Elinor Ostrom 1933-2012

It is being reported that Professor Elinor Ostrom, who received the 2009 Nobel Prize in Economic Sciences for her groundbreaking research on the ways that people organize themselves to manage resources, has died.

Ostrom shared the 2009 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, also known as the Nobel Prize in Economic Sciences, with University of California economist Oliver Williamson. She was the first woman and remains the only woman to be awarded the prize.

The Royal Swedish Academy of Sciences awarded the 2009 Nobel Prize in Economic Sciences to Ostrom "for her analysis of economic governance, especially the commons." Through a multidisciplinary approach that combined theory, field studies and laboratory experiments, she showed that ordinary people are capable of creating rules and institutions that allow for the sustainable and equitable management of shared resources. Her work countered the conventional wisdom that only private ownership or top-down regulation could prevent a "tragedy of the commons," in which users would inevitably destroy the resources that they held in common.

Incentives matter: teacher file

From a new paper, Incentives Work: Getting Teachers to Come to School by Esther Duflo, Rema Hanna, and Stephen P. Ryan, in the latest issue of the American Economic Review,

We use a randomized experiment and a structural model to test whether monitoring and financial incentives can reduce teacher absence and increase learning in India. In treatment schools, teachers’ attendance was monitored daily using cameras, and their salaries were made a nonlinear function of attendance. Teacher absenteeism in the treatment group fell by 21 percentage points relative to the control group, and the children’s test scores increased by 0.17 standard deviations. We estimate a structural dynamic labor supply model and find that teachers respond strongly to financial incentives. Our model is used to compute cost-minimizing compensation policies.

EconTalk this week

Jonah Lehrer, staff writer for The New Yorker and author of Imagine: How Creativity Works, talks with EconTalk host Russ Roberts about the science of creativity. They discuss focusing vs. ignoring as a way to solve problems, the potential for computer-based creativity, how W. H. Auden used drugs to improve his poetry, Bob Dylan, Steve Jobs, and the creative power of mindless relaxation. The conversation closes with a discussion of what policies might increase creativity.

Interview with Gary Becker

The latest issue of the Erasmus Journal for Philosophy and Economics has an interview with Gary Becker on the potentials and limitations of rational choice theory.

An interesting question:

Following the crisis, many economists and methodologists have argued that more realistic behavioral underpinnings of economic theory would have made forecasts more accurate. Do you think that one of the things the recent crisis has shown us is that people just do not behave rationally? Or did the crisis rather show exactly the opposite—that people did in fact react to incentives and that the consequences of introducing new financial instruments were just not foreseeable?

I think it is mainly the latter. There were incentives, both on the borrower and on the lender side, that these subprime loans would be made available at the lowest interest rates; and there was pressure from the government to do so; and probably those involved did not understand the financial instruments. Now, is it that we have to change our theories radically with respect to their behavioral structure or even switch to a new behavioral framework? There is very little evidence that would support such a move.

There is a whole field of behavioral economics that I follow pretty closely, and parts of it I have even contributed to. But did the behavioral economists predict the crisis any better? When taking a look at the literature, one does not find better results. The rational choice model is an abstraction and as is the case with all abstractions and all theories from whatever discipline, say physics, you abstract from some things that sometimes may be important. And this is also true of the rational choice model. In terms of understanding the crisis, I do not think that more realistic behavioral assumptions would solve the problem. It has always been difficult in rational choice models to adequately account for the coordination of people’s expectations. To some extent, the crisis involved the coordination of irrational expectations. This might be something we should think about and improve.

With respect to how the crisis affects our models in terms of being based on a more realistic assumption structure: what will occur is that models become refined to help us understand what happened. But I do not see a fundamental change in the models with respect to the underlying structure of human behavior, nor do I see a need for such a change.

Incentives matter: banking file

Anticipated, and actual, bailouts do cause moral hazard. This from Luigi Zingales at Bloomberg

The circumstances that make policy makers succumb to the “too big to fail” doctrine are similar. An important difference, however, is that a Federal Reserve chairman’s resolve to bail out banks actually increases the likelihood of disaster, since the implicit promise to intervene has a perverse influence on the banks’ willingness to take risk.

