Marcus Nunes directed me to a recent post where John Cochrane advocated price level targeting. I agree that price level targeting is superior to inflation targeting. He then responded to questions about nominal GDP level targeting: Many comments here and on twitter ask about a nominal GDP target. I’m not a fan, for three reasons.    First, just what does the Fed do to hit a nominal GDP target? That objection is common to the price level target, but it’s an important point. Nominal GDP targeting advocates seem to think it solves the whole conundrum of just how do interest rates affect inflation. No, it’s just a different centering point of the Taylor rule. Raise interest rates if nominal GDP growth is high, lower it if low.    Second and more to the point, it assumes that “potential,” “supply” or “neutral” real GDP growth is constant or at least slow moving and known. If potential grows 2% real and you want 2% inflation, then the nominal GDP growth target is 4%, and the idea is that you let the economy take care of the split between real and nominal in the short run. I’m of the view that there is a lot more high frequency movement in “potential” than commonly thought, so even if the Fed achieved steady nominal GDP growth, there would be needless inflation volatility or needless deviation from neutral real growth. Real GDP grew 4% 1950-2000 and 2% since then. How long does it take the target to adapt to this sort of thing?    The idea is that the Fed isn’t smart enough to separate nominal GDP growth to real growth and inflation, so let that be endogenous. Of all the problems of monetary policy, this doesn’t seem like the worst to me.    Third, I like the clarity of a price level target. Even if you make it level, not growth, of nominal GDP, it’s muddy just how much inflation you should expect when borrowing money, financing a project, etc. Keep the units pure. Moreover, if you don’t like price index measurement issues, wait until you look in to GDP measurement issues. GDP is not consumer surplus.  None of those objections are persuasive.   1.  The first point is correct, but (as Cochrane indicates) applies equally well to price level targeting (which he supports).  I favor employing NGDP futures contracts to guide policy.  I seem to recall that Cochrane once spoke positively of using CPI futures contracts in monetary policy.     2. The second complaint has been made many times by NGDP critics, and refuted many times by NGDP proponents.   I’m not sure if Cochrane is familiar with that literature.  NGDP targeting does not make any assumptions about potential GDP growing at a constant rate.  Proponents see the variation in inflation due to RGDP fluctuations as a feature, not a bug in the NGDP regime.  (One possible exception is changes due to population growth—arguably it would be better to target NGDP per capita, or per adult.)   In addition, at the level of individual prices there might actually be more volatility with a price level target than with a NGDP target.  Consider an oil supply shock that raises oil prices by 50%.  Assume oil is 2% of the CPI.  Under a price level target you are forced to reduce non-oil prices by 1%.  That’s thousands of needless price changes—menu costs.  Under a NGDP target you would likely get a reduction in real GDP and a rise in the price level, leaving non-oil prices little changed.  Many non-oil prices (like haircuts) are tied to nominal wages, which tend to be pretty stable under a NGDP targeting regime.  When there’s an oil shock it’s easier to reduce real wages by allowing a slight rise in the price level, rather than squeeze nominal wages (and NGDP) lower at the cost of unemployment.   And this doesn’t even account for the issue of hedonics.  The CPI doesn’t measure the change in the average price of products, it measures changes in quality-adjusted prices.  If you have quality rising at 1%/year, you’d need the average nominal price of products to also rise at 1%/year to keep the measured CPI stable.     So price level targeting is not the policy that does the best job of reducing “menu costs”; indeed NGDP does better when there are supply shocks.   3.  The third point is also incorrect—it’s easier to measure NGDP than inflation.  To measure (overall) inflation accurately you need to measure both nominal and real GDP.  Let’s say Tesla produces 2 million cars (final goods) at an average price of $60,000.  Then using the final goods approach to NGDP you could say that Tesla contributes $120 billion to NGDP.  But how does Tesla affect the price level?  To determine its impact on inflation you must measure the quality change over time in a Tesla car.  But what does “quality change” even mean?  The government says modern TVs are 99% cheaper than the TVs of 1960, mostly due to quality improvements.  What does that mean?  Does it mean I laugh 100 times as much watching Seinfeld on a modern TV as I would watching it on a 1960-era TV? I like modern TVs, and I agree they are vastly better—but 100 times better?  By what metric?  What does the term “better” even mean?  Let’s be honest, quality estimates are pulled out of thin air by government bureaucrats that have no objective method of measuring utility.     I have been promoting NGDP targeting for decades.  I have yet to see any NGDP critic address the actual arguments being made by proponents of NGDP targeting.  I am certainly open to counterarguments—indeed I suspect NGDP targeting is not the optimal policy.  But it’s far better than what the Fed is currently doing.  We had a massive undershoot of NGDP in 2008-09 and a massive overshoot in 2021-23.  And we can all see what happened.   PS.  Under the value added approach to GDP, you’d add Tesla’s value added to the value added of its suppliers.   PPS.  If Cochrane insists on targeting a price index, I’d suggest he switch from price level targeting to nominal wage level targeting.  That’s an idea I could support.   (0 COMMENTS)

