Pearl Harbor Day!

Lest we forget either the tremendous sacrifices and triumphs of World War Two or the reality that we are at war even now - no, I'm not talking about Iraq - with an enemy that is more eager to destroy our way of life than the Japanese ever were.


One paper down, major homework getting done, then studying for finals and modifying the paper.

Arrogance of the intellect.

If I ever start using my education and training as a foundation for arrogance, you MUST set me straight. This week I have come to the conclusion that, while not all of the economics professors here at GMU suffer from arrogance, far too many of them do. Included in the afflicted are all three professors that I have classes with this semester. Now, this arrogance takes several forms, but all have the same root - forming judgments and beliefs based on seriously flawed and/or incomplete information. Now don't get me wrong, all three men are brilliant, and I respect all of them, but all three have allowed their intellect to impair their ability, in some areas, to absorb information that doesn't fit with a preconceived idea of how things should be.
One professor emphatically does not believe evolution, and is able to rattle off many logical and factual problems with the theory, but neither does he believe in design by the Creator. Why? Because his back hurts, and other physical aliments observed around him, make him think that humans were not perfectly designed. His intellect cannot accept the notion of a Creator, therefore, no Creator exists. So what does he believe? Hmmm, good question. Not in evolution, and not in God (in any sense).
The next prof. allows his intellect to make snap judgments about political issues. Sometimes he seems to be on target, but more often his assumptions are simply incorrect. Though I think he realizes that he doesn't have all vital information, he feels that he has enough to act and believe as if he had all pertinent information. He doesn't.
The third professor blatantly assumes that the rules he plays by are the only proper, the only rational, rules by which to think and form opinions. If you can argue and win from within his rules he may accept your point, but heaven help you if you try to argue that one of his assumptions about rationality, morals, motives, or another such human aspect, is flawed. His fervent belief in his perfect conception of rationality is, ultimately, irrational.

Three forms of arrogance: "This doesn't fit into my preconceived opinion of how things should be, so it must not be true." "I don't need to know all the relevant information, I know enough to make a judgment." "My approach is the only rational and proper approach to use." All three are dangerous both in academic and personal life, yet all three are oh so easy to slip into - especially for the educated mind.

Why should I believe as I do?

Tonight I had the pleasure of attending a debate between two of my favorite professors here at GMU about the rationality of religion. It was unfortunate that one debated the rationality of religious action and the other the rationality of religious belief, but the debate was fantastic nonetheless. I believe that the debate will be made available as a podcast (digital recording) for dispersal, and when it is I will link to it. Why should you listen to it? Because it provides excellent examples of a fantastic speaker (Dr. Larry Iannacone), the types of anti-religious arguments you hear all the time in academia (Dr. Bryan Caplan), and some good, non-experiential based, arguments for why religion is a rational action (again, Dr. I). Why non-experiential? Well, simply because if you base your entire argument for religion on experienced phenomenon you leave yourself open to counter-arguments such as "well, that's your experience and that's fine for you, but I've never experienced that", or, "are you sure you didn't just see/feel/experience what you really really wanted and expected to - kind of a mind-over-matter sort of thing."

All right, that's enough for now. I have many more thoughts on this though, so if you're interested, ask me.

God bless,

Read this

Wednesday I read a paper that made me laugh, smile, chortle, and think that perhaps it's time that economists stop pretending they can analyze religion without accounting for the supernatural. That leaves me with a significant question however - how can I provide additional depth to the work being done on the Economics of Religion by drawing God and the supernatural into the picture? Here's the paper - it's not long and really isn't as sacrilegious as it seems at first. And here's a good website for some background on what economists have just started doing with religion in the last couple years. Warning about that second website - it is substantially more complex and "economic".

Another one of these kooky 60 degree and sunny November days here in Virginia.... Yesterday I drove nearly all the way to the southern edge of the state while making a run for my part-time job. At least I didn't have to drive all the way to our branch office in Raleigh NC.