Self-Fulfilling Prophecy

Worse, “too big to fail” creates a self-fulfilling prophecy: Shortsighted policy makers will always prefer the cost of a bailout to the cost of upsetting the market. As a consequence, the problem continues and expands. Anticipating government bailouts in case of emergency, lenders are willing to lend to large financial institutions very cheaply and without restrictions. The managers of these financial institutions find it attractive to borrow a lot and to take wildly risky gambles, because they can maximize their profits by doing so.

Unfortunately, the risky bets also maximize the probability that the government will have to intervene, as well as the cost to the government when it does.

The family as a firm

Given the discussion in the previous post, a question that occurred to me is, To what degree is the family a firm? After all in many cases families and firms look very much alike. If Mr and Mrs Hayek were to go home and make a meal for the Hayek family, haven't they just turned themselves into Cafe Hayek?

The answer, if we follow Harold Demsetz, is no. For Demsetz a firm is an organisation which produces for those, and only for those, outside the organisation, whereas the family is an organisation which produces for those inside the organisation. But it is also possible for the family to produce for those outside the organisation -they can have friends over for dinner, for example. This makes the family look more "firm-like". For the Grossman-Hart-Moore approach to the firm, on the other hand, the firm is a collection of asserts over which an agent (or agents) has property rights or control. But doesn't this also apply to a family? Assets such as the house and the car and the microwave and the television and computer etc are controlled by agents, normally the parents, in the family. Are there not "quasi-rents" created in a relationship for which the use of vertical integration - the forming of a family in this case- is just a way to avoid hold-up problems?

Of course if you look at the neo-classical model of the firm and the household they are the same. As Kenneth Boulding once point it "[t]his type of analysis [the theory of the firm] is exactly analogous to the analysis of the reactions of a consumer by means of indifference curves. Indeed, a consumer is merely a "firm" whose product is “utility.” The indifference curves are analogous to the isoquants, or product contours, the only difference being that they cannot be assigned definite quantities of utility. The utility surface, whose contours form the system of indifference curves, is a “mountain” whose shape we theoretically know, but whose height at any point probably cannot be known; by contrast, we can assume that both shape and height of the production surface are known. The "substitution effect" and the 'scale effect" are likewise known in consumption theory, where the scale effect is usually called the “income effect.” Thus, a rise in the price of a single object of consumption will have a substitution effect tending to reduce the consumption of that object as cheaper alternatives are substituted for it. There will also be an “income effect” tending to reduce all consumption, as the higher price makes the consumer poorer. The effect of a given rise in price, therefore-i.e., the elasticity of demand-depends first on the substitutability of the commodity concerned, and, secondly, on its importance in the total expenditure. This is true either of a consumption good or of a factor of production".

So do we need any additional theoretical tools to analyse the family over and above those provided by the theory of the firm? If so, What and why?

Ronald Coase's theory of the firm and the family

A video on the theory of the firm applied to the family, In what ways is a family a firm? Mary Anne Case, professor of Law at the University of Chicago Law School, puts her work on reproductive technologies and on analogies in the governing of marriage and business corporations in an explicitly Coasian context. She analyzes the long history and recent past to make predictions about the future of families, sex, and society.

We are now generally free, as Coase observes, to structure our business affairs in corporate or partnership form, as a franchise operation, or as a sole proprietorship. Both law and society now offer a variety of ways to structure one's personal life: the provision of sex and care, and the production of children can each now be outsourced or internalised within a legally recognised family structure.

Summit job losses do not show need for government support

Homepaddock point us to a media release on Scoop informs us that

Summit job losses show need for government support

The announcement of 49.5 redundancies at Summit Wool Spinners in Oamaru today shows the need for government action to protect jobs in the manufacturing sector, says the Engineering, Printing and Manufacturing Union.

The company has cited a lack of orders overseas driven in part by the high exchange rate as a cause of the redundancies.

No these job losses don't show the need for any government action. For a start the government can only affect the exchange for a short time and at a large cost. Also once the government stops its interventions the exchange rate goes back to its true level and Summit has exactly the same problems all over again. For the company to remain in business the government would have to intervene in the exchange rate permanently, which it can't do. The message here is most likely that we just don't have a comparative advantage in this industry. There is also the question that if the government intervenes to keep the exchange rate "low" to protect jobs in the Summit factory how will this effect jobs in business who rely on imports? If the exchange rate is "low" imports cost more, this raises the costs of firms who utilise imports in their production and this makes these firms less viable, jobs will be lost in these industries. So while some jobs will be saved in a particular firm, jobs in other firms will be lost.

