Please, Reach Me the Way I Want to Be Reached

From the NYT:

AT a planning meeting I attended earlier this summer, a legal pad was passed and we were each asked to write our name and our “communication preference.”

Some people prefer e-mail, some prefer cellphones, some want to be sent a text message on their cellphones,” the leader of the meeting said. “We want to reach you the way you want to be reached.”

Time was when making contact meant finding someone’s phone number and dialing. You might connect with your party; you might leave a message. But you had done all you could.

Now contact means decoding the quirks of the person in question, the better to predict how to actually get your message through. And if you misread your target, it means the risk of a frosty response, or sometimes deafening silence.

Does he or she hate e-mail, letting it build up in the inbox, but quick to answer the cellphone on the first ring? Does the person refuse to carry a cellphone, but grab the office line through the Bluetooth that is literally attached to one ear? Is it solicitous or stalkerish to send an e-mail message, then leave an office message, then try the cellphone just to be sure?

ATSRTWT

(Nod to Anonyman)

Hard to Make Predictions...

...especially about the future.

In 2005, Amerihaters were puffed up with pride about Airbus.

How's that working out for you? Airbus? Hello!

Well, I can answer, since Airbus seems to have lost its voice: the demise of Boeing was somewhat exaggerated.

(Nod to WD)

Markets in Everything: Growth in Islamic Accounts

Islamic accounts: the ad seems to recognize that Islamic consumers expect to pay high fees if they want to get around the problem of interest.

But there is a market response:

Do Islamic Accounts have to mean additional costs?

Surely not. Our prime ambition is to show you that additional costs are not necessary. The present situation in the world of investment has made us wonder why this type of practice is acceptable. Social, cultural and religious beliefs should not be taken advantage of. This is exactly what we would like to present you with.
Due to the growing interest in Islamic accounts, we have decided to introduce investment accounts compliant with the Shari’ah or Islamic Law. What this means is that these accounts will be swap free and that no interest will be charged neither for investors nor against them.

What does this mean?
Commission free accounts.
No swap points debited or credited for investors.
Widened spread on the FX market by only 1 pip.
Regular spread for all other instruments.
10 USD daily charge per lot for every transaction held through the weekend.

Examples:
1. 5 lot transaction opened on Monday and closed on Thursday. No charge.
2. 1 lot transaction opened on Friday and closed on Tuesday. 40 USD charge.
3. 0.5 lot transaction opened on Wednesday and closed on Tuesday. 30 USD charge.

In case of any questions don’t hesitate to contact – we speak Arabic, too: Omar Arnaout

(Note: "MiE" is a registered trademark of MR)

Angii in the Mist

(Posted remotely, by Angus)

OK people, if the Grumeti river gators or Rwanda Airlines haven't gotten us, today we will be in Volcanoes National Park in Rwanda, mountain gorilla trekking!!

The park contains 5 dormant volcanoes, Sabyinyo (3.674 m), Gahinga (3.474 m), Bisoke (3711 m), Muhabura (4.127 m), and Karisimbi, the highest volcano with an altitude of 4.507 m.

They look like this (that is Sabyinyo):
And we are hoping to see a lot of this:
If you prefer your images to move, try this youtube video

France....Always France

From DW-World:

The 13 EU members of the euro zone agreed in April to balance their account books by 2010. Though Sarkozy voiced his commitment towards that goal in Brussels, he also stressed it could only be achieved if France's economic growth was higher than it has been so far.

In other words, he gave himself the go-ahead to violate the EU's budgetary rules that lay down that the budget deficits of member states should not exceed 3 percent of GDP.

Does anyone but me wonder why "grow really fast" and "have huge domestic fiscal deficit" are synonyms in the minds of politicians?

ATSRTWT

Money by Fiat, Razors by Choice

Interesting post by Tyler, on the rupee/razor blade black market "exchange rate."

Even the comments are interesting and pretty well informed.

Money is usually a very cool but dangerous topic. It is easy to say dumb things about it. One of my favorite things to do is just listen other people talking about monetary theory or policy. The things that pass for knowledge, I just dont' understand.

Not Surprising, And Yet....

Interesting finding.....

"This paper studies the influence of mass media on U.S. government response
to approximately 5,000 natural disasters occurring between 1968 and 2002.
These disasters took nearly 63,000 lives and affected 125 million people per
year. We show that U. S. relief depends on whether the disaster occurs at
the same time as other newsworthy events, such as the Olympic Games, which
are obviously unrelated to need. We argue that the only plausible
explanation of this is that relief decisions are driven by news coverage of
disasters and that the other newsworthy material crowds out this news
coverage...News biases relief in favor of certain disaster types and
regions: For every person killed in a volcano disaster, 40,000 people must
die in a drought to reach the same probability of media coverage. Similarly,
it requires forty times as many killed in an African disaster to achieve the
same expected media coverage as for a disaster in Eastern Europe of similar
type and magnitude...to have the same chance of receiving relief, the
disaster occurring during the highest news pressure must have six times as
many casualties as the disaster occurring when news pressure is at its
lowest, all else equal. Similarly, a disaster occurring during the Olympics
must have three times as many casualties as a disaster on an ordinary day to
have the same chance of receiving relief." [News Floods, News Droughts, and U.S. Disaster Relief, (Thomas Eisensee and David Stromberg), Quarterly Journal of Economics, 122(2), 2007.]

ATSRTWT

From the paper:

In May 1999, a storm struck India, reportedly killing 278 people and affecting
40,000. On the same day, a 15-year-old sophomore shot and wounded six classmates at the Heritage High School in suburban Atlanta. The two events competed for news time. Since this was just a month after the Columbine high school tragedy, the events at the Heritage High School were extensively covered by the U.S. television network news, while the Indian storm was not covered. About one year earlier, a storm of similar size struck India (killing 250 and affecting 40,000 people). At that time, there was less other breaking news around, and the storm was covered by the television network news. Two days later, the U.S. Ambassador in India, Richard F. Celeste, declared this storm a disaster, and its victims consequently received U.S. relief. He did not issue a disaster declaration for the first mentioned storm and its victims received no U.S. government relief.

Question: Is this supply driven, or demand driven? As Russ Roberts at CH noted, Adam Smith's thoughts on this are instructive.


(Nod to KL, who covers everything)

Barbara Rohde's new site

A good friend, Barbara Rohde, a very talented artist and painter, has just put up her new web site.

I love her watercolors, and have one hanging in my living room. Here are some examples:




























She is not interested primarily in big, sweeping views of things. Barb focuses on the beautiful details, in her life and in her art.

Words from the Front Lines

From an email, from a friend who works for a large important organization.

"I was recently rebuked for actually calling someone instead of using email. Appearently if someone wants to be important, then they can't bother answering the phone, they need to type."

Emailing, and AntiTrust

As an old FTC guy, I do appreciate the problem here:

I used to tell clients that they had a mistaken image of FTC lawyers as impartial regulators interested in nothing more than truth and justice; in fact they were eager and ambitious litigator/prosecutors looking to put notches on their holsters. These notches would lead to advancement in the agency or to lateral partnerships at Wall Street firms. Some of my best friends advanced this way. So that when you gilded the lily by overstating or misstating the reasons for an acquisition in some ill-chosen memorandum (usually written by the investment bankers), you were creating good old-fashioned understandable evidence.

In this case, the Whole Foods CEO sent an e-mail to the board listing as the top two reasons for the acquisition: "Elimination of an acquisition opportunity for a conventional supermarket" and "Elimination of a rival." Two reactions: (1) Damn! You can do all the training and prophylactic work you want with your business people, but CEOs still write these damn e-mails (which constitute 4(c) documents) without showing them to you, the general counsel; and (2) I could re-write the two reasons to say almost the same thing without the incendiary effect: "Enhance our ability to compete against the more powerful and resource-laden supermarket chains who are bound, in view of the low barriers to entry, to provide the kinds of natural and organic products we do" and "Achieve cost, marketing, and sales synergies through rationalization of locations, more efficient advertising budgets, and other efficiency moves."

