Month: September 2006

Unknown but incredibly important inventors

by  Tyler Cowen in

Shane Greenstein asks me for examples of:

…unknown inventors whose work greatly benefited society and who deserve more recognition.  Ask for nominations! 

…And I will start with nominating Robert Noyce and Jack Kilby, the inventors of the microchip.  I do not know a school boy who has ever heard of them, but everyone uses their invention.

Comments are, of course, open.  How about Fred Soper?

Should we abolish the IMF?

by  Tyler Cowen in

Here is Ken Rogoff on the IMF, via Asymmetrical Information.

Many critics argue that Bretton Woods has gone away and the world has no current financial crises.  What is the IMF to do?  Plus the IMF’s management of crises can be counterproductive and create moral hazard.

The primary question is what kind of recurring but temporarily patched together multilateral crisis management arrangements would replace the IMF.  The IMF would seem to be an especially good deal for the United States.  Despite being the world’s largest debtor nation, in the absence of an IMF, we would be looked upon as a global lender of last resort. 

The presence of an IMF allows us to trade with other nations, and sometimes bully them around.  But when their financial claims come we can calmly tell them to go take a place in line; furthermore other countries will help pick up the tab or help make "conditionality" look less imperialistic.  Given that the US has a role as global policeman in any case, the IMF shifts the "terms of trade" of that role in our favor.  Do note that many IMF critics would prefer to revise this entire arrangement, but simply abolishing the IMF, taken alone, would not bring large gains even under a libertarian view of the world.

A question: given that much of the funds are raised on
private capital markets, how much does the IMF cost (in the crude sense
of the gross subsidy) each year?

By the way, I’ll go out on a limb and predict the next financial crisis will come in an Eastern European nation which wanted to join the Eurozone but couldn’t quite make it.  Once this failure is realized capital will flow out rapidly.

On the IMF, here is commentary from The Economist.

Addendum: Here is an IMF piece on Robert Mundell, via Greg Mankiw.

Penny Politics

by  Alex Tabarrok in

Eliminating the penny is about the most straightforward, obviously beneficial public policy that one can imagine.  The idea that eliminating the penny would increase inflation is a joke.  (Note also that although many products are priced at _.99 most purchases are of more than one product so many bills are of the form _.01 or _.02 so many bills will be rounded down even when prices are rounded up.)

But politics infects everything even the most technocratic of decisions.  The main lobbying group in favor of the penny, for example, is Americans for Common Cents, which is funded by the zinc industry (zinc being the main ingredient in pennies).  Thanks to AfCC we will have at least four new pennies in 2009 to honor that famous penny pincher Abraham Lincoln.

On the opposite side is representative Jim Kolbe who Sebastian Mallaby calls an Olympian statesman for his opposition to the special interests and dedication to efficiency.  Well maybe, but it’s no accident that Kolbe is from Arizona the dominant producer of copper the main ingredient in… you guessed it… the nickel.

Hat tip to Roger Congleton.

Henry Farrell reviews my new book

by  Tyler Cowen in

He is very kind.  Why don’t I excerpt the part that praises me most?:

There are two, quite different libertarian styles of writing about culture that I enjoy.  One is the pop-culture variety, which uses libertarian precepts as the framework for a certain kind of flip, contrarian analysis.  This can be quite entertaining, but it usually doesn’t bear up well to close examination.  Libertarian nostrums all too frequently substitute for actual thought (granted, much leftist opinionating on culture has similar problems).  The second style is that of Tyler Cowen.  Cowen writes in an entertaining and straightforward manner.  He’s enthusiastic and knowledgeable about both high and low culture.  But the fun of his arguments is that they’re serious, interesting, and properly thought through.  If they’re hard to fit into conventional frameworks of debate, they aren’t self-consciously contrarian either.  Instead, they lead in their own directions, and Cowen isn’t afraid to follow them, even if they lead to unexpected destinations.

If you haven’t already, you can buy the Good and Plenty: The Creative Successes of American Arts Funding here.

