Starting Anew

I have to admit that I have not been very diligent about keeping this blog up to date. Part of the problem is finding time to actually write and post stuff. The other problem is that I’ve not found a really good blogging editor. I’ve been using emacs and org-mode along with googlecl and that works reasonably well. However, inserting images and such is a bit of a nuisance. I’ve also been using MacJournal on my Mac. I use it for keeping notes of various sorts and with works well for that. Publishing to a blog is easy enough, as long as you don’t have graphics included. Then things get a bit challenging.

Today I’ve played around with a few other editors. On the Mac, it looks like MarsEdit is probably about the best, but it costs $40. This post is being written with Windows Live Writer on my netbook. It too seems pretty good. I will have to give them each a good try to see which is best. I guess this means that I will have to write two or three posts per week. Stay tuned.

org-google-weather follow up

Well, I've been mucking around with org-google-weather and have everything working on my computer now. It seems that Julien wrote his extensions with Linux in mind so I had to do a couple of minor tweaks to get it to work on my Mac. Most notably, the standard Emacs installation seems to not possess image.el. This is needed to display graphics for the weather forecasts. I did a google search and found iimage.el and installed it. Next, I had to go looking for the icons. Luckily I have a Linux machine handy so I copied the necessary weather icons to a folder on my Mac. Then I had to change the path specified in google-weather.el to point to where they were on my machine. Once that was done, I see cool little icons for the weather forecasts.

The next battle was to get the right units to show up. By default it was showing the temperature in Fahrenheit instead of Celsius. This is actually really easy to fix. In org file where I keep the calendar stuff, I just added "en-gb" after the location. For some reason, Google weather seems to think that Canada uses Fahrenheit. The resulting call in my todo.org file is

#+CATEGORY: Camrose Weather %%(org-google-weather "Camrose, AB" "en-gb")

This puts the weather forecast for each day into my calendar along with my todo list and appointments.

Still more Emacs stuff

I have found even more cool things for org-mode. I came across Julien Danjou's really cool weather extension for Emacs and org-mode. It gives a weather forecast along with each day's todo list. Kind of nifty.

A New Blogging Tool

For quite a while now I have been using org-mode and Emacs for just about everything. Tonight I came across a new org-mode tool for posting directly to blogspot blogs (like mine). I decided to give it a try and I think it is pretty cool. It certainly makes it easier to write blog entries. Maybe I will be more diligent about keeping this blog up to date.

A World Currency

A while back a former student suggested that I comment on the notion of a world currency. Given the turmoil that we have seen in the world economy over the past couple years, this is probably a good topic to write on. At first blush, the notion of a single world currency may have some appeal in times of currency volatility. However, there are a number of problems with such a system. First, there are a couple of ways that such a system could be implemented -- the implications are different for each. The first method is to an actual “earth currency” that is used as the means of exchange in all countries -- call it the “terran”. The second method would be to have each country retain its own currency but fix that currency against the terran.

The terran as the only currency

In a system that uses the terran single, world-wide currency there would be a couple of advantages but many more disadvantages. The advantage is that there would be no volatility in prices for importers and exporters. If you are going to import goods from another country, there is no uncertainty about what will happen to your cost due to exchange rate fluctuations. Also, if you are investing in assets in another country, there would be no exchange rate risk in terms of the returns that you will earn. These are about the only advantages. The disadvantage of such a system is that monetary policy would be bad for half of the world at any given time. If one part of the world is undergoing an economic boom and experiencing inflation, then the appropriate monetary policy would be a tight money policy to fight inflation. However, any regions that are in a slump and facing unemployment would be hurt by that tight money policy. Why not simply have different monetary policies in each region? Well, as soon as we do that, we are back to having separate currencies. The above problem is a challenge that faces common currency areas like the Euro zone. When one country’s economy is booming and perhaps facing inflation, the appropriate policy response is tight money but that hurts other countries. There is an extensive literature on the size of optimum currency areas. For the most part, the Euro zone is about as big a currency area as you want to see. Anything larger will carry costs that outweigh any benefits.