General Counseling 101: If the CEO had sent the draft e-mail to me, we would have had the following conversation:

Lipshaw: "The e-mail is fine if that's what you really mean, but I think you are using loose language and it comes out contrary to your intent."

CEO: "Huh?"

Lipshaw: "You have made it sound like you are trying to eliminate competition, when in fact you know that Kroger, Safeway, Meijer, and Winn-Dixie could crush us tomorrow in one fell swoop. Marsh in Indianapolis is already taking share from us with their organic and natural section. So "eliminating" Wild Oats wouldn't do a damn thing."

CEO: "That's true."

Lipshaw: "So why write it that way? It's red meat to the FTC carnivore! You don't need this puffing to persuade the board it's a good deal."

CEO: "How would you do it?"

Lipshaw: "Doesn't this sound more like why we are REALLY doing this deal?" [Reads bullet points from above].

CEO: "Yeah! That's good. Read again to me slowly so I can get it down."

Absolutely right, on the "notches on the holster" bit. It may be "notches on the lipstick case," but still. In 1984, at the FTC, I was an economist, and my (at that point, future) wife was an attorney.

I spent my time thinking of reasons why mergers enhanced competition. And she and her lawyer pals spent their time thinking of ways to kill all the economists. You only get experience litigating by...litigating. FTC lawyers did NOT take that pay cut so they could sit around and serve the public.

(Nod to Mr. Zorro, who knows a lot of stuff he can't say)

Is It Okay to Ask Questions?

From yesterday's NYT:

For many economists, questioning free-market orthodoxy is akin to expressing a belief in intelligent design at a Darwin convention: Those who doubt the naturally beneficial workings of the market are considered either deluded or crazy.

But in recent months, economists have engaged in an impassioned debate over the way their specialty is taught in universities around the country, and practiced in Washington, questioning the profession’s most cherished ideas about not interfering in the economy.

“There is much too much ideology,” said Alan S. Blinder, a professor at Princeton and a former vice chairman of the Federal Reserve Board. Economics, he added, is “often a triumph of theory over fact.” Mr. Blinder helped kindle the discussion by publicly warning in speeches and articles this year that as many as 30 million to 40 million Americans could lose their jobs to lower-paid workers abroad. Just by raising doubts about the unmitigated benefits of free trade, he made headlines and had colleagues rubbing their eyes in astonishment.

“What I’ve learned is anyone who says anything even obliquely that sounds hostile to free trade is treated as an apostate,” Mr. Blinder said.

And free trade is not the only sacred subject, Mr. Blinder and other like-minded economists say. Most efforts to intervene in the markets — like setting a minimum wage, instituting industrial policy or regulating prices — are viewed askance by mainstream economists, as are analyses that do not rely on mathematical modeling.

ATSRTWT

Blinder makes two claims: economists oppose all government regulation, and the economics profession hates words, favoring equations.

I just don't think the first claim holds up at all. Redistribution is quite an intrusive form of regulation, and far and away most economists I know favor it strongly. (and, yes, I know a LOT of economists.) Most economists are registered Democrat (although it is true that the Republicans are hardly free market, either).

But it is clearly true that the profession scorns qualitative or "imprecise" analysis for published work. The harder to understand, the better. The less connected to real applications, the more "fundamental" the work.

Which may explain why I have been in Poli Sci for 21 years, yes?

(Nod to NeanderBill, who questions EVERYTHING)

Designated Hitter: A Disease With No Cure

Interesting paper, showing the endless diversity of academic interests.

(nod to Tofe, who actually prefers the Junior Circuit, with the DH pathology)

Indian Food, Hold the Growth!

From Business Week, a review of B.M. Friedman's THE MOREAL CONSEQUENCES OF GROWTH

The title of Harvard University economist Benjamin M. Friedman's new book, The Moral Consequences of Economic Growth, might seem a bit off-key. After all, politicians and economists typically focus on the material benefits of growth -- more and better jobs, higher gross domestic product, larger incomes, and more money available for government programs. And companies such as Wal-Mart Stores Inc. () typically point to economic benefits, such as low prices for consumers and jobs for workers, when they want to justify their business policies.

But the narrowness of the public discussion is exactly what Friedman wants to address. "Our conventional thinking about economic growth fails to reflect the breadth of what growth, or its absence, means for a society," he writes. "Growth is valuable not only for our material improvement but also for how it affects our social attitudes and our political institutions -- in other words, our society's moral character."

The real benefit of growth, Friedman argues, is that it encourages a wide range of social virtues, including dedication to democracy, tolerance of diversity, social mobility, and commitment to fairness. By contrast, he writes, "when living standards stagnate or decline, most societies make little if any progress toward any of these goals, and in all too many instances they plainly retrogress."

...Friedman has scored a dead-center hit on the critical question: Why do we value economic growth? The usual argument is that a bigger GDP -- more goods and services -- leads to happier, more satisfied citizens. But that apparently simple proposition turns out to be far more complicated. As Friedman notes, there is plenty of evidence that people judge their well-being by comparing themselves to others. As the average income in a country goes up, so do expectations. As a result, the level of GDP per person in a country, taken alone, doesn't necessarily say much about the level of happiness....

[But] Friedman argues that economic growth has a key additional benefit: As long as people see their own income rising, they worry less about doing better than others. And that in turn creates a more favorable environment for political and social advances. To demonstrate this point, he draws on economic studies and historical examples, both American and global. In the 1700s, he points out, it became accepted that the rise of commercial and trading activity was a force for positive legal and institutional change. Adam Smith, for one, believed that moral progress went hand in hand with economic progress, as voluntary exchange replaced the use of force.

Friedman points to the the Ku Klux Klan in the U.S. and the Nazis in Germany as examples of what can happen when growth vanishes. And he worries that "rising intolerance and incivility and the eroding generosity and openness...have been, in significant part, a consequence of the stagnation of American middle class living standards during much of the last quarter of the twentieth century."

Friedman is forthright about admitting that the New Deal doesn't fit his argument. He says the hard times of the Great Depression brought forth a virtue: a generous public response. But the New Deal was "exceptional," says Friedman, arguing that rising incomes in general make people more willing to help others.

The link between economic growth and democracy also works on a global level. The movement toward civil liberties and open societies, says Friedman, has been most successful in countries with rising incomes: He predicts China will take this same path...

I don't see why the New Deal doesn't fit. FALLING incomes, and prices, might well elicit a sympathetic response. And most "New Deal" programs were payoffs to specific interest groups, as Tom Ferguson documented in his "Normalcy to New Deal" paper in International Organization. (link for JStor subscribing institutions only)

Downside

The downside of the possibilities of integrating music videos and movies.
Middle Earth Metal

Add to My Profile | More Videos
This is the worst. The worst video in all of history. Ever.

That's the problem with innovation. You can get videos like this.

UPDATE: John Q. Public nominates the Hoff as competition for worst video ever.

And, on watching....okay, he's right.

So, Dragonforce gets "Worst Video, Amateur Division."

The Hoff wins "Worst Video, Professional Awfulness."

Better?

Recycling....gives you a bigger winkie!

Mea culpa! Should have put this link up before, so loyal fans can do what loyal fans SHOULD do. (Podcast here, for the listening public)

A bonus: one kind reader, the fine folk at Am Econ & Curmud, linked the podcast and the essay. Thanks!

But, thanks even more for having Google Ads on your site.