Was I born in the right decade?

Once again I have come across one of "my" economic ideas in a paper that was written in the 60s. I guess the challange for me now is to both learn to identify which ideas of mine that haven't been written about yet have merit (instead of just assuming they are so simple as to be worthless) and to explore new applications of these old ideas of "mine".

I have a question for you. Why is democracy the best? Do you have any economic, administrative, or effectivness reasons why democracy is the best form of government? I think that question can be solved rather easily, but more difficult is the question of which of the many voting methods is best.

Third random point. Yesterday, working in the AAV shop, I was marveling at the network of small and medium sized businesses that exist to produce the technical setups for tradeshows, conferences, concerts, etc.... Not only are there the companies that actually bring the equipment, set it up, and run the show (and even then they hire lots of freelance help for specific jobs), but there are also many companies that rent additional equipment, do shipping, even tasks as mundane as building cases in whish to transport and store expensive equipment.

The reset button

Have you ever had an experience that convicted you, illuminated your actions, and pushed you back on some course you had originally set?

When these experiences come from God they are just amazing and make me praise Him all the more. When I discover a particular "reset" on my own, I just kick myself. And when the reset comes from a friend, from realizing that by straying from my previous course I may have hurt someone I care about or caused them turmoil, I grieve for them and feel great remorse regarding my actions.

This afternoon something from one of my friends triggered this third kind of reset, and believe me, seeing how far and fast I can go from where I want to be when I try to take matters into my own hands just makes me all the more glad for God's grace and the constant advice/companionship of the Holy Spirit, and all the more committed to relying totally on the provision of my Father.

My friend - - I am deeply sorry, and thank you for (whether or not you intended to) setting me back on track.

In other news, I had a meeting/interview at the Tax Foundation this afternoon. Talking with several of the staff I discovered that one of their major points in the discussion on what attracts businesses to states is almost exactly the same idea I had and wrote a little about back in June. Now I really wish I had turned that thought piece into a full paper or article for MCPP. Good news though - it appears that I am moving from having "original" ideas that were first written about sixty years ago to simply not getting my ideas on paper fast enough to be the first. Guess I should write about my thoughts and ideas more, huh. :)

Went hiking with several friends yesterday. Fantastic day, so wonderful to be out and among God's forests, hills, and rocks again. The group hiked about 7.5 miles (one of the young ladies and I hiked about 1.3 miles more than the group). Here are a couple of pictures.


















Just a stream I really enjoyed hiking along. The goofy camera said the picture was blurry, but I like the picture the way it is.

Below is most of the group. The standing guy (Mike) and seated gal (Carolyn) both go to my church.
















And here's me, playing with the rocks again.

Behind the politics

More and more evidence continues to surface that we must give decentralized disaster relief more freedom in responding to crises. It seems as though worries over jurisdiction, licenses, and other bureaucratic nonsense hampered various small scale initiatives to provide assistance (article). Could there really be something to the wisdom of free-market economists' saying that a central authority has no hope of efficiently (or even workably) coordinating all relevant information and making the right decisions? Ok, so why do people clamor for stronger government response and protection after disasters? That's right, because then they do not have to take responsibility for their own actions and safety.

Apparently there is also a dispute over whether Amtrak was available to help move people out of the city (article), substantial emergency funds were unaccounted for or mis-spent before the fact (here and here), and my favorite of all religious groups in America - the envirowackos - strike again, causing more death and destruction (article).

More red tape (article). Just makes me upset.

No real profound economic thoughts, just been doing lots of reading lately - mostly about voting methods, rent-seeking, and various other facets of public economics and public choice. Played football (among other things) with friends from church yesterday, very sore all over today. So much fun....

YeeeeeHaaaaaaah!!!!!

I passed my Macro Economics Preliminary Exam!

I feel as though I should write something.

