Comments on economics, mystery fiction, drama, and art.

Wednesday, September 28, 2005

Why the Wild Card Can Be a Bad Idea

It was bound to happen sooner or later, and it has happened this year. The way the wild card works in Major League Baseball gives the St. Louis Cardinals an incentive, right now, to lose a couple of games.

Why? Because who the wild card team is in the National League playoffs will determine who the Cardinals play in the first round. And because the Cardinals are playing one of the teams remaining in the wild card competition--the Houston Astros. If Houston wins the wild card, St. Louis will begin the playoffs against San Diego, a team that might not have a winning record. And if St. Louis loses its Wednesday night game to Houston, then the Astros will need to win only 2 (at most) of their final four games against the Cubs to clinch the wild card. (St. Louis lost to Houston Tuesday night.)

If Houston does not win the wild card, then Philadelphia probably will, and St. Louis will start against the Phillies. The Phillies are a better team than is San Diego. They have a better record right now (84 - 74, compared with 78 - 79). They've scored 770 runs, compared with SD's 667. The two teams have virtually the same ERAs--4.23 for the Phillies, 4.24 for the Padres.

Who would you rather face, if you were the Cardinals?? So why would you try--really try--to beat the Astros?

And this will happen again. And again. And again. That much is certain. And some day, a team will not try to win.

Wednesday, September 07, 2005

Race and the relief effort

I don't have anything to add to this, by Jacob Weisberg, posted on Slate:

"Had the residents of New Orleans been white Republicans in a state that mattered politically, instead of poor blacks in city that didn't, Bush's response surely would have been different. Compare what happened when hurricanes Charley and Frances hit Florida in 2004. Though the damage from those storms was negligible in relation to Katrina's, the reaction from the White House was instinctive, rapid, and generous to the point of profligacy. Bush visited hurricane victims four times in six weeks and delivered relief checks personally. Michael Brown of FEMA, now widely regarded as an incompetent political hack, was so responsive that local officials praised the agency's performance.

"The kind of constituency politics that results in a big life-preserver for whites in Florida and a tiny one for blacks in Louisiana may not be racist by design or intent. But the inevitable result is clear racial discrimination."

Tuesday, September 06, 2005

9/11 and Katrina

A local newspaper reporter just called asking for comments on the economic consequences of 9/11, 4 years later, then on the economic consequences of hurricane Katrina.

I suspect my comments would be pretty mainstream...9/11 had a limited short-term impact...the impact, even short-term on the financial sector, was small, because of those firms already had, and were able to use, facilities in existence for emergencies. The long-term impace has been, I think, essentially zero. Given the macroeconomic policies of the federal government and of the Federal Reserve, we're about where we would have been had the terrorist attacks never happened.

Katrina may be another thing altogether. We're faced with the temporary loss of a substantial percentage of domestic crude oil and natural gas production and of oil refining capacity. If that capacity is off-line for any substantial amount of time, the US economy will suffer. (As George Friedman wrote on his blog Stratfor, one issue will be the ability of firms in those industries to bring back their skilled workforce, that "requires homes. They require stores to buy food and other supplies. Hospitals and doctors. Schools for their children. " This suggests that an immediate return of families unlikely. But an immediate return of the workers, housed and otherwise supported by their employers, sending money back to their families does seem possible, if we're willing to do it. The question is whether the capital can be brought back on line reasonable quickly, and I don't think we know.

In addition, Katrina has disrupted the transportation chain, outward for agricultural products and inward for other categories of agricultural products (bananas, coffee). This could lead to temporary disruptions to agricultural exports and therefore to agricultural incomes, and some temproary price spikes for a few products.

The reporter asked about local impacts. Two major industries here are steel production and oil refining. If the local firms are not already operating at or near capacity, then there's an opportunity for a short-term local boost in employment and income. My sense, however, is that in both industries firms are producing up against their limits (I'm almost certain that's true in oil refining, and pretty sure it's the case in steel). Nationally, construction (especially residential construction) has been booming, leaving little slack there as well. (One thing is that the reconstruction efforts micht offset the end of the coastal real estate bubble, by shifting construction employment to New Orleans.)

Longer term, the issue is whether, and how rapidly, the capacity of the Gulf region can be brought back on-line. And we do not now know the answer to that question.