Assorted links

by on December 16, 2011 at 12:52 pm in Uncategorized | Permalink

1. A theory of flattery inflation.

2. Censored Mother Goose.

3. “Sheep can do better,” and dolphin-whale cooperation, and taxi auction markets in everything.

4. Long article on on-line, for-profit education; how much of it is arbitraging public school dollars?

5. There is no great stagnation (with music).

6. A survey of the Target2 debate and its importance.

Dredd December 16, 2011 at 1:03 pm

What we call “our knowledge” is really a belief in what someone else writes or says they know.

Brian Moore December 16, 2011 at 1:22 pm

re: item 2, you have seen the “censored Count” (of Sesame Street fame) video, right? :)

Benny Lava December 16, 2011 at 1:40 pm

Tyler,

Any comment on this: http://mobile.slate.com/blogs/moneybox/2011/12/16/when_irish_growth_is_contracting.html

Or do you only consider evidence if it fits your premise? No please, tell us again how successful austerity in Ireland is. Oh Ireland doesn’t count anymore? Oh I see.

Cliff December 16, 2011 at 2:02 pm

Yes, Tyler, there have been 17,349 articles published today already and you have commented on only a handful of them. When are you planning to get around to the rest? Are you avoiding them?

Andrew' December 16, 2011 at 2:07 pm

Politicians suddenly decided they don’t like spending money? Because of economists?

Tyler Cowen December 16, 2011 at 4:14 pm

See my tweet!

Jens Fiederer December 16, 2011 at 5:39 pm

“It is sad that “current collapse of the eurozone really hurts Ireland” is cited as evidence for Keynesian views.”?

Merijn Knibbe December 17, 2011 at 1:01 am

A collapse in spending hurting Ireland is 100% ‘Keynesian’. Investments in Ireland are down 20% – which leads (in fact: is) a contraction of GDP. That’s a 100% ‘Keynesian’. The idea that spending matters is Keynesian and that the idea that when investments go down with 20% ‘Say’s tendency’ does not automatically lead to an increase in haircutting or whatever supply is, is reality. Spending does not have to be government spending. Please, master some National Accounting. But, well, in this case the decrease in investments might indeed lead to more haircuts. Money matters.

mark December 16, 2011 at 2:04 pm

A further link for your consideration – the SEC filed securities fraud actions today against Fannie and Freddie’s former top executives, for signing off on financials that understated the amount of high risk mortgages the companies held.

http://www.sec.gov/news/press/2011/2011-267.htm

Andrew' December 16, 2011 at 2:22 pm

4. Recommend you start reading on page 5

RM December 16, 2011 at 2:40 pm

4. Tyler, you have to bring this up with Alex. He is a strong advocate for online education.

Floccina December 16, 2011 at 3:02 pm

#4
For-profit education is fine for learning something and they are used for that purpose by many people. Piano teachers, tutors, SAT prep, how to use computer programs, etc are for profits. If you want to learn something for profits are great. Incentives are aligned. If you are not learning you quit. But learning is not what people want out of schools. They want credentials/testing/grading and here they incentives are not aligned the schools do not want to filter or drop students because each is source of cash. In time this might be overcome but it would IMO take a long time. The state could only pay for students that learn but that creates a huge incentive to cheat.

I think that we need a separation between education and credentialing/grading/testing or else we will continue to spend more and more on ineffectual schooling.

Urso December 16, 2011 at 3:08 pm

They also want kids to develop social skills, which can’t be done on the Net. Of course as our lives migrate more and more to the Net, those kinds of social skills may become increasingly irrelevant.

Willitts December 16, 2011 at 3:33 pm

The “social skills” learned in college are over-rated.

Borrowing an eraser from a student next to you in a lecture hall isn’t social interaction.

Discussion groups on the web can be just as informative and interactive as a discussion session in a classroom.

Partying at a fraternity or sorority devalues the learning experience. The relationships formed are hollow. The fraternity nepotism after college might better enable you to get a job, but not because you’re the best candidate for the job.

Attending protests isn’t, in my view, a value-added learning experience.

There are clubs one can join without having to be enrolled in a B&M university.

There are many criticisms of online or proprietary education. This is not one of the better ones. It’s the same argument that fails about home schooling.

Non-traditional students have other avenues of social interaction. Many of those students WORK.

“There’s a time and a place for everything. It’s called ‘college’.” ~ Homer Simpson

msgkings December 16, 2011 at 3:52 pm

+1, sadly

cournot December 16, 2011 at 7:14 pm

This is right. But as long as there’s no demand in the private sector for rating the quality of graduates and as long as Duke vs. Griggs Power restricts IQ testing or other sorting mechanisms with “disparate impact” it’s hard to build up a respectable alternative to the top school sorting mechanisms.

Indeed, the claim that schools develop social skills and not just math or writing ability should be enhanced by private testing of technocratic skills IF they really believed their own nonsense. After all, the Ivies could say, Sure our bottom 10% are worse in math and writing than the top 30% of Podunk tech but look how well they talk at cocktail parties or play team games! And if that were valuable firms would take that into account.

But in fact, the elites want LESS transparency in education. They want to insinuate that ALL their graduates are superior both socially AND on narrowly technical/meritocratic grounds. The latter might be harder to do if it were demonstrable that the average student from What Have U were objectively better on some measures than their various legacy, AA, and athletic admits. Moreover, limiting transparency, makes it hard for lesser known universities to compete. The more open the competition, even on limited and imperfect margins, the easier it is for newcomers to get on the playing field.