Since the post was about (as far as Google could tell) recycling, the ad they put up was about recycling! And if you click through, it contains this gem:

Clean Up the Way You Recycle
With an ecopod in your home or office, you will change the way you recycle. Place aluminum cans and plastic bottles into the top and step on the easy-step compaction system to store 50 or more containers. Place glass and other recyclables inside the top bins and you'lll benefit from clean effective recycling that your friends will admire. Order your ecopod today!

Presumably, this kind of exchange takes place, daily:

"Say, Alfred, isn't your penis bigger since you started recycling? I really ADMIRE that!"

"Why, yes, Trip, it is. Thanks for noticing! It's all due to my new ecopod!"

Notice the reason you should get an ecopod. It doesn't say you can make money, save space. It just say, "your friends will admire" you. Wow. Just wow.

To Find Monopoly, Count the Number of Firms

Preach, Don. Preach it.

As an old FTC hand myself, I find most antitrust "policy" remarkable.

The Sherman Act is just fine, if interpreted narrowly. But interpreting the Sherman Act narrowly requires interpreting the definition of "industry" broadly.

When I was at the FTC, my old friend Mike Smirlock proposed to me a definition of monopoly, or monopolize, as used in the Sherman Act.

1. ASSUME THE MERGER TAKES PLACE.
2. Define the industry. Include close substitutes in the defintion of "industry."
3. Now, rank the firms in the industry (post-merger) from largest to smallest.
4. Starting with the largest, count the number of firms in the industry.
5. If the number is "1", the industry is a monopoly, and the merger should not be allowed.
6. If the number is "more than 1," the industry is NOT a monopoly, and the merger SHOULD be allowed.

The good Boudreaux makes a persuasive argument for why THIS merger should go through. ATSRTWT, please.

But I think the Smirlock test is the one we should use. The considerations raised by Don B only arise because we are doing something else.

For enthusiasts, I give you the Sherman Act, the only anti-monopoly legislation you will ever need:

Section 1. Trusts, etc., in restraint of trade illegal; penalty
Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $10,000,000 if a corporation, or, if any other person, $350,000, or by imprisonment not exceeding three years, or by both said punishments, in the discretion of the court.

Section 2. Monopolizing trade a felony; penalty
Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $10,000,000 if a corporation, or, if any other person, $350,000, or by imprisonment not exceeding three years, or by both said punishments, in the discretion of the court.

The other sections, which are either obselete, purely technical, or (IMHO) shaky, can be found here.

(I should note that my own view is quite centrist, compared to that of my good friend Gary Hull. Check this out!)

Solow on Growth: A Retrospective

From Robert Solow's Nobel Address, in Stockholm, 1987:

The "neoclassical model of economic growth" started a small industry. It stimulated hundreds of theoretical and empirical articles by other economists. It very quickly found its way into textbooks and into the fund of common knowledge of the profession. Indeed that is what allows me to think that I am a respectable person to be giving this lecture today. Nevertheless I must summarize the outcome in a couple of sentences, so that I can move on to the more interesting questions about what is still unknown or uncertain and remains to be found out.

Just allowing for a reasonable degree of technological flexibility accomplished two things. In the first place, the mere existence of a feasible path of steady growth turned out not to be a singular event. A range of steady states is possible, and the range may even be quite wide if the range of aggregative factor-intensities is wide. There are other ways in which an economy can adapt to the Harrod-Domar condition, but it still seems to me that variation in capital-intensity is probably the most important.

Secondly, it turned out to be an implication of diminishing returns that the equilibrium rate of growth is not only not proportional to the saving (investment) rate, but is independent of the saving (investment) rate. A developing economy that succeeds in permanently increasing its saving (investment) rate will have a higher level of output than if it had not done so, and must therefore grow faster for a while. But it will not achieve a permanently higher rate of growth of output. More precisely: the permanent rate of growth of output per unit of labor input is independent of the saving (investment) rate and depends entirely on the rate of technological progress in the broadest sense. (emphasis mine)

Technological progress is a problem. They don't sell it in boxes. Policies designed to focus on saving, or consumption, don't accomplish much, except to keep politicians and pundits in business ("Vote for me, folks, and you'll soon be farting through silk!!")

Hard for politicians to admit, "The best thing we could do is create a setting where innovation flourishes, and is rewarded, and get the hell out of the way!" Even the word, "progress," has been stolen by those Luddites who call themselves "Progressives" but who in fact try to protect industry and hold back economic change. "Progress" is not building roads. Progress is individual humans thinking of new ways to use roads, and new products to move along those roads.

I am excerpting Solow, of course. Much of his real view has to do with stimulating effective demand, Malinvaud's famous theory of disequilibrium. But I do have to give Solow some credit for the way he concluded. A nearly Austrian riff, though he seems to approve:

When I read Robert Frost's lines from "The Black Cottage":

Most of the change we think we see in life
is due to truths being in and out of favor

it occurred to me at once that they sound altogether too much like economics. Some of that feeling is inevitable, and not necessarily to be regretted. The permanent substructure of applicable economics can not be too very large because social institutions and social norms evolve, and the characteristics of economic behavior will surely evolve with them. I believe also that part of the changeability of economic ideas on a shorter time-scale is our own doing. It comes from trying too hard, pushing too far, asking ever more refined questions of limited data, over-fitting our models and over-interpreting the results. This, too, is probably inevitable and not especially to be regretted. You never know if you have gone as far as you can until you try to go further.

Mahale Mountain Breakdown

If all has gone well on our OKC - Newark - Amsterdam - Kilimanjaro flights, today Robin and I will be in Mahale Mountains National Park in Tanzania, on the shore of lake Tanganyika. There are a few hundred wild chimps here that are habituated to humans and we are gonna go follow them around as best we can.

Also, lake Tanganyika is touted to be clean and good for snorkeling.

This area is fairly remote, the left hand photo shows an aerial view. Supposedly there are no roads in our out; the only access being by boat.


Here is a link to a video of chimps at Mahale (warning, video is pretty over the top pretentious). After this we are headed to the Serengeti to see the great migration.
(Transmitted remotely, from Angus in Tanzania)

Is This So Wrong?

Dancing garbage, some big green furry things, and delightful 25 year old Japanese women doing the whole "schoolgirls in white dresses" that Japanese men seem to like so much.

I'd recycle for them. The women, not the green things. The green things are holding pieces of paper that actually can't be recycled. Maybe composted. Maybe that is what they were going for.

Have to admit, I didn't pay that much attention to the green things. Quite taken by the schoolgirls, though. In a paternal, sort of observer way, of course.

(Nod to BH, who found it)

I gotta Jones for keeping up wid da Joneses

Some of you may have seen this when it came out, two years ago. I missed it, so I bring it to you now.

From the QJE, August 2005, Vol. 120, No. 3, Pages 963-1002....(Luttmer's personal link to a PDF of the paper)

"Neighbors as Negatives: Relative Earnings and Well-Being," Erzo F. P. Luttmer,

Abstract:
This paper investigates whether individuals feel worse off when others around them earn more. In other words, do people care about relative position, and does "lagging behind the Joneses" diminish well-being? To answer this question, I match individual-level data containing various indicators of well-being to information about local average earnings. I find that, controlling for an individual's own income, higher earnings of neighbors are associated with lower levels of self-reported happiness. The data's panel nature and rich set of measures of well-being and behavior indicate that this association is not driven by selection or by changes in the way people define happiness. There is suggestive evidence that the negative effect of increases in neighbors' earnings on own well-being is most likely caused by interpersonal preferences, that is, people having utility functions that depend on relative consumption in addition to absolute consumption.

This is an old problem, but the empirical work is quite interesting. Here's the problem: consider two societies.....each has exactly two classes of people, the numerous poor and small number of rich. Assume also that the numbers, and proportions, are identical in the two societies. The two are:

Society Alpha, where the poor receive $20k income per year, and the rich receive $40k income per year.