Wal-Mart’s price muscle: cause for worry?

by  Tyler Cowen in

The highly-intelligent-but-requiring-a-good-dose-of-Don-Boudreaux Ezra Klein writes:

My guess is that Wal-Mart’s size and might is having much more profound effects on our economy through the demands and strains it places on suppliers than through their lowish wages and benefits for direct employees (although those labor standards give them a competitive advantage over chains with higher standards, and so we race to the bottom…).  So much as I want the latter to go up and unionization to rush across the land, I’m more worried that Wal-Mart’s size and status as the indispensable outlet for products, when coupled with their virtually maniacal (though fully understandable) demands for lower pricing, are pushing down wages and work conditions all throughout [sic] the land and, for that matter, the world.  Suppliers simply can’t pay better and push the marginal cost to consumers — Wal-Mart will drop them faster than you can say "Always low prices."

If our economy had more pockets of sluggish monopoly power, those highly stable and visible firms might be more unionized.  But unionization is not desirable per se.  Keep in mind, a well-functioning antitrust law raises real wages rather than lowering them.  Wal-Mart, by squeezing suppliers and lowering prices, does the same.  Wal-Mart suppliers are still selling at "price above the appropriate measure of marginal cost," albeit by less than before.  Asking for higher prices and higher monopoly profits — not as a spur to innovation, but in the hope that monopolizing suppliers will share those profits with their laborers — is a bad way to elevate the American standard of living.

I worry more when Wal-Mart acts to keep prices up. 

Prudie’s corn cob

by  Tyler Cowen in

Here is the query:

I have fallen in love with a woman I knew from childhood and ran into
again after not seeing her for 20 years.  As kids we hardly noticed each
other, but when we met again after all these years we felt an immediate
[sic] attraction.  The problem is that when I was 12 years old I did something
terrible that caused an accident that killed her father.  No one ever
found out it was me and I’ve never told anyone after all these years.  I
feel horrible about what happened, but it was a long time ago and I’ve
gotten on with my life.  But now what?  Should I tell this woman that I
caused her father’s death many years ago?  I’m afraid it would ruin our
relationship and we love each other a great deal.  The accident occurred
when I was in a cornfield at night—we were throwing corn at cars when
they drove by.  We couldn’t see the cars because we were hidden in the
field.  An ear of corn I threw went through the open car window and
struck her father in the head, causing him to lose control of the car
and crash into a tree.  I ran from the scene and was never implicated.

Prudie thinks this is a tough moral dilemma, but that the guy has to come clean for his self-respect ("You cannot build a healthy relationship on such deceit"), admitting that her lawyers give the opposite advice. 

Trudie starts from a different framework, namely that falling ln love is not entirely a spontaneous event.  It is planned by our subconscious more than we realize.  What could prevent us from falling in love with someone?  Trudie could not, for instance, fall in love with a woman Trudie knew to be a communist, even if, like the younger Yoko Ono, she were extremely smart, attractive, and loved atonal music.  Trudie also could not fall in love with a woman whose father he had killed, however "accidental" the event (what *was* he aiming the corn cob at, at what angle did it enter the window, and did he glue a rock to it?)

The simplest hypothesis, based on the near-universality of self-deception, is the following: a) the guy is a murderer, and b) he loves having the power over this girl that follows from having murdered her father and then holding this secret from her.  He feels he can reduce her to a quivering mass of jelly anytime by coming forward with the information.  He loves having that power so much that first he falls in love with her (who has he been dating in the meantime?) and then he writes into an advice columnist so as to report that power to other people, even at the risk of legally incriminating himself.  Sick, sick, sick.

If that scenario is true, if only with some positive probability, what advice should Prudie give the guy?  And under what conditions can you fall in love?  Can you trust your conscious self-reporting of what you are doing any more than the murderer who wrote  Prudie?

If only Tim Harford were here to set us straight…

I didn’t believe it at first

by  Tyler Cowen in

…we conjecture that binge drinking conveys unobserved social skills that are rewarded by employers.

Here is the full and very carefully done paper.  I’ve known for a while there is a correlation between drinking and wages, but only recently have I started thinking it might be more than a trick in the data.  The effect disappears for women, once educational attainment is taken into account.  So should you encourage your sons to drink, so as to learn rituals of social bonding, or is their binging simply a signal of sociability?  I’ll note, by the way, that I am a not very social person who also doesn’t drink much, verging on not at all.