A possible bias may be a work here, but I find it rather sad that those most responsible (if anyone is) for the troubles in New Orleans most try to pass the blame while the one least responsible is the only one who has taken responsibility. I have actually heard people saying (and writing) that no blame rests on anyone except the President, while I strongly feel that, due to the evac plans that were not followed, the delays in requesting federal help (National Guard, etc...), and other various factors, what blame exists is to be found in lower levels of government.

Anything I could say has already been hashed to death, but you may have missed several points that I feel are crucial. First, the death toll stands at 659. Tragically high, yet not nearly the cataclysm that was initially feared. Second, to the best of my knowledge (and limited time), neither city evacuation plans and state response plans were followed completely. Third, everything that happened in New Orleans had been predicted and warned about for decades - expect perhaps the looting - and nothing was done by the "responsive and compassionate" leadership of the city and state. Fourth, it is the responsibility of the state governments to call for federal aid - especially when that aid involves military personnel. National Guard units are under the command of the governor. Neither was requested until after President Bush called and urged the governor to do so. Fifth, the talk about blacks being "targeted" in some way is preposterous. Look at the inner city of most urban areas. Anything that affects that inner city area is going to affect a greater number of "racial minorities" than "racial majorities".

There may be other salient points, and I make no assurances that the above is 100% correct, but it is true to the best of my knowledge given the limited time I've taken to be informed.

Now to some interesting economic thoughts - again, not original, but with my own spin.

First - the response of the free market, even though there are some tacit restrictions on prices, has been terrific. WalMart, Home Depot, cell phone providers, and other major retailers began preparing for the hurricane before it made landfall by stocking stores around the area expected to be hit with food, water, and relevant supplies (mobile cell towers and generators moved into the nearest safe zones in the case of the cell providers). Positive press was probably part of the story, but there was also money to be made. Survival items were given away, but markets existed for vastly increased quantities of "hurricane related but not survival" items.

Second - private relief efforts aside, the government spending/rebuilding/assistance/relief in disaster scenarios significantly decreases the costs of living in areas prone to disasters. My intelligent but non-economist mother saw this as a problem, and any economist worth his/her salt will heartily agree with her. Put in simple "economist speak", government disaster relief distorts the true costs of living in such areas, allowing more people to live in such areas than is best for the society as a whole. Instead of accounting for the true cost of potential ruin, they count on government relief to defray their costs. I have heard several economists who are concerned with the growing trend of increasing relief efforts and setting up special funds for victims of disasters. I agree with them. It is always easier, politically, to increase the amount of relief and be seen as "compassionate" than to decrease the relief and be decried as "heartless", "racist", and whatever else your political enemies will attempt to crucify you with. If we set up special funds for Katrina victims, al la 9/11 funds, where do we draw the line? At least with 9/11 you could draw a line at "victims of foreign attack during time of peace", though even that line is tenuous at best. Looking at things from a public choice perspective, it seems likely that more and more tax money will be spent on disaster relief of various kinds, and the costs of living in a disaster-prone area will continue to decrease.

Third - should we rebuild New Orleans? No, we should not rebuild it. Should it be rebuilt? Perhaps, but only if the costs of rebuilding are born by those who will live/work/have businesses there will we really know. Only then will we know if the benefit the residents expect to receive is greater than the costs of rebuilding.

Fourth - will the average income/wealth of New Orleans increase, stay the same, or decrease as a result of the hurricane? My bet is that average wealth will increase. If it is truly months before people are allowed back in to the entire city, I would expect that a lower proportion of low-income individuals will return to the city than the proportion of high and middle-income individuals.

All right, that's enough for tonight. I still have to read for class tomorrow. Do your homework, be willing to look beyond the major sources for news and information, and you won't need me.

NR

Enough!

