Thursday, October 18, 2012

"God will truncate their hustle"

People, I cannot recommend this post, "How to give foreign aid" highly enough

Here is just a taste to get you motivated:

Some wicked people will say blasphemous things like we do not need to have highly paid foreigners living posh lives in our country in the name of development. The evil people will even imply that by pumping in so much money into projects that the government should be doing and has the money to do, you are making the government lazy and inadvertently encouraging corruption. They lie! And God will judge them harshly. Their real aim is to spoil your hustle, yours and those of all the good Africa-helping people of the world under the able leadership of Bono (and Madonna who has been kind enough to adopt dark Malawian babies who would otherwise have died of poverty or some dreadful disease). God bless Bono and Madonna.

How to prepare for next time

Let's face up to the fact that our government is not going to try and stop "running" the economy any time soon and think about ways to limit the damage they do.

When it comes to macro policy, there are two no-brainer reforms that would really help.

First, I agree with Ryan Avent (really). Raise the inflation target to say, 3.5%, but INDEX all tax brackets so that the higher inflation can be more neutral.

There clearly is a "discontinuity" in the Fed's reaction function when nominal rates hit zero, and a higher inflation target can help avoid this situation.

Second,  I agree with JM Keynes (really). Counter-cyclical fiscal policy is a good idea. Surplus in the booms, deficits in the downturns. Chile has figured this out for Pete's sake, why can't we? Balance the budget over the business cycle.

People, I don't think the Fed can control real GDP. I think the Fed has done a decent job controlling inflation over the last 30 years, and they did a great job throwing the kitchen sink at the financial system and preventing a full meltdown / depression. I don't think there is a magic monetary policy the Fed could have been following that would have either avoided the downturn or given us a quick and robust recovery. I do think that zero bound problems were not sufficiently appreciated and a modestly higher inflation target could help us from smacking into them.

Neither do I think that fiscal policy has big multiplier effects (though I admit to being intrigued by the idea that at the zero bound, the effects are perhaps greater than 1), but you know that in troubled times it will be used. Let's just stop shooting ourselves in the foot by running big deficits in the good times as well.

We are not going to get rid of policy actions in downturns. But if our policymakers were operating from better baseline positions (further from the zero bound, further from an explosive level of debt), these policy actions would be much more effective and carry lower long term consequences.


Wednesday, October 17, 2012

Deer Crossing Performance Art

I refuse to believe that this is serious.  It is the most brilliant performance art hoax in human history.

Step 1:  Woman suggests that "Deer Crossing" sign be moved somewhere with less traffic.  She thought that the sign was to tell the deer where to cross.  I mean, that's what she SAID.  "We can use the signs to direct the deer elsewhere."  Please, please listen to this....

Step 2:  Woman "admits" that she was confused.  The "Deer Crossing" sign is actually information for HUMANs, not for DEER.  She totally stays in character.

She says she grew up in a rural area.  Because apparently people in rural areas think that deer can read.  They aren't like those smart city folks, who know a lot about deer.

A Joy

Why was the internet invented?  So a fat guy could lecture us on how to use a katana against burglars.

The description, from YouTube:

Bike Helmet Follies

"One common denominator of successful bike programs around the world — from Paris to Barcelona to Guangzhou — is that almost no one wears a helmet, and there is no pressure to do so. In the United States the notion that bike helmets promote health and safety by preventing head injuries is taken as pretty near God’s truth. Un-helmeted cyclists are regarded as irresponsible, like people who smoke. Cities are aggressive in helmet promotion...'Pushing helmets really kills cycling and bike-sharing in particular because it promotes a sense of danger that just isn’t justified — in fact, cycling has many health benefits,' says Piet de Jong, a professor in the department of applied finance and actuarial studies at Macquarie University in Sydney. He studied the issue with mathematical modeling, and concludes that the benefits may outweigh the risks by 20 to 1. He adds: 'Statistically, if we wear helmets for cycling, maybe we should wear helmets when we climb ladders or get into a bath, because there are lots more injuries during those activities.'" [Elisabeth Rosenthal, NYT op-ed]

I like the comments part of the article.  The idiot parade is in full swing.  The claim is not that (1) wearing a helmet is a bad idea, or that (2) wearing a helmet should be illegal.  The claim is that the statistical risks are in line with wearing a helmet when you brush your teeth.  People slip and fall in the bathroom, sometimes, and hit their heads.  Not very often.  And the survivable accidents on bikes where a helmet matters are statistically rare.