Society Beta, where the poor receive $25k income per year, and the rich receive $120k income per year.

Society Beta is better, right? First, by the Pareto criterion, EVERYONE is better off in Beta than in Alpha. Second, one could always redistribute, and take some from the rich in Beta, and make the poor even better off.

This paper would seem to raise questions about the first claim. Pareto comparisons based on wealth have nothing to do with welfare. The poor in Beta are MUCH worse off, because the disparity between rich and poor is greater. And there may be no means of redistributing enough to make this difference go away, unless you do away with the rich entirely.

Oh, society of frailty, thy name is growth.

(Nod to KL, who actually believes in redistribution, but isn't envious of the rich. At least not much)

Wimbledon Update

Finally a dry day for the backlogged mess that is Wimbledon and some very strange results:

Justine Henin wins the first set 6-1 but then eventually loses to Marion Bartoli of France.

Andy Roddick wins the first two sets and is up a break in the third but then eventually loses to Richard Gasquet of France.

This next result is a bit more understandable as it involves a "dangerous floater" and isn't such a major choke job as the first two, but Anna Ivanovic (the 6th seed) loses 2-6, 4-6 to Venus Williams (23rd seed).

So the women's final will be Venus Williams v. Bartoli. Gotta like Venus to uphold my pick that a Williams sister will win this year.

Men's semis are going to be Federer v. Gasquet and Djokovic v. Nadal. Djokovic has played back to back marathon matches, Gasquet went to 8-6 in the fifth set today, Nadal at least had an easy match today, Federer has only played one match in the last 5 days. I think its going to be a rematch of the French final and I can only hope the same outcome will prevail.

Goin' to Arusha

No it's not a new song by the Mountain Goats, its the first leg of our upcoming vacation itinerary.

Last year the Economist named Tanzania "The country that deserves the money it gets" in an article entitled "Bye-Bye Poverty" which says in part:

Tanzania's relative lack of graft means that some donors now put their money directly into the national budget with few strings attached. Britain hopes to deposit $170m a year into Tanzania's coffers in this way for the next few years

While this may help dilute colonial guilt in Blighty (Tanzania was a British colony from 1919 till independence), I respectfully submit that government to government transfers will never bring about development.

Rather, I believe they will mainly bring about a long lived recipient government. And indeed, Tanzania has been a one party state since independence, namely the CCM party founded by Julius Nyerere, the leader of their independence movement.

The Check was in the Mail

In a series of recent papers, Micheal Dooley, Peter Garber, and David Folkerts-Landau have been arguing against the textbook open economy macro model (and said model's dire predictions about the current set of global financial accounting imbalances). They argue that since Sovereign debt is not really collectible, poor countries must post effective collateral to get financial flows from rich countries. They further argue that past exports as represented by the US current account deficit are precisely this collateral.

In other words, China has given us a ton of stuff in exchange for t-bills. If they expropriate US or other rich country FDI, the US cancels their claim to the t-bills and we get the stuff for free. That is to say, China's huge reserve holding of dollars is just collateral against any appropriation of the FDI being done there.

Here is how they put it in their latest NBER working paper (gated, sorry):

The nature of the social collateral is so obvious it is hard to see. If the center cannot seize goods or services after a default, it has to import the goods and services before the default and create a net liability. If the periphery then defaults on its half of the implicit contract, the center can simply default on its gross liability and keep the collateral. The periphery's current account suplus provides the collateral to support the financial intermediation that is at the heart of development strategies. The interest paid on the net position is nothing more than the usual risk-free interest paid on collateral.

This is really cool.

Finally, a link to other Dooley et al papers on this topic along with criticisms of their approach is here.

UPDATE: Interesting comment over on Marginal Revolution, on this topic....

There's a practical problem with canceling China's dollar assets: The enormous secondary market in T-bills means that China can easily sell them to some third party who could redeem them at face value. I can't think of any way to close this loophole without effectively shutting down all trade in T-bills, which has enormous negative consequences for the U.S.

Sounds right, and raises an interesting problem. Even if sold at a discount, a quantity of t-bills that large might well drive prices down, and therefore raise interest rates a LOT at the next auction. Good point, Ammianus.

UPDATE II: A correction, from Belligerati. So, never mind on the secondary market way out. Angus was right all along.

Another nice round number

KPC recently reported on China muscling the World Bank out of reporting on the extremity of the pollution situation there. However, in 13 months the world will descend on China for the 2008 summer Olympics and its hard to imagine the Chinese government being able to keep a lid on each and every reporter (though if anyone can, they can!).

It looks like they have a plan B though: banish a few autos from the streets during the games. Check out the story here: Beijing to ban a million cars in clean air test.

I wonder how long these guys can continue to get away with playing the shell game on us.

Grumpy old men

Why do past icons often age so ungracefully? Jack Nicklaus for example takes the fact that Tiger Woods is on a faster winning pace than his to to be clear evidence that Tiger's rivals are somehow lesser than Jack's rivals. Also there is the constant sniffling about the "equipment".

Now Pete Sampras joins the club as summarized by Harvey Aarton in the NY times article: Sampras Jabs a Finger in Federer’s Eye. Sampras seems to be saying that everyone is a wussy boy playing into Federer's hands by not serving and volleying on the grass.

“If there is anything Roger doesn’t like to see, it is someone coming in and serving and volleying, someone putting pressure on him,” Sampras said. “I think my game matched up reasonably well against his.”

Now it is weird for an old-timer like me to see the grass all burned out on the baseline and lush and green up by the net at Wimbledon. Its kind of a photo negative of the old days. However perhaps Pete has forgotten that in his next-to-last Wimbledon (his last one was a second round loss to the immortal Georg Bastl), a pre-prime Federer beat him (and yes Pete was playing serve and volley tennis).

I am guessing Pete sees his most majors won position going down the tubes and isn't real happy about it.

Now I am about three orders of magnitude away from icon status at least, but Robin is under standing orders to smother me with a pillow if I start complaining about how new equipment has made publishing too easy for the youngsters. So far the worst I've done is tell my econometrics class how when I started out we had to use punch cards and could basically only run two (simple) programs a day.

Mahmoud Ahmadinejad is a lot smarter than I thought

New evidence comes from this AP Story reporting that the Iranian president has turned down Oliver Stone's request to make a movie about him (without even taking a meeting with Oliver)!

Does anyone else wonder if he is just holding out for Michael Moore??

Hey I thought the World Bank was OUR Puppet

But from the Financial Times comes the story that the Chinese government engineered the removal of nearly a third of a World Bank report on pollution in China because of concerns that its findings on premature deaths could provoke "social unrest".

The article says that pre-censoring, the WB report claimed that about 750,000 people die prematurely in China each year, mainly from air pollution in large cities.

And apparently I've been hiding under a rock somewhere because the FT article takes as an already given fact that sixteen of the world's 20 most polluted cities are in China

To me, this has implications for several issues.

First, it seems like China is in trouble. While their reported growth rates have been spectacular, they still have a very very long way to go to catch the up to the developed countries and it seems like the country will be a smoking cinder long before they do.

Second, man the WB is full of wusses!!

Third, doesn't this kind of potential environmental meltdown have to factor into any analysis of our trading relations with China? Yes we get cheap poison dogfood and all, but aren't these pollution costs in some way relevant too?

Life imitates Art

(click the graphic for a readably sized version)

Like V2 bombs and Tyrone Slothrop, the island nation of São Tomé has gotten things slightly out of order. In particular, even though no oil has been actually produced (Chevron drilled but came up dry), they already have a full blown oil corruption scandal in the works. Its a good one too with a dirty US congressman (William Jefferson), global crusader Jeffery Sachs, and a Texas firm fronted by a pal of Ousegun Obasanjo, the ex-ruler of Nigeria.