One of the most common refrains from politicians of both parties who want to justify their new programs or higher spending is that it will create jobs. Then there are those who argue that the goal of industrial policy is the creation of “good jobs.” I wish they would stop so we could have a conversation about what industrial policy is about and whether it is the best way to achieve whatever goal it is supposed to achieve. With that in mind, I thought these comments from Noah Smith and Larry Summers were interesting. During a Good Fellows podcast a few months ago, Larry Summers made a comment  that is worth keeping in mind (The whole discussion is very good and worth listening to). Look, I think this is something we need to think very hard about. I believe that the best generals are the ones who hate wars most, and I believe the best industrial policy experts are the ones who hate it most. The problem is that the only people who talk about industrial policy are the ones who love it and are looking for a reason to do it. Anyone who can […] talk for five minutes about why we need industrial strategy or resilience without saying the words “it will create US jobs” I have substantial time for but whenever it comes with a whole set of talk about US jobs then it becomes much more problematic. What Summers is getting at is that industrial policy should be about using the government to achieve what arguably can’t be achieved through market forces. National security is one of those things. But national security will be best promoted if the goal is, well, national security. It will not be effectively promoted if it is used as a Trojan horse for achieving goals – such as job creation – other than national security. As soon as you start talking about job creation, you get distracted from what you claim you are trying to achieve. Noah Smith also suggests that the first goal of industrial policy isn’t and shouldn’t be job creation. He writes that industrial policy’s goal is climate strategy in the case of the Inflation Reduction Act,  and national security (among other things) in the case of the Chips Act. He also believes that that industrial policy as implemented in these two bills could and will lead to a manufacturing boom. However, he explains that even if the manufacturing boom happens, we should not expect a job boom too. Here’s Smith: So far, the critics of industrial policy tend to spend a lot of their time rebutting the notion that we can bring back the golden age of widespread “good jobs” in factories…. And they’re right. Industrial policy will not turn us back into a nation of factory workers. Every country in the world, including China, sees its share of manufacturing employment fall as it becomes rich — both because consumers start demanding more services as they get richer, and because rich countries can only stay competitive in manufacturing by using lots of automation. If we do manage to engineer a manufacturing boom, most of the actual production work will be done by robots, because we are a rich country with very high labor costs and lots of abundant capital and technology. Automated manufacturing is what we specialize in, not labor-intensive manufacturing. The latter is for countries like India and Tanzania. America needs to build with robots This is an important point overlooked by industrial policy fangirls on the right and the left. I would add another point. Industrial policy is meant to reallocate resources in different directions than what profit-motivated actors and market forces would achieve (translation in practice: produce less output using more resources). That doesn’t add up with the belief that “incentivizing” those who invest their money to do something they wouldn’t do without specially created government privileges (such as protective tariffs, tax credits, loans and subsidies) somehow will end up creating growth and jobs. Smith does correctly note that industrial policy could create some particular jobs in the subsidized industries. As he explains, labor is needed to build factories, which when operating require workers. That said, we should also account for the fact that subsidies given to some industries necessarily shift resources – capital and labor – away from other, nonsubsidized industries. For instance, Dean Baker once explained the unfairness of the ExIm Bank noting—“by diverting capital to the winners picked by the Ex‐​Im Bank, we are raising the price of capital for other firms.” If I believed that the government has a way to identify profitable ventures better than market actors, I could buy that on net we would be better off. But I don’t harbor such a