In an ideal world, rescue would have come to all individuals trapped in New Orleans almost immediately, law and order would have been maintained, and the survivors would have been spared the trial that so many have born over the past five days. Instead, despite their best efforts (the US Coast Guard alone rescued 22,000 survivors and assisted with a further 9,400 rescues) the available rescue assests were overwhelmed by the magnitude of the disaster, worries about political correctness allowed looting and armed banditry to reach such a point that US military units have been conducting "combat operations" in the city, and the scale of flooding combined with the lawlessness contributed to the length of time required to extract all survivors taking shelter within the city. Yeah, things could have been done better, but I would argue that human factors have made things substantially more difficult than they otherwise would have been.

But wait!! What's this!? It looks as though, prior to the hurricane, all residents were warned that in the event that New Orleans was hit by a hurricane they (residents) would be responsible for their own safety and evacuation. Here's the article. Draw your own conclusions - I respect you enough to let you think for yourself.

Oh, and by now I am sure you've heard about Senator Clinton's request for a 9/11 commission style investigation into Katrina and the disaster response. Does that mean the commission would get to selectively ignore embarrassing revelations? It remains to be seen whether her request has true merit or whether it is a political maneuvering device to distract the administration.

'Nough for now. I was pleased to read that many of the Gulf refineries are beginning to restart operations, that crude oil prices have fallen below pre-Katrina levels, that we got through the Labor Day weekend without serious fuel problems, that various utility crews have made strides of progress in restoring service, and that engineers have been able to plug more of the levees around New Orleans and begin pumping operations.

Food for the hungry………..graduate student.

Yes, I went to the grocery store today. Buying food has become an unexpected pleasure, but also a little of a frustration as my mind glides over the many things I could make – if only I had the time, the reason (ie, guests), or the budget to purchase the ingredients. This economy we live in is truly amazing though. Bananas (fresh of course, and very tasty) were priced at $0.39 per pound. Stop and think about that for just a moment. What would be a reasonable real price for a pound of delicate fruit grown thousands of miles away, picked and rushed practically to your doorstep while still fresh, and available in such quantities that everyone has as much as they want?

How about less than five minutes of work by a low-skilled worker earning $5.50 an hour! Is that not incredible? Price is a marvelous signal of how resources need to be moved around in the market. Imagine if suddenly people began eating more bananas. At the low price of thirty-nine cents it would be easy to add several pounds of bananas to your weekly diet, and suddenly the grocery store would be running out or stock. Grocers would both increase the price they charge customers (but not too much or customers will shop elsewhere), which marginally reduces the poundage of bananas purchases, and the grocers would increase the price they pay their suppliers to provide a few extra boxes of bananas. By a similar mechanism, the increased money flowing to the suppliers would reach the growers (who may actually be one and the same, making the transmission of price very simple indeed), giving the growers - who until this time had been planting quantities of bananas and pineapples such that a box of one earned the same return as a box of the other - a very good reason to put more effort and land (resources of production) into growing bananas. Of course this story is highly simplified, but because prices were allowed to freely adjust at all levels, the increased demand for bananas was soon met with an increased supply. If price hadn’t been allowed to adjust shortages would have developed, there would have been “banana lines” in the grocery, and society would have been worse off by the value of the spent waiting in line.

Now let me jump to hurricane Katrina. Right off the bat, let me say that I am deeply sympathetic of the hurricane victims’ plight, they are in my prayers, and I understand that the nation should respond and help these many people get back on their feet. At this time I will not even touch the issue of to what level the federal government should be involved. Though it is true that the analysis of the costs and benefits of living in areas susceptible to natural disasters is badly distorted, that is a topic for some other time. However I would like to make a couple of “economist’s observations” about things I expect to see.

First, price controls. Refer to my story above. Now apply the same lesson to a shipment of generators headed for Alaska, output from a bottled water plant destined for Seattle, or plywood intended for developers in the Midwest. If the prices of these and many other goods that will be required in the hurricane-struck areas are not allowed to adjust, these and other goods intended for areas where life-as-normal continues will go where they are intended. Sure, the goods that are regularly supplied to the Gulf coast will continue to go there, but any increase in quantity will be slight regardless of how quickly stock sells out or how long the lines become. If prices are allowed to signal demand, generators, bottled water, plywood, and a thousand other goods will suddenly be freed-up from less vital requirements and made available to help with the recovery of the affected area. This reasoning also applies to the Atlanta gas panic on Wednesday. Though I hate to see gas prices going this high, I would rather see high prices than long lines at the station – even though I do have virtually no spare cash and lots of flexible time to wait in line.

