Month: December 2005

Buenos Aires bleg

by  Tyler Cowen in

Not for barbecue, but rather Christmas vacation.  Advice and suggestions about all facets of the place are welcome, leave them in the comments.  Yes I have the relevant guidebooks, but during my previous visit they were not much use for this splendid city, which lacks major sights.

By the way, many readers ask me what is "bleg" is.  This neologism combines the ideas of "blog" and "beg," the latter referring to a plea for assistance.

Has there been a free trade breakthrough?

by  Tyler Cowen in

We at MR are reluctant to recycle posts from the past, but I stand by this previous analysis about WTO agreements on agricultural subsidies.  One excerpt:

Many agricultural interventions keep world prices up, not down, by
preventing the reallocation of farming to its most productive
geographic venues. Nonetheless it is not obvious that the very poor
countries would be big winners in any competitive reshuffling of
sectoral specializations. In fact we might expect technology to make
agriculture increasingly high-tech. We are then back to the case where
export subsidies hurt taxpayers in rich countries but help consumers in
poor countries.

Also keep in mind that many poor countries already enjoy free
bilateral access to EU markets for many agricultural commodities, with
rice, sugar, and bananas being prominent exceptions. So if
liberalization causes food prices in Europe to fall, agricultural
exporters in the poor countries may again be worse off.

Addendum: Today’s NYT has an excellent article on the same.

How Google changes information markets

by  Tyler Cowen in

The underappreciated David Zetland loves Google but sees two negative externalities:

One externality is a reduction in community bonds between individuals who consume more commodified knowledge and less common knowledge. The second externality is a reduction in the creation of new knowledge when Google delivers others’ presentations too quickly–removing the Aha! moment when composing a known concept generates a completely new one. To not be evil, Google should act to offset these externalities. I suggest solutions to build community bonds and increase innovation.

Here is the paper.  I too love Google, but I see the negative externalities differently.  My main worry is that we learn more about topics with readily imagined keywords, and we neglect hard-to-define abstract concepts.  We are headed toward a culture of facts and small bites of information, and may neglect the sort of judgmental wisdom found in, say, John Stuart Mill.  I call this kind of knowledge "Factor X."  In relative terms, Factor X is becoming more difficult to disseminate; whether it is declining in absolute terms is harder to say.

David’s philosophy of travel offers some Factor X.  An excerpt:

I wasn’t sick very often. Someone asked me what I learned in five
years. I learned that parents love their children. The rest of my experience was
about coping with me, what I wanted, what I couldn’t get and why that hardly
mattered.

If you wish to offer an alternative account of the knowledge biases in Google, comments are open.

What were the most blogged about books in 2005?

by  Tyler Cowen in

Here is a New York Times list, no permalink yet.  The data are drawn from an automated survey of the top 5000 blogs.  Freakonomics, Harry Potter, Blink, and The World is Flat lead the list.  Jared Diamond has two in the top ten.  Surowiecki’s Wisdom of Crowds is #12.  The first work of fiction is The da Vinci Code at #10.  Orwell and Narnia are not far behind.  I conclude, tentatively, that the blogosphere is increasing the influence of non-fiction books, relative to fiction.

Addendum: Many of you wrote in to suggest that Harry Potter, number two on the list, is a work of fiction.  Spending some time with Wikipedia confirmed that this view is probably correct.  My apologies for the earlier mistake.

What is currency good for?

by  Tyler Cowen in

Think of having a fun dinner with friends at a nice restaurant, and
then hand over to the waiter a 200-Francs bill representing the AIDS
virus.

This is on track to happen in Switzerland, although the central bank still has veto rights.  Read more here, plus there are pictures.  Swiss currency has long been my favorite, with the Euler bill holding pride of place.  Here are other bills with physicists and mathematicians.

The more general question is what images on currency should be used for.  I see a few options:

1. Prettiness.  Even better would be increasing prettiness.  If the demand for money increases over time, we may approximate Milton Friedman’s optimum quantity of money.