Seems more like BrokenViews.com to me

Speaking of anniversaries, we are also at the 10th birthday of the 1997 Asian Financial Crisis. Today's WSJ provides bewildering commentary on the lessons of the crisis from a site called breakingviews.com.

According to them, one important lesson that the US learned from the crisis is "Don't borrow in foreign currency. The US borrows almost exclusively in dollars." Um, excuse me but did the US not know this before the summer of 1997? Is there a major break in the time series of "foreign denominated borrowing by the US government" at that time? Does such a time series even exist? The article gives no data at all to support what to me is a risible claim.

We are also told that emerging markets learned "one big thing" from the crisis, namely "Don't rely on fickle overseas funds". The evidence? "Rather than borrowing, the Asians are now accumulating dollars. Indonesia and Malaysia, two of the crisis countries a decade ago are running trade surpluses of more than 10% of GDP." Sorry, but countries do not directly choose the size of their foreign inflows, unless they impose strict capital controls which none of these guys have done (though the closest to doing so was Malaysia). Current/Capital account outcomes are produced by a combination of the relative productivity of a nation's firms, the relative attractiveness of a nation's markets to foreign investment, and the relative economic policies of the country (though this last factor really can be subsumed into the first two).

It is incredibly simplistic to point to a current account number and claim to be able to say exactly what forces have produced it. One would need to produce evidence that Asian governments are undertaking even more export friendly policies than they did pre-1997 or show that they are actively refusing / discouraging foreign investment funds (a lot of them, not just Malaysia).

In other words, at the level of evidence being considered, one could just as easily say that foreign investors learned one big thing from the crisis, namely not to throw money at fickle emerging markets.

Good News from Mexico: Democracy is working

Its been a year since the ultraclose Mexican Presidential election installed Felipe Calderón in Los Pinos and AMLO (Andres Manuel Lopez Obrador, aka Peje) in the Zócolo protesting. At the time prospects were not good for the second post-PRI presidency. Calderon seemed defensive and not dynamic and the charismatic Peje was promising to overturn the election and/or run a shadow government.

AMLO is still out there plugging his new book (La Mafia nos robó la Presidencia) and trying to rally the faithful, but it is no longer working. Calderon has been able to work with the Congress in a way his predecessor Vicente Fox never could and enjoys a 65% popularity rating, while many of Peje's erstwhile supporters say that if they had it to do over again, they would not vote for him.

In 2000, Vicente Fox's election made Mexico a real Democracy and the 2006 election has helped that new Democracy mature. This is good news from south of the border.

Upon further review.....

.....my pick of Safin to upset Federer was a bit off as the listless underachiever Safin turned out to be the personality inhabiting the body that day. However, undaunted, I offer up this pick for the women's side: a Williams. Serena is closing in on another match-up with the lil cheater Henin and Venus is heading towards Sharapova. I favor Serena but think it'll be one or the other hoisting the big plate next Sunday.

It probably worth pointing out that these two and Laura Granville are the only Americans left in the women's draw and Andy Roddick (aka Roger Federer's proverbial rented mule) is the only American man left. Right now, Serbia is a greater tennis power than the USA and I blame George Bush for that! On the bright side, its an improvement over the French Open for American tennis as there Serena was the only American to make it out of the third round.

On the men's side, I'll take the field over Federer but that is just out of spite.

Development: Yer doin' it Wrong**, example #101

From the department of Doh!! comes this story: Nigerian school without power receives 300 laptops

"We have been browsing the Internet and we are very happy", Juliet Onah, an excited primary six pupil, was quoted as saying. But she said powering the laptop remained difficult as the school had no electricity and the supply at home was irregular.

No further comment is really necessary is it?

** see some others who are doing it wrong here

Well thats a load off my mind!

Former astronaut Lisa Nowak didn't wear diapers during her 950-mile road trip to confront a romantic rival, her lawyer said Friday, disputing one of the more bizarre details to emerge from the NASA love triangle.

"The biggest lie in this preposterous tale that has been told is that my client drove from Houston, Texas, to Orlando, Florida, nonstop, wearing a diaper," Donald Lykkebak said. "That is an absolute fabrication."

You cannot be serious!!

In the "loser who needs to get over himself category", I hereby nominate one Isaiah Washington.

Apparently there is a TV show called Grey's Anatomy that Isaiah was recently fired from after almost coming to blows with another cast member and referring to yet another cast member with an anti-gay slur, which he then repeated later at an awards show.

However, in Mr. Washington's ego addled universe here is how he sees things:

"Maybe for 50 years and the history of media and television I represent something that's supposed to not exist...This happened to Malcolm X, this happened to Paul Robeson -- this misconception can happen to any man of power that loves himself and wants to spread that love and that humanity throughout the world."

Say What???????

Was Malcolm X the star of "Malcolm in the Middle"??

Paul Robeson basically broke the color bar at Rutgers University and crusaded against lynching, before he fell in love with Uncle Joe Stalin.

Have a good weekend people, don't forget to spread that love!!

A Nice Round Number

In a recent post I questioned whether African development problems stemmed largely from a lack of foreign aid. I asked "haven't untold billions of dollars been send in aid and debt relief?"

Well, untold billions is pretty fuzzy even for me, so I asked the redoubtable Bill Easterly if he perhaps knew how much aid had gone to Africa.

Here is what he told me: "Total net aid (including concessional loans net of repayment and debt relief) to Africa from 1960 to 2005 is about $600 billion in 2005 dollars. This is a figure I have calculated myself recently from World Bank World Development Indicators and OECD figures."

So there you have it people, after $600 billion has gone in with (in my view at least) precious little to show for it, J. Sachs is still advocating large increases in aid as the solution and casting aspersions on anyone who might beg to differ.

I still beg to differ.

He Had the Receipt! Is there a PROBLEM, Officer?

Plus tax, of course. $4.88 + tax.

Man pays $4.88 for plasma TV at Wal-Mart Fri Jun 29, 7:46 AM ET

While Wal-Mart is known for dropping its prices, one West Monroe (KPC: That's in LOOOsiana, for you Yankees) man took the ad campaign seriously when he dropped the price of a plasma television from $984 to $4.88. Police arrested Chandon L. Simms, 23, on Tuesday at the retail store on a charge of felony theft.

According to police reports, Simms carried a 42-inch Sanyo Plasma TV to a self-checkout aisle after switching the original price tag of $984 with one for only $4.88. Wal-Mart Loss Prevention officers witnessed the alleged transaction and called police.

When the store officers stopped Simms on his way out the door, he produced a receipt for a television purchased at the West Monroe Wal-Mart, authorities said.

Simms told officers that he purchased a TV from the West Monroe store and planned to returrn that one and keep the one he purchased for only $4.88 from the Monroe store. He was then arrested and booked into the Ouachita Correctional Center.

Information from: The News-Star, through Yahoo

He thought he would get away with it, because he was going through the self-checkout? With a four foot long box that said, "Plasma TV"? Wow.

Story Blows Up Like A Tater in the Microwave

This story will not die.

In fact, the followups show it has legs. If a potato could have legs. Eyes?

Lots more background here, in the Bay City Times

Angus has already pointed out the conflict of interest that lies at the heart of this controversy. But the BCT is still working on that angle:

The first runner-up, Katie Smrecak, will serve as the Potato Queen until a new queen is chosen next month. Smrecak is the daughter of Don Smrecak, chairman of the Munger Potato Festival.

Don Smrecak and Katie Smrecak could not be reached by The Times, and her family declined to comment.

But here is the important new development. Please join!

But for Nowicki's family and friends - and even some strangers - she still reigns as the Potato Queen.

