Tuesday, July 31, 2007

Sasha for next American Idol?

The VC (actually, Eugene) post a bit of YouTube with Sasha doing an a cappella version of this song:

We're doing battle with statists
Across the USA,
'Cause everybody's reading Hayek,
The man from Austri-ay --
In spontaneous order
We let the market play,
With the writer Fred Hayek,

We use the signals of prices
And then we'll be O.K.,
'Cause no one knows what's efficient
Unless they have to pay;
If we replace that with planning
Like once in Russ-i-ay, [pronounced "Rush-Eye-Ay"]
We'll take the road to serfdom --
Serfdom USA.

[Backup singers should at this point start singing, "Serfdom, serfdom USA, Friedrich H-A-Y-E-K."]

We still have government bureaus,
Just like the FDA, [replace with three-letter agency of your choice ending in A]
But the welfare state mindset
Will soon become passe.
Ayn Rand said he was evil,
Which makes him A-O.K. --
Friedrich August von Hayek, H-A-Y-E-K.

(Nice singing, Sasha. Nice dig on Rand, there toward the end. And thanks to Eugene for finding that, and outing Sasha.)

Caplanian testability?

Let me start with two confessions: (1) I like Bryan Caplan very much, (2) I have not read his book. However, I take the following as his central thesis:

“I see neither well-functioning democracies nor democracies hijacked by special interests,” Mr. Caplan writes. “Instead, I see democracies that fall short because voters get the foolish policies they ask for.”

and wish to speculate on how these three points of view might be discriminated between empirically.

My own work, mostly joint with Mungowitz, shows that interest groups systematically give money to legislators best positioned to support their causes, and that the amount an interest group can raise and spend depends on both the potential gains they may receive and the costs of overcoming free riding in their particular interest class. We also predict and find that the economic interests of voters serves to influence the price that specific legislators would have to charge to provide services to an interest group. So I guess we would say that interest groups get what they want subject to (a) their ability to organize, (b) the constraints that having to face voters in periodic elections puts on legislators, and (c) the institutional structure of the government (committee system, term limits, etc.).

I guess the biggest problem for me in the Caplan quote (sorry for going all Rand-ian on you guys) is defining terms. How do we know a well-functioning democracy when we see one? To me, if power changes hands peacefully and fraud is not rampant, then we pretty much have a well-functioning democracy. That is to say, I'd judge democracy on the process and not on the outcomes. I don't know of any proofs of propositions like "well functioning democracies produce efficient economic outcomes". In fact proofs of the opposite are somewhat prevalent, aren't they?

I also find it interesting that a lot of left leaning political scientists (and yes there ARE other kinds as well!!!) bemoan exactly the same alleged phenomenon claiming that poor and middle class people foolishly and repeatedly and mistakenly vote Republican against their own personal economic interests (right, Mungowitz?? Bartells and them guys).

Note that I personally am a very small government kind of guy. I'd like to cap spending at say 10% of GDP, virtually do away with our military, privatize social security, increase competition and ease entry into medicine, law, etc. I am just not sure how effective Bryan's argument is in reaching this kind of conclusion (which I freely acknowledge has probability zero of ever happening).

I guess I should actually say something about what this post is supposed to be about, the testability of Bryan's thesis, so here goes. I don't see any way to actually test between the three positions outlined in the original quote. Anyone?? Anyone?? Ferris??

Monday, July 30, 2007

4th Amendment Rights: Illegal Seizure?

Chief Justice John Roberts has suffered a seizure and is hospitalized in Maine, the Supreme Court says.

The funniest thing I've read in a long time

Originally written June 10 by Lydia Polgreen in the NY Times and repeated today in the Gray Lady by Mike Nizza:

A journey between Abidjan, the government seat, and Bouaké, the rebel capital, reveals a nation eager for reconciliation but caught between war and peace, its once-mighty economy hobbled, its cosmopolitan image sullied, its place as a symbol of stability and progress long gone.

Lets start with "once-mighty economy". According to the Penn World Tables, per-capita gdp in the Cote d'Ivoire was around 11% of the US in 1960. It peaked at 13% of the US in 1977, and in the last year available, 2003, stood at around 6.5% of the US level. hmmmmm......

Anybody want to take a crack at the "cosmopolitan image" part? They do speak French so I guess that counts for something.......

"Symbol of progress"?? Sure, there's the Asian Tigers, China, India and Cote d'Ivoire, right??

Does everyone who writes about economics at the NY times smoke crack??

Pride of the Celtics!

