Tyler Cowen

Wednesday assorted links

by on April 29, 2015 at 1:27 pm in Uncategorized | Permalink

1. Team develops lab-made civet coffee.

2. Will Dubai turn to robo-cops?

3. Claims about rat mobility.

4. New interview with Paul Romer.

5. This viral YouTube video (“will you have sex with me?”) is in fact an object lesson in the econometrics of out-of-equilibrium behavior.

6. Bernanke also will advise Pimco.

Which VPNs are working these days?  What other advice do you have for me, when it comes to accessing the internet?  Is accessing some sites easier with a Mac?  Can GMU email be accessed without a VPN?  WordPress?  MR?  Is there a difference between iPhones and iPads and laptops in these regards?

I thank you all in advance for your assistance.

A new Brookings study by Rothwell and Kulkarni attempts to do just that.  The list of ratings for two-year institutions puts NHTI’s-Concord Community College at the top, followed by a large number of institutions you mostly haven’t heard of.  For four-year institutions the list starts with:

1. Caltech

2. Colgate

3. MIT

4. Rose-Hulman Institute of Technology,

with other surprises to follow.  The Colorado School of Mines does better than Princeton, for instance.  Here is the report itself, here is a story on the report.  I am finding the web site for the rankings is still a little glitchy, let’s hope they fix that soon, or maybe it is just the current volume of traffic.

Not for Greece, that is clear, rather for everyone else.  Given bank recapitalization, the introduction of the European Stability Mechanism, European QE, a more general flood of liquidity to European banks, and a burgeoning European economic recovery — by European standards that is — it seems Grexit stands a good chance of being a non-event at the global or even the European level.  After all, Greece is only a small sliver of EU gdp; a few years ago it was only two percent, now presumably it is less.  On top of that, most of the remaining Greek debt is to public sector institutions, not private banks, which ought to limit contagion effects.  Indeed, as Greek bond yields rise, these days the bond yields of the periphery nations do not rise in tandem; some in fact have been falling.

So what’s the problem?

I think 80-20 that Grexit would not become a major macroeconomic problem for other countries, with the possible exception of small Cyprus.  But where does that 20% come from?

If Greek deposit flight forces a form of Grexit, whether whole or partial (capital controls plus scrip?), there is a good chance that markets will in essence “ask” the ECB again just how firmly it stands behind the other troubled eurozone member nations, such as Portugal.  The danger is that the current “creative ambiguity” cannot be disturbed in a useful way.  It might be hard for the ECB to announce that it stands fully behind the other eurozone nations, and in effect promise to monetize any pending default.  The incentive for moral hazard would be too destructive, and besides governments such as that of Spain don’t want to encourage the anti-austerity opposition.  The ECB is therefore likely to make a public commitment less extreme than that.

But neither will “we don’t really stand behind these governments at all” do the trick.  That probably would induce contagion along some other parts of the periphery, maybe more.

The ECB therefore must choose some intermediate point to signal — “we are committed, but member nations still bear fiscal risk.”  In part that is why they have rearranged the ex ante guarantees to fall so firmly upon national central banks, a move which some have compared to turning the euro into a currency board system.  Ex post, of course, the ECB or EU still has the discretionary option of bailing out those central banks, if and when it chooses to do so.  And, following Grexit, they could credibly say “The EU would have bailed out Greece, had an agreement on structural adjustment been reached and previous commitments honored.”  That’s basically a repeat of previous messages and maybe it is good enough.  That is where the 80% comes from.

So which ingredients will shape the new (old) message?: an intelligent but constrained ECB with a highly restrictive charter, a Europe-dedicated and wishing to atone for Grexit but electorally cautious Germany, a bunch of periphery nations which basically want any and all guarantees reserved for themselves and not for opposition parties, and lots of other voices, all mixed into a more or less unprecedented shock surprise in modern financial history.

So will the ECB get the signal right? Did I say 80-20?  Can I change that to…um…70-30?