A group on Facebook.com titled ''ALLISON NOWICKI IS THE REAL MUNGER POTATO QUEEN'' was created by Nowicki's sister, Jennifer Nowicki, last week. There are about 25 members so far. Nowicki said she was flattered to find some group members who showed support were people she didn't know.

The Potato Queen preceding Nowicki, KayCe Caban, sympathizes with her as well.

''I know when I was queen, there was a lot of drama ... because I could also not do a lot of parades,'' said Caban, who now lives in Ocean City, Miss. ''It's a popularity contest. A lot of people were upset that I won, and I think that a lot of people were upset that she won. I'm just shocked that they would do that, especially so close to the end of her reign.''

Linda Jenkins, an Essexville resident, was the first runner-up for Potato Queen in 1973 and said she filled in for the queen for several parades and even crowned the new Potato Queen.

''My understanding is the first runner-up did step in when the queen wasn't available,'' Jenkins said. ''As first runner-up, I had a ball. I got to be in the parades ... I got to wear a sash - nobody knew the difference.''

Down goes Dubya

Immigration reform is dead and this time its for real. Besides reflecting on Bush's complete lack of clout with his party's dwindling congressional delegations (only 12 out of 49 Republican senators were with him), and speculating on his noble obsession with this issue, it is worth thinking about what happens next.

From my point of view, the status quo is preferable to the type of bill that would attract the votes of 61 Senators. Perhaps Congress could try some small ball and address raising the number of work visas available for skilled immigrants (the current H1B limit is 65,000 per year and they go faster than tickets to the Police reunion tour).

Far be it from me to give political advice to the Republican party, but anti-immigration does not seem to be a huge vote winning platform item. Perhaps a Democratic majority will pass a better bill in 2009?

Marat Safin, International man of mystery

Wimbledon is starting to get good. We are one more win each away from Sharapova vs. Venus Willams, Tim Henman is out so tv time and center court are both freed up for actual professional players and in the morning (if the Oklahoma-esque London weather allows), Marat Safin will play Roger Federer.

Safin is a brooding, enigmatic, freakishly talented, impish, underachieving tennis genius and I am predicting he pulls a big upset and takes out the robotically perfect Swiss star Federer, winner of the last 4 Wimbledons.

I know, I know, but I'm a kid with a dream.

ps. Rafael Nadal, last year's finals loser had this piercing analysis of the All-England Championships:

"The grass don't change," Nadal said Tuesday after beating Mardy Fish of the United States 6-3, 7-6 (4), 6-3 in the first round. "Always is grass."

I Still Don't Get It

So the blockbuster 3-way trade sending Kevin Garnett to Phoenix, Amare Stoudemire to Atlanta and the #3 and #11 picks in the draft (plus two bums) to Minnesota didn't go through after all. Ah, Steve Kerr came to his senses you say, or Kevin McHale thought better of it. No, apparently it died because ATLANTA DECIDED AGAINST IT!!! That's right, the only team clearly getting a big net gain nixed the deal. Wow. I would love to be an NBA GM.

Scots wa hae*

Yes, my native land is in the news.

Gordon Brown takes over as PM of the UK. Glasgow born and Edinburgh educated, Brown is in many ways the anti-Blair. The Wall Street Journal has an incredibly smarmy and condescending profile of Brown on its editorial page today entitled, "So Who's this Gordon Brown Anyway".

Among the gems: "If he is having a bad time, big Gordon has a job disguising it. His purple lips start to pout. He begins to pull at his dark pepper-and-salt fringe, or at least he did until he recently had it shampooed and trimmed."

Wow and then there is this: in public he is a bundle of anxiety who thinks he must crush all resistance. His jaw juts when he speaks and he has a smallish repertoire of jokes. At a lectern he does not swagger or casually survey the throng. He pats his script repeatedly with two hands the fingernails of which are bitten to bleeding remnants. Not even the most skilled Manhattan manicurist could salvage those nails.

This has got to be an all time low, even for the WS Journal editorial page. I guess they are practicing up for eight years of Hillary bashing!

*if the title seems overly weird look here

Tootin' the Sachs-o-phone

Erstwhile economist and current development messiah Jeffery Sachs is again instructing us how to solve Africa's problems.

He tells us: "Africa will be the bank's test under incoming President Robert Zoellick. If it fails there, not only Africa but the bank will be in mortal peril."

Well I am just a dumb Okie, but Africa has been the World Bank's test since McNamara was president and the BANK HAS COMPLETELY, UTTERLY, AND IRREVOCABLY FAILED the test.

I think for the overwhelming majority of the Bank employees, the mission of the bank is to continue to secure rich nation funding, employment and pay raises (note that employment and pay raises are a universally common goal of workers everywhere, I am not necessarily faulting Bank employees here at all).

Sachs rightly decries the lack of accountability for results that the World Bank has enjoyed for 60 years and counting now: Yet the bank's managers have not been held accountable. Senior bank officials actually whisper to African leaders not to dream about achieving the (millenium development) goals, since the managers don't want to be responsible for ambitious targets. They hope that the goals will just fade away.

Even after saying all that, though, Sachs seems to indicate believe that somehow by hearing the sound of his voice the Bank can magically change and become an effective tool for development. Its actually pretty easy, they just gotta get more resources and do what he says with them.

Sachs comes incredibly close to giving African governments a free pass for their plight and putting the blame squarely on one George Bush and his "free market ideologue" pals.

Seasoned practitioners not held back by ideology and posturing know how rapidly results can be achieved.

and

Yet when it comes to Africa, according to Washington's free-market ideologues, all those wonderful things (infrastructure) are supposed to spring up by themselves, with markets coming to the rescue. And when those things don't arrive, since there is no way to pay for them, African governments are blamed for corruption.

Wow. I mean, WOW!! Has Africa gotten no development aid before? Haven't untold billions of dollars been sent in aid and debt relief? Is the problem of Africa really not enough aid?

One more bar: And the core problem in Africa is not corruption but the lack of basic infrastructure and services.

Isn't there possibly a connection there? Just maybe?

Look, I agree with Sachs (and I greatly admire his commitment and passion) that corruption isn't the only, or even main, problem in Africa. But it is a significant problem.

I think that more broadly "governance" is the main problem in Africa, and all the aid in the world won't fix that. The solution is ultimately internal, not external.

I don't get it

Timberwolves talking three-way Garnett deal:

Minnesota Timberwolves forward Kevin Garnett is close to going to the Phoenix Suns in a monumental three-way trade that would send Phoenix forward Amare Stoudemire to the Atlanta Hawks, league sources said Wednesday.

Atlanta would move the Nos. 3 and 11 picks in Thursday's draft, as well as Zaza Pachulia and Anthony Johnson, to Minnesota.

Minnesota owner Glen Taylor has delivered a mandate to his basketball executives to get a deal done, one league executive said.

Bear with me people because its gonna take old Angus a while to break this one down for you. I'm not sure which part is crazier.

Kevin Garnett, 31 years old had the following stat line last year: 22.4 ppg (on 48% shooting), 12.8 rebounds, 4.1 assists. His career numbers are 20.5 (49%), 11.4 and 4.5 so even though he came to the league out of high school and has a lot of miles on him, he hasn't really slipped. He is going and the T-Wolves are getting two draft picks neither of which is Oden or Durant and two bums??

Phoenix is willing to give up Amare Stoudemire at 24 years of age and seemingly fully recovered from his microfracture surgery for the 31 year old Garnett? Here's Amare's stat line from last year: 20.4 ppg (at 57% shooting), 9.6 rebounds playing about 6 and a half minutes per game less than Garnett (he has virtually no assists, but then again, he's got Steve Nash).