So Kevin Garnett is now a Boston Celtic. The Celtics will have Paul Pierce, Ray Allen and KG on the floor with pretty much no one else. Even in the east, I don't think its enough but they should at least make the playoffs now. Reportedly, KG had refused going to Boston as recently as last month, so I also wonder exactly what is up now. On the other side of the deal, the T-Wolves are heading directly to the lottery for the forseeable future. Ex Celtic greats Larry Bird, Kevin McHale and Danny Ainge have not exactly covered themselves with glory as NBA executives, have they?

Lott v Levitt settles

John Lott appears to have gotten no money, but considerable satisfaction, from the settlement terms, if in fact these terms are correct (and I got them from John's own forward of the article quoted below, so they must be!)

In documents filed on Friday in federal court, the two parties outlined a settlement that requires Mr. Levitt, who is a professor of economics at the University of Chicago and a co-author of the best-selling book Freakonomics: A Rogue Economist Explains the Hidden Side of Everything, to send a letter of clarification to John B. McCall, a retired economist in Texas.

Mr. Lott's lawsuit alleges that Mr. Levitt defamed him in a 2005 e-mail message to Mr. McCall. In that message, Mr. Levitt criticized Mr. Lott's work on a special 2001 issue of The Journal of Law & Economics that stemmed from a conference on gun issues held in 1999.

By some measures, Mr. Lott appears to have won little from his 15 months of litigation. No money will change hands, and the settlement does not require a formal apology from Mr. Levitt.

But on certain points of reputation and pride, Mr. Lott might take some satisfaction. Mr. Levitt's letter of clarification, which was included in Friday's filing, offers a doozy of a concession. In his 2005 message, Mr. Levitt told Mr. McCall that "it was not a peer-refereed edition of the Journal." But in his letter of clarification, Mr. Levitt writes: "I acknowledge that the articles that were published in the conference issue were reviewed by referees engaged by the editors of the JLE. In fact, I was one of the peer referees."

Mr. Levitt's letter also concedes that he had been invited to present a paper at the 1999 conference. (He did not do so.) That admission undermines his e-mail message's statement that Mr. Lott had "put in only work that supported him."

In his letter of clarification to Mr. McCall, Mr. Levitt said, "At the time of my May 2005 e-mails to you, I knew that scholars with varying opinions had been invited to participate in the 1999 conference and had been informed that their papers would be considered for publication in what became the conference issue."

ATSRTWT (if you are a Chronicle subscriber)

Jury Duty: Legit, or a Taking?

There may be problems with the jury system that we all understand, such as the cottage industry that has grown up around selection and manipulation.

But KL writes with a straight-up objection that is interesting. He was prompted by a piece in the NYT:

"Ann Blakely, the clerk of the Superior Court in Lee County, said sending
deputy sheriffs to find jurors at random was done very rarely, and only when
a judge was about to begin a case without enough jurors...Courts across the
country have been going to extraordinary lengths to get people to report for
jury duty, which many people would do almost anything to avoid."
(July 29, 2007)

As KL goes on to say, in his email:

The Constitution states that private property cannot "be taken for
public use, without just compensation." Given that "time equals money", the
current (trivial) compensation policy for jury duty arguably constitutes an
improper taking. Meanwhile, it is entirely possible that the cost-benefit
ratio of the current jury system is worse than the cost-benefit ratio of
alternative mechanisms of due process.

Reference is the 5th Amendment, of course:

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

It is interesting that there is a trend, at the federal level, to rule against "commandeering" of state government officials for use by Federal agencies, or statutes (New York v. U.S., 1992, and Printz v. U.S., 1996, for example).

So, can local governments "commandeer" the time of private citizens for jury duty? Is this like a military draft (which presumably has some emergency justification, so there is a sufficient state interest to justify the "taking" of the body of soldiers), or is it something else? Why isn't jury duty commandeering, and subject to a bar as a taking?

Good one, KL.

(Postscript: Yes, I know commandeering in NY and PRINTZ is a 10th Amendment issue. But commandeering is also a form of taking; why isn't jury duty a taking, for that reason? We can force people to serve as jurors, but we have to offer fair compensation.)

Why Doesn't Rwanda Have Better Growth? Because We Don't Give Them More Money!

UN reports make pretty amusing reading, if you can stomach the cant.

Why isn't Rwanda doing better economically? Is it because of a dysfunctional government, a nonexistent financial sector, and insecure property rights that prevent the poor from borrowing against their meager assets.

NO! It turns out the biggest problem that Rwanda has is: Rich people! Too darned many of them, going around buying stuff and investing. If we could get rid of those darned rich people, everything would be okay.

According to the report, Rwanda's recent growth has bypassed the rural poor leading to a concentration of wealth at the top of the income distribution bracket - a situation that could lead the country to exhaust its ability to reduce poverty rates through economic growth alone.

