by Tyler Cowen
on May 2, 2013 at 3:19 pm
in Uncategorized |
1. A new database on educational quality.
2. On the unreliability of early New Zealand gdp figures.
3. Claims about the economics of Game of Thrones.
4. Status competition among religions, as designed by the homeless.
5. There is now a journal for porn studies.
6. China gives Algeria an opera house.
7. Edward Hugh: what kind of test case will Japan prove to be?
Will the new journal be open access?
I believe you should start a marijuana theme here at MR. With the legalization of pot in Washington and Colorado, we are seeing public policy unfolding in front of our eyes.
NPR’s Brian Lehrer Show (WNYC) had a fascinating interview this morning with Mark Kleiman, professor of public policy at the UCLA School of Public Affairs, and marijuana legalization consultant for Washington state. (http://www.wnyc.org/shows/bl/2013/may/02/legalizing-marijuana-who-smokes/)
The legalization of marijuana is bringing up a host of day-to-day public policy and social issues. For example, 25% of pot users are under the age of 21. But pot is operating under the same rules as smoking or alcohol, so pot has not been legalized for these users. Also, pot can be pretty stinky, with neighbors complaining in apartment houses about the fumes from next door.
These are all emerging issues. If you like public policy, it’s just this fantastic little laboratory of about dealing in a new way with a substance rife with externalities.
Personally, I see it a useful template for thinking about the introduction of self-driving cars. We’ll see analogous issues emerging there.
I live in Colorado and have been researching business opportunities in the legal marijuana industry. It’s an interesting field to say the least. One side effect of the muddy legal environment is that companies are practically begging to be taxed and regulated as a means to legitimize the industry.
Re: stinky pot – In 10 years I think that smoking weed will only be something that hipsters and hippies do. The majority of consumption will be in the form of edibles and vaporizers.
I can’t believe that a Fuchsia Dunlop piece from The Browser has not made your links!
For #4, cf. Matthew 6:1
#6: Why does the Retief story “Pime Doesn’t Cray” immediately come to mind when I hear about China building an opera house for another country. Are we building a Yankee Stadium style baseball field for them, I wonder?
This is part of China’s global outreach program. In Costa Rica, China built a new soccer stadium. See http://en.wikipedia.org/wiki/Estadio_Nacional_de_Costa_Rica_%282011%29. Quote
“Although the cost was programmed at the beginning to around $88 million, this was later adjusted to $100 million. The Chinese government financed the construction of the stadium in its totality, along with its furnishing, and assumed all other costs Demolition of the old National Stadium began May 12 of 2008, after the match between UCR (Universidad de Costa Rica) and Brujas FC and the 200M event where Nery Brenes set a new national record (20:28 seconds).
The construction of the stadium formed part of the agreements signed between the presidents of Costa Rica and China, Óscar Arias and Hu Jintao, respectively, during Arias’ first visit to the Asian country in October 2007. The construction began on March 12, 2009 and finished in 2011.The Chinese company Anhui Foreign Economic Construction was charged with the construction of the stadium and brought 800 Chinese labourers to complete the work.”
What did China get in return? The main thing most Costa Ricans know about China (at this point) is that China built the stadium. Perhaps more substantively, Costa Rica and China signed an FTA (Free-Trade Agreement). Predictably, many Costa Rican industries promptly collapsed and Costa Rica’s exports to China are limited to agricultural products.
China seeks a colonial relationship with its trading partners (for obvious reasons). The soccer stadium was a cheap way of getting one.
Predictably, many Costa Rican industries promptly collapsed and Costa Rica’s exports to China are limited to agricultural products.
Which Costa Rican industries collapsed?
Low-tech, labor intensive manufacturing (toys, textiles, etc.)(
Low-tech, labor intensive manufacturing (toys, textiles, etc.)
Another great leap forward for the Keep Groac Gray Campaign!
On #4, I’m curious if the homeless man benefits by altering the source of previous donations. In other words, do future gifts depend in any way on the shown distribution of prior gifts.
This seems plausible. There is asymmetry, because a majority of passers-by are likely christian. So are people more motivated to give if their in-group is winning? Or, if it losing? Perhaps the fact that he claims atheists are winning is evidence for the latter.
By changing the amount in each container, I wonder if we could detect if future giving by one group depends on which group has the most. Why did he choose the Atheist bucket instead of another competing group? Maybe Christians feel most threatened by Atheism, so they would be more likely to contribute if this bowl were filled the most.
