Month: July 2004

The earthquake in France

Or should that read man bites dog? Get this:

French workers at a car components factory owned by Bosch on Monday dealt a blow to the country’s law limiting the working week to 35 hours, as they unilaterally accepted demands from the private German automotive group to work longer for the same pay.

The near-unanimity of the vote at Bosch’s Vénissieux plant near Lyon is expected to encourage other companies to seek ways of securing greater flexibility in Europe’s rigid labour markets, in the absence of political will for reform. The vote was the first of its kind in France and could set a precedent for a gradual de facto reversal of the 35-hour week.

But alas, it may not be as radical as you think. The vote was to extend the workweek from 35 to er…36 hours a week. Still, you know what Chairman Mao said.

Here is my previous post on the earthquake in Germany, read here too.

Addendum: Bill Sullivan points me to the Tao Te Ching as the original source for the Mao quotation.

Capitalism and women

Here’s a graph I put together for another purpose showing two United Nations development indicators, the gender development index which looks at life expectancy, literacy, and earned income with penalities when these are distributed unequally and the gender empowerment index which looks at the number of women with parliamentary seats, shares of women who are senior officials and managers, and female and male estimated earned income again corrected for gender inequality. The gender indices are graphed against the Economic Freedom Index which looks at the size of government, protection of property rights, marginal tax rates, mean tarrif rates, the ease of starting a new business and other such factors.

Both indicators increase strongly with economic freedom. Capitalism is good for women. Correlation doesn’t imply causation, of course, and causality, if it exists, could run from economic freedom to women’s development from women’s development to capitalism or a third factor could cause both – probably all three processes are involved to some extent. Nevertheless, at a minimum the graph indicates that capitalism and gender development are compatible contrary to many radicals. It’s interesting that no country with the high levels of economic freedom has a low score on either index. The graph actually underestimates the relationship between freedom and women’s development because there are many countries, Gambia for example, with incomplete data and we can be pretty sure that these countries have low economic freedom and low gender development.


The new Iraqi stock market

Iraq has just started its new Stock market. Fifteen stocks available…and thirty by the end of the month. Pepsi Baghdad, Al-Helal Industry, Dar-Al-Salam bank, Al-Kazer Construction are a few of the ones available for investment today…

Open your account by emailing here.

So far trading appears to be enthusiastic and more than a little volatile:

The miniature Liberty Bell clanged. Elbows flew. Sweat poured down foreheads. Sales tickets were passed and, with a flick of the wrist, 10,000 shares of the Middle East Bank had more than doubled in value.
The frantic pace yesterday of those first 10 minutes of trading typified the enthusiasm behind the Iraq Stock Exchange, an institution seen as a critical step in building a new Iraqi economy.

In five sessions, trading volume has nearly quadrupled, and the value of some stocks has surged more than 600 percent. Traders say the gains reflect the pent-up frustration of 15 months of closure.
“How can I not be excited by this?” asked Taha Ahmed Abdul-Salam, the exchange’s chief executive officer, as he eyed the activity on the trading floor.

Trading is open for two hours a day, two days a week. And how do you like this quotation from the Iraq Securities Commission?

“Right now, we’re all working together to build up the exchange. Later, when things are running smoother, then we’ll give them a hard time,” Mr. al-Okali said with a wink.

Here is the full story. Recall that not long ago, Iraq opened up markets in government securities.

If I could add to my media wish list, it would include more coverage of these developments, along with regular price reports.

The economics of teenagers

There was a time when teenagers did not dominate music markets, but was this for the better?

For some perspective, I pulled together the top-selling music of 1951, 1961, and 1971.

1951: The soundtrack for “Guys and Dolls.” Mario Lanza. Yma Sumac. The Weavers. Les Paul. Tony Bennett.

1961: Bert Kaempfert. The soundtrack for “Exodus.” Lawrence Welk. Judy Garland. But also: Elvis, Connie Francis, Brenda Lee, and Paul Anka.

1971: George Harrison. “Jesus Christ Superstar.” Janis Joplin. Sly and the Family Stone. Michael Jackson. Carole King.

Teen tastes, in other words, weren’t present on the 1951 charts at all; took up only half the list’s space in 1961; and didn’t triumph entirely until 1971.

Les Paul I like, but overall kudos to the teenagers. The list is from the ever-excellent, and we welcome the new addition Vanessa Blowhard to the blog; here is the post itself.

Addendum: Did you know that the word “teenager” only popped up in the dictionary in 1942?

Who would have guessed?

Who would have guessed that when taking drive-thru orders at a McDonald’s it’s more efficient to send the order not 25ft into the restaurant but 900 miles away to a call-in center which then relays the order via computer to the workers inside the restaurant making the food. To avoid errors, the system also takes a digital picture of the customer to accompany each order (the picture is destroyed once the order is complete). That’s the way it’s done at a Cape Giradeau, MO restaurant and at some dozen others which send their orders to a call center in Colorado.