At the same time, Rwanda has been finalising the Economic Development and Poverty Reduction Strategy.

The strategy estimates that total investment of approximately US$140 per capita per year is needed for MDG-related interventions. With the extent of poverty and the small size of the private sector, the bulk of these investments would have to come from the public sector.

"Rwanda needs to increase investments in development sectors, mainly in agriculture," James Musoni, Rwanda's Minister of Finance and Economic, planning told reporters during the 26 July launch of the report. He also expressed concerns over high population growth.

According to official statistics, life expectancy in Rwanda now stands at 51 years, partly because of efforts to reduce HIV/AIDS related deaths; while the number of people relying on agriculture is projected to drop from 90 percent to 50 percent by 2020.

"In some sectors progress has been recorded but the target is still to be met," the minister added.


The "target"? Sounds like it was written by John Edwards, who hates all rich people except himself. And I even think he hates himself, sometimes.

Another Congolese Tragedy

As I may have mentioned a few hundred times by now, Robin & I just got back from our trip to Tanzania and Rwanda where we were lucky enough to see mountain gorillas in the wild. It was a wonderful experience, but it makes the shocking news of recent gorilla massacres in neighboring Congo even more disturbing. There are about 700 mountain gorillas and 6 billion homo sapiens in the world but some are not content with even that ratio as seven gorillas have been killed so far this year in the Congo.

One can find more details here, along with information about how one can help to protect these magnificent animals.

Sunday, July 29, 2007

Plunk Biggio

Fundman sends this suggestion, regarding the HBP thing I mentioned last week.

As the blog says, it is:

Dedicated to Craig Biggio and his (probably unintentional) Quest to break the all time major league career record for getting hit by pitches.

So, the current standings are:

Hughie Jennings 287
Craig Biggio 285
Tommy Tucker 272
Don Baylor 267

Projected HBP total for Biggio, at end of season total = 287
And, end of season matters, since Biggio is retiring.

C'mon, pitchers, you bunch of pussweilers! Plunk Biggio. He is in the Hall anyway, but all time HBP leader is quite a feather in your cap. Or, quite a bruise on your boom-boom.

(Gratitude to Fundman. An excellent tip.)


Ize in ur chamber............
...........stickin' to mah storie!!!!

Saturday, July 28, 2007

For philosophy, they'll pay you!

From today's NY Times, public universities are more and more charging different tuition rates for different majors. Business, engineering, chemistry and journalism (really, journalism???) are the premium priced majors cited in the article and the University of Wisconsin, Kansas U, Arizona State U, U of Nebraska, U of Illinois are cited as price discriminators. Among the stated rationales are to offset high professor salaries in the premium fields and to help purchase specialized equipment.

No one quoted in the article appeared to be happy with the practice, which to me just kind of makes sense. A bureaucrat from U of Kansas put it this way:

“Where we have gone astray culturally,” he said, “is that we have focused almost exclusively on starting salary as an indicator of life earnings and also of the value of the particular major.”

(Is there a better single proxy for life earnings than one's starting salary??)

Mark Kushner, dean of Iowa State's engineering college weighs in thusly:

Mr. Kushner said he thought society was no longer looking at higher education as a common good but rather as a way for individuals to increase their earning power.

“There was a time, not that long ago, 10 to 15 years ago, that the vast majority of the cost of education at public universities was borne by the state, and that was why tuition was so low,” he said. “That was based on the premise that the education of an individual is a public good, that individuals go out and become schoolteachers and businessmen and doctors and lawyers, that makes society better. That’s no longer the perception.”

If that was the perception of the past, I don't think its very accurate to emphasize a significant public good dimension of higher education. It really is all about the Benjamins, isn't it?

Friday, July 27, 2007

Coincidence? Ouch.

At baseball camp yesterday, week long thing at a local high school, my son Brian (nickname at camp: Fluffmaster Flex, and no I have no idea why) got hit by a sailing fastball. Right in the left arm. Left bloody stitch marks on his tricep. Pretty cool.

Then, final game of regular season last night....first at bat....bases loaded. Brian's up. Kid throws a curve that didn't. (Curve, that is). Brian does as we have often discussed, with the bases loaded, and flinches just enough to make it look good. Hits him right in the tricep. HBP, take your base, RBI. Other team fusses a little, but nothing much.

Next inning, he bats again. First pitch (again), curve that doesn't. He actually tries to get out of the way. Hits him right in the tricep.