How sweatshops help the poor escape poverty

Here's a new Learn Liberty video with Professor Matt Zwolinski from the University of San Diego.

Interesting blog bits

1. Chris Dillow writes on "Economics" & Rationality
   

   "One of the great irritations of our age is the tendency for non-economists to tell us what's wrong with economics."
   
   It would be, I think, difficult to find an economist who disagrees with Chris on that.

2. Gavin Kennedy on Larry Arnhart Reviews Matt Ridley

   I agree with much of Larry Arnhart’s criticism of some of Matt Ridley’s ideas, but I also have reservations about some of Larry’s presentation of the “stateless” versus market-states extremes. States evolved both bottom up and top down; both are susceptible to future changes

3. Don Boudreau notes that The Problem Is Precisely that Majoritarian Voting Is a Deeply Problem-Filled Means of Making Decisions

   A sadly overlooked alternative to a democratic state governing / controlling / restricting / regulating / subsidizing / commanding activity X is for the market to govern X.

4. Stephen MacLean gives A cheer for constitutional monarchy's restraint on government

   As the Queen’s Diamond Jubilee celebrations wind down, it may be well to reflect on an aspect of public choice theory which supports constitutional monarchy — principally its rôle as a brake upon self-aggrandising politicians.

5. David Henderson asks Is Labor Law More Oppressive for Workers than for Employers?

   The main effect of the federal government's labor laws is to give monopoly power to groups of workers. So abolishing federal labor law would be more liberating for employers than for the unions.

6. Greg Mankiw on Barro on the Slow Recovery

   Robert says incentives are the key

7. John Cochrane on Crony Capitalism

   Luigi Zingales has a nice Wall Street Journal oped today, decrying how crony capitalism has ruined Italy and is on its way to doing so in the US

8. Steven Horwitz asks Do Free Markets Require Rational Actors? Learning and correction of error are what count.

   Two plane rides the other day afforded the opportunity to read Dan Ariely’s Predictably Irrational. Published in 2008, Ariely’s book is a popular treatment of the growing field of “behavioral economics.” This field combines economics and psychology (and sometimes neuroscience) to try to figure out whether people always behave the way the rational-actor model of economics says they will, and if not, why not. Behavioral economists use experimental methods to see how people will react to various choice situations and determine whether they pick the maximizing choice, as the standard economic model says they should.

When do employers support minimum wages?

A question to which the answer seems obvious, never.

But not so fast. There may be times when employers do support minimum wages. As an example look at Germany. At present Germany does not have a minimum wage, but there is pressure for the introduction of one, or more correctly the introduction of a number of minimum wages. Currently in Germany collective bargaining is largely handled at the sectoral level and one idea being discussed is to adopt sectoral minimum wages, it could be that such wages would be negotiated about within the collective bargaining rounds. A question that arises is, In which sectors is support for minimum wages most likely to be found?

A new working paper looks at this question. Ronald Bachmann, Thomas Bauer and Hanna Kröger use a survey of some 800 firms in 8 different sectors and find some interesting results. Not too surprisingly I guess the support for minimum wages is greatest when they would raise barriers of entry for competitors. In effect agreeing to a minimum wage amounts to little more than the cartelisation of industry. Note that this outcome is a result of the fact that negotiations are done at the sectoral level. In such an outcome we would see a reduction in the number of firms, and most likely to a reduction in employment. However the drop in employment is not for the standard reasoning we associated with minimum wages, here the cartelisation reduces output and thus the demand for labour. You are producing less and so you need less inputs, including labour. Low productivity firms who can't afford a high minimum wage are forced out. Of course I would also expect to see higher prices and thus a reduction in welfare for consumers.

An addition question raised here is How much of this support for a minimum wage would vanish if the minimum wage setting took place at the nationwide level level rather than the sectoral level?

Nolan on talking to macroeconomists

Over at the TVHE blog Matt Nolan is talking about talking to macroeconomists. Who know why? But he notes that this Stuff article has five basic principles to keep in mind when talking to macroeconomists. Matt summaries them as,

1. Commodities are our comparative advantage, they are what NZ is relatively better at making than other things.
2. Monetary policy that targets inflation aims to set NZ in a “Goldilocks zone” where the economy isn’t running too hot (high inflation) or too cold (high unemployment).
3. Don’t put too much faith on one data point, or even one data set. To tell a story we need to explain why a full set of different figures are moving the way they are.
4. As a small open economy, what is going on in the rest of the world is important!
5. Economics isn’t about telling the future. Economic forecasts are useful only insofar as they tell us about risks and describe what is going on – economists cannot tell the future.