Second, the economics of rebuilding. If anyone ever tells you that the rebuilding is somehow good for the economy, that it stimulates the economy, that it’s good for jobs, or any other such claptrap, they are wrong. As the great classical economist Fredrick Bastiat explains in his article, “What is Seen and What is Not Seen”, the resources that a society invests in restoring destroyed or damaged property are in essence wasted because they are expended merely to regain what was once had. So no, the rebuilding in the wake of Katrina is not a boon to the economy – resources and labor are merely being drawn from whatever other use they would have been put to in the absence of the destruction.

President Bush is absolutely right. It will take years to recover. My hope is that sound economic principles will be allowed to guide that recovery along as rapid a road as possible.

Well, I’m done writing for now. More later. Today I went to the VA DMV and officially became a Virginia resident. More on that too.

So yeah, 20 days later...

No, I haven't been sent on some secret venture to far off places. Instead I have been inward, in beyond the teeth and fingernails, through the epidermis, under the skeletal structure, into the very mind of man. What man? Why, me of course! Back in VA as of one week ago, but studying all the while for prelim exams. Last exam on Saturday. I promise I'll feed you shortly thereafter.

Published!

Ok, so it's not exactly the AER, but I'm happy nontheless. This is my first time published since writing about lasers and the future of warfare (don't laugh) for the Hillsdale Collegian. You can read my article for yourself here. I highly recommend poking around the rest of the Mackinac Center for Public Policy website as well.

"Think-tanking"

Just got out of a brainstorming session with a few of the other policy, communication, and advancement staff here at the Mackinac Center. The more I am here the more I begin to realize what a team has been assembled here. I'm off to Lansing (taking an early day) to attend the swearing-in of 6th US circuit court of appeals justice David McKeague, but you should check out the MCPP website.

A few more pictures

Here are the pictures of the "pit" and a couple more bursts.

More Fireworks Pics

Hello dear friends! Thought I'd share some pictures from the fireworks shoot on July 3rd at Delta Township. Some of the pictures are of setting up. You'll be able to see the racks and mortars that we hand-light and fire the shells from. Each tube contains one shell of either 3, 4, or 5 inches in diameter. The shells in the racks next to the fence are the finale. The finale is fused together so that several hundred shells can be fired with only a couple of lightings. I lit the finale in this show.

Davidson (16 yr old brother) took several pictures during the show. We are still learning the camera, so bear with us. Several of the pics show bursting shells. I hope these are obvious. A couple of the pictures show the environment we work in on the ground around the racks as we are lighting shells. In short it is loud with firing cues and the explosions of the lift charges, hot with our heavy gear and the flaming debris falling on us, busy with carefully thought-out but rapid movements, and such an incredible experience.

Enjoy!

fireworks

The fireworks shows that my family worked on this past week went very well. The show at Delta Twnshp on the 3rd went smoothly and normally. I shot the finale. On the fourth, setup was normal, but we had a significant amount of rain again (third year straight). I stood on the hill during the drenching to maintain the tarping and protect the shells, but even I was forced down when the lightning got just a little close. We only lost one shell in the main body during an hour of rain! Parks and Rec lost their nerve though, and the show was delayed 'till the fifth. Unfortunate this was, as I was unable to be there during the shoot or clean-up.

There were news-crews at both setups. Links to the shorts are below. Click the video link at the top of each article. One clip is entirely about fireworks, featuring Clayton, Davidson, Larry, and Roger Bonney. The second clip has several Russell boys in it and show some of the action on the hill in Lansing.