In Seattle, where a dozen officers started wearing body cameras in a pilot program in December, the department has set up its own YouTube channel, broadcasting a stream of blurred images to protect the privacy of people filmed. Much of this footage is uncontroversial; one scene shows a woman jogging past a group of people and an officer watching her, then having a muted conversation with people whose faces have been obscured.

“We were talking about the video and what to do with it, and someone said, ‘What do people do with police videos?’ ” said Mike Wagers, chief operating officer of the Seattle police. His answer: “They put it on YouTube.”

There is more here, via Michelle Dawson.  The article has more detail on the status of these feeds in various localities, and the debates over how public they should be.

In a specifically Vietnamese context, there is good evidence that more trade with Vietnam will bring more FDI.  A more general political science study shows the same, namely that joining trade agreements boosts FDI and also growth.

Here is an argument (circa 2005) that Vietnam still has too much trade protection.  Here is a good general piece that trade boosts poverty reduction in poorer nations.  Here is supporting evidence specifically on rural Vietnam.

Those are just a few follow-ups on my earlier post on TPP and Vietnam.  By the way, here is Greg Mankiw showing that TPP is in fact a trade agreement.

Dogfish Head, for example, has Chicha – a native corn beer that is chewed by the brewers and spit out before being brewed (and boiled – so it’s sterile). The saliva, say the brewers, has enzymes that convert the starches in the corns to sugar.

Earlier this month, Barrels and Bottles Brewery in Golden, CO offered an extra special bitter that was brewed with Peeps, the colored marshmallow candy that marks the Easter season. (90 of them, to be specific.) And just last week, New Belgium teamed up with Ben & Jerry’s ice cream to announce plans to produce a Salted Caramel Brownie Brown Ale (which will go on sale this fall).

…The newly crowned king of stunt beers is Iceland’s Brugghús Steðja. In January, the microbrewery introduced Hvalur 2 – a 5.2% ABV seasonal ale that incorporates the testicles of fin whales into the brewing process. And, believe it or not, that’s not the weirdest part of the ingredient list.

“We consider this beer to be in perfect style of [the Thorri] season,” says Dagbjartur Arilíusson, Steðji’s co-owner. “We get fresh whale testicles from a fin whale and we smoke it in an old Icelandic tradition way, smoked with dry sheep dung.”

There is more here, via the excellent Samir Varma.

Tuesday assorted links

by on April 28, 2015 at 12:33 pm in Uncategorized | Permalink

1. Women rating men.

2. The Mariah Carey business model.

3. Ezra Klein on TPP.   And Matt Yglesias on genetic engineering.  I agree with them both.

4. Israel evacuates surrogates from Nepal.

5. Who needs mutual funds?: when bots collude.

6. The new Orhan Pamuk novel comes out in English in October.

I have read and heard many times that TPP will bring harsher intellectual property law than is appropriate for the poorer Asian countries, noting that over time we can expect more of them to join the agreement.  In general poorer countries often benefit from weaker IP enforcement, more copying, and lower prices.  This is standard stuff.

It is less commonly recognized by the critics, however, that tougher IP protection may induce more foreign direct investment.  Why for instance invest in a country which might subject your patents and copyrights to an undesired form of compulsory licensing?  Trade agreements are likely to rule out or restrict such risks.  There will be more cross-border licensing activity as well, if there is tougher IP enforcement.  A company might even set up an R&D facility in a upper-tier developing country.

Carsten Fink and Kwith E. Maskus have an entire volume on these questions, Intellectual Property and Development.  Here is one sample bit from their introduction (pdf):

IPRs are quite important for multinational firms making location decisions among middle-income countries with strong abilities to absorb and learn technology.

You will note however that the effect is not there for poorer countries.  But in general:

…stronger IPRs have a significantly positive effect on total trade.

And this:

The study’s findings support a positive role for IPRs in stimulating enterprise development and innovation in developing countries.

I would say the volume, and the surrounding literature, as a whole provides some positive support for how IP rights may boost economic development, though not overwhelming or unambiguous support.  And the literature does not support a “one size fits all” approach to IP law; in this sense TPP is far from ideal.  But still, the literature does find some very real development benefits when a country moves to tougher IP rights.

