Month: July 2006

Cold stores and high prices: The Culture Code

…I regularly hear Europeans complain that American stores are too cold in the summer.  Again, the conflict lies in the cultural schemes.  Americans like to be cool, even extremely cool.  Research has shown that the coldest stores in America tend to be the most expensive.  Since air conditioning is a necessity, we need extreme air conditioning to convey a sense of luxury.

That is from Clotaire Rapaille’s The Culture Code, a fun romp through national cultures, how the French think about seduction, why the Americans invaded Iraq, why monetary incentives work better in some cultures than others, why autistic children have trouble learning, and what makes foreigners so hard to understand.

OK, he is making all this stuff up.  Publishers Weekly referred to its:

"preposterous generalizations and overstatements, e.g., Japanese men "seem utterly incapable of courtship or wooing a woman.""

It is one of the few non-fiction books I have read this year which will stick with me.  Here is the book’s home page.

The Coase Theorem and Parties

A conversation in Carow Hall:

Can I bring anything to the party tonight?

No thanks.  I’m stopping by the store on the way home and there’s no point both of us shopping.

Ah, the Coase Theorem.

Yeah, since there are no women involved we can be efficient.

I might add that we all had a good laugh when my wife arrived at the party a little later than I bearing all kinds of gifts.  The other speaker has sworn me to secrecy but let’s just say he is not the sort of person to argue without evidence.   

What a great paper, what a blah abstract

Corruption is believed to be a major factor impeding economic development, but the importance of legal enforcement versus cultural norms in controlling corruption is poorly understood. To disentangle these two factors, we exploit a natural experiment, the stationing of thousands of diplomats from around the world in New York City. Diplomatic immunity means there was essentially zero legal enforcement of diplomatic parking violations, allowing us to examine the role of cultural norms alone. This generates a revealed preference measure of government officials’ corruption based on real-world behavior taking place in the same setting. We find strong persistence in corruption norms: diplomats from high corruption countries (based on existing survey-based indices) have significantly more parking violations, and these differences persist over time. In a second main result, officials from countries that survey evidence indicates have less favorable popular views of the United States commit significantly more parking violations, providing non-laboratory evidence on sentiment in economic decision-making. Taken together, factors other than legal enforcement appear to be important determinants of corruption.

Here is the paper.  I might have tried the following:

During a period of diplomatic parking immunity, the average Kuwaiti diplomat to the United Nations racked up 246 parking violations.  No Swedish diplomat had any parking violations.  This paper explores how that might possibly be the case.

Greg Mankiw lets out his moralist

Ten percent of Greg disapproves of gambling.  More than anything I am baffled by gambling; to me it would be as fun as paying to count pennies.  I genuinely cannot understand the adrenalin rush but I don’t enjoy driving really fast either.  If I let out my moralist (who is more than ten percent, I might add), I would disapprove of people who are usually late, people who smoke cigars in restaurants, people who play loud music late at night, and people who are not curious.  Call me a prude if you want, but might these people be, in some fundamental sense, partly evil?  Seriously. 

Reviving the Invisible Hand

That is Deepak Lal’s new book, the subtitle is The Case for Classical Liberalism in the Twenty-First Century.  I rarely call myself a classical liberal, for fear the title has become musty and for realization that the feasible set today is quite different from that faced by Cobden and Bright.  That aside, here is what I think classical liberalism should become for the 21st century.

1. The welfare state is not going away.  But it is imperative that we avoid Western  European levels of taxation through the explosion of Medicare liabilities.  Don’t forget that the United States is a — should I say the — generator of global public goods par excellence.  Going down the path of France or Sweden would mean disaster.

2. What recipes lead to both strong markets and decent governance?  The not-yet-developed countries of the world all face this problem.  Simply deregulating does not itself solve the governance problem, as we have discovered many times in the last fifteen years.  Our understanding here is backward but much is at stake.

