[Epistemic Status: I am not an economist. I am fairly confident in my qualitative assessment, but there could be things I've overlooked.]

Vox has an interesting article on Elizabeth Warren’s newest economic reform proposal. Briefly, she wants to force corporations with more than $1 billion in revenue to apply for a charter of corporate citizenship.

This charter would make three far-reaching changes to how large companies do business. First, it would require businesses to consider customers, employees, and the community – instead of only its shareholders – when making decisions. Second, it would require that 40% of the seats on the board go to workers. Third, it would require 75% of shareholders and board members to authorize any corporate political activity.

(There’s also some minor corporate governance stuff around limiting the ability of CEOs to sell their stock which I think is an idea...

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Did you know that half of all surgical complications are preventable? In the US alone, this means that surgeons cause between 50,00 and 200,000 preventable deaths each year.

Surgeons are, almost literally, getting away with murder.

Why do we let them? Engineers who see their designs catastrophically fail often lose their engineering license, even when they’re found not guilty in criminal proceedings. If surgeons were treated like engineers, many of them wouldn’t be operating anymore.

Indeed, the death rate in surgery is almost unique among regulated professions. One person has died in a commercial aviation accident in the US in the last nine years. Structural engineering related accidents killed at most 251 people in the US in 2016¹ and only approximately 4% of residential structure failures in the US occur due to deficiencies in design².

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Last week I explained how poor decisions by central bankers (specifically failing to spur inflation) can make recessions much worse and lead to slower wage growth during recovery.

(Briefly: inflation during recessions reduces the real cost of payroll, cutting business expenses and making firing people unnecessary. During a recovery, it makes hiring new workers cheaper and so leads to more being hired. Because central bankers failed to create inflation during and after the great recession, many businesses are scared of raising salaries. They believe (correctly) that this will increase their payroll expenses to the point where they’ll have to lay many people off if another recession strikes. Until memories of the last recession fade or central bankers clean up their act, we shouldn’t expect wages to rise.)

Now I’d like to expand on an offhand comment I made about the minimum wage last week and explore how it can affect recovery,...

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I like to keep track of my life over time. I’m an obsessive journaler (and, as this blog can attest, a fairly regular blogger). At the end of every day, I track my mood, my sleep, my productivity, my social life, and how well I did in spaced repetition exercises. Last May, I decided to track one more thing about myself and start a tradition of publishing my Political Compass results yearly.

I’m a bit late this year (I kept the title because I started the post in May) because there’s actual politics happening; I’ve been volunteering for my local MPP’s re-election campaign. Of explanations for being late with a politics related blog post, that might be the best one I ever give.

The Results

Last year, I scored -3.25 on the economic axis and -6.56 on the authority axis.

Canadian results come from The Political Compass’s...

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No, this isn’t a post about very pretty houses or positional goods. It’s about the type of beauty contest described by John Maynard Keynes.

Imagine a newspaper that publishes one hundred pictures of strapping young men. It asks everyone to send in the names of the five that they think are most attractive. They offer a prize: if your selection matches the five men most often appearing in everyone else’s selections, you’ll win $500.

You could just do what the newspaper asked and send in the names of those men that you think are especially good looking. But that’s not very likely to give you the win. Everyone’s tastes are different and the people you find attractive might not be very attractive to anyone else. If you’re playing the game a bit smarter, you’ll instead pick the five people that you think have the broadest appeal.

You could go even...

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[6-minute read]

I don’t understand why people choose to go bankrupt living the most expensive cities, but I’m increasingly viewing this as a market failure and collective action problem to be fixed with intervention, not a failure of individual judgement.

There are many cities, like Brantford, Waterloo, or even Ottawa, where everything works properly. Rent isn’t really more expensive than suburban or rural areas. There’s public transit, which means you don’t necessarily need a car, if you choose where you live with enough care. There are plenty of jobs. Stuff happens.

But cities like Toronto, Vancouver, and San Francisco confuse the hell out of me. The cost of living is through the roof, but wages don’t even come close to following (the difference in salary between Toronto and Waterloo for someone with my qualifications is $5,000, which in no way would cover the...

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In simple economic theory, wages are supposed to act as signals. When wages increase in a sector, it should signal people that there’s lots of work to do there, incentivizing training that will be useful for that field, or causing people to change careers. On the flip side, when wages decrease, we should see a movement out of that sector.

This is all well and good. It explains why the United States has seen (over the past 45 years) little movement in the number of linguistics degrees, a precipitous falloff in library sciences degrees, some decrease in English degrees, and a large increase in engineering and business degrees¹.

This might be the engineer in me, but I find things that are working properly boring. What I’m really interested in is when wage signals break down and are replaced by a job lottery.

Job...

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Since the minimum wage increase took effect on January 1^st, Tim Hortons has been in the news. Many local franchisees have been clawing back benefits, removing paid breaks, or otherwise taking measures to reduce the costs associated with an increased minimum wage.

TVO just put out a piece about this ongoing saga by the Christian socialist Michael Coren. It loudly declares that “Tim Hortons doesn’t deserve your sympathy”. Unfortunately, Mr. Coren is incorrect. Everyone involved here (Tim Hortons the corporation, Tim Hortons franchisees, and Tim Hortons workers) is caught between a rock and a hard place. They all deserve your sympathy.

It is a truism that a minimum wage increase must result in either declining profits, cuts to...

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Previously I described regulation as a regressive tax. It may not kill jobs per se, but it certainly shifts them towards people with university degrees, largely at the expense of those without. I’m beginning to rethink that position; I’m increasingly worried that many types of regulation are actually leading to a net loss of jobs. There remains a paucity of empirical evidence on this subject. Today I’m going to present a (I believe convincing) model of how regulations could kill jobs, but I’d like to remind everyone that models are less important than evidence and should only be the focus of discussion in situations like this, where the evidence is genuinely sparse.

Let’s assume that regulation has no first order effect on jobs. All jobs lost through regulation (and make no mistake, there will be lost jobs) are offset by different jobs in regulatory compliance or the jobs...

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[10-minute read]

Breaking news: a retired mechanic spent one afternoon and $550 building a staircase. This is news because the City of Toronto said it would cost $65,000 for them to do it. They’ve since walked back that estimate, claiming it won’t be that expensive (instead, the final cost looks to be a mere $10,000).

Part of this is materials and labour. The city will probably go for something a bit more permeant than wood – probably concrete or metal – and will probably have higher labour costs (the mechanic hired a random guy off the street to help out, which is probably against city procurement policy). But a decent part (perhaps even the majority) of the increased costs will be driven by regulation.

First there’s the obvious compliance activities: site assessment, community consultation, engineering approval, insurance approval. Each of these will take the...

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[5-minute read]

There are two sides to every story. Zoning and maximum occupancy regulations are exclusionary and drive up the price of housing. They are also necessary to prevent exploitative landlords from leaving their tenants in squalor. Catastrophic health insurance plans leave patients uncovered for many of the services they might need. They’re also often the only plans that are rational for younger people to buy.

Where you come down on either of these – or any similar cases where there’s a clear trade-off between maximum access and minimum standards – is probably heavily dependent on your situation. If you’re an American millennial without an employer-provided or parental health care plan, you’re probably quite incensed about the lack of catastrophic health care insurance. For healthy young adults, those plans were an excellent deal.

Similarly, workaholics in the Bay Area sometimes want to...

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