I wouldn't do this if I were Phoenix, nor would I do it if I were Minnesota. And, if I were Minnesota, why wouldn't I trade Garnett heads up for Stoudemire (allowing for whatever juggling the cap rules require to make it work)?

Does Phoenix think this is Nash's last good year coming up but Amare won't peak for two or three more so they'll never be in synch for a championship?


What is it about Amare Stoudemire that I don't know? He's really 50? He's a bad teammate? Is a tattoo that says "Black Jesus" really THAT objectionable?

Tyler? Matt? Help me out here.

ps. if this goes through, I hope Emory University, Mercer University, Agnes Scott College, or Georgia Tech are hiring next year.

OKC, the Seattle of the Great Plains!!

From an AP wire story

In Oklahoma, about 20 firefighters had to use a raft to rescue 16-year-old twin sisters from their car, stalled in rushing bumper-deep water Tuesday.

The Oklahoma City area received about an inch of rain in 24 hours, bringing the city's annual total to 28.03 inches — about 10 inches above normal. Flooding closed some roads Wednesday in central and northeastern Oklahoma.

There are 10" wide mushroom caps growing in my backyard, people. We are gonna have to change "where the wind comes whistling down the range" to "where the rain comes running down your back" or something. Its like Ireland around here.

Munger Potato Queen: BAGGED!

Since we have been doing the Michigan thing here at KPC, I have to note that there is a scandal in Munger, MI: The "Potato Queen" has been called out and bagged. Her offense? She did not attend the Munger Potato festival events in the off-season.

Not just ANYONE gets to be queen. It takes dedication, and energy. You can't be one of those couch potatoes, and be Potato Queen, Allison Nowicki. You betrayed the public trust, and you had to be mashed.

BUT WAIT: Allison Nowicki fights back! Apparently it was just a misunderstanding. The accusation of holding back on the spud circuit?

Not so, says Nowicki, who appeared at the Miss Bay County Pageant, St. Johns Mint Festival, Bay County Fair, Montrose Blueberry Festival and Linwood Pickle Festival.

"The only one I missed was the (Bay City) St. Patrick's Day Parade," Nowicki, a sophomore at Lake Superior State University in Sault Ste. Marie, told The Bay City Times for a Monday story. "I called the first runner-up and told her I wasn't going to make it."

First runner-up Katie Smrecak, daughter of festival chairman Don Smrecak, will serve as queen until a new king and queen are crowned July 26 at the 53rd Annual Munger Potato Festival.

Munger is an unincorporated town about 85 miles north-northwest of Detroit.

Munger [sic? Nowicki?] said she had a school meeting that conflicted with the St. Patrick's Day Parade and couldn't make the 3 1/2-hour drive.

"To me, it wasn't about getting a crown and getting a sash — it was about getting to meet people and showing my love for Munger," Nowicki said. "Who knows if they're going to do that to next year's queen? I don't want anyone else to have to go through this."

Later in that story, we learn that "Two queen committee members declined comment." A cover-up! Call Oliver Stone!

For those of you thinking of attending this year's festival, it is July 26-30. Here is the schedule of events.....and here is what is going on, just on DAY ONE, Thursday (the order in which the events are listed escapes me):

Thursday, July 26
FIGURE EIGHT DERBY
7:30 P.M.

Queen & King Chosen
7:00 P.M.

Jerkwater Town Boys*
8:00 P.M. till Midnight

Ellitott's Amusements
4 P.M. till Close

LA$ VEGA$ CA$INO
9:00 P.M. till ?

Bingo Tent
8:00 P.M. till ?


And, as the main ad states...well, here's what you can expect:
Family Fun - Activities for the entire family! - Famous Potato Bratwurst - Hot French Fries - Food Tent - Potato Display - Tons Of Free Potatoes

Do me a favor, open the door, let them in.

I'm a big fan of liberal immigration policies. My grandfather came here from Scotland with no skills, no real education (some would say he didn't really speak 'merican english even!!), and made a life for himself and his family opening up a grocery store in NYC. His children became railroad engineers, theologians, and bank vice presidents. His grandchildren have been at various times, airline mechanics, NYC policemen, realtors, and university professors.

I think immigration is win-win. Good for the immigrants and on net good for the host country. Yes I mean all immigrants. Heck, I love Mexico; lived there for two years.

So one would think I'd be happy about the news that the Senate (the worlds greatest deliberative body and all) had voted to take up the immigration bill again.

But.

Holy Crap this is a weird one. Bush and Kennedy? Random amendments? A path to citizenship that takes time, money, and an attention to bureaucratic detail that woulda send my old granddad packing? Nothing to address the extreme limits we put on skilled immigrants?

The system that produced a 1,000+ page free trade bill, that tried to jumpstart the Doha talks by pledging to poor countries that we would definitely commit to capping our agricultural subsidies at a point well ABOVE their current levels, is now going to "do" immigration pressed by a desperate president.

I actually think I'm hoping for no bill at all.

You Have To Learn How To Signal

Dr. Karlson is right in this, as in so many things.

Fighting over whose language to use seems silly.

Of course, maybe I just say that because I teach at a preternaturally expensive private school.....But acquiring a real facility with signals, and learning
how to fit in, and how to think and solve problems, EVEN IF THE PROBLEMS ARE MADE-UP AND ARE REALLY JUST ENTRY BARRIERS....It's valuable.

Education is the lubricant for social intercourse. There, I said it.

If we're so smart, why aren't they rich?

In the May 2007 issue of the American Economic Review, Bill Easterly argues that one reason why the overall package of development assistance offered by the World Bank and the IMF has not been very successful is that they (we?) mistakenly believe that they know what actions are needed to achieve development (ungated link here). First it was Investment that was the key to growth, then Human Capital, then Openness, then Institutions. As Easterly puts it: "Development economists have long known the answers on how to achieve development. The only problem is the answers change over time".


Meanwhile, in the September 2007 issue of the Journal of Development Economics, Robin and I provide empirical confirmation of this point by showing that while countries have become much more homogeneous in their policies (policy variables are converging), output paradoxically continues to diverge (ungated link here).

Specifically we show that Investment, Government Spending and Openness to Trade, and several measures of institutional quality are all converging in our sample of 90 countries from 1960-1999 while per capita incomes continue to diverge. A la Easterly, we interpret this as showing that poor countries have on average followed the development advice of the Bretton Woods Institutions (Bank and Fund), but have not gotten the promised payoff.

Going beyond this point, we also claim that our results show the neo-classical growth model to be totally inadequate to explain the data.

The Blues Brothers: Mike and Linwood!

Mike and Linwood are both out of a job!

Now, I hope that Carrie Fisher can find them, and use her rocket launcher.

Why I am Not Not a Libertarian

DoF asks some good questions, and shares some very useful insights.

My two favorite "kill!" arguments from non-libertarians:

1. You just hate people!

2. You just don't want to pay taxes!

Gosh, those are devestating. I have no answer to those profound insights.

Danny, we hardly knew ye: Drezner Really *IS* a Moral Midget

Good lord! Dan Drezner, who pretends to have libertarian sensibilities, actually thinks that a system of fines for unpredictable, unintentional accidents will make the world a better place. He took a test; I give him an "F"!

(If you want to take the Moral Sense Test, do it now. Spoilers below)

Now, check this, from Dan:

I came across this Moral Sense test at Harvard.

It's an eight question test in which an action is described and then you are asked to award damages.

In the scenarios I was given, I awarded an average of $129 in fines. The average response of all test takers was approximately $72,000.

So, clearly, I'm a heartless bastard. [And you also like to make fun of short people!!--ed.] Or, I'm more willing to blame fortuna than people when bad but (largely) accidental things happen.

