Assorted links

by on December 18, 2013 at 1:01 pm in Uncategorized | Permalink

1. What is scarce.

2. The dangers of barter with gingerbread biscuit tickets.  And Izabella Kaminska on shadow banking as free banking.

3. Clemens reviews Collier on immigration.

4. Will drones revolutionize agriculture?

5. A chat with Geoffrey Hill.

6. Pre-order the new Murakami book here, due out in August.

7. More excellent John Cochrane on the Nobel Laureates and finance.  And behavioral economics at the movies.

Simone Simonini December 18, 2013 at 1:19 pm

I made the mistake of pre-ordering the last Murakami book.

IVV December 18, 2013 at 1:31 pm

Haha! Perhaps it’s my exposure to the concept of alternate reality, but 1Q84 did a most impressive job of turning a basic idea that should be quite fascinating into an exercise in drudgery, didn’t it?

Tom Noir December 18, 2013 at 2:17 pm

Hear hear!

prior_approval December 18, 2013 at 1:22 pm

1. ‘Intellectual property, or good ideas about what should be produced.’

Intellectual property is an artificial concept, especially in the age of digital copying. It might be possible to stuff the genie back into the bottle through enough repressive law making – but the reality remains that not only ideas are not possible to diminish by sharing, neither is most forms of what is so lazily called ‘intellectual property.’

Ray Lopez December 18, 2013 at 8:22 pm

PA this is misguided, akin to Proudhon’s “Property is theft”. It ignores the supply side arguments for having stronger intellectual property laws: a lot of IP would not be produced if we did not have IP laws (even the weak ones we have now). Unless I live in China, where being plagiarized or copied is a form of social recognition and honor, why would I invent the flying car if you can then knock off my design? First to market? Often overrated (MySpace, et al). Fame? Fleeting, unless you are living in a Pareto Optimal society where money does not matter anymore. We’re not there yet.

Cliff December 19, 2013 at 9:29 am

LOL why are you such a big champion of IP? Do you actually know anything about it? I am an IP lawyer and the only thing working pretty well in the IP world is trademarks. Copyrights are an absolute debacle. Much more creative work is being suppressed than is being encouraged.

Willitts December 19, 2013 at 1:16 am

I see your point. Clearly IP can be copied. The suggestions of what is scarce includes genuine creativity embodied in IP. For that matter, entrepreneuship is scarce. Time is scarce.

Axa December 19, 2013 at 2:36 am

Yes, anyone can copy your ideas. But not anyone is going through the tiresome process of developing a business with your ideas. It’s called working.

CBBB December 18, 2013 at 2:25 pm

1. Why would he frame that on his wall? Is he going to suddenly wake up one day and say “Damn! Had I only remembered that Quality land is valuable!”?

Willitts December 19, 2013 at 1:13 am

They aint makin any more of the stuff.

o. nate December 18, 2013 at 2:33 pm

#2 This is the kind of Kaminska piece that might lead some to bandy about terms like “phoney”. I don’t think she’s a phoney, but sometimes she has a way of sounding more sure of herself than she really is, and this combined with a tendency to use idiosyncratic jargon to describe fairly mundane and well-understood banking practices and to suggest that these somehow hold the key to a revolution in economic thinking can lead to some head-scratching at the least.

o. nate December 18, 2013 at 2:46 pm

Oops- didn’t check the link. I assumed you were linking her more recent piece: “The theory of money entanglement (Part 1)”. The one you linked there is actually not bad IMO.

ChrisA December 19, 2013 at 11:55 pm

Why does Kaminska keep insisting that there is a scarcity of safe assets caused by QE? The current estimate for 2014 is that there will be $18.2 trillion of outstanding US debt of which $11.6 trillion will be held by the public and only $1.6 trillion held by the Fed thanks to QE. In 2009 the comparable numbers were $11.9 trillion of outstanding debt of which $6.8 trillion was held by the public and $0.8 trillion was owned by the Fed. So over the last four years, the net amount of safe debt held by the public has increased by $4.8 trillion or 70%. QE has not significantly reduced the amount of new debt being purchased by the public. The idea that the Fed’s purchases are somehow competing with the market so that prices for bonds are driven high seems just silly when you look at the data. And it cannot be supported by any reasonable theory, debt monetization by governments must be inflationary or suddenly we have the monetary equivalent of a perpetual motion machine.

I think the whole QE thing causing lower interest rates and higher bond prices is reasoning of the most simplistic kind – basically both events are occurring at the same time so one must be causing the other. More likely they are both aspect of the same thing, a massive recession in the Western economies which scared a lot of investors off more risky assets, such as IB bonds and into treasuries, as they suddenly realized, post Lehman, that just possibly the US government might not bail them out after all. In others words the risk premium on leveraged debt went up and a lot of leveraged debt schemes no longer became viable. Realising this the Fed has been engaging in QE to try to add some monetary stimulus to offset the deflation caused by the increased risk premiums.