belief. I have to say, though, that I am more skeptical than Smith that industrial policy will create a sustainable manufacturing boom. In part it is because the government forced reallocation of resources once again means producing less output using more resources. Either the government incentives are incentivizing companies to do something they believed wasn’t in their interest before or the government payouts are going to companies to do things they would have done anyway. Neither is the best use of resources. I have found those two things to be true, no matter what government favoritism programs I have studied in the past. Talking about companies now getting subsidies for something they would have done absent the subsidies, I found this interesting. In a recent paper by Réka Juhász, Nathan Lane, Emily Oehlsen, and Verónica Pérez found that industrial policy “is highly correlated with an industry’s revealed comparative advantage.” Translation: The market discovers ‘winners,’ and then politicians encourage them to expand inefficiently and – more and more – also saddles these firms with politically fashionable strings such as childcare and Buy American requirements. Free-market advocates recognize that exceptions exist to a policy of free trade or the unhindered functioning of the market. National security is the main one that comes to mind. But it must be a real national-security reason, not a fabricated one like the Trump steel tariffs. We also recognize that if real market failures exist, and persist over time, they could justify government interventions. In this case too we must be clear about what market failure means. It certainly doesn’t mean more than merely that the outcome produced by the market happens to be permanently different than what a few people believe should be the appropriate outcome. The most important thing, however, is that government interventions that disrupt market allocations almost always means less efficiency (recessions are a different situation). These costs (which include future taxes and distorted capital markets) might be justified if industrial policy is to address a real national-security threat or some other genuine problem that we deem incredibly important. But if so, stop claiming that the goal is job creation.   Veronique de Rugy is a Senior research fellow at the Mercatus Center and syndicated columnist at Creators. (0 COMMENTS)

Former president Donald Trump wrote about his possible indictment related to his trying to stay in power after he lost the 2020 election: “An Indictment of me would only further destroy our Country.” A critical observer (perhaps under the influence of Public Choice analysis) may reflect that the word capitalized should have been “me” instead of  “country.” But we should not minimize the concerns that many of Trump’s voters had, even if they were naively looking for a dear leader, instead of individual liberty, to resolve them. And the following also applies to his successors and, indeed, to many of his precursors’ sometimes smaller steps. The populist temptation and unlimited democracy naturally become competitive dictatorship. Power is a matter of incentives. Incentives must be such that a potential dictator will not find it in his own self-interest to pursue his project. On this topic, a reflection by famous economist Mancur Olson is especially relevant (quoted from his book Power and Prosperity: Outgrowing Communist and Capitalist Dictatorships [Basic Books, 2000], pp. 39-40): Sometimes, when leading families or merchants organized a government for their city, they not only provided for some power sharing through voting but took pains to reduce the probability that the government’s chief executive could assume autocratic power. For a time in Genoa, for example, the chief administrator of the government had to be an outsider—and thus someone with no membership in any of the powerful families in the city. Moreover, he was constrained to a fixed term of office, forced to leave the city after the end of his term, and forbidden from marrying into any of the local families. In Venice, after a doge who attempted to make himself autocrat was beheaded for his offense, subsequent doges were followed in official processions by a sword-bearing symbolic executioner as a reminder of the punishment intended for any leader who attempted to assume dictatorial power. As the theory predicts, the same city-states also tended to have more elaborate courts, contracts, and property rights than most of the European kingdoms of the time. As is well known, these city-states also created the most advanced economies in Europe, not to mention the culture of the Renaissance. (0 COMMENTS)