3. We face a variety of critical issues involving decentralization: how to deal with pandemics, natural disasters, or terrorists with nuclear weapons, to name but a few.  None of these are areas for laissez-faire.  Yet for all the squawking about the need for government, most of the real solutions "on the ground" will emphasize voluntary action and the private sector.  When faced with these problems, how can we do better rather than worse?  Note the close connection between this problem and #2; for instance in Indonesia the government won’t allow transparent communication about the nature of the avian flu problem.

Overrated classical liberal ideas are privatization (sometimes useful, but it often replicates old problems in a new regulatory guise) and abolishing foreign aid.

Your take, Alex?  Other classical liberal bloggers?

For Lal’s vision, well…you have to read his book.  You can start with the book’s web page and sample chapter here.

It is also Gerard Debreu’s birthday

Remember Theory of Value, that elegant 128 pp. book which summed up general equilibrium theory?  Here is a brief bio of Debreu, courtesy of Liberty Fund.  Here is Debreu’s own autobiography.  Here is Wikipedia

I recall Debreu once saying he took his inspiration from Proust.  To what extent is time a dimension just like space in its effects on human organization?  Debreu solved for those conditions, with of course assistance from Arrow, Hurwicz, Wald, and others.

And by the way, Yana just got her bag, so I feel Debreu’s model is just a little less unrealistic than it was appearing last night.

Would I have supported the American Revolution?

These modal questions are tricky.  Which "Tyler" is doing the choosing?  (If I were an elephant, would pink be my favorite color?  Living in 1773, have I at least still read Jonathan Swift?  Would a modern teenage Thomas Jefferson have a crush on Veronica Mars?)

But think about it, wasn’t it more than a wee bit whacky?  "Let’s cut free of the British Empire, the most successful society the world had seen to date, and go it alone against the French, the Spanish, and the Indians." [TC: they all seemed more formidable at the time than subsequently]

Taxes weren’t that high, especially by modern standards.  The British got rid of slavery before we did.  Might I have concluded the revolution was a bunch of rent-seekers trying to capture the governmental surplus for themselves?

Or would I have been swept up by love of liberty and love of ideas and the desire for adventure…?

Or would I have estimated the long-run political equilibrium and tried to calculate when would be the optimal time for a break, in which case 1776 seemed just about right, so as to capture the intellectual Enlightenment at its peak…

Those guys expected a re-flowering of Periclean Athens; few of them were or would have been ready for the subsequent levels of 19th century alcoholism, partisan political bickering, or the later cult of Princess Diana.  What would I have expected?

What would James Madison expect today?  And would he find a TV show worth watching?

Revolutionary Characters

If we want to know why we can never again replicate the extraordinary generation of the founders, there is a simple answer: the growth of what we today presumably value most about American society and culture, egalitarian democracy.  In the early nineteenth century the voice of ordinary people, at least ordinary white people, began to be heard as never before in history, and they soon overwhelmed the high-minded desires and aims of the revolutionary leaders who had brought them into being.  The founders had succeeded only too well in promoting democracy and equality among ordinary people; indeed, they succeeded in preventing any duplication of themselves.

That is from Gordon Wood’s new and excellent Revolutionary Characters: What Made the Founders Different.  It is in my view the best introduction to the lives and thoughts of the Founders.

I don’t, by the way, agree with the above quotation.  The Founders were not the smartest Americans to have come down the pike.  Instead they a) were extremely wise, and b) had a unique chance to be both great and famous because they were first.  It has not exactly been a string of mediocrities since then, and of course there is more to American life besides the Presidency.

Does Lufthansa have customer service?

Lufthansa, HELP!

Poor Yana [Chernyak] is stuck in Nice, France without her luggage, which was "misplaced" somewhere in transit, apparently in Munich.  No one in Lufthansa, Europe will take calls or help her.  Lufthansa, USA passes the buck to the European offices.

The phone number given for Lufthansa, Nice — 0 826 103 334 — does not work from outside the country of France. 

Lufthansa, HELP, HELP, HELP!  Es gibt die deutsche Wertarbeit, nicht wahr?  Ist die Wirtschaftswunder schon so schnell vorbei?  Lufthansa, can you please help?  Does anyone from Lufthansa read this blog?

Zu Hilfe!  Arme Yana…