Dan! DAN! Walk away from those totalitarians at Tufts, and try to come towards the sound of my voice! THE PREMISE OF THE TEST IS THAT GOVERNMENT SHOULD FINE PEOPLE FOR ACCIDENTS, AND TAKE THE MONEY AT GUN POINT FOR USE IN THE GENERAL FUND!

These are TORTS, not criminal offenses. It is important that the victims do not receive the payment. An average of $129? GOTT IN HIMMEL! I had an "average payment of $0.00! I thought that several of the scenarios (like the peanuts in the allergist's office) were clear negligence, and that there was a cause of action for a law suit. Any allergy sufferer knows, or should know, that peanuts can be deadly, and in an allergist's office one expects to encounter people with.....ALLERGIES!

But not a fine! Why put government in charge of collecting fines when one private person harms another accidentally? You are in favor of criminalizing private mistakes, when there is a private remedy. There is no deterrent effect here, and no pretense of making the damaged party whole.

Danny, Danno, Danton....I thought you were one of us.

Sniffle.

Berndt Coffee?

Interesting paper, by friend of KPC Colleen Berndt, on "Fair Trade Coffee."

Proponents of Fair Trade claim it improves the lives of farmers in developing countries by providing them a higher sale price for their crops, allowing for a higher standard of living, and offering the opportunity to escape the vulnerability of poverty. Drawing on field work conducted in Costa Rica and Guatemala, the author examines the observed effects of Fair Trade and finds it is unclear whether Fair Trade actually delivers on its promise. Rather, it may actually harm the long-term interests of small farmers in high-cost production areas.

ATSRTWT

Per molts anys, Antoni!!

One of the coolest things about visiting Barcelona is scoping the buildings of Catalonian architect Antoni Gaudi, who was born on this date in 1852. The pictures are nice but actually seeing these works is magical. I think Gaudi has been a huge influence on current funky superstar architect Frank Gehry

See more photos here

Now I'm a believer?

According to Sunday's NY Times, new Fed chair Ben Bernanke has made believers out of "the markets".

"Could an Ivy League academic like this ever have Street credibility? But as Mr. Bernanke meets with Fed policy makers this week to set interest rates, the answer is clear: yes, yes and yes again. If anybody has had to learn on the job, it has been Fed watchers and investors rather than Mr. Bernanke."


The article also claims that, despite having underestimated the housing mess, Bernanke has engineered a masterful economic soft landing where inflation falls gradually without a recession and growth picks back up soon. Second quarter growth for this year is being noised about at 3%.

There is at least one economist who doesn't agree, the emphatic Nouriel Roubini.

Me? I'm still stunned that academic economists don't automatically have mad street cred!

To Shoot, Perchance to Dream

Went out to the property in Chatham County yesterday.

Younger younger Munger and I went out early. Ah, the reason to have sons: you get to buy rifles, and pickup trucks, and people think MORE of you, because you are a good dad.















Then, Large Guns Man showed up, with his boys. We put the buffet out on the table. 8 mm Mauser rifle, AR 15, AK 74, the strangest Baretta carbine (with both flashlight and laser, straighth from Halo II), four different shotguns (two coach guns, and two with clips, which is psychotic) and a wild variety of pistols for dessert.













Angus had left behind a cooler after his visit to Duke a year ago. I had used it a few times, but left it at the property. Top blew off in winter, and cooler filled with water. Slime, mold, ick. My fault, a shame to waste the cooler. But since it was wasted, we wasted it good. More than 200 rounds of ammunition, and at least 50 shotgun shells, of many types, were blasted into the cooler at a range of 25 yards. The boys pose with the "kill."

















(Identities disguised to protect the gunnutters, except for my son Brian, and the other kid. The other kid wandered out of the woods, ALMOST DIRECTLY BEHIND THE DIRECTION WE WERE FIRING. He heard the guns, and was drawn like a moth to the cordite.)

Weekend Update

Here at KPC we like to keep you informed about new developments on past posts, so without further ado:

(1) After while, Crocodile! Not if I see you first, Damien Hirst! KPC gave you art collecting advice, listing the most expensive living painters and which were most worth pursuing. Now word comes from the BBC this week that Damien Hirst's top sale price has jumped from $7.4 million to $19.3 million. Similarly, Lucien Freud's record price went from $8.2 million to $15.6 million. Wow, Contempory art prices are showing almost bubble-like behavior. KPC advises selling your Rothkos, Johns, Pollocks and the like ASAP.


(2) The NY Times has GOT to stop copying KPC! Earlier I reported with delight about Gustavo Arellano's awesome column "Ask A Mexican". Now the copycat NY Times has chimed in as well. Back off gray lady, he's OUR Mexican.


(3) Apres disbarment, le deluge! CNN reports that the Duke LAX 3 are (a) seeking to have Mike Nifong charged with criminal contempt of court and (b) asking a judge to order Nifong to pay their legal bills. So dreams do come true!

ROFLMAO

"The word "protection" is no longer taboo," he said. "Competition as an ideology, as a dogma, what has it done for Europe?" He said a competition policy could emerge "that will favour the emergence of European champions".

So, who's "he" you ask? Why it is our good friend Nick Sarkozy, the man who is going to bring economic reform and renewed vitality to France.

What exactly did our man do to re-legitimize protectionism and government favoritism in the EU? He insisted on having the words "undistorted competition" removed from the list of EU goals in the new draft of the constitution.

But Nick, can it really be so simple?

EU lawyers insist the removal of "undistorted competition" from the Union's objectives will have no legal impact on the European Commission's powers to police cartels and anti-competitive behaviour.

Oh, never mind. (and, as Mungowitz likes to say, "read the damn article here")

You Can Check Out Anytime I Want

The Arctic archipelago of Svalbard has become a haven for immigrants,
because an unusual treaty says they do not need a visa or permit to work and
live there ... Longyearbyen is Svalbard's biggest settlement and has about 1,800 residents...The treaty was signed by World War I victors in Paris in 1920. It gave sovereignty over Svalbard to Norway, conditional on there being no barrier to entry...Longyearbyen, named after John Munro Longyear, the American coal miner who founded the town in 1906, lies in a glacial valley on the edge of a fjord. It now has a university, hospital, school and hotels, restaurants and shops. East Europeans also live and work in Longyearbyen and the pizzeria is run by Iranian brothers. In all, there are about 25 nationalities living in the town...But there are two hitches to Svalbard life - the weather, temperatures in winter can fall to -40C, and limited social services. The governor has the right to throw people off the island if they cause trouble or cannot find work or accommodation. (al Jazeera English, ATSRTWT)

(nod to KL, who got thrown off the island LONG ago)

Same Mistakes, Not Different Models

Interesting view of growth problems, in Restoring Japan's Economic Growth, by Adam S. Posen

Why aren't nations rational?

UPDATE: Chapter 6 is available on-line. Simplistic, perhaps, but good questions about growth, and nongrowth.

We need more Michiganders like Wally Wallington

I am leaving Michigan today (much to everyone's relief) and as always I'm struck by the sheer awesomeness of the people here. From Mark Perry, I found the story of Wally Wallington who manipulates and moves 30' x 30' pole barns and 20,000 pound concrete columns with wood, rope, stones, sand, and water. Why? Like the old punchline says, because he can!

Wally thinks he's uncovered how the ancients constructed Stonehenge and plans to singlehandedly erect a concrete replica in his back yard. Check out Wally's fantastic story via YouTube video here.

The north WILL rise again, people.

Biker Brutality

A story of a guy who was tased, and beaten, for riding his bike.

Now, I bet he is one strange guy.

But you can't mess with people like that.

Not just the fault of the police, either. We criminalize things that are no one else's business. As one of my favorite groups, the Corporate Avenger, point out:

"I don't fault the police....'cause the people that run 'em, got 'em on a short leash." (And thanks to Large Guns Man for that!)

(nod to Whacking Day)