Month: September 2006

Markets in everything: customer service edition

Stephen Dubner reports:

Now there’s a new website, still in beta, called Bringo! (a.k.a.,
which takes a different approach. Here’s how one of its founders,
Marcin Musiolik, describes the project: “Our mission is to help users
skip phone trees and connect with a real human on the customer support
phone lines at many companies throughout the U.S.  Users simply choose
the company they wish to call, and we’ll dial the company directly,
navigate their phone tree, and call them back when they are in queue
for an operator or customer service representative.”

Random rants on music and books

1. Bob Dylan’s latest has received rave reviews just about everywhere.  Who can doubt an honest effort from the elder statesman?  In reality it is little more than a repackaged version of his last two (superb) albums and thus mostly predictable and mostly boring.  By the way, it is becoming clearer — against all former odds — that he was often a horrible lyricist but he remains, even in his dotage, a remarkable vocalist.

2. I loved the first half of Samuel Beckett’s Watt, but then lost the thread of the book.  Beckett’s fiction remains underread, if only because we’ve yet to figure out just how good it is (or isn’t).  The best parts are astonishing, but at times I feel I am listening to one of those unfunny British radio comedy shows.

3. Claire Messud’s The Emperor’s Children is a novel about thirty-somethings, in a pre- and post 9-11 NYC, transitioning (or not) into adulthood.  That is a recipe for literary trouble.  But I bought it anyway, trusting Meghan O’Rourke, and yes it deserves the sterling reviews.  I kept expecting Megan McArdle to show up as a character and give them all a good talking-to about microeconomics, which is exactly what the characters need.

4. The best world music release of the last year or so remains Amadou and Mariam, Dimanche a Bamako.  It is also the best pop album of the last year.  The two Mali musicmakers are blind and also married to each other.  I don’t see how anyone could help but love this music.  After a year from its purchase, I’m still listening to it.

5. Steven Slivinki’s Buck Wild: How Republicans Broke the Bank and Became the Party of Big Government is exactly what the subtitle suggests.  How did that happen?  One factor is that the Republicans found Democratic rule too horrible a prospect to bear and they became more populist.  Let’s hope the Democrats don’t make a comparable mistake.

6. Stephen Miller’s Conversation: The History of a Declining Art.  I loved the title, hated the subtitle.  Much of the book, which considers the preconditions of good conversation, is fascinating and, despite its popular level, goes beyond the muddled arguments of Habermas.  It collapses when it argues that the quality of conversation is declining in the modern world.  The evidence consists solely of examples of bad modern conversations.


Brad DeLong writes:

My point was that the rich are spiteful–that they enjoy the envy of the poor.

Putting aside whether the poor are more spiteful toward each other (which is in fact my view), at the relevant margin the spiteful rich mainly enjoy the envy of the other rich, not the envy of the poor.  A rich person who sought or enjoyed the envy of the poor would be considered a loser by the other rich.  And having that reputation is a terrible fate.  The rich have a strong incentive to train themselves out of such "low level" forms of spite, which are viewed as no better than naming your kid "Jed" or buying a velvet painting of Elvis.

Brad follows up:

Surely public policy should weigh the spite-generated utility the rich
gain from their conspicuous consumption as worth less than nothing,
shouldn’t it?

In my view the "spite game" of the rich is not so grim.  It is mostly positive-sum, if only because in the rich-on-rich competition, each rich person self-deceives, defines a new dimension of quality, and calls himself the winner.  This process is sometimes sad, but I don’t see an ethical reason to downgrade those pleasures.  Am I in fact so different?  I enjoy being part of (what I think is) the best "struggling to redefine libertarianism, economics survey, scattered cultural recommendations, occasional dating advice" blog out there.  It doesn’t much bother me that Leibniz or for that matter Joe Stiglitz was/is much smarter than I am.

I view status competition as closer to a Tiebout hypothesis of quasi-efficient sorting; perhaps Brad views it as a long and potent hammer, deliberately wielded so as to crash into the front door of homes in Camden.

Many of the poor resent the successful Korean grocer more than they resent Paris Hilton.  Yet I wouldn’t want to tax the grocer for that reason, even if he does sometimes gloat.  Those "formerly poor who are making it" are often the people I least want to tax (in fact both Brad and I wish to subsidize them through EITC), yet they are often the most envied. 

The bottom line: I’m not denying the standard efficiency-combined-with-Willie-Sutton reasons for taxing the rich, but I would not add spiteful preferences to those rationales.

Addendum: Here is Greg Mankiw’s response to Brad.

Making Globalization Work, or Joe Stiglitz watch, part II

Joe Stiglitz’s new book claims the main problem is that "we" have not "managed" globalization very well.  It has benefited mainly the rich and not the poor.  Funny me, I thought the main problems were tyranny, dictators, corruption, and low-quality and weak governments.

On p.144 Stiglitz seems to defend Putin’s jailing of Khodorovsky; after all it did bring money back to the Russian people.