Point 4 is a biggy. We are a very small part of the world and what happens to us to a large degree will be determined overseas, and thus there is little we can do about it. No matter what politicians try to tell you! Point 5 explains why 99% of economists never forecast and don't have much time for those who do. Its not clear just how well point 2 turns out in practice. Point 3 is also something to keep in mind, one data point isn't necessarily the truth. This is just as true for microeconomics as for macro. Point 1 is just a statement of the obvious.

I really only have one principle for talking to macroeconomists, don't! Remember that inflation is the only true macroeconomic topic, everything else is micro.

PS: I should, I guess, point out that I'm a microeconomist so may have a biased (if consistent) view of the matter.

Austrian capital theory

For those with an interest in all things Austrian, in terms of economics, The Freeman has an article on Austrian Capital Theory: Why It Matters by Peter Lewin.

Keynes talked about the “capital stock” of the economy. He argued that by stimulating spending on outputs (consumption goods and services), one can increase productive investment to meet that spending, thus adding to the capital stock and increasing employment.

Hayek accused Keynes of insufficient attention to the nature of capital in production. (By “capital” I mean the physical production structure of the economy, including machinery, buildings, raw materials, and human capital—skills). Hayek pointed out that capital investment does not simply add to production in a general way but rather is embodied in concrete capital items. That is, the productive capital of the economy is not simply an amorphous “stock” of generalized production power; it is an intricate structure of specific interrelated complementary components. Stimulating spending and investment, then, amounts to stimulating specific sections and components of this intricate structure.

The “shape” of production is changed by stimulatory activist spending. And given that in a world of scarcity productive resources are not free, this change comes at the expense of productive effort elsewhere. The pattern of production thus gets out of sync with the pattern of consumption, and eventually this must lead to a collapse. Productive sectors, like dot-com startups or residential housing, become “overbought” (while other sectors develop less), and eventually a “correction” must occur. Add this distortion to the fact that the original stimulus must somehow eventually be paid for, and we have a predictable bust.

Picking Green losers

From the NZ Herald we learn about the Green Party's economic policy,

Co-leader Russel Norman also told journalists of the need to measure wealth in different ways, not simply in terms of gross domestic product (GDP).

He believed there was a "paradigm shift" occurring globally where leaders were realising the need to look wider than GDP to social and environmental indicators to properly understand a country's health.

GDP is just a measure of the production in an economy but it is positively corrected with many other measures of "welfare". High GDP countries tend to have better health care, better education, better environment etc than low GDP countries.

Dr Norman admitted that, if elected, the party would have to "pick winners" to achieve a green economy.

Unforunately for Dr Norman governments are very, very bad at picking winners, of any colour. In fact they seem much better at picking losers.

Back in 2008 Tim Harford had a piece up at Forbes.com in which he tried to unravel why governments so unerringly back losers. Harford points out that "[i]f you want to dismay an economist, just mention the phrase "national champion." " On hearing such a phrase economists automatically think of "wheezing corporate behemoths protected from domestic competition, propped up with generous government subsidies and shielded behind trade barriers." Not a pretty picture, it has loser written all over it. So, asks Harford, if governments want to back winners, Why are they so good at backing losers?. He answers,

Partly, it's because picking the winners is inherently a difficult job. Left alone, the market does a great job of rewarding the very best and cutting the rest down to size. Any corporation that gets big and stays big in a competitive environment is likely to be very good at what it does. A corporation that stays big only because of government backing probably won't be.

He then goes on to explain that government favouritism may have a somewhat more sinister logic behind it,

Namely, firms in emerging, competitive industries have virtually no incentive to lobby for government hand-outs, while firms in aging, shrinking industries have the most to gain.

The reason for this is simple he says,

Firms in an open, competitive, growing young industry have little to gain from government support. More government funding for, say, biotechnology, is going to mean more biotechnology companies, more competition and (perhaps) more innovation. That might be good for America, but probably not much good for any single biotech company. Sure, they'll all enjoy the government help, but each must weigh that assistance against the swarm of new competitors attracted by the handouts. No one firm would choose to hire top lobbyists and send them to D.C. to bring back the pork.