The current system is a scam because the average genius or nerd at the Ivies casts a warm glow over the less capable but more well connected or stylish or fashionable or socially approved members of the class. And vice versa. They don’t want clear sorting that the public can see. That’s why they won’t even release the full range of test scores or the average (not median) SAT scores of their entering class.

derHeimatlose December 16, 2011 at 3:08 pm

5. All this Target2 mechanism looks like they treat currency originating from another EZ country A different from local currency. Basically, treating “foreign” euros like foreign exchange.

DKF December 16, 2011 at 4:06 pm

4. Dislike the use of “abitrage” as a verb in this context (same as in the recent McRib link). “Exploiting”, maybe. “Abusing”, possibly. But that word implies (1) simultaneous transaction (2) replicating portfolios and (3) risk-free profit. None of that here…
Pretty disappointed by the article–long on anecdote, short on analysis. For example, they didn’t place the student scores in any kind of a “value-added” analysis in order to show them in context to similarly situated students at competing schools. And, though they portray the company as some kind of profit machine (“a remarkable success by Wall Street Standards”), a little digging on yahoo finance yields a different story http://yhoo.it/taEjRx. Their financial numbers don’t look like anything to write home about, at least to me…

Floccina December 16, 2011 at 4:50 pm

More on #4
May son is taking a class online and the state of the art of the software is very low (Florida Virtual School). They have managed to make it even more boring than sitting in class.

Floccina December 16, 2011 at 5:18 pm

Should have been:

More on #4 My son is taking a class online and the state of the art of the software is very low (Florida Virtual School). They have managed to make it even more boring than sitting in class.

TravisA December 16, 2011 at 5:10 pm

Tyler, this Target2 stuff seems to be nonsense. Karl Whelan is the goto guy:

http://www.irisheconomy.ie/index.php/2011/12/15/more-target-2-fun-bloomberg-edition/

JP Koning December 16, 2011 at 5:16 pm

Agreed. Story 5 is definitely wrong about the Bundesbank needing to sell gold or raise deposits.

Jonas December 17, 2011 at 1:06 am

+1 on the article on the flattery inflation. A bit pedantic, but good model articles always are.

The global 1% right now has benefited from the past 10 years from exactly the same thing, from countries/states/electorates that want to attract business or from companies that want to attract investors/funding. There isn’t that much of a status difference, but the material differences are quite large, as are the pool of suitors.

Merijn Knibbe December 17, 2011 at 1:48 am

5. Is anybody really surprised that when deficits on the current account are combined with capital flight, while the ATP’s and the checking accounts have to continue to work liabilities and assets in the system change? Which is another way of stating that there is too much money in Northern Europe (M1 recently declined with about 20%, in Greece). Target2 is in fact somewhat comparable to the Chinese buying USA debt – except for the fact that in Europe, ‘we are our own chinese’.

Up to about 2008 the same thing happened financed by private capital, without the capital flight, however, as southern European countries and Ireland were running huge deficits on their current accounts. That time, it was financed (and even caused) by large net private capital inflows, while these inflows led to higher house prices which led to more demand for houses and even larger inflows of capital – at least in the countries with deregulated capital markets. Never underestimate the housing market (a TGS point: the National Accounts of the Netherlands show that, since 1980, expenditures on housing (rent, houses, furniture, energy) were the kind of expenditure which grew most, estimated in %-points of GDP. My point: this tendency (an increase of housing in total expenditure) dates back centuries and is a marked characteristic of Modern Economic Growth. And no, Tyler, I do not yet have long series on this beside the National Accounts data. Somebody should write a proposal).

The deficits on the southern European current accounts have already become quite a bit smaller, as domestic consumption and investments imploded in Southern European countries and Ireland (see Kash Mansori on this:http://streetlightblog.blogspot.com/2011/12/more-house-prices-and-current-account.html). This has alerady been going on for three or four years, consumption in Greece is ALREADY down 40% – which include pills and diapers. Is more austerity really needed (and those silly stories about all these Porsches in Greece? Car ownership is much lower than in Germany and car sales have plumetted too – that’s real life).

Up to 2008 the (at that moment: very large) deficits were financed (and partially caused) by Northern European savings flowing to Southern Europe. In 2011, the (smaller) deficits are financed by Target2, indeed a kind of ECB-credit card at the ECB. But again – money is already disappearing out of the Greece economy. What do we want! Back to Graeberian tally stick economics (which still functioned, to an small extent, in Greece)? That would make a difference – but it won’t pay your Euro dominated taxes.

It would be better if these deficits were ‘financed’ by more Northern European expenditures in Southern Europe – but in the end it’s the circular flow of money which counts: exports, capital inflow or Target2 credit. It’s money that matters. And it’s clearly ECB policies which led to this capital flight which is financed by Target2 credit. Financing this flight is, absent policies of financial repression, the least the ECB can do. And indeed – if deposits in Germany are not large enough to finance this – money will have to be created. Like it is created every time somebody uses a credit card. It’s not like financing investments or consumption. It’s just financing people who take their money to another bank – i.e. financing a bank run. By the way: even more accounting. What would have happened it Target2 hadn’t financed these checks? Employment in Greece is already down 7.6% compared with last year, unemployment in Spain is already up to 23% (and rising).

At this time, Northern European savings are, alas, flowing to the USA – while Spain is the saver creditor. I, for one take those tea partiers serious (and USA debt not, therefore).

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