Here is one snitty but not altogether inappropriate review.  Here is a New York Times review.

Ethnic goes Exurban

Here is my article from today’s Washington Post, on the history and development of ethnic dining in the DC area.  Excerpt:

This new mobility is weakening the whole notion of the ethnic
neighborhood. Forget the old Chinatown paradigm: Diffusion is the new
model.  As a result, ethnic restaurants are more like scattered
outposts, drawing from a wide radius.  As [Victor] Serrano points out, "Our
competition is not right next door. We compete with . . . restaurants
five or 10 miles away."

…Korean food…remains largely the province of Korean patrons.  Most Westerners don’t go beyond bul gogi (broiled beef) or perhaps bibim bap
(rice bowl with egg and vegetables).  The cuisine tastes harsh to the
uninitiated, with its abundant garlic and unusual seafood delicacies.
This also explains why Korean restaurants remain so tightly clustered
near Korean communities (most of the best are in Annandale) and why
just about every Korean restaurant is good.  Unlike Chinese restaurants,
there is little danger of Koreans taking the Americanized
beef-with-broccoli route.

Herndon, western Fairfax, and Chantilly have never been better for food.  Adams-Morgan, Dupont Circle, and Georgetown are not quite deserts, but I can’t imagine having to eat there all the time. 

Tax the Envious

Tyler, Greg and Brad all forget the Coase theorem – all externalities are dual.  The solution to envy is not to tax the rich but to tax the envious.  To be envied is unpleasant.  People want to be admired but not envied.  To be envied is one step from being hated.  (Consider how much crime is motivated by envy.)  It’s envy which imposes an externality on the rich.  Make the envious pay for their ugly preferences.

Surprising analysis?  Not really – should gays be taxed because they make some people uncomfortable?  Hell no.  Tax the bigots for making gays feel unwelcome. 

Envy pollution

Greg Mankiw considers Brad DeLong’s view that the presence of the rich makes the poor worse off.  Jane Galt discusses Cindy Crawford.  I will add the following:

1. Often the rich make us feel we are worse off when we fill out questionnaires, but the quality of experienced life doesn’t go down much from their existence.

2. Consider food.  If I hear of other people visiting El Bulli, I might downgrade the quality of my own eating life on a survey.  But I don’t enjoy my Sichuan Chili Chicken or my Silpancho any less.

3. "…its a great testament to economic progess that, walking round the city
center these days, say, it’s very hard to differentiate the rich and the
poor in the first instance. In this sense, things have indeed become a
lot more egalitarian."  That is from one of Greg’s commentators.

4. Envy tends to be local.  Few Americans resent Bill Gates or Warren Buffett.  The real definition of a wealthy man is one who earns more than his wife’s sister’s husband.

5. Greg Mankiw suggests that perhaps we segregate the rich into places like Nantucket and Aspen, so as to minimize the envy of the poor.  That won’t get at the root of the problem, as expressed in #4. 

What we need to do is tax gatherings of extended family and other like-minded people.

What makes individuals take up science?

In a nutshell, mentors:

The most common response to the question ‘What inspired you to take up science?’ – given by respondents including Dr Colin Berry, Peter Cochrane, Jorge Mayer, Simon Singh and Christopher Llewellyn Smith – is that they were inspired by teachers or mentors. Typical of such reponses are Alom Shaha‘s description of ‘gifted teachers, whose enthusiasm for their subjects was relentless and infectious’, and Michael Wilson‘s account of ‘inspirational and rigorous teachers in high school, who engendered an insatiable intellectual hunger for factual knowledge, and who encouraged observation and deductive thinking’.

Survey respondents often point to one or two particular individuals who made a lasting impact. Josef Penninger, for instance, was inspired by ‘a great mentor and teacher’, and argues that ‘most of us became what we became because of one dominating person, who moved us into a certain direction’. Frances Downey, James Enstrom, Pat Norris, John Zarnecki and Anton Zeilinger describe inspirational mathematics and physics teachers, Thomas Addiscott and Eliot Forster discuss inspirational chemistry teachers, and Kenneth Freeman had ‘a very capable and very overworked teacher’ who taught him mathematics, physics and chemistry. Meanwhile, Professor Sir Colin Berry, Keith Davies and William Ledger found inspiration in their biology teachers.

Here is much more, via  Here is the answer of Sophie Petit-Zeman: falling in love with the teacher.

Joe Stiglitz watch

Let me start with the concessions.  Joe Stiglitz is one of the most brilliant economic theorists of the last thirty years.  The current Bolivian distribution of wealth is drastically unfair and is a legacy of prior and indeed ongoing theft and oppression.  Large enough resource confiscations, as occurred when the Saudis nationalized Western oil interests, can make a people better off. 