I brought Adam Smith’s The Theory of Moral Sentiments (TMS) with me on my vacation this year. My plan was to read most of it, in preparation for a talk I’m giving in December for the Osher Lifelong Learning Institute (OLLI) in Monterey. I found it tough slogging. I could typically read only about 10 pages at bedtime. The language is dense. I’m not criticizing Smith. That’s how people wrote in those days, but I also found it much tougher than The Wealth of Nations. Fortunately, I also brought along James Otteson’s short book The Essential Adam Smith, published in 2018 by the Fraser Institute in Canada. It’s first-rate. The first five chapters are on Smith’s TMS. They will help me tremendously when I get home and systematically work my way through TMS. One passage from TMS that Otteson quotes on p. 20 is this: All the members of human society stand in need of each other’s assistance, and are likewise exposed to mutual injuries. Where the necessary assistance is reciprocally afforded from love, from gratitude, from friendship, and esteem, the society flourishes and is happy. All the different members of it are bound together by the agreeable bands of love and affection and are, as it were, drawn to one common centre of good offices. (TMS: 85.) What I like about this passage, besides the fact that it’s true, is that it’s such an offset to the stereotype that people who have not read Smith. or have not read him carefully, believe. The Otteson book, by the way, is zero-price in pdf form from the Fraser Institute. Here’s the bio I wrote of Smith in The Concise Encyclopedia of Economics. (0 COMMENTS)

Two stories about cottage life in a climate with a tough winter. When I come to my cottage in Minaki, Ontario, Canada, which my grandfather built in 1921 or 1922, I start to develop skills at fixing little things and then those skills atrophy through the other 49.5 weeks of the year. This year was no different. But what’s striking is the snapshots of technology I get every few years that, if I’m willing to spend some money, make things better. Two things stand out this year. The Water Pump Each year I put out a hose with a foot valve on the end out in the water, attach the other end to a water pump under the cottage, prime the pump, and then pray that it works. This time a record 7 primes was a charm. But a day later, it broke down in another way. I texted a pic of this to my cousin in Texas, who’s the guru on this. He suggested a fix, I did his fix, and it worked. Right there, you can see the role of technology. I wouldn’t have been able to text him a picture 15 or 16 years ago. Then a few days later, it broke down again but that time I figured out what was wrong and fixed it without consulting my cousin. When I was going through this, I talked to some neighbors (oops, I’m in Canada: neighbours) who told me I could buy a submersible pump, connect it to a hose that expands and contracts with changes in temperature, and them, when I get to the cottage, flick a switch. I may or may not do that. I really think that this time I’ve got the old pump solved. Still, a nice option at C$3,500. The Roof Shingles on my roof badly need replacing. They have been up there for about 30 years. I got a local contractor to look, but he’s pushing me into a metal roof. One of my big pleasures is sitting in the verandah during a rainstorm and hearing the rain on the roof. If it were a metal roof, that wouldn’t be fun. But yesterday morning I looked out and saw a young guy kayaking into our bay. I went outside and hailed him. We had a nice talk. I found out he’s from eastern Manitoba. I asked him what he does for a living. “I’m a roofer, ” he answered. “Do you ever do roofs here?” I asked. He said yes. “Come on in,” I said. I served him a piece of my just-baked chocolate zucchini cake and we talked. Then he went on the roof and did measurements. He sat on the roof for about 30 minutes as we talked measurements, options, and big picture issues like marriage. He said it was easy for me to avoid metal. By last night, I had an estimate. The price is steep relative to my expectations and I need to involve my co-owning cousin, but I think it might be a go. He told me that given that the shingles had held up for about 30 years and the new shingles are much better, this new roof would last a long time. Technology rocks. Pinch me.                 (2 COMMENTS)

You’ve probably heard the phrase “Baptists and bootleggers”, referring to the odd coalition that favored the prohibition of alcohol.That phrase came to mind when I saw the following graph: There’s a recent trend away from emphasizing academic factors when determining who gets admitted to college.  So who would benefit from less emphasis on grades and test scores?  The graph shown above suggests two different groups:  Those from low-income families (who tend to have slightly lower academic ratings) and the top 1% of the income distribution (who tend to get extremely high ratings on intangible factors.)  Thus left wing social justice warriors and trust fund kids have a certain commonality of interests—de-emphasizing academic ratings. I see a lot of academic studies, but rarely do I see a graph that is so “expressive”.  In the TV show “Succession”, a spoiled rich young man makes fun of the sort of people who have to stay at a Marriott (which most people view as a pretty good hotel).  This graph suggests that there really is something different about the entitled rich.  I’m not surprised that they “earned” (bought?) higher ratings, although the extent of the increase did surprise me.  But what most surprises me is that the intangible ratings seem pretty flat all the way up from 10% to 90% of the income distribution. There’s a lot of recent debate about “white privilege”, and I would never deny that being white has advantages in certain situations.  But this graph suggests that any advantage from being white is probably dwarfed by the advantage of being rich. PS.  I’m not saying the ratings are necessarily inaccurate; the rich have greater ability to achieve success in certain non-academic areas.  Rather the problem (if there is one) would be if the college admission officer interpreted the ratings as measuring some sort of intrinsic characteristic of the applicant.   (1 COMMENTS)