Addendum: Andrew Gelman has much more to say on the topic.

New Jersey fact of the day

by  Tyler Cowen in

Life expectancy for an Asian female living in Bergen County, New Jersey: 91 years.

Here is the source, via Jason Kottke.  Yes, lifestyle and attitude matter.  This is one indication that the American health care system isn’t as bad as it is sometimes made out to be.

Addendum: From a different direction, here is Levitt and Dubner on paying doctors to wash their hands.

As of tomorrow, Shostakovich was born 100 years ago

by  Tyler Cowen in

The symphonies are tricky, because many of them are wonderful
live but meandering on disc.  On disc you should favor 5, 10, 14, and
15.  #4 is a breakthrough work but no longer so important.  #6-8 are
amazing in concert, with a good conductor, but otherwise a struggle.  9 is pleasant but
slight.  #11-13 are a mixed bag, worth knowing, but don’t judge him by
those or start there.  For #5 buy Bernstein, for ten buy Mitropoulous or
Mravinsky (though many versions are excellent), for #15 Jarvi or Haitink are good versions.  The closing bit of #10 is perhaps my favorite
moment in all of Shostakovich.

The String Quartets are his most convincing and most consistent works.  The Brodsky, Borodin, and Manhattan Quartets all do good versions.   

Buy the two-disc set of his Preludes and Fugues, Opus 87.  Ashkenazy is the version of choice, though I retain a fondness for the idiosyncratic jazzy take of Keith Jarrett.  This is the Shostakovich you will enjoy if the sometimes harsh textures of the orchestral works put you off.

Also buy the Op. 67 Trio for Piano, Cello, and Violin, performed by Yo-Yo Ma, Isaac Stern, and Emanuel Ax.

That’s it.

I’ve never been convinced by the opera, the film music, the concerti, the rest of the piano music, or the short jazzy pieces, though all have their defenders.

Here is some summary information.

The phantom Tyler Cowen

by  Tyler Cowen in

Here is a rough paraphrase of my words yesterday to one of my doctoral students:

"It is not I, Tyler Cowen, your doctoral advisor, who will give you the most aid on this dissertation.  It is the Phantom Tyler Cowen inside your head.  You have a model of me, a pretty good one, and you know what I will object to and what will delight me.  The Phantom Tyler Cowen objects, in your head, before the real Tyler Cowen has much of a chance.

That is why the real Tyler Cowen is sometimes so silent."

The Conquest of Nature

by  Tyler Cowen in

I had not realized how man-made and engineered the Rhine was, and how early this occurred:

This was the largest civil engineering project that had ever been undertaken in Germany.  The Rhine between Basel and Worms was shortened from 220 to 170 miles, almost a quarter of its length.  Dozens of cuts were made, more than twenty-two hundred islands removed.  Along the stretch between Basel and Strasbourg alone, well over a billion square yards of island or peninsula were excavated and 160 miles of main dikes constructed containing 6.5 million cubic yards of material.  During the 1860s the number of fascines being used was running at up to 800,000 a year.

That is from David Blackburn’s The Conquest of Nature: Water, Landscape, and the Making of Modern Germany.  This history of water engineering is not a book for all of you, but if you think you might like it, you will.

Addendum: Elsewhere on the new book front, Niall Ferguson is a splendid author, but his new The War of the World doesn’t add much.

Torture and neuroeconomics

by  Tyler Cowen in

Studying some neuroeconomics has made me even more opposed to torture than I was in the first place.  Yes I will make an exception for the ticking nuclear time bomb.  But if we are torturing a very very bad person, I don’t see the torture as satisfying justice.  The part of the brain which suffers is not the same as the part of the brain which planned the crime.  Yes neuroeconomic data are hard to interpret.  But under one view, there is a sheer production of pain which is severed, to some extent, from the individual personality of the criminal.  It is almost as if we are creating a new suffering entity which consists of little more than pure suffering.

I don’t think this is the most important argument against torture, but it is one additional consideration.  Retributive justice does not weigh on the pro-torture side of the scale as much as one might think.

Matt Yglesias surveys what the recent "torture compromise" really means.