Fourth inning, he comes up. Two at-bats, two PITCHES, two HBP. First pitch is a fastball on the inside. He crushes it. Line drive, hits three feet in front of the 335 sign in left on the fly....six inches foul. Hit it plenty hard enough to go out, just foul and a little too much on the nose instead of getting under it. Second pitch of the at-bat....HITS HIM SQUARE ON THE LEFT ARM.

Four pitches, three HBP for the night so far. I'm yelling at the catcher, who is an old family friend, and who at 16 is an inch taller than I am, and very solidly built. "I know where your car is, Carl! I'll meet you in the parkin' lot, boy!" The ump is hiding his face in his chest pad, laughing.

Top of the last inning, we are up by one. Could use some insurance. Men on first and third. Brian comes up. And the pitcher nails him right in the butt with a fastball, first pitch. The ball park goes crazy. The Latino parents behind are screaming and laughing, "Cuatro veces! Cuatro veces!" Brian's coach, coaching third, has his hands on his knees and is obviously shaking with laughter. Carl the catcher yells to me, "I'm not callin' those. I am NOT callin' those!"

We score two runs and shut them down in the bottom of the inning, win the game. Brian has big bruises on his arm and butt cheek, and has been the main character in a night to remember.

His batting line for the night:

AB: 0 H: 0 W: 0 HBP: 4 RBI: 1
SB: 2 R: 2 SO: 0 Total Pitches Faced: 5
Avg: undefined Slg: undefined OBP: 1.000

I've never seen anything like it.

Made me wonder about HBP records. (My older son holds the career record for HBP at his middle school. You get on base. And the pitchers are throwing in the high 50s. Why not?)

The career leaders for the Majors?

Hughie Jennings--287
Craig Biggio--282*
Don Baylor--267

*still active

How about for a single game?

The record is 3 times in a game, record held by many.

How about for a single inning? Four guys have two HBP in an inning.
AL Brady Anderson Baltimore 05-23-1999 1st Inning
NL Willard Schmidt Cincinnati 04-26-1959 3rd Inning
Frank Thomas New York 04-29-1962 4th Inning
Andres Galarraga Colorado 07-12-1996 7th Inning

So, Brian takes his place up there among the immortals. 4 HBP in a one
seven-inning game: Well done, son. Way to take 4 for the team.

Wednesday, July 25, 2007

The Worst Book I Ever Read

When I travel, I am paranoid about running out of reading material. Especially on a trip like the one we just took where we are out in the bush with little night life. So, rather than chucking it after the first 25 pages or so, I read the entire hideous mess that is The Kite Runner.

Holy Crap, where do I begin? First, it is a first person account of a great writer written by a crap writer. Example: "All my life had been spent in the company of men, but tonight I would learn what it is like to lie with a woman". In the words of one of my heroes (John McEnroe), you cannot be serious!!

Second, every single plot advancement is done by means of a virtually impossible, melodramatic, coincidence. I am not joking. Every single one. For example, the protagonist's life goes awry when he fails to prevent his servant/friend/half-brother from getting buggered by a blond haired, blue-eyed, Afghani neo-nazi boy who has just happened to trap his friend alone somewhere in Kabul on the most important day of the protagonist's life. And when the protagonist returns to Kabul to rescue the son of said friend, the head Talibani in charge is the SAME NEO-NAZI guy. And HE'S BUGGERING THE BUGGEREES SON!!!!! Its really quite mind boggling.

This book has over 1900 customer reviews on Amazon with a 4.5 out of 5 star rating. I just don't see how that is possible.


I am the lead plaintiff in a suit filed today against the state of North Carolina. Represented by NC Institute for Constitutional Law, the real moving force.

Some background on the GOOGLE bribery....um.....incentives package.

Just as Google has pushed the boundaries of its Internet business, it plays the real estate game aggressively. Beginning with an anonymous approach in late 2005, the company elicited a stream of promises from local and state officials in North Carolina, all frantic to lure a major tech company, even before they knew which one. During months of negotiations over Google's shifting requirements, the company never failed to remind those officials that it could go elsewhere. In the end, the North Carolinians agreed to a package of tax breaks, infrastructure upgrades, and other goodies valued at $212 million over 30 years, or more than $1million for each of the 210 jobs Google said it eventually hoped to create in Lenoir.

Had a press conference today, and some press even showed up. We'll see what happens.

Some early ink here and here and here.

My own view, summarized briefly:

This statement is Michael Munger’s alone, and does not necessarily represent the views of the other plaintiffs, or the views of the NCICL.