One good, one bad, and one piece of trivia that’s about the USA. The Good. Recently (actually 2021 and 2023), when I’ve come to my cottage in Minaki, Ontario, I’ve stopped at a large Walmart near the Winnipeg airport to stock up. A large percent of the workers there are either Indian or Pakistani (I’m guessing the former) and they have a great attitude and a great work ethic. They smile and are helpful and in some of them I can almost see the delight they have in their jobs. I’m even less of a fan of Justin Trudeau than I was of his father, but I think Justin is doing something right by letting in more immigrants. The Bad. On the eastern side of Winnipeg I stopped at a government liquor store (the Manitoba government still has a monopoly) to buy booze. No longer can you just go in. You get in a line, which was, fortunately, short, probably because it was at about noon on a Thursday, and then someone clicks a switch to let you in a security door. Then you pull out your ID and the person looks at it and compares it to your face. This isn’t about making sure a 72-year old man is old enough to buy booze. The person explained it to me. During the previous year, there were a number of invasions by gangs of young people who would come in, threaten employees, and steal lots of high-priced liquor. This new requirement was the response. It sounded as if I were back in California. My complaint is not about the security measure but about the thugs. I wonder how a for-profit private company would have handled it. I don’t know for sure but my guess is that the company would figure out a way of letting people in more quickly. The second time I went there, on a late Saturday afternoon after getting back from Montreal, there were 3 people in front of me and it took about 2 minutes per person. It’s hard to get a lot of people in the store with that kind of delay. The Trivial (kind of). When I’m at my cottage, I start the day with a crossword puzzle from the Wall Street Journal. I clip about 30 of them through the previous months and bring them to the lake. Here was a clue: “SFO screeners.” The answer that Jesse Goldberg, the author of the puzzle, wanted was “TSA.” That’s incorrect. SFO is one of the few U.S. airports that doesn’t have TSA but, instead, has a private firm. And I do notice little positive differences. David Friedman, some years ago on his blog, Ideas, noticed one big difference in the way the SFO people treated his checked bag versus the way the San Jose TSA people did. I can’t find the URL quickly but it’s worth checking. (0 COMMENTS)

Back in 1990, a US diplomat informed Saddam Hussein that his border dispute with Kuwait was of no concern to the US. We all know what happened next. Would Saddam have invaded Kuwait if he had known how the US would respond? I doubt it.  In international affairs, misunderstandings can be very costly. Better to make  your policy crystal clear to your adversaries, in order to avoid misunderstandings.This FT article caught my eye: It is easy to forget that early in Joe Biden’s presidency he made a bridge-building overture to Vladimir Putin. During the 2020 campaign, Biden barely mentioned Russia as a geopolitical rival to the US. China hogged all the attention. At the Geneva summit with his Russian counterpart in June 2021, the US president went to great lengths to massage Putin’s ego, even calling Russia a great power. A few weeks later, Biden withdrew America’s remaining forces from Afghanistan in a debacle that threatened to define his presidency. In retrospect, it is clear that the two seemingly unrelated events — Biden’s positive mood music towards Russia and his Afghanistan pullout — reinforced Putin’s decision to invade Ukraine. The west, in Putin’s view, was unlikely to react any more decisively to his planned annexation of Ukraine than it had to Crimea in 2014. Such misunderstandings have characterised geopolitics through the ages. I’m not sure this is entirely correct (I suspect Putin expected a quick win.)  But it is certainly true that Biden ought to have informed Putin that we’d supply weapons to Ukraine if Russia invaded. Now you see discussion of “strategic ambiguity” in our policy regarding Taiwan.  Here’s Raymond Kuo at Foreign Policy: Strategic ambiguity typically is understood as deliberately creating uncertainty in Beijing and Taipei about whether the United States would intervene in a war. This supposedly creates dual deterrence: The threat of U.S. intervention prevents China from invading, and the fear of U.S. abandonment prevents Taiwan from sparking a war by declaring independence, which China considers a casus belli. This approach, supporters contend, has kept peace for decades and prevented entrapment, whereby the United States unwillingly gets pulled into war.… Let’s hope it doesn’t end with a war between the US and China.   