2. Boosting patriotic feeling and national unity.

3. Reminding people of unpleasant truths; perhaps this is the motivation behind the use of the AIDS virus.  How many lives would this save, and is this reason enough to do it?  Are you supposed to think of AIDS when you pull out bills to pay your Swiss male prostitute?  Should Indonesia try dead chickens?

4. Artistic merit.  Gilbert Stuart was in fact a very good painter, even if most people do not appreciate him.

5. Supplying images which are sold at P > MC or otherwise restricted, thereby moving us closer to an optimum.  Any examples here?  Actresses who did nude shots only in the early parts of their careers?

6. Signaling the nature of your national character to foreigners.  This helps them decide where to migrate, or perhaps deters them from attacking your country.

7. Political advertising for current candidates.  I recall reading that Hitler was on every German stamp in the late 1930s.

8. Maps or something else practical.  Multiplication tables?  Translations of key words, especially if the country is multilingual?

9. Short pithy sayings by Milton Friedman, such as "Inflation is at all times and everywhere a monetary phenomenon".

10. Honoring great achievers from the past, so as to encourage more fame-seeking in the future.  (Does a little birdie on your currency mean your country pretends to be egalitarian?)

11. Appeasing unruly minorities and ethnic groups.

12. Silvio Gesell wished to stamp and tax currency so as to keep the velocity of circulation high.  A currency which falls apart would serve much the same function.

My least favorite currency is the Euro, which seems to signify virtually nothing; perhaps this is appropriate.  I miss the old French money and its inability to fit inside any kind of reasonable wallet.

Thanks to http://kottke.org for the pointer; comments are open.

Africa fact of the day

by  Tyler Cowen in

For say, a banana picker in the Central African Republic…The trade barriers at the borders of the rich world may have disappeared, but if our picker wants to sell his bananas abroad he first has to get them onto a ship bound for America or Europe.  That takes 116 days, and an incredible 38 signatures — each one an opportunity for some official to collect a bribe.

That is by Tim Harford, from today’s New York Times.  Today in fact was Tim Harford day, here is his Slate piece, which, among other things, recounts his dinner at China Star with yours truly.  Here is an account of his recent lunch with Tom Schelling.

Plus ca change…

by  Alex Tabarrok in

I had the same reaction as Pablo Halkyard at the PSD Blog to yesterday’s article in the NYTimes on Bolivian water privatization so here is his post:

Juan Ferrero’s
article in today’s New York Times discusses the poor results of water
privatization and nationalization in Bolivia, as well as the country’s
turbid future as it struggles to reform.

After
days of protests and martial law, Bechtel – the American multinational
that had increased rates when it began running the waterworks – was
forced out. As its executives fled the city, protest leaders pledged to
improve service and a surging leftist political movement in Latin
America celebrated the ouster as a major victory, to be repeated in
country after country.

Today, five years later, water is again as cheap as ever, and a
group of community leaders runs the water utility, Semapa. But half of
Cochabamba’s 600,000 people remain without water, and those who do have
service have it only intermittently – for some, as little as two hours
a day, for the fortunate, no more than 14.

The sad
part is that I have read the exact same article by Juan at least four
times in the last two years – although sometimes the names of Peru or
Ecuador are plugged in for Bolivia, or electricty/gas replaces water as
the featured sector.

See also my earlier post on some surprising benefits of water privatization.

Markets in everything

by  Tyler Cowen in

For some reason (psychoanalyze me if you wish), I find this one especially awful:

For her 17th wedding anniversay Jeanette Yarborough wanted to do something special for her husband.  In addition to planning a hotel getaway for the weekend, Ms. Yarborough paid a surgeon $5,000 to reattach her hymen, making her appear to be a virgin again.

"It’s the ultimate gift for the man who has everything," says Ms. Yarborough…

This is reported to be one of the plastic surgery industry’s fastest-growing segments, and yes that is in the United States.