A single vehicle currency

The second way to implement a world currency would be to have a single vehicle currency, again we will call this the terran. Each country fixes its currency against the terran. Each country is then free to set its own monetary policy, right? Well, no. Under a fixed exchange rate regime, monetary policy is ineffective. An expansionary monetary policy to spur the local economy leads to downward pressure on the value of the domestic currency against the terran. In order to prevent currency depreciation, the central bank of that country must step into the foreign exchange market and buy up excess domestic currency. This has the effect of reducing the domestic money supply. The exchange rate defending activities of the central bank sterilize its expansionary monetary policy. In fact, we have seen a couple of times in the history of the global economy where such a system has been used. Prior to World War I much of the world was on a gold standard -- gold was that vehicle currency. There were a number of problems with that system due to the nature of the underlying commodity - gold. The other time where such a currency system was used was from the 1950s through the late 1960s under the Bretton-Woods exchange rate system. The U.S. dollar was the vehicle currency and everybody fixed against the dollar. The problem faced by the Bretton-Woods system was that expansionary monetary policy in the U.S. led to inflation in the U.S. and this was contagious across other member countries. While in times of economic instability, it might be intuitively appealing to think about a world currency, such a system would not do what we hope it will. It certainly won’t be a panacea that solves all of our problems. Also, it will create more problems than we currently have.

Really Useful Apps for My Mac

I keep coming across really neat and useful apps for Mac. I thought I would list them here with a brief description.  You might find them useful. If you know of an app that you think is really useful but don't see it here, email me
Yojimbo
This is one neat little application. When I used Windoze I found OneNote to be a remarkably useful program, although a bit bloated.  The things that I missed about OneNote was the ability to do screen shots from websites and stuff to save for later use. As well, the ability to make notes related to different topics. Yojimbo, from barebones software (http://www.barebones.com) fills that need, plus a whole lot more. It does not suffer from the same kind of bloat that OneNote has fallen prey to. Instead, it does all sorts of really useful things really well.  It retails for $39 (and that license allows installation on multiple computers for use by a single user).  In my case that turns out to be really useful, along with its ability to sync through MobileMe.  I have an iMac at work and one at home. I also have a MacBook Pro that travels with me.  The sync feature means that all three computers have the same information always.  Definitely a bargain at $39.

Price-Fixing, oh my

Today the Competition Bureau - Canada's watchdog agency for things involving market structure and competition - announced that it has begun an investigation into allegations of price-fixing among chocolate bar makers in Canada. You can read about the story at CTV's website. While the story itself is rather interesting, what prompted me to write this blog entry are some of the talk-back comments on the CTV website.

A number of people continue to insist that price fixing is going on in gasoline retailing and that the Bureau should be investigating the gasoline retailers instead of wasting their time on something as trivial as chocolate bars. The fact is that the Bureau has had a number of investigations in the past into gasoline pricing and not found evidence of price fixing. Maybe they didn't look hard enough. Or maybe, just maybe, the people that insist that there is price fixing in gasoline are misunderstanding the symptoms.

What gets people all worked up about gasoline prices and convinces them that prices are fixed is that gasoline prices always move in unison among nearby dealers. Well, that's exactly what one would expect to happen in a competitive market! You have to remember that gasoline is pretty much a homogeneous good -- perfectly substitutable across brands. My car runs just fine on regular unleaded regardless of where I buy it. Thus, each gasoline retailer's product is a perfect substitute for their competitors' products. This perfect substitutability means that prices have to move in locked-step.

Suppose that you are driving down the road and need to buy gas. On one corner you see the price is $1.10 and on an equally accessible location the price is $1.08. Where are you going to buy fuel? If you are like most consumers and concerned about price, you will buy it where it is cheapest. The retailer trying to charge $1.10 will lose all of his/her sales. In order to prevent that they must match their competitors' prices. Before you know it, everyone is charging $1.08. Hardly evidence of price fixing.

This is distinctly different from the case of goods that are not perfect substitutes. Suppose that you are in the market for a new car. You could buy a new Ford Focus for about $20,000 or you could buy a new Kia Rio for about $14,000. Why is Ford able to charge $20,000 for the Focus when the Kia is so much cheaper? Because the goods are not perfect substitutes (at least in the eyes of consumers).