The system has cut order time by 30 seconds, reduced errors by 50 percent and saved on labor. Who would have guessed that this system would work? Not me and I’d wager not most people, but Steven Bigari, a McDonald’s franchisee gave it a shot – an interesting illustration of why a decentralized, capitalist system furthers innovation. The system is now spreading – at some McDonald’s customers can call their order in from their table, pay by credit card, and have their order “delivered” minutes later.

It’s from small improvements like this that a productivity miracle is born.

Pay or pray?

Many people give money to their churches and then go less often. Jonathan Gruber writes:

I find strong evidence that religious giving and religious attendance are substitutes: larger subsidies to charitable giving lead to more religious giving, but less religious attendance, with an implied elasticity of substitution with respect to religious giving of -0.92. [TC: If your giving goes up by one precent, your expected attendance goes down by about 1.1 percent.] These results have important implications for the debate over charitable subsidies. They also serve to validate economic models of religious participation.

Here is the abstract; you can buy the paper there for $5. Here is Jonathan Gruber’s home page.

The question for policy is whether you want churches to be wealthier or fuller. I’ll vote for wealthier, so I have no trouble endorsing the tax break for church giving. It spurs donation but apparently keeps some people at home as well. The irregular attendees are the ones whose behavior tends to vary with dollar donations.

One story is that the irregulars are guilted into going and that we should give them an easy way out, namely a donation. A cash transfer substitutes for a real time investment, which is efficient. Let’s also not forget the intra-family externality on the kids; many would rather play than hear a sermon. An alternative story is that getting these people into church, in the bodily sense, will create a positive social externality. If that’s your view, stop doing fundraising for your church. Perhaps you should stop giving money as well.

Speaking of the economics of religion, this site, put together by my colleague Larry Iannaccone, offers systematic links to the field and its scholars.

Psychoanalysis and Consumer Society

Freudian introspection aimed to foster the individual’s capacity to live an authentically personal life, yet it wound up helping to consolidate consumer society…Psychoanalysis remained marginal to European psychiatry until after Wrofl War II, when Americans brought it back to Europe, but it became central to American culture almost immediately. The reason was the weakness of traditional authority in the United States and the widespread belief in the power of the individual mind to overcome “external” difficulties. In that context, American psychoanalysis became intensely popular. As a result, it was caught up in a process that emphasized personal empowerment, self-regulation, and individual charisma. As we shal see, the actual practice of analysis was less important than its cultural impact. Ultimately American analysis came to mean almost the opposite of the self-reflective exploration of internal limitations that characterized its European counterpart.

From the intermittently fascinating Secrets of the Soul: A Social and Cultural History of Psychoanalysis, by Eli Zaretsky.

I want my money back

It’s late in the game to be blogging this, but I’ve just seen Michael Moore’s Fahrenheit 9-11. I was dragged to the movie, more or less against my will. I won’t review the film’s well-known problems with the facts. I was at least as disturbed by the implicit racism. For instance it portrayed the Saudis as vile connivers, in a manner reminiscent of 19th century racial propaganda. [N.B. I agree we should trust the Saudi government less, but this is not the point.] Even worse was the segment on the “Coalition of the Willing”; Costa Ricans for instance are shown as a primitive and laughable people who work with oxen.

Most of all the film shows an overall contempt for humanity. The American poor, supposedly the object of Moore’s concern, come across as stupid, inarticulate, and easily duped. The only idyllic paradise we ever see is Saddam Hussein’s Iraq, where all appears beautiful.

It is a sad day in Cannes and in the United States when a movie of this kind commands so much attention. There are many important and intelligent critiques of the foreign policy of the Bush Administration, but this is not one of them. On top of everything else, the film was outright boring, especially during the second half.

Movie downloading on the rise

Illegal downloading is not going away. And movie downloading could soon be a bigger issue than music downloading:

Films and other files larger than 100MB are becoming the most requested downloads on networks around the world, said UK net analysts CacheLogic….

It estimates that at least 10 million people are logged on to a peer-to-peer (P2P) network at any time.

“Video has overtaken music,” CacheLogic founder and chief technology officer Andrew Parker told BBC News Online.

The firm has come up with its picture of file-sharing by inspecting activity deep in the network rather than just at the ports.

P2P is the largest consumer of data on ISP’s networks, significantly outweighing web traffic and every year costing an estimated £332 million globally, according to CacheLogic. [TC: This is a figure you don’t usually hear, though its calculation remains obscure.]

In the sphere of music, traditionally assumed to account for the vast majority of file-sharing, it is no longer about the big guns such as Kazaa, which has declined in popularity since being targeted by the RIAA (Recording Industry Association of America).