But here’s the thing: TPP opponents simply tell us that bad and too tight IP law will be foisted upon the world’s economies.  I see talk of Aaron Schwartz and Mickey Mouse extensions, but I don’t see enough of the critics weighing the costs and benefits, or for that matter even mentioning the possible benefits of extending IP regimes.  I think the benefits of this IP extension may well outweigh the costs, when it comes to the developing nations involved in TPP.  At the very least it seems to me up for grabs.  And I certainly don’t think that voting down TPP this time around is going to lead to a more favorable redo of the agreement, not on IP for sure.

So IP considerations are not weighing nearly as much against TPP as you might think.

Eric Posner’s (with Adrian and Blakey Vermeule) new and excellent venture The New Rambler asked me to write a book review for them.  The impish side of me thought “what book better to review than the old Rambler?”, namely by Samuel Johnson?  Here is the opening of my piece:

A blogger by the ostensible name of “Samuel Johnson” has compiled his previous posts into a book, edited by a supposed W.J. Bate and Albrecht B. Strauss. But the true work here is “Johnson’s,” and the sequential editing, as such, seems to have been done by WordPress. The editorial illusion, of course, is a trick dating from the eighteenth century, as for instance Jonathan Swift and Alexander Pope presented the work of an imaginary Martinus Scriblerus in the 1740s. These Johnson posts claim to date from the early 1750s, a typical blogger’s conceit and misdirection, but the content is too modern and innovative to sustain that illusion for long.

Cutting through the postmodern trappings, Johnson’s blog reflects his ongoing interest in behavioral economics. He is continually skirting the frontier of the latest research insights, although like many bloggers he is lax in providing the proper citations. He writes off the top of his head, though without care for what came before from Thomas Schelling, Jean Tirole, or Cass Sunstein, among other titans of the field. Reading these short pieces is thus a fascinating but often frustrating experience. And as is true for most of the work in behavioral economics, there are insights but a fully fleshed out model, applied consistently to all human choices, is nowhere to be found.

Here is the full review, recommended!

Assorted links

by on April 27, 2015 at 12:23 pm in Uncategorized | Permalink

1. What are the new status symbols? (for one operator of private flights, the number of pets exceeded the number of people on a flight sixty-five different times; actually that strikes me as possibly efficient).  And here is an article on the Four Seasons private jet experience: “We didn’t sleep much on the flights, because we were always having much too much fun drinking champagne and giving our neighbors nicknames,” said passenger Davidson. An interior designer from Calgary, she booked the trip to celebrate her 55th birthday and wound up forging new friendships. “We loved our space and all of the people who were surrounding us.”

2. Russia has a steam locomotive reserve, still.  In case of nuclear war.

3. We have figured out why the earth hums.

4. Svetozar Pejovich attacks Milovan Djilas.

5. Acemoglu’s lecture notes on weak and strong states.

6. Fortunately, the Somewhat More Serious People seem to be taking over the Greek debt negotiations.

Jeffrey Rothfeder has a very good piece on that question, here is one excerpt:

Somewhat surprisingly, cross-border capital flows are equally anemic. Despite the common perception that multinationals these days manufacture their products anywhere but the West, global foreign direct investment (which reflects the amount that companies earmark for doing business in other countries) has fallen to a mere 2 percent of global GDP from 4 percent before the recession.

Still, the most tangible metric that belies the Pollyannaish depictions of globalization is corporate financial performance, which is also a window into the fundamentals of local economies. Although most companies don’t separate out geographical earnings, revenue comparisons provide an apt picture — and few multinationals can boast big returns in global markets.

There is much more to the argument, do read the whole thing.

In a word, Vietnam.  Vietnam has about ninety million people and a relatively low per capita income, below by 2k by some measures.  It liberalized tariffs a good deal upon WTO accession, but since then has done some backsliding.  It has large numbers of state-owned enterprises, and its policies toward such enterprises could use more transparency and predictability, as indeed TPP would bring.  Most generally, Vietnam is not today a free country.  Bringing Vietnam into TPP would further ensure their attachment to a broadly liberal global trading order.  TPP also would bring free(r) labor unions to Vietnam.