July 3rd - Delta, Sharp Park
July 4th - Lansing, the hill.

edit: belay that - the video seems to have been taken off the news site for the 3rd.
2nd edit: video now seems to be down from the 4th as well. Too bad.

Economically Speaking

Working here at the Mackinac Center for Public Policy, I have become convinced that Michigan needs to settle down. Or at least, that Michigan political executives and legislators must settle down. Instead of continually making and changing statements about what they intend to do to "fix" the state economy, there should be some sensible reforms enacted, then things should be left alone for a while. Thus would businesses, business owners, and entrepreneurs be shown that Michigan is stable enough to support long-term business investment. Instead, what we have right now is a climate where pols are proposing significant shifts to our business environment, the established rules are not always followed, and the future prospects of new businesses in Michigan are unstable. Instead of giving MEGA incentives and legislative handouts to those who would provide Michigan jobs we should provide them with a stable and predictable legislative base. Unfortunately, our governor and legislator seem intent on creating fault-lines.

Another imagination paper.

Hey gang. Probably the last of the short papers for a couple weeks at least - writing group is done for now and we'll see what I come up with over the summer. As opposed to the last paper, I'm actually reasonably happy with this one.

Imagination Required

Atop a slight ridge overlooking a large field a young officer sit on his charger. Briefly surveying the two armies locked in mortal combat, he couches his lance and leads his unstoppable cavalry in a charge to rupture the enemy’s lines. Suddenly he is brought up with a jerk as his horse goes down with a broken leg. As the charge sweeps around him an attendant brings up another horse. The young officer quickly remounts and leads his cavalry into the fray at the crucial time to turn possible defeat into decisive victory. After receiving the commendation of his general for his contribution to the victory, the young officer returns home to his loved ones.

Later that same evening the young officer’s mother is dismayed to find that the chain on his bicycle has ruined the cuffs of yet another pair of his pants.

What is imagination?

Nearly everyone is familiar with imagination in the context of childhood. In the role enabling and enhancing play it is truly important, it is the ability to create realities far beyond the merely physical, yet imagination does not lose its usefulness after one’s 18^th birthday, or even after the 98^th. Imagination remains incredibly important for any adult who hopes to solve the unexpected or create the unprecedented. It is seeing things where they are not. Imagination is that intangible ability that allows an individual to create something ‘new’ – a solution, product, or theorem that has never before existed. In particular, it is this last quality that prompts us to assume the other benefits of imagination as proven to be of value to the “grown up” world and focus on the value of imagination to economics.

Why is imagination important to economics and economists?

The economist who lacks imagination may be successful, able to analyze data and perform all the tasks normally expected of an economist. They may even be able to write papers that other people consider being helpful and contributory to the literature, but they will never make a truly revolutionary advancement of theory or ideas. The individual’s facility of imagination is what allows an answer to the query “what if…?” Though individual economists may be able to function without imagination, economics as a whole will wither if imagination ever fails. Lacking the spurs to analysis and research provided by imaginative innovations in economic theory, the discipline would quickly become stale, irrelevant, merely a method of analyzing the problems of the day with the methods of yesterday. Whereas, with imagination assisting theorists, economics as a whole drives ahead, seeking to analyze and understand the issues of today with the best methods of yesterday AND the new methods of tomorrow. For imagination to be available as a tool for the economists of tomorrow, it must be something they are accustomed to calling on throughout their lives. In today’s culture of provided entertainment, electronic and visual mediums that remove all necessity for imagination in entertainment and play, will there be a dearth of “imaginationists” in the future?

Is there a threat to imagination?