I bet putting money into the atheist bucket causes ALL of the other religions to donate more.
In regards to #7:
Hugh quotes the following from an old Krugman article:
“If this is the problem, there is in principle a simple, if unsettling, solution: What Japan needs to do is promise borrowers that there will be inflation in the future! If it can do that, then the effective “real” interest rate on borrowing will be negative: Borrowers will expect to repay less in real terms than the amount they borrow. As a result they will be willing to spend more, which is what Japan needs. In short, this explanation suggests that inflation–or more precisely the promise of future inflation–is the medicine that will cure Japan’s ills”.
Now, this is standard prescription for inflation being successful, but my question is this- if this is the incentive to get people to borrow and spend, what does this incentive do to get the lenders to lend?
The BoJ can just lend directly. Why not? They already buy equity ETFs and REITs. With the 10-year JGB already yielding under 0.6%, maybe they get more bang for their yen buying anything and everything else. And considering Japan’s debt-to-GDP ratio, maybe it’s even less irresponsible for the BoJ to do so.
I suppose if it’s politically desirable, Abe will snap his fingers and the BoJ will do it. Or he’ll go back to rearranging the leadership until the new principals just happen to agree with his monetary policy ideas.
Not My real Name –
“The BoJ can just lend directly. Why not?”
I’m tempted to lampoon the hubris implicit in your remark but let me try to answer seriously: Because the de facto setting of interest-rates by central bank asset purchase programs threatens to short-circuit the largely market-set system that has been in place for centuries.
Of course, lenders can be coerced into lending, but then who eats the losses? In the case of the BOJ, it is the same people who are the borrowers. I see a snake eating itself.
Yancey – You make a good point. I found this Hugh article to be a very interesting discussion of the main macroeconomic story of 2013 and beyond, the Japanese experiment, and think Hugh’s piece merits much fuller coverage.
Hugh concentrates on the effect of deflation pushing consumption off into the future and rightly points out that reversing that deflation is really a one-time benefit that will disappear, leaving Japan’s demography-driven consumption decline to continue thereafter. However, my understanding is that one of the perils of deflation is the level of indebtedness. It’s not clear to me why a modest amount of deflation would be dangerous to an economy unencumbered by high levels of debt (and I think that is borne out by the historical record in Britain and the US in the 19th century). Obviously, Japan is in debt to the eyeballs. Then the composition of the debt becomes an issue.
I salute Hugh for thinking of the problem in broad terms and moving beyond arcane arguments and overfocus on “austerity” (quotation marks are fully intentional) and NGDP.
I thought Hugh’s long essay was the very best thing I read on the subject in a very long time, and probably deserved a separate posting here rather than in a collection of links where it got buried here at MR.
Totally agree. Outstanding link. Krugman deserves a lot of credit here- I’m still not 100% sold on Sumner- I’m kinda ‘yeah, lets’ give it a shot’ – but Krugman’s thoughts here seem to anticipate Market Monetarist thinking by many years.
As far as the incentive for lenders to lend- these are mostly old people trying to turn wealth into income- they’re kinda sitting ducks for inflation or currency depreciation. But hey, these are the people that gave us the mountain of debt in the first place, so…rough justice.
#2 – The revisions resulted in an large upward correction of estimated growth in New Zealand growth (actually: estimated decline) in 1951. Which means that the RR conclusions were not only biased by using weird weights to calculate average growth – but also plain wrong (not their mistake, by the way). Anyway – the debt growth correlation gets a little weaker, again. The main finding of RR was of course the inherent instability of financial market economies – they found that THERE IS NOT A SINGLE CASE OF AN EMERGING ECONOMY WHICH DID NOT DEFAULT AT LEAST ONCE. That’s the interesting thing. Disequilibrium. Exit Lucas.
“The revisions resulted in an large upward correction of estimated growth in New Zealand growth (actually: estimated decline) in 1951. Which means that the RR conclusions were not only biased by using weird weights to calculate average growth – but also plain wrong (not their mistake, by the way). Anyway – the debt growth correlation gets a little weaker, again.”
Not only weaker, but evidently pointing in the opposite direction.
Matthew C. Klein notes the following:
“Historians of New Zealand know that there was a boom in 1951 as a result of the U.S. Army’s demand for wool to make uniforms during the Korean War. According to Statistics New Zealand, the real economy expanded by about 16 percent in just that one year. Output contracted in the following years as the demand for wool subsided.”