Tuong Lai writes (see the first link above):

But Vietnam cannot play its significant geopolitical role until it fully develops economically and further liberalizes politically. And adopting the T.P.P.’s requirements — free trade unions, reduced state participation in the economy, greater transparency — will help Vietnam along that route.

Many potential TPP signers still have significant tariffs against Vietnamese textiles?  Here is Jack Sheehan:

Vietnam is set to gain the most from the TPP due to the potential for a greater share of the apparel and footwear market, particularly in the US and Japan.

In 2012, Vietnam exported almost $7bn (£4.2bn) worth of apparel to the US, which accounted for 34% of US apparel imports. Vietnam also exported $2.4bn worth of footwear.

The TPP will allow Vietnam to export apparel to the US at a 0% tariff rate, which will make Vietnamese exports even more competitive.

Here is an assessment from the Peterson Institute that Vietnam will be the biggest gainer from TPP.  Do you get that, progressives?  Poorest country = biggest gainer.  Isn’t that what we are looking for?  And if you are a deontologist, Vietnam is a country we have been especially unjust to in the past.

Yes, I am familiar with the IP and tech criticisms of TPP, and I agree with many of them.  But if you add those costs up, in utilitarian terms I doubt if they amount to more than a fraction of the potential benefit for the ninety million people of Vietnam.  TPP is more of a “no brainer” than a close call.

Most generally, one of the big dangers today is “The Great Unraveling of Globalization.”  Is the passing or the striking down of TPP more likely to contribute to that trend?  People, you are allowed only three guesses on that one.

Robot sentences to ponder

by on April 26, 2015 at 4:00 pm in Economics, Science | Permalink

Harnessing high-powered computing, color sensors and small metal baskets attached to the robotic arms, the machine gently plucked ripe strawberries from below deep-green leaves, while mostly ignoring unripe fruit nearby.

Such tasks have long required the trained discernment and backbreaking effort of tens of thousands of relatively low-paid workers. But technological advances are making it possible for robots to handle the job, just as a shrinking supply of available fruit pickers has made the technology more financially attractive.

…Machines are doing more than picking produce. Altman Specialty Plants Inc., one of the country’s largest nurseries, has been using eight, squat robots for the past two years to ferry more than 1.2 million potted roses and other plants to new rows as they grow larger. The $25,000, self-driving machines have occasionally gotten stuck in mud, but they freed eight workers for other jobs and ultimately paid for themselves in 18 months, said Becky Drumright, Altman’s marketing director.

And we used to say that gardening was one of the hardest jobs to automate.  By Ilan Brat, there is more here.

Getting a speeding ticket is not a feel-good moment for anyone. But consider Reima Kuisla, a Finnish businessman.

He was recently fined 54,024 euros (about $58,000) for traveling a modest, if illegal, 64 miles per hour in a 50 m.p.h. zone. And no, the 54,024 euros did not turn out to be a typo, or a mistake of any kind.

Mr. Kuisla is a millionaire, and in Finland the fines for more serious speeding infractions are calculated according to income. The thinking here is that if it stings for the little guy, it should sting for the big guy, too.

…The fines are calculated based on half an offender’s daily net income, with some consideration for the number of children under his or her roof and a deduction deemed to be enough to cover basic living expenses, currently 255 euros per month.

Then, that figure is multiplied by the number of days of income the offender should lose, according to the severity of the offense.

Mr. Kuisla, a betting man who parlayed his winnings into a real estate empire, was clocked speeding near the Seinajoki airport. Given the speed he was going, Mr. Kuisla was assessed eight days. His fine was then calculated from his 2013 income, 6,559,742 euros, or more than $7 million at current exchange rates.

The full story is here, and in a much earlier MR post I argue against the practice.  Wealthier people have a higher value of time, and it is probably efficient to allow them to speed more.