I wouldn’t worry too much about this stuff normally, but because this appears in the FT some policy makers may actually get the idea there is something to this, or worse politicians who want to justify their pet fiscal schemes, and we end up with monetary stimulus being pulled back and waste money on stupid projects instead, like in Japan in the 1990′s.

ummm December 18, 2013 at 2:48 pm

By tapering only 10 billion the fed signaled that the process will be gradual and the bond buying program could take well over a year to be phased out entirely. This removed a lot of uncertainty which is why stocks are surging.

msgkings December 18, 2013 at 4:47 pm

Thanks, Larry Kudlow!

Z December 18, 2013 at 6:13 pm

Green shoots! I’m seeing green shoots!

Too bad none of them are near the bitcoin cemetery.

Yancey Ward December 18, 2013 at 5:22 pm

Prediction- it never ends, and might not ever fall below $50 billion/month.

Willitts December 19, 2013 at 1:22 am

They may want to make it gradual. The question is whether they will be able to do so. Each successive sale will drive prices lower and yields higher. They will have to sell increasingly more to achieve the same effect. This could well get out of hand. Their hope is that economic growth is so strong, that it offsets the tightening. That’s rolling a hard six.

dearieme December 18, 2013 at 2:59 pm

5: a neat wee allusion to C S Lewis towards the end?

dearieme December 18, 2013 at 3:10 pm

Or maybe Wordsworth?

dc red dogs December 18, 2013 at 10:54 pm

I like his poetry but based on that interview would not expect him to be capable of making an interesting allusion to either C.S. Lewis or Wordsworth, he appears to be plowing other and, as he was on the verge of admitting, more narcissus-like and lesser poetic furrows

jott December 18, 2013 at 3:03 pm

5. Hill’s obscurity is the result of Hill’s obscurity. He puts a great deal of effort into making his poems difficult to understand.

FredR December 18, 2013 at 3:12 pm

Clemens doesn’t seem serious to me.

Brian Donohue December 18, 2013 at 3:15 pm

#7. Good stuff from Cochrane.

Cliff Styles December 18, 2013 at 3:34 pm

What is scarce? Attention. What is even more scarce? Apt attention. So machine intelligence ought to help apt attention? If so, might that be a fountainhead of good?

C December 18, 2013 at 3:37 pm

Very excited about the new Murakami book, which I will happily pre-order.

Ronald Brak December 18, 2013 at 5:40 pm

4. I couldn’t access the article on drones and agriculture because of a shoddy internet connection (I’m in Australia), but it seems to me that drones in of themselves won’t revolutionise agriculture, they will just be very useful. However, combined with fancy software that can correctly interpret information sent back by the drone, then maybe it could be just a little bit revolutionary, allowing a reduction in inputs such as water, fertilizer, and pesticides, and very importantly labour, which is quite expensive here and Australia and also places such as Europe.

dearieme December 18, 2013 at 5:44 pm

If they could shear the sheep they’d be handy.

Ronald Brak December 18, 2013 at 6:26 pm

My god! I just found out that in America people watch movies via streaming! I can’t even watch a youtube video in real time here.

As for shearing sheep, there are robots that can do that although they don’t have the edge over humans yet. There are difficulties with getting sheep used to the new technique and with the cost of capital. But it is the sort of thing that could suddenly reach a tipping point and rapidly become widespread. But I wouldn’t want to try to guess exactly when that would happen.

Willitts December 19, 2013 at 1:11 am

What will shepherds do when they get lonely?

Big Happy Al December 19, 2013 at 4:03 am

Use technology. And I don’t mean Droneback Mountain.

Russ Mitchell December 18, 2013 at 6:38 pm

Children don’t need to learn to become coders, but I argue that they should learn how to code. My second-grader just finished One Hour of Code ( where should learned, in a fun way, about the world of IF, THEN, AND and OR statements. Knowing the basics of coding, and its underlying logic, with help her work with technology, whatever field she chooses.

Russ Mitchell December 18, 2013 at 6:38 pm

Where “she learned” I mean.

A Definite Beta Guy December 18, 2013 at 7:25 pm

Is “effective organizational capital” missing from number 1? Perhaps methods to differentiate skilled labor from unskilled labor and reward it properly? Is not the ZMP hypothesis based mostly on a combination of both?

Ray Lopez December 18, 2013 at 8:30 pm

@#3 – I’m awaiting Steve Sailor’s review of this anti-immigration book. I have a feeling it will be a lot more positive.

As for polemics masquerading as academic books, I once read the excellent Bovard book “Farm Trade Fiasco” (he is an excellent polemicist, and I see he’s alive and well:, and was struck by the prose of this book: you think the world is coming to an end, and then the kicker: $100B a year (back in 1989) in farm waste and unneeded subsidies. Roughly double that now, and say it’s $200B, but it pails in comparison to the real waste in today’s economy: that 40% of it is government, instead of the 10% it should be at, as before 1929.

Willitts December 19, 2013 at 1:09 am

4. They had a personal agri-drone in the movie Looper.

Combines are already GPS driven with the operator barely necessary. If I recall the completely made up statistic, farming in perfect lines (no overlap, no misses) with the robo equipment increased output more than 10%.

chuck martel December 19, 2013 at 9:54 am

“The Federal Aviation Administration does not allow drones’ commercial use.”

A law as immutable as gravity. If federal bureaucrats say you can’t do it, it can’t be done.

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