Now I fully expect some goofball to comment and say, "A helmet saved the life of my cousin's stepdaughter!"  Yes.  And your dad should have worn a condom.

(Nod to Kevin Lewis, who likely wears a helmet when he brushes his teeth)

Hell, Meet Handbasket

Why are things so bad in the U.S.?  This is a theory I had NOT heard before.

The decline of the US is that people go to Wal-Mart wearing saggy-butt PJs!

With thanks to Jeff...

Tuesday, October 16, 2012

The Amazing video Paul Samuelson doesn't want you to see

Pinback are back!

Argo, the Movie

The LMM and I went to see Argo.  Like it.  A lot, in fact.  But even I recognized that there were some pretty improvements in the story.

My good friend Dan Drezner notes that the films succeeds when it tells the truth.  And it also succeeds when it fibs.  As he puts it, "If you didn't detect at least one of the Really Big Whoppers in the second half of the film, well, then you should probably find a career other  becoming a foreign policy wonk.  Because there is some serious fictionalizing going on.  If you're buying it as fact, then you either lack the instincts or the strategic sense necessary to operate in the world of statecraft."

Dan points to two sources for getting actual historical background:  the Wired story by Joshuah Bearman that partially inspired the movie and theSlate explainer by David Haglund

Interestingly, Angus has suggested a related test for having the instincts for doing political economy.  And that's reading Mark Thoma.  If you don't immediately spot several credulous whoppers, you may not be a political economist.

Subversive? Deconstructing Gangnam Style

Interesting attempt at analysis of the "Gangnam Style" song/video.  Excerpt:

This skewering of the Gangnam life can be easy to miss for non-Korean. Psy boasts that he's a real man who drinks a whole cup of coffee in one gulp, for example, insisting he wants a women who drinks coffee. "I think some of you may be wondering why he's making such a big deal out of coffee, but it's not your ordinary coffee," U.S.-based Korean blogger Jea Kim wrote at her site, My Dear Korea. (Her English-subtitled translation of the video is at right.) "In Korea, there's a joke poking fun at women who eat 2,000-won (about $2) ramen for lunch and then spend 6,000 won on Starbucks coffee." They're called Doenjangnyeo, or "soybean paste women" for their propensity to crimp on essentials so they can over-spend on conspicuous luxuries, of which coffee is, believe it or not, one of the most common. "The number of coffee shops has gone up tremendously, particularly in Gangnam," Hong said. "Coffee shops have become the place where people go to be seen and spend ridiculous amounts of money."

Um...actually, that IS our ordinary coffee.  At least for a lot of people.  But I guess we have "Doenjangnyeo" here, too.

Disclaimer:  We have had the tag line "Blogging Gangnam Style!" for about a month.  And we certainly intended it subversively.  Or at least sarcastically.

Monday, October 15, 2012

A Peculiar Prevalence of P values Just Below .05

A peculiar prevalence of p values just below .05

E.J. Masicampo & Daniel Lalande
Quarterly Journal of Experimental Psychology, forthcoming

Abstract: In null hypothesis significance testing (NHST), p values are judged relative to an arbitrary threshold for significance (.05). The present work examined whether that standard influences the distribution of p values reported in the psychology literature. We examined a large subset of papers from three highly regarded journals. Distributions of p were found to be similar across the different journals. Moreover, p values were much more common immediately below .05 than would be expected based on the number of p values occurring in other ranges. This prevalence of p values just below the arbitrary criterion for significance was observed in all three journals. We discuss potential sources of this pattern, including publication bias and researcher degrees of freedom.

