken Window." You can't raise living standards by breaking windows so some people can get jobs repairing them.

If this is Washington's idea of a program that works, heaven help us when they get their hands on our health care.