By contrast, firms in aging, shrinking, capital-intensive industries have everything to gain from government support. Because the industry is shrinking and it's expensive to enter--think steel mills--the government subsidies and tax breaks are probably not going to attract new competitors. If there are no new competitors, the old guard gets to pocket all the money.

D R Myddelton looked at a related question in his recent book They Meant Well: Government Project Disasters. In this work, published by the Institute of Economic Affairs in London, Myddelton asks How is it that so many major, government-sponsored projects can lose so much money? He points out that the the answer to this question does not lie with malign intentions on behalf of their promoters in government. On the contrary the supporters within government of such projects only have the best of motives, so why do these projects go so wrong?

Myddelton considers six projects covering a period of 80 years to find answers. He looks at The R. 101 airship, the groundnut scheme, nuclear power, Concorde, the channel tunnel and the infamous Millennium Dome. A recurring rationale for these grandiose projects has been to boost "national prestige", but this concept has little real value.

Myddelton's explanation for the continual failure of such projects is that failure results from mismanagement, lack of clear lines of responsibility and lack of accountability. The point is made that

[n]one of the six projects was well managed and many of the failures were down to politicians: installing inadequate or over-complex organisations, appointing incompetent managers, or insisting on excessive secrecy.

These problems have their roots in the wider economic problems of undertaking quasi-commercial ventures in the public, rather than in the private, sector. This results, argues Myddelton, in well-meaning politicians and government officials wasting huge sums of taxpayers' money.

The arguments of both Harford and Myddelton should make us very apprehensive when governments start picking winners - Green or otherwise - and starting wanting to back these notions with our money. Odds are things will end badly.

EconTalk this week

Ed Yong, science writer and blogger at "Not Exactly Rocket Science" at Discover Magazine, talks with EconTalk host Russ Roberts about the challenges of science and science journalism. Yong was recently entangled in a controversy over the failure of researchers to replicate a highly-cited and influential psychology study. He discusses the issues behind the failed replication and the problem of replication in general in other fields, arguing that replication is under-appreciated and little rewarded. After a discussion of the incentives facing scientists, the conversation turns to the challenges facing science journalists when work that is peer-reviewed may still not be reliable.

Interesting blog bits

1. Gary Becker on Profits, Competition, and Social Welfare

   The main reason to be concerned about the attacks on competitive capitalism is that it has delivered during the past 150 years so much to all strata’s of society, including the poor. I will try to demonstrate this not with a general analysis, but with several rather impressive examples.

2. Chris Dillow argues, loudly, that Punk is dead, alas

   Watching Punk Brittania reminded me of a now-lost world - one in which young people's anger shocked their elders.

3. Not PC on Re-designing Russel’s “green” economics

   Interesting to see Greens’s co-leader Russel Norman getting back at his party’s weekend conference to talking about the impending demise of the environment”—the alleged reason for the party’s existence, and for them the ultimate imaginary hobgoblin.

4. Eric Crampton says Libertarian paternalism is an oxymoron

   Remember those Sci-Fi movies from the '50s where the mad scientist, who only had the good of the world at heart and proceeded with his experiments despite much warning, winds up on his knees crying out to the sky "It wasn't supposed to be like this! This isn't what I wanted!"

5. Sam Richardson asks Who saw this coming?

   "I have to admit, I thought we, as a country, might just have gone a bit over budget in the hosting of the Rugby World Cup. Rugby New Zealand 2011 didn't though!"
   
   I would still point out that it is being claimed that the RWC LOST $31.3 million. How many business would call that a good result?!

6. Groping towards Bethlehem on The value of a Wellington worker’s life

   "The Christchurch earthquakes have made the whole country more focused on earthquake risk. It has changed the Wellington market for office space, for example, with businesses now putting more weight on earthquake safety."
   
   What I can't get my head around is the idea that there is a real worker in Wellington! Isn't it all just bureaucrats and politicians?

Well said, Sam Richardson

Stuff is reporting that Stadium plans met with scorn,

The prospect of yet more glittering new stadiums being constructed by ambitious city fathers – as being debated right now in Christchurch and Auckland – is being met with scorn by some in Dunedin.