I. Why is this public payoff to GOOGLE the wrong thing for NC?

1. No public purpose. Private economic benefits to GOOGLE, and private political benefits to North Carolina’s elected officials. Nothing here for the businesses and taxpayers of NC. Government shouldn’t be in this business. It violates our constitutional principles, and violates a long tradition of separation of business and political activities. GOOGLE is being used as free political advertising for politicians, and taxpayers are being used as unwilling subsidizers of GOOGLE’s stock price.

2. Equal protection. You can’t single out a business for bad treatment, and tax them extra to benefit everyone else. But then you can’t tax everyone else just to benefit one business.

3. These programs don’t work. It’s a waste of money. Few jobs are created, at enormous cost. The cost to taxpayers will be double the “salary” of the “new” workers. And, more generally, businesses don’t make location decisions based on these kinds of subsidies. It’s just a pure political payoff.

II. Why do businesses make location decisions, over the long haul?

My work in economics and politics has convinced me that businesses make location decisions on three factors: (a) transportation system, (b) education system, and (c) the burden of taxes and regulation in the state. North Carolina is a wonderful place for business. We have good roads, a very solid primary and secondary education system, and our burden of taxes and regulations are better than that of many other states. People are moving to North Carolina from all over the nation, in fact all over the world.

Let’s let businesses focus on what is good about North Carolina, ALL of North Carolina, and not make political payoffs to a few high-visibility companies that aren’t going to produce many new jobs anyway.

I'll be writing about this pretty often, in the weeks to come.

And, welcome back Angus!!!!!

My favorite things Tanzanian

Robin and I are back from our trip to Tanzania and Rwanda, so let me sincerely flatter my blogging godfather (and marriage matchmaker) Tyler and tell you about our favorite things in Tanzania

1. Lake Tanganyika. The water, at least around Mahale Mountains National Park, is crystal clear, safe for swimming and turquoise like the Caribbean. We puttered around on a motorized dhow, and saw hippos wading under the boat, crocs on the shore and beautiful sunsets. The lake also has a fascinating military story from World War I that is well told in the book, Mimi & Toutou's Big Adventure, which I highly recommend (written by the guy who wrote Last King of Scotland, which was made into a movie where Forest Whittaker dazzled as Idi Amin).

2. Swahili. What a fun language! Phonetic, poetic and according to some Tanzanians we talked to, there are approaching 100 million Swahili speakers. Sweet! Wapi tembo leo?

3. The great migration. The books say 1.5 million wildebeests, but the guides we talked to swore that it is more like 3-4 million at this point. When we got to the western corridor of the Serengeti, the herd had split into thirds, but what we saw was stupendous. Mile after mile of wildebeests and zebras. The crocs on the Grumetti river were so fat when we got there, they were kind of just going through the motions, though we did see 3 wildees go down at their hands.

The one more academic/economic impression that we picked up was that people are well aware of corruption as an important issue and are pleased with their current president's anti-corruption stance. Several people told us stories, more or less unprompted, about previous types of routine corruption that had been eliminated or reduced due to government action.

Tuesday, July 17, 2007

From the Mouths of Hoosiers, Ye Shall Learn the Truth

From the Journal-Courier..., in West Lafayette, IN, an article by T. Craig Ladwig, of the Indiana Policy Review Foundation.

It is in Indiana's geographic good fortune to be surrounded by some of the nation's highest-taxing, biggest-spending, most anti-business states.

But Indiana government, even during the recent Republican years, has become the enemy of economic growth, the enemy of its citizenry.

Cecil Bohonan, reviewing recent Statehouse decisions, makes clear that leaders in both legislative houses, abetted by an arrogant judiciary, protect a tax structure ruinous to our families', friends' and neighbors' fortunes.

Why? They have no concept beyond personal ambition of what they want to accomplish. They lack the political courage to risk that ambition even in the interest of what they know to be right.

Hard words. We chose them carefully. Our tipping point came last session when the Legislature, instead of passing a bill to finally cap taxation of private property at constitutionally prescribed levels, raised taxes -- on the very segment of our society that defines economic growth, business and industry.

Why a government becomes an enemy of its own people is a mystery that won't be solved here. We can only note that this nation's founding documents consider it a recurring challenge, that there are times when government must be ... yes, revolutionized is the right word.


Monday, July 16, 2007

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?


(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.

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

Saturday, July 14, 2007

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?


Friday, July 13, 2007

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
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.]


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)

Thursday, July 12, 2007

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.


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)

Wednesday, July 11, 2007

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)


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."


Monday, July 09, 2007

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.

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!)

Sunday, July 08, 2007

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)

Saturday, July 07, 2007

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)

Friday, July 06, 2007

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,

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.

Thursday, July 05, 2007

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.

Tuesday, July 03, 2007

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?

Monday, July 02, 2007

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.

Sunday, July 01, 2007

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.