A better solution would be to tell Taiwan that we won’t support them if they declare independence, and make clear to China how we will support Taiwan if they are attacked.  My own view is that it would be a very bad idea for the US to go to war with China. A recent article by Tim Willasey-Wilsey makes some good arguments against strategic ambiguity on Taiwan: There are four problems with strategic ambiguity. The first is that it often masks a genuine uncertainty in the policy-owning country (the US) whether it would go to the defence of the potential victim and whether that defence would include direct military intervention, the provision of arms and intelligence, or neither. The second is that its very existence can serve as an impediment to genuine policy planning. An incoming secretary of state would be told ‘our policy towards Taiwan is one of strategic ambiguity’ and the briefing would then move on to the next topic. In other words, it looks like a policy but, unless underpinned by full assessment and planning, it is a vacuum. The third is that potential aggressors are getting wise to the fact that strategic ambiguity often means ‘absence of policy’. In such circumstances the deterrent effect disappears. And the fourth is that, at the moment of truth, the president will have to take a rushed decision which may embrace a host of other factors such as the state of the global economy and electoral prospects at home. PS.  To be clear, I supported the withdrawal from Afghanistan—and it was certainly not a “debacle”.  Any withdrawal from a place like Afghanistan would be very messy, and no amount of “planning” (good luck with that!) would change that fact. (0 COMMENTS)

I’ve written before about how to use the idea of opportunity cost to focus on your decision making – a good rule of thumb when making a choice is to make the opportunity cost explicit. Don’t just say to yourself “I’m going to do X” when making a choice – say “I’m going to do X, instead of doing Y,” when Y is what seems like the next most desirable option to you. After all, it’s easy to say, “I’m going to spend my evenings working on writing a novel.” But it becomes a little trickier when you phrase it as “I’m going to spend my evenings working on writing a novel, instead of spending my time going out with my friends.” You may still decide pursuing your writing project is a good idea, of course, but that decision should be made while fully aware of what it will cost you. I was recently reminded of an example of this sort of thing from an old job of mine. Different employers handle paid time off in different ways, but one system I’ve encountered that I really liked was one that made the opportunity cost explicit. At the time, I was taking a job as an analyst with a healthcare and insurance provider. As is often the case, the first few days on the job were spent at an orientation, where you sit through some standard presentations, fill out your paperwork for taxes and payroll, and make your benefits selection. But the way this company offered PTO had an interesting twist that I hadn’t seen before that point, although I’ve since learned it’s not unique to them. Every employee started out with a certain amount of PTO – say, 15 days of PTO, equal to three work weeks of paid time off. However, you had the option to select more vacation time than the standard offering. If you wanted, you could choose to have 20 rather than 15 days of PTO – and if you made that choice, it showed a small deduction that would come out of each paycheck due to that selection. Adding up those deductions across 26 paychecks per year, and it came out equal to the value of 5 days of pay. So, employees had a choice – you can get more vacation time per year, in exchange for a slightly smaller paycheck every pay period. This was a very popular choice – most of the employees I talked to went with at least an extra 5 days, and many chose an extra 10 days. Getting a little less in each paycheck was, to them, worthwhile in exchange for having four or five weeks of vacation time rather than three weeks. Of course, you might have picked up on something slightly ironic about referring to those extra weeks as additional “paid time off.” Because selecting that option came with a corresponding paycheck deduction, you weren’t really getting two extra weeks of “paid” time off – you were getting two extra weeks of out-of-office time, in exchange for the equivalent of two weeks less pay. Or put another way, it was paid time off, but the time off was paid for by the employee, not the employer. And that’s why I think this was such a great system – it made the opportunity cost explicit. (The initial allotment of 15 days PTO is paid by the employee as well, it’s just not made as explicit.) There is a trade-off to be made between more wages and more benefits, and in at least this one area, employees were able to decide whether and to what degree that trade-off was worth making. And this is a case where I think it’s worth generalizing the lesson. There is no objectively “correct” mix of wages and benefits appropriate for total compensation – different mixes can be better for different people facing different constraints and with different preferences. Over time, regulators have required ever more expansive and comprehensive benefits to be provided to employees, which puts a heavy thumb on the scale for the wage-benefit tradeoff. I’m not saying that higher benefits and lower wages is a bad thing in itself – for many people, it makes perfect sense. But it’s also easy to see how for some, it makes far more sense to prefer lower benefits and higher wages. Someone who is young and just starting out on their career may well prefer to take less vacation time and lower benefits in exchange for a bigger paycheck, in order to build up a strong financial foundation at the outset of their career, or to make it easier to save up for a down payment on a house, or any number of reasons. Should it really be a crime for them to be able to make that decision for themselves? (0 COMMENTS)