Now, if you think back to Thomas Herndon, Peter Ash, and Robert Pollin’s (HAP) original analysis, they pointed out that due to Reinhart and Rogoff’s ad hoc cutoff dates, 1951 was the only year that New Zealand was above 90% of GDP in terms of public debt. Furthermore, due to their odd weighting scheme, New Zealand’s 1951 real GDP growth had one seventh of the weight in the average growth rate of countries with public debt over 90% of GDP. According to Reinhart and Rogoff’s dataset real GDP (RGDP) was (-7.6%) in 1951. But according to Statistics New Zealand (SNZ) the correct figure is (+15.6%):
Now go back to HAP and look at Table 2:
Do the arithmetic. Add together the average growth figures for the seven countries during the time that they had public debt over 90% of GDP but this time replace (-7.6%) with (+15.6%) for New Zealand and what do you find? Instead of an average RGDP growth rate of (-0.1%) for countries with debt over 90% of GDP you find that they had an average RGDP growth rate of (+3.3%).
Now compare that to the results from Reinhart and Rogoff’s paper which are listed in Table 3 of HAP (RR 2010b Appendix Table 1). For countries with public debt less than 30% of GDP the average RGDP growth was 4.1% and for countries with public debt between 30% and 60% of GDP, and between 60% and 90% of GDP, the average RGDP growth was 2.8%. Thus the average RGDP growth rate of countries with public debt over 90% is *higher* than than every category except the lowest category.
So the threshold effect at 90% now means that countries going above it have higher growth.
Didn’t check your calcs, but R&R always stressed the median, not the mean. Doubt that changed much
The median rises from 1.0% to 2.4%.
#1 Any education quality index putting Japan, South Korea, and Taiwan on the top of the list should reexamine their definition of what constitutes “good education”.
A typical Taiwanese or South Korean high school student spends 10 hours a day at school from 8am to 6pm and after that, 3-5 hours at privately-run “cram school”. All the curriculum, text books and exams (including the official exam into university) are about memorizing names, dates, scientific formulas. Critical thinking and creativity are completely absence from any of their teaching. Even writing is graded on the basics of whether one can write in a pre-defined manner and pattern rather than about the ability to argue and support argument. They teach English from the day one of kindergarten yet few of their high school graduates can speak English at a functional level because their idea of English teaching is all about memorizing words and grammars instead of using it practically. Also don’t forget that schools in these East Asian countries teach little if anything at sports, arts, music, personal finance and other areas that are considered “unrelated” to the official curriculum and exams.
Their students might be better than the Americans in doing math and scientific calculation (which is apparently how most education index evaluating “education quality”), but their inability to think critically and come up with new idea means that they will always lag behind in making changes to the real world.
Ok, then who SHOULD be winning this? American schools teach neither facts nor critical thinking in any great quantity. Sure, I had band, gym class, and art, but I can’t say that they had a huge impact on my education. The American ideal of well-roundedness may be seriously oversold.
Also: “their inability to think critically and come up with new idea means that they will always lag behind in making changes to the real world.”
That statement demands some evidence. Residents of those countries certainly seem to be highly successful in fields like science and engineering.
“That statement demands some evidence. Residents of those countries certainly seem to be highly successful in fields like science and engineering.”
Even in those fields the majority of scientific breakthroughs and highly successful inventions are still coming from North America and Europe despite their average students have poorer math and science scores than the East Asians. You cannot produce a great scientist by forcing a student to memorize hard formulas and data, that never work well.
“The American ideal of well-roundedness may be seriously oversold.”
I personally think American education put too much emphasize on sports and the culture around it. However, even in a sports-obsessed American high school, intelligent students have enough free time and space to pursue their own academic interests or hobbies that lead to great success (like computer programming for example). This is not the case for East Asian students who have to spend 10+ hours a day memorizing text book curriculum in order to do well in the official exam that determines one’s score used in university admission. Geeks like Bill Gates would be totally destroyed in the Asian university admission exam since he spends most of his time on computer and not on memorizing questions from past exams.
I am struck by the complete inability of Japanese people to speak English considering their many years of English education. I mean, yeah Japanese and English are very different, but if I took Japanese for 10 years I promise you I could speak it better than Japanese tourists.
I really love #4. Brilliant.
Plus, I suspect the clever man has rearranged the distribution of coins so as to encourage Christians to donate more.
They wouldn’t want to be outdone by the atheists.
“#5 There is now a journal for porn studies.” I’ll start designing a randomized controlled trial (RCT) for my next paper!
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