In the case of chocolate bars, what is particularly interesting is that the goods are not perfect substitutes - an Oh Henry bar is not the same as a Mr. Big or a Jersey Milk - they are very different products. However, it is interesting that they are all priced the same. Now, the fact that heterogeneous, competing goods are priced the same is not in itself evidence of price fixing. There may be very sound business reasons for standard pricing such as price list simplicity. The point that I am trying to make here is that how close the prices are among competing products or services depends largely on how substitutable the goods are.

As the degree of substitutability between competing products increases, there is less and less room for dispersion. In the case of gasoline prices, the products are very nearly perfect substitutes. As a result we would expect prices to exactly match across competing retailers. Just because prices move together does not mean that prices are fixed, it may actually be a sign of fierce competition.

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OS X Leopard Is amazing

Well, it has been a long while since I posted to my blog. I just installed OS X Leopard on my MacBook Pro. Wow!!!! Up until a week ago I had been mostly just Windoze and Linux. I have an old G4 PowerMac that is pretty slow. I finally got sick of Vista and went out and got a new MacBook. I liked Tiger -- it was certainly an improvement over Vista. But Leopard is terrific. The upgrade was pretty painless -- stick the DVD in, click on upgrade and pretty much walk away after selecting a few options.

Probably the two biggest improvements in Leopard are Spaces -- a multiple desktop tool that lets you have any number of desktops running in the background. This has been standard on Linux systems for years and has finally made its way onto the Mac. The other really nice feature are the improvements to the dock. While it seems minor, being able to have folders on the doc, such as Applications and Documents, and click on them and have them pop open before you on the screen, sort of like the Start Menu in Windoze (the one feature that I missed from Windoze). Definitely a nice touch. I haven't played with Time Machine yet -- that's next. I suspect that it may be a bit of a resource hog (based on my experience with things like Norton Ghost on a PC). Time will tell.

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A Sin Tax on Junk Food??

Recently the Medical Society of P.E.I called for a junk food tax -- an excise tax placed on "junk food" similar to tobacco and alcohol taxes. (Read the story on CBC's website here.) There is actually a good basis in economic theory for such a tax. Unfortunately, effectively implementing such a tax would be no easy task. The rationale for such a tax is based on the belief that junk food, however it is defined, is creating a public health crisis. The extent of this crisis is going to create externalities in that those who are affected by diabetes and obesity and this will impose costs on the rest of society. As such, it is in the government's best interest to curb these problems and one of their main sources. How would such a tax impact the consumption of junk food and would it be effective? That is the first question that needs to be asked in this case. The logic is simple -- a junk food tax will cause the supply curve to shift to the left and as a result, the price will rise and due to the law of demand (which says quantity demanded declines as the price rises). The extent to which a junk food tax actually reduces consumption ultimately hinges upon how flat or steep the demand curve is. If demand is relatively elastic and hence the demand curve is relatively flat, such a move would likely have a large impact on consumption. On the other hand, if demand is relatively inelastic, resulting in a steeper demand curve, the tax will have little impact on consumption -- merely raising the price by consumers (and putting more money in the government's coffers). This is why cigarette taxes generally have little impact on consumption -- it takes a very large increase in price to bring about any change in consumption. Given the nature of junk food, it is likely that demand will be quite inelastic. As a result the demand curve will be quite steep and so the tax will not have much impact on consumption. That said, however, if such a tax were implemented and the money directed to media campaigns that show consumers the bad things that junk foods do to their bodies, then such a tax might be able to achieve something. However, if we think that just putting the tax on the good will reduce consumption, then we are mistaken -- about as mistaken as we are if we think there is any nutritional value in soda pop. Apart from the practicalities in terms of the actual effect such a tax would have, there is also the matter of implementation. The PEI health minister, Chester Gillan rightly pointed out that defining what a junk food is will be difficult. If we are not careful, as we often are not, we could end up creating all sorts of problems with market distortions and activities to find loop-holes. If so, the tax will not only not achieve anything in terms of junk food consumption but also create numerous other problems in the marketplace. The real solution to junk food consumption issues is to reduce demand -- given its inelastic nature, a junk food tax will have little impact there. A better course of action is more aggressive public education as well as making junk food harder to get by getting rid of vending machines in schools.