File-swappers have moved their attention to other peer-to-peer software, such as Bittorrent.

While the FastTrack network (which carries Kazaa ) still accounts for 24% of all P2P traffic, the lesser known Bittorrent and eDonkey together account for 72% of file-sharing, according to CacheLogic’s report…

On the release of one major Hollywood blockbuster, 30% of the P2P traffic at one ISP came from a single 600MB file.

Here is the full story. Here is (sketchy) evidence that movie downloading leads to fewer theater visits. South Koreans seem to have a special propensity to download movies.

That all being said, downloading has not been so bad for the music industry. Sales are up, read this too. What is the biggest winner? Country music. Concert revenues, supposedly the future of the music industry (“give music away for free and then tour”), are on the downslide.

My take: DVDs are currently cinematic goldmines, read here too. This won’t last forever, and part of the “rent exhaustion” will include additional movie downloads, especially from low income viewers. Hollywood will end up back in a normally profitable state of affairs. I’m all for copyright enforcement, but current violations are not (yet?) close to a critical point.

Addendum: Legal music downloads are shifting the balance toward classical music.

How to stop an asteroid

A mission to smash into a space rock to deflect it and study its structure has been given priority over five other potential asteroid projects by the European Space Agency…Scientists don’t know enough about asteroid insides to predict how one would respond to attempts to nudge it off an Earth-impact course or turn it into harmless dust. While no asteroids are currently known to be on track to hit the planet, experts say a regional catastrophe is inevitable in the very long run– over millennia. And run-ins with small asteroids that could incinerate a large city occur ever few thousand years.

It’s nice to see the Europeans supplying a global public good of this kind.

…the mission could launch in five to six years.

Don Quijote [the project’s name, probably not a political winner] is similar to NASA’s Deep Impact mission, which is slated to fling a small probe at a comet on July 4, 2005.

Here is the full story. Here is Alex’s earlier post on asteroid deflection as a public good. And the ever-insightful Randall Parker offers further commentary.

Obesity now an illness

Medicare now considers obesity to be an illness. In other words, Jenny Craig could soon be receiving government funds to treat obese patients. Medicare and Medicaid are already busting the fiscal scales and with nearly 30 percent of Americans already obese and some 60 percent overweight this now adds another burden to the system.

More on the economics of obesity here and here. A short review of the economics of obesity written by myself can be found here.

Addendum: Thanks to Daniel Akst for adding more weight to my discussion.

Fishy fraud?

While learning in a course how to extract, amplify and sequence the genetic material known as DNA, University of North Carolina at Chapel Hill graduate students got a big surprise. So did their marine science professors.

In violation of federal law, more than 75 percent of fish tested and sold as tasty red snapper in stores in eight states were other species. How much of the mislabeling was unintentional or fraud is unknown, said Dr. Peter B. Marko, assistant professor of marine sciences at UNC’s College of Arts and Sciences…Our work has a margin of error of 17 percent, meaning that between 60 percent and 94 percent of fish sold as red snapper in the United States are mislabeled,” Marko said.

Here is the full story. It is unknown how much of the mislabeling is fraud and how much is human error. They tested 22 fish, albeit from a few different states. Furthermore it is commonly known, however, that what is called “scallops” is often generated from the wing of a skate ray, using a cookie cutter. That is probably not human error.

How much should we, as economists, worry about “mistakes” of this kind? After all, I’ve bought “snapper” many times, and never been disappointed, at least not relative to expectations. The real problem comes when some customers want higher quality fish, or “real snapper,” as opposed to “snapper as we have grown to know it.” Perhaps those customers are willing to pay more, but they simply cannot be sure they are getting what they want. So they don’t go buying at all.

Do you know anyone who is searching around for higher-priced kinds of fish? I don’t, although this may reflect my lack of a home in Aspen. I was happy to buy a pound of catfish [or was it?] for $7.99 this afternoon. But if anyone is suffering from this fraud, she probably earns much more than I do.

Many fraud problems have this structure. Yes, you get screwed over but the price falls too. Costs arise when everyone substitutes into lower quality. Is your auto mechanic cheating you? Well, wait a long time before visiting him — then you know there is something wrong with your car. In the meantime, some cars will break down, thus the costs of fraud. But in this case? In the meantime, some wealthy people will go without real snapper, suffering with the indignity of having to eat instead “snapper as we know it.”

Addendum: I’m still trying to figure out what “scrod” is; no dirty rejoinders please.

The shape of song

This is pretty cool: The Shape of Song.

The diagrams in The Shape of Song display musical form as a sequence of translucent arches. Each arch connects two repeated, identical passages of a composition. By using repeated passages as signposts, the diagram illustrates the deep structure of the composition.

You can select a song from the list and view its shape — or upload your own MIDI file. The shape below is, of course, one of the tracks from Pachelbel’s Canon.

From J-Walk Blog.