This weekend was Meliora Weekend at Rochester, a weekend full of fun and excitement for parents and alum. However, there was a huge controversy over tickets to see the keynote speaker, former President Bill Clinton.
The controversy was that the tickets were limited and the alum and "big donors" got first dibs on the tickets. The rest of the university had to go online while the registration crashed and were unable to get tickets. There was then a lottery for some students to get tickets, but most students scalped these tickets.
The University of Rochester violated the Rule of Law. This says that there should be no special privilege given by a governing body to certain people. The University did just this as they gave the alum and donors the tickets to see Bill Clinton (indirectly because they had early registration) and had everyone else get what was left over.
Some students were in uproar and articles in the school newspaper showed how upset some students were at the Universities unfairness. They thought there should be no favoritism and if there was then it should be to the students who go to the University - the alum had their turn here.
Every group is going to say they should have the special privilege but no one should. If anyone should get the privilege, I can see why they would give it to the alum as they are the ones donating to this new $1.2 billion plan.
But there was no equity in the ticket distribution. There was no horizontal equity that treated everyone as equal people. Instead they favored one certain group, violating the Rule of Law.
Showing posts with label rule of law. Show all posts
Showing posts with label rule of law. Show all posts
Saturday, October 22, 2011
Class 20 - Mysterious Black Box
Today we talked more about the Bus Driver example under the rule of law. We shouldn't wait for anyone because it would be special privilege, but we have a knowledge problem. Social costs are impotent.
We then talked about feedback loops. If FedEx fails, we would use UPS. However, FedEx cares when it loses a package and it is their interest to hire trustworthy people.
We looked at trade and specialization. The point of economic activity is because things are scarce and we want things. The challenge is to figuring out what gets produced, how we do it, and how to distribute it. The factors of production are land (place to do stuff), labor (people), and capital (stuff needed to produce stuff - physical and human ability to increase ability (i.e. education))
Production process: Inputs --> black box --> stuff. Black box is where cool things happen (production).
We do this by being self-sufficient, specialization and exchange (PSST - patterns of sustainable specialization and trade), and discovery.
Economics is a matching problem as self-sufficiency causes less economic activity. We need to match technology, skills, and consumer presences.
We then talked about feedback loops. If FedEx fails, we would use UPS. However, FedEx cares when it loses a package and it is their interest to hire trustworthy people.
We looked at trade and specialization. The point of economic activity is because things are scarce and we want things. The challenge is to figuring out what gets produced, how we do it, and how to distribute it. The factors of production are land (place to do stuff), labor (people), and capital (stuff needed to produce stuff - physical and human ability to increase ability (i.e. education))
Production process: Inputs --> black box --> stuff. Black box is where cool things happen (production).
We do this by being self-sufficient, specialization and exchange (PSST - patterns of sustainable specialization and trade), and discovery.
Economics is a matching problem as self-sufficiency causes less economic activity. We need to match technology, skills, and consumer presences.
Class 19 - The Silver Rule
Today we talked about the Golden Rule and how it fails economically. If we "do unto others as we want them to do unto me"then our motivation for trade would be for the benefit of others. However, this only works in small societies and not in large markets. This fails in big societies like Stalin's Holomodor in Ukrain in the 1930's and Mao's Great Leap Forward because of a knowledge problem.
We operate under the idea that production for profit causes production for the people. But this is frowned upon. We celebrate self-interest in everything but the market (going to the gym/not smoking is good for only me and celebrated). So apparently the person who jogs is good but the person who makes the jogging shoes is evil.
We then looked at reciprocal altruism and the ethics of paying for organs. Say Tony needs a kidney and Tina gives him one. Ten years later, Tina runs a fundraiser and Tony gives her $20,000. These two events are very altruistic, but shrink the time span and the proximity of the people and the actions are horrific.
We looked at the definition of self-interest as people pursuing actions that interest them. Under this definition, Gandhi and Mother Theresa are self-interested, but not selfish.
We then talked about the Bus driver example in terms of the Rule of Law. If Rizzo is late for his buss, what is the effects. There is a knowledge problem for the bus driver to know the cost of being late. In Ecuador, lateness has caused the GDP to drop by 4%. There is a knowledge problem.
We then talked about the Silver rule. This says that "do not do to others what is unfair/unjust if they did it to you." This is better than the Golden Rule in a large population where we have a knowledge problem.
We operate under the idea that production for profit causes production for the people. But this is frowned upon. We celebrate self-interest in everything but the market (going to the gym/not smoking is good for only me and celebrated). So apparently the person who jogs is good but the person who makes the jogging shoes is evil.
We then looked at reciprocal altruism and the ethics of paying for organs. Say Tony needs a kidney and Tina gives him one. Ten years later, Tina runs a fundraiser and Tony gives her $20,000. These two events are very altruistic, but shrink the time span and the proximity of the people and the actions are horrific.
We looked at the definition of self-interest as people pursuing actions that interest them. Under this definition, Gandhi and Mother Theresa are self-interested, but not selfish.
We then talked about the Bus driver example in terms of the Rule of Law. If Rizzo is late for his buss, what is the effects. There is a knowledge problem for the bus driver to know the cost of being late. In Ecuador, lateness has caused the GDP to drop by 4%. There is a knowledge problem.
We then talked about the Silver rule. This says that "do not do to others what is unfair/unjust if they did it to you." This is better than the Golden Rule in a large population where we have a knowledge problem.
Saturday, October 15, 2011
Class 18 - When Markets Fail...and Rizzo Sits on Students
Today we talked about the market.
We said that market transactions caused positive sum outcomes. But markets are often wrong and sometimes trade doesn't happen.
This happens when there is a lack of markets or a problem in the institutions.
When we have a lack of markets, there are usually externalities (like social norms preventing transactions), market powers (monopolies), or information problems. Rizzo proved this by politely sitting on a student and asking him to pay him to get up. Both parties would benefit from the transaction, but there was no trade - social norms prevented this.
We have problems in institutions usually with the Rule of Law. This is when legislation applies equally to everyone, the law is not arbitrary/arbitrarily enforced, and it is a general law (see titanium czar lecture). Rizzo talked about getting pulled over for speeding and when speeding is acceptable. The law can't be arbitrarily enforced.
We then talked about efficiency as producing what people want and at the lowest cost. We don't want to wast resources.
We ended the class with inflation. This is when there is a general rise in all prices. Basically there's too much money. There is the same amount of goods, but there's just more money so prices increase. There is always that famous complaining Grandpa story - "when I was a kid, candy cost 2¢." Well you know what Grandpa? You also made less in wages.
We said that market transactions caused positive sum outcomes. But markets are often wrong and sometimes trade doesn't happen.
This happens when there is a lack of markets or a problem in the institutions.
When we have a lack of markets, there are usually externalities (like social norms preventing transactions), market powers (monopolies), or information problems. Rizzo proved this by politely sitting on a student and asking him to pay him to get up. Both parties would benefit from the transaction, but there was no trade - social norms prevented this.
We have problems in institutions usually with the Rule of Law. This is when legislation applies equally to everyone, the law is not arbitrary/arbitrarily enforced, and it is a general law (see titanium czar lecture). Rizzo talked about getting pulled over for speeding and when speeding is acceptable. The law can't be arbitrarily enforced.
We then talked about efficiency as producing what people want and at the lowest cost. We don't want to wast resources.
We ended the class with inflation. This is when there is a general rise in all prices. Basically there's too much money. There is the same amount of goods, but there's just more money so prices increase. There is always that famous complaining Grandpa story - "when I was a kid, candy cost 2¢." Well you know what Grandpa? You also made less in wages.
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