And not just in Dunedin, there are those of us here in Christchurch who are also meeting the idea of a new stadium with scorn. As has been noted a number of times on most of the economics blogs here in New Zealand, stadiums are not economically viable. As I have noted before, economist Dennis Coates, writing at the Sports Economist blog, puts it this way: the

[...] evidence that sports franchises and stadium and arena construction generate large impetus to economic growth and urban development exists only in the minds and reports of consultants to sport franchises and their rent-seeking employers.

The Stuff article ends by noting,

Vandervis mentions Massey University academic Sam Richardson's paper "Oasis or Mirage", which studied the impact of Wellington's Westpac Stadium and concluded it had no long-term impact on the local economy or employment, and that stadiums were usually unprofitable.

Both Chin and Brown see the stadium as a catalyst for Dunedin's revitalisation, and say new plans for a five-star hotel on the city waterfront show it's already having an impact.

But Dr Richardson says expectations for the stadium were "off the mark" and it would never be an economic stimulant.

Read the whole article and if you live in either Christchurch or Auckland take up the fight to stop your council from doing something really stupid.

A bleg on professional sports teams

For a paper I'm finishing up I need an example of a professional sports team that is owned by its players. In the conclusion to the paper I make an argument, based on the reference point approach to the theory of the firm, as to why no professional team will be owned by its players. While I have come across many different forms of ownership for sports teams I have yet to come across one which is owned by it players.

Anyone know of such an example?

Thanks.

Smoking actually saves the Government money in the long run

This from a few days ago from Radio NZ,

The fiscal benefits of smoking have long been suspected but rarely acknowledged and a report by the Treasury now puts this on the record.

In its report, the Treasury says smokers often die earlier than non-smokers and save the state in superannuation costs.

The Treasury says smokers pay $1.3 billion a year in excise which may already exceed the direct health costs they impose.

The report then goes on to consider broader economic questions. It says smokers' shorter life expectancy reduces superannuation and aged care costs, meaning they are already "paying their way in narrowly fiscal terms".

The report was prepared for last Thursday's Budget decision to raise the tax on cigarettes to discourage smoking.

The tobacco excise will rise by 10% per year for the next four years, beginning on 1 January 2013. This is in addition to the annual inflation-indexed increase and will increase the price of an average pack of 20 cigarettes to more than $20 by 2016.

The Treasury's report says smoking helped, not harmed, Government finances, because the early death of smokers saved huge huge pension costs of $5.5 billion to $5.8 billion a year.

But

[...] health lobby group Action on Smoking and Health (ASH) rejects those arguments, saying they ignore many costs from smoking.

And these costs would be? And how large are they?

Research by the New Zealand Institute of Economic Research has suggested that people should be able to pay increased prices into a special fund and get the money back later if they can prove they have quit.

Isn't there a bit of a moral hazard problem here? After they have gotten their money back why don't these people just go back to smoking?

Meanwhile, a group of smokers spoken to in central Wellington seemed determined to keep on smoking, saying they would save money in other areas as the price goes up.

Or in other words the demand for smokes is inelastic. Which of course is why the government just loves taxing it!

Incentives matter: overhead-bin file

Resource allocation by non-price mechanisms usually doesn't work at all well. It gives people the wrong incentives for use of the resource. Don Boudreaux makes this point in a letter to USA Today:

Gary Nudd pleads with airline passengers to “play by the rules” when storing carry-on luggage (Letters, June 1). Makes sense. But a little-known fact that helps to explain today’s chaotic scramble for overhead-bin space was reported recently by Politico: “Two years ago, [U.S. Sen. Charles] Schumer got five big airlines to pledge that they wouldn’t charge passengers to stow carry-on bags in overhead bins.”

Overhead-bin space is scarce and, hence, valuable. So some airlines sensibly experimented with charging for its use. Government intervention, though, stopped this scarce commodity from being allocated by prices. As any Econ 101 student will tell you, the result is a costly free-for-all in which bin space is allocated far more arbitrary – on a first-come, first-served basis – than would be the case if allocation were guided instead by prices.

Sen. Schumer likely imagines that by ridding reality of one of scarcity’s symptoms – prices – he miraculously rids reality of scarcity itself. Today’s mad and frustrating clambering for space in overhead bins, however, proves that Sen. Schumer is deluded.