Cursory observation seems to reveal that every generation, every major shift in entertainment technology, has brought distraught cries that the children’s imaginations will atrophy. Robert E. Lee is known to have written home admonishing his wife to not allow their son access to many novels. It was Lee’s strong opinion that his son’s perspective on the world and his imagination would be weakened by reading accounts of another’s perspective of the world and life in a fictional book. Parents and elders have railed against television and more recent forms of childhood entertainment, decrying the lack of exercise and claiming a detrimental effect on young imaginations. Cave paintings probably met with similar criticism because they showed boys and girls images about certain aspects of life (hunting, skinning, etc) before the children experienced it themselves. Despite the concerns, from all appearances it would seem that the imagination of society has not suffered, with patents, inventions, and theories continuing to increase at an incredible rate. Economics in particular continues to develop new theories of markets and behavior, new ways to gather and analyze information, and new concepts of how mankind interacts with itself.

As economists, let us not distance ourselves from that little boy, riding his bicycle and waving a stick, who turns the tide of battle and wins the gratitude of a nation. We should all be so lucky.

slightly tardy

Ok, here's last weeks paper. I don't really like this one - it seems rather choppy and poorly written, but I don't have time to fix it right now. Yesterday's paper, the last for the semester, will follow later this week - prolly Friday.

The Role of the Selfish, Single, Working, Man

Who was the first person to purchase a DVD player? What brave soul paid hundreds of dollars for a device that could only play a very limited selection of movies? Were the first owners of DVD players willing to gamble that more movies would become available, despite witnessing the debacle of the videodisk player just a few years earlier? It seems rather amazing that people would make such a purchase. It is even more amazing that businesses would develop new technology and products that depart from previously established markets. There is risk. The company must start producing the new good before it can be purchased, cost must be incurred before the profit (maybe) arrives. The initial consumers must be willing to tolerate poor film selection, poor support, and an expensive piece of equipment that become obsolete very rapidly. Yet once enough people have purchased the good the benefits can be significant. Though this example specifically refers to DVD players, it can easily be seen how the same pattern has applied to many other goods.

A ‘networks effect’ is the term economists use to describe a good or process that experiences an increase in value as its use becomes more and more widespread. This also means that it is relatively less valuable to use/produce the good earlier rather than later. Companies would rather produce a good after it is seen to have market potential. Discerning consumers would rather wait to spend their hard-earned money until prices drop and use is sufficiently common to have raised consumer value to near its maximum level.

Companies can choose to develop new products or improve old. Each choice has its own risks and rewards. An old product has the advantage of an established market, but the risk that maybe something new will come along and supplant it. A new product has the advantage of perhaps developing a new market, replacing an old good, or gaining market share, but also has the risk of being, well, risky. Any new product carries uncertainty about whether it is a viable product.

So what gives a company the confidence to introduce a new good opening a new market such as some new gadget, equipment, or electronics device? Likewise, what possesses a consumer to purchase something so new no one really know how readily it will become a part of society? Why be the first to own a good that is expected to benefit from significant network effects, when at first the usage and network benefits will be rather small?

The answers to these questions are very intricate and require careful thought on the many factors involved, but I believe there is one element that has often been overlooked. This element can be summed up in two words. Boys. Toys.

Men, often relatively young and single but not necessarily either, seem to have a proclivity toward owning things that are “new” or “high tech” simply because they are. There is a strong flavor of competition in this – a man wanting either to have something before any of his friends does or wanting something because all of his friends already have it. Not all of this (generally) male behavior can be explained by competition though; a fair amount must be caused by just general male-nature. Gadgets, new “stuff, “toys” typically interest guys. All guys like new stuff that is high tech and interesting, but it is the single man, earning a decent wage, who can afford to indulge his taste for the latest new idea. Narrow selfishness causes him to purchase for his own enjoyment and to show off his new stuff for his friends, but in doing so he starts the ball rolling on network effects for the rest of us. It is the known existence of such consumers that give companies the confidence to delve into new products and new markets.

Back to the DVD player example. Starting from a small number of initial buyers, DVD makers have continued to develop and improve their products, numerous films have now been released on DVD, and we are well on our way to seeing the DVD burner become a normal method of recording data and video. Not bad for selfish young men with money to burn.