The Science is Settled?

The next time you hear the phrase "The Science is Settled" you might want to review this piece of previously "settled" science.

The history of human evolution has been rewritten after scientists discovered that Europe was the birthplace of mankind, not Africa.
Currently, most experts believe that our human lineage split from apes around seven million years ago in central Africa, where hominids remained for the next five million years before venturing further afield.

But two fossils of an ape-like creature which had human-like teeth have been found in Bulgaria and Greece, dating to 7.2 million years ago.

The discovery of the creature, named Graecopithecus freybergi, and nicknameded ‘El Graeco' by scientists, proves our ancestors were already starting to evolve in Europe 200,000 years before the earliest African hominid.
An international team of researchers say the findings entirely change the beginning of human history and place the last common ancestor of both chimpanzees and humans - the so-called Missing Link - in the Mediterranean region.
At that time climate change had turned Eastern Europe into an open savannah which forced apes to find new food sources, sparking a shift towards bipedalism, the researchers believe.
“This study changes the ideas related to the knowledge about the time and the place of the first steps of the humankind,” said Professor Nikolai Spassov from the Bulgarian Academy of Sciences.
“Graecopithecus is not an ape. He is a member of the tribe of hominins and the direct ancestor of homo.
“The food of the Graecopithecus was related to the rather dry and hard savannah vegetation, unlike that of the recent great apes which are living in forests.  Therefore, like humans, he has wide molars and thick enamel.

The Economic Costs of Restrictive Housing Practices

It is not unusual for cities to engage in restrictive housing practices that are designed to benefit existing property owners at the expense of new entrants. Restricting competition to benefit incumbents is pretty much what government does.  However, a new study by
Chang-TaiHsieh of the University of Chicago seeks to quantify the cost of these anti-competitive practices -- and they appear to be huge.

We quantify the amount of spatial misallocation of labor across US cities and its aggregate costs. Misallocation arises because high productivity cities like New York and the San Francisco Bay Area have adopted stringent restrictions to new housing supply, effectively limiting the number of workers who have access to such high productivity. Using a spatial equilibrium model and data from 220 metropolitan areas we find that these constraints lowered aggregate US growth by more than 50% from 1964 to 2009.

So while politicians gnash their teeth around strategies to get growth up a percent or two, they are simultaneously working against that growth by employing restrictive housing policies to benefit incumbent property owners. These people who seek protection might actually be better off with higher overall levels of economic growth. But the politicians might not be and, after all, aren't they why government exists?

You can read the entire study here. https://eml.berkeley.edu//~moretti/growth.pdf

Cuomo's Low IQ (Insurance Quotient)

The State of New York wants to ban the use of occupation or education in rating auto insurance premiums.

“This new protection cracks down on this unfair practice that soaks drivers for not having a college degree or a high-paying job,” Gov. Andrew Cuomo said in a news release. 

As if we needed more evidence of the Governor's ignorance, let's examine this. Insurance data clearly shows that professionals such as military officers, teachers, engineers, accountants and dentists have lower claims costs than other professions.  Why would you NOT want to use that information to price policies? If you ignored the information or followed the Governor's illogic, you would be overpricing policies to, say, teachers, and under-pricing policies to, say, professional athletes. You would sell more policies to higher risk people and fewer policies to lower risk people. This violates the cardinal rule of insurance as surely as Obamacare did. 

Too bad the people of New York can't buy demagogue insurance. 

A Thought Experiment for Equalitarians

Here's a thought experiment regarding the benefits of greater equality.

Imagine you are participating in a company 401k plan. Your plan has two choices for investment. (A) An investment fund run by Dick that has consistently produced an annual rate of return of 5-7%. (B) An investment fund run by Jane that has consistently produced a 2-3% annual return.

What percent of plan participants do you think will choose Dick's fund? Suppose, not illogically, that 80% of plan participants choose Dick's fun. Is this fair to Sue? Sure, Dick appears to be a more capable investor than Sue, but should Dick really get four times Sue's income for doing the same thing? Especially since it turns out that women who run investment funds attract fewer investments than those run by men?

Now suppose your company (being progressive thinkers) ordered some of the plan's participants to take money from Dick's fund and give it to Sue. Would the plan participants as a whole be better off by doing this? Would the rate of return for the plan be better or worse? Do you think anyone here (other than Sue) would think this was a good idea? How much of your retirement investment are you willing to give up so that Sue is treated with greater equality?

Why, then, is it a good idea in general to re-allocate resources from the members of society who produce high returns to those who produce lower returns. The latter, like Sue, may be nice people and work hard, but what they produce just isn't quite as valuable. Are the members of society better off in total by doing this? Would the total rate of economic growth be better by doing this? How much economic growth are you willing to give up so that the lower producers receive resources more nearly equal to high producers?