The article is from the 15 December Wall Street Journal, p.A1.

Next thing you know, there will even be a market in Ron Artest.

Who pays the highest prices?

by  Tyler Cowen in

I do, it seems.  Don’t tell my suppliers, but I am a big fan of zero price search.  Mark Aguiar and Erik Hurst write:

Using scanner data and time diaries, we document how households substitute time for money through shopping and home production. We find evidence that there is substantial heterogeneity in prices paid across households for identical consumption goods in the same metro area at any given point in time. For identical goods, prices paid are highest for middleaged, rich, and large households, consistent with the hypothesis that shopping intensity is low when the cost of time is high. The data suggest that a doubling of shopping frequency lowers the price paid for a given good by approximately 10 percent. [TC: is that all????]  From this elasticity and observed shopping intensity, we impute the shopper’s opportunity cost of time, which peaks in middle age at a level roughly 40 percent higher than that of retirees [emphasis added]. Using this measure of the price of time and observed time spent in home production, we estimate the parameters of a home production function. We find an elasticity of substitution between time and market goods in home production of close to 2. Finally, we use the estimated elasticities for shopping and home production to calibrate an augmented lifecycle consumption model. The augmented model predicts the observed empirical patterns quite well. Taken together, our results highlight the danger of interpreting lifecycle expenditure without acknowledging the changing demands on time and the available margins of substituting time for money.

Here is the paper, and thanks to Bruce Bartlett for the pointer.  We also learn that people with children pay higher prices (presumably they have less time to search) and people in their forties with children pay the highest prices of all, six to eight percent more than people in their twenties or sixties.

I also take these results to imply that poor households, which shop more frequently and pay lower prices, are better off in material terms than CPI-based measures of real income will imply.  That being said, they also have less time.  Fans of the "happiness literature," which suggests more money above a certain level doesn’t make you better off, should favor less search.  After all, we are told that people enjoy time spent with friends more than either money or sex.  So does this view (not mine) suggest that we shut down discount outlets and induce more consumption of time?  Are single price monopolies better than price discrimination?  Is Marshall’s the true enemy of the middle class?

The politics of why Yao Ming is not a great player.

by  Tyler Cowen in

The crude forms of weight lifting practiced in China — squats, for example, were performed by lifting a teammate on your back [TC: how’s that for the Ricardo Effect?] — were off-limits for Yao…

…the Shanghai coaching staff in fact protected Yao as if he were a priceless Ming-dynasty vase.  During most of his first two years at Meilong, the fragile recruit only joined the vets of the junior team for the low-impact shooting and dribbling exercises.  Once the practices moved into fast-paced drills or full-contact scrimmages, coaches pulled him off the court…"…we gave him lighter workouts to slowly build up the strength of his heart and lungs."

I had not realized that Yao has been prodded, tested, measured, and virtually controlled since his childhood.  There is more:

In Yao, Wei had found the ultimate guinea pig on whom to test his theories about human growth and athletic performance…The rumpled researcher tried to accelerate the usually unhurried processes of traditional Chinese medicine…If those who helped engineer Yao’s growth were proud of the way they harnessed traditional Chinese medicine, they showed reluctance to discuss a much more sensitive issue: rumors of the use of human-growth hormones…

Wei claims to have made Yao several inches taller, while noting, perhaps correctly, that his secret concoctions "would pass any NBA drug test."

That is all from Brook Larmer’s fascinating Operation Yao Ming: The Chinese Sports Empire, American Big Business, and the Making of an NBA Superstar.  If you want to know where China is headed over the next twenty years, this book is one of the better places to start.

In a related post, Matt Yglesias made a good point:

Yao is never going to be just like Patrick Ewing. He’s taller and skinnier and more Chinese.

I have a simpler theory: being taller than 7’1" is a disadvantage on the basketball court.  My second theory is that Yao will have to retire by the time he is thirty years old.