The opposite of Max Smart's "missed it by THAT much!"  A blog post.  All too obvious:  you mess with the estimation, specification, and reweighting of the S.E.'s (to "correct" for various imaginary problems) until you that p<0 .05=".05" p="p">
With a nod to Tim Harford, who tweeted on this six weeks ago.  Anod also to K Lewis...

This is Pretty Disgusting

So, this triumphalist video.  It's more than a little disgusting.  Why exactly do we need to do this?

Note the map: These two bases are very close to the border...of the freakin' CZECH REPUBLIC! Those vicious Czech hordes may pour over the border in the soft underbelly of Bavaria any moment.

Close the bases.  Now.  Bring all the troops, and their mighty Strker vehicles, home.  From Germany, Japan, and a dozen other places.

When I was in Bavaria in 2009, I asked quite a few people if they thought it was time the American occupying army left.  They said no.  Because the "benefits" of these military bases were so large.

Let the Germans have their own army to defend against the Czechs.  They can afford to write all those "checks" to EU countries.  WTF is the US doing in Germany?

Thanks to Mr. Fox.

Roth and Shapley Win Nobel in Econ

Alvin Roth and Lloyd Shapley win Nobel in economics for algorithms for matching.

Everything I know about this subfield I learned from my friend Atila A., here at Duke.  Here is a paper he coauthored with Roth, in the AER.  It's an interesting and important problem, though the "solutions" are highly technical.  But this paper is quite accessible.


Sunday, October 14, 2012

It's not Tina's glorious comeback

This morning, I read Mark Thoma's column about Tyler's column before I read Tyler's column and thought to myself, "an anti-government screed? Kill Government? Tyler? Did Tyler outsource his column to me and Mungowitz? Or has visiting North Korea allowed Tyrone to just take over?"

Then I read Tyler's actual column and it was vintage Tyler. We are both makers AND takers. Restrictive zoning favors the rich. There are things we could do over time to improve education but those things are difficult. The mortgage interest deduction is both popular and distortionary.The founding fathers worried about this problem.

But here's Thoma's reaction:

I just don't believe that no government at all will result in a better outcome for the vast majority of Americans. (A good analogy is monopoly power. I think the government should do more to reduce monopoly power, but it doesn't due to the influence of the wealthy and powerful who own these companies. But getting rid of anti-trust law altogether, i.e. getting government out of the way completely, won't improve the outcome -- monopoly problems would simply get worse). I want to improve government, not kill it.

Maybe Romney's glorious comeback has everyone on edge, but Mark is just way way way off base here. There is not a single phrase in Tyler's piece to suggest that Tyler favors "killing" government.

In fact, Tyler's libertarian bona fides are actually quite suspect to many because of his acceptance of relatively big government.

Liberalizing zoning laws is not killing government. Repealing the mortgage interest deduction is not killing government. Reforming teachers' unions is not killing government. Centralizing school spending decisions is not killing government. More school choice is not killing government.

I'd suggest that Mark consider responding to what people actually write, than to the boogieman that appears before his eyes when he sees the byline of someone he suspects might be a libertarian.

I'd also suggest that phrases like this, "the answer is a government that represents all of our interests," suggest that Mark's comparative advantage in blogging may lie outside the field of political economy.

New York Times Dumb Article Contest

1.  Dumb article about "food movement."

2.  Remarkably dumb article comparing 14th Venice to a capitalist society.

3.  Appallingly partisan editorial claiming that the best way to judge a candidate is what s/he says early in the campaign.  Clearly, the best way to judge a candidate is on what that candidate actually DID, in office.  If we went by what Obama SAID, we'd have a balanced budget, be out of Gitmo, and have broad bipartisan consensus.  We have none of those things.  If you want to say that Romney is a bad guy, because he has no values except winning, okay.  But to claim that his speeches in primaries are the ONLY source of "real" info....shame on you, NYT.  How far you have descended into the muck and mire of partisan shilling.

But, then, an interesting and provocative article from my friend Nick Carnes at Duke Sanford School.  Not sure what I think the policy implication is, but an interesting argument.