A trip report about three good things, one of which might piss off people who already think I’m “privileged.” I’m telling this story partly because I like telling stories about my life but also partly because I’ve noticed that many people complain about bad service from for-profit businesses but don’t much mention the way many of those businesses go the extra mile (pun intended but you won’t get the pun until you read this post.) On Thursday morning, I interrupted my time at my cottage in Minaki to drive to Winnipeg. Then I flew to Montreal, rented a car in Montreal, and drove almost 4 hours (due to a wrong turn and a 20-minute wait at the U.S. border) to Lebanon, NH. My purpose: to attend a memorial service in Newport, NH for my dear friend (and fellow Canuck and fellow UCLA econ Ph.D. Harry Watson.) The service was very nice and on Saturday I got up early, drove to Montreal, flew to Winnipeg, did some shopping errands in Winnipeg, and drove to Minaki. In all, I did over 14 hours of driving in 3 days, almost all of it in 2 days. At the start, though, I had an upset. After renting my car from Avis at the Montreal airport, I was in Montreal’s rush hour and, a few miles in, noticed that the gas tank was less than half full. I was pissed off, and there was no way I was going to lose time by turning back to the airport. I did take a picture of the fuel gauge with the total mileage on the car showing. I resolved to tell them when I got back to Avis on Saturday but was not confident that the people at Avis would believe me. I calculated that, given upstate New York gas prices, I would be out about US$30. I had to keep telling myself that $30 was not a big deal and was not worth fretting over. I sometimes have trouble with that, and I think it comes partly from having so little money for about my first 25 years of life.  I stopped at a gas station just south of the border and, sure enough, spent a little over $35, making my $30 estimate about right. By the way, because I took a wrong turn that lengthened my trip, I saw Lake Champlain for my first time. What a gorgeous lake! I crossed a bridge over the northern part of the lake and, looking to my left, saw a beautiful old stone fort that is almost 200 years old. It’s Fort Montgomery, pictured above. On the way back, I filled the tank just south of the border, to save money on gas. That meant that I would use about 1.5 to 2 gallons before getting to the airport and was prepared to tell the Avis people that but that they deserved it because my tank had started out less than half full. When I got to Avis, I immediately told the guy, whom I recognized as the guy at the Avis counter who had set me up with the car, about the half-full tank. I was prepared for an argument. What I wasn’t prepared for was for him to take my word for it. And I think he didn’t have to. He showed me on his cell phone the exact amount of gas that was in the car when I rented it and the exact amount when I returned it. So I told him my calculations that led me to believe that I was out US$30. I then went to translate that to Canadian dollars but purposefully went low–to $37–because of the gas I had used up after the last fill. Then he said, “Let’s round up to $40.” I high-fived him and he told me I would get something in my email asking me to evaluate him. I said I would praise him, but I’m still waiting for the email. The night before, I had received an email from Air Canada telling me that because of a different airplane it was using, I was in 34F. That was unacceptable to me because I had paid extra for more leg room near the front. So after printing out my boarding pass, I went to a special line at Air Canada and explained the situation. The woman behind the counter told me that they had shifted me because it was a different airplane. I told her that I had paid extra and I wanted a better seat. “I can give you 16A, which is an exit row,” she said. “Done,” I said, happy with the conclusion. I really like it when people work with me to achieve something that’s in both of our interests. The final thing was not from a for-profit company but from the people who can choose whether you get in the quick line to get through the gate-keeper or the long line. I noticed that the long line was really long. So I went to the two guys who were guarding access to the short line. I told them that I had Clear, and I was wondering if that was good enough to get me in the short line. I’m not sure if they knew what Clear was but the two young guys looked at each other and said, “Go ahead.” All in all, an excellent trip. (0 COMMENTS)