Now let’s move to the train wreck, quoted from The New York Times Book Review, written by Alma Guillermoprieto:

Stiglitz and his wife first visited Bolivia four years ago, and returned in May. "Morales’s election was such a big thing," he said in a recent phone conversation, "that we decided to make the effort to go down there and take a look."  He spent one day of the visit listening to Powerpoint presentations by members of Morales’s economic team, most of whom are academics who at some point have studied abroad.  He found his interlocutors thoughtful and impressive, he said.

In May, Evo Morales decreed the nationalization of the energy industry…In July, Stiglitz, who has written about energy resources and how they are used, did not seem to find the policy startling or irrational, even though it has enraged the representatives of the companies that have invested in Bolivia’s tempting deposits of natural gas.

It should be noted that the Bolivians were receiving only 18 percent royalties on these resources, and that figure was calculated on a base lower than market prices might imply, given that the country is landlocked and does not receive market prices for its gas.  So yes it is unfair.

But under the new regime, the gas yields only $820 milliion in revenue a year.  That is over $100 a person a year.  Lots of money for a poor Bolivian, but hardly enough to retire on or hardly enough to then stagnate.  And Bolivia wrecks its credibility with foreign investors.  And a renegotiation of the deal with the private companies would have been possible.  And most state energy companies are very badly run.  And energy and indeed natural gas shortages are already popping up in Bolivia.  And many people in the wealthier, eastern part of the country (e.g., Santa Cruz) opposed nationalization; they are keen to do business with Brazil.  And few poor countries — dare I say any? — have done well going down the route of economic populism.  And if we are going to be populist, is anyone — read: Stiglitz — calling for that money to go directly to Bolivia’s citizens?  That includes the indigenous ones who live on the barren altiplano and even now don’t control the government and probably never will.  Yup, those people.  (I might add that I have such a hat, which I cherish, although Natasha asks I do not wear it in the United States.)

Addendum: Here is Brad DeLong on Paul Krugman’s economic populism: "…when I read Paul’s call for "smart, bold populism," I am reminded of earlier calls a couple of decades ago by Milton Friedman, Marty Feldstein, and their ilk for smart, bold conservatism or smart, bold libertarianism.  But they did not get what they ordered: on the economic policy front the policies of Reagan and of Bush II have been a horrible botch.  What populist policies that we can think of would be smart?  And how can we make our high politicians allergic to populist policies that are stupid?"

China clinic of the day

The first clinic for internet addiction opened up in China last year, but now internet-addicted teens can take advantage of an improved facility, the Shanghai Sunshine Community Youth Affairs Center, an actual halfway house set up to soothe and detox the internet-riddled souls of young Chinese addicts.

According to the BBC, "internet addiction is reaching epidemic proportions in China". Internet addiction, like most of the so-called addictions, is usually diagnosed as a compulsion which requires intervention.

That is from Alina Stefanescu.

The new New Republic blog

Catch it here, with Cass Sunstein, Steven Pinker, Alan Wolfe, and other luminaries.  But how frequently, and what about the free-rider problem?  Can it work to pay them by the post, and who has really the chance to establish a voice?  Of course I didn’t think the Huffington Post blog or the Euro would work either, but I did forecast the downfall of "Redeem Team" USA, which just lost a basketball game to Greece.

Trudie on long-distance relationships

"Your long-distance relationship faces two main enemies, you and the other person. 

The first danger is that you deliberately seek someone far away because he is inaccessible and thus less emotionally threatening.  If that is the case, you don’t really want to be closer.  Go for it.  Or don’t.  More precisely, you will do both at the same time; that is what preference intransitivity means.

If you had opted for someone geographically closer, you would be more distant in some other way, in Ramsey rule-like fashion.  Until you have conquered your fears, geographic distance is probably less emotionally abusive on you and the other person than the other kinds of distance you might opt for.  So go for it.  The "longing" will feel sad but it is also beautiful and bittersweet and will lead to lovely poems; more importantly it is better for social welfare than directly torturing some poor guy next door.

Under the cheerier scenario, you do actually think the distant person is your best bet and you are not seeking distance per se.

But then you must confront the Alchian and Allen Theorem.  The higher the fixed cost, the "higher quality" a trip you will both tend to seek.  (New readers: take any set of relative prices and add a fixed cost to each; notice that the ratio, in relative terms, shifts in favor of the bigger, more costly, or higher quality item.)  More concretely, who would fly across the country for a mere kiss on the cheek?

But moving too fast is dangerous and ill-advised.  And in the longer run you will each "expect too much" from each visit.  Remember the old question: "Are We Having Fun Now?"  The quest for continual high-quality excitement is not conducive to casual down time together, which is the glue which binds relationships together in the longer run.  The Alchian and Allen Theorem is a potent enemy of the all-important "low expectations" and that alone is one good reason to keep transportation costs low in your life.

The solution is simple conceptually but difficult to implement.  Do something else with part of your trip to the west (east) coast.  Lower expectations for the visit.  Meet another friend too, or set up some business, or give a paper at a scintillating academic conference.  Yes you will have less time with your potential beloved, but the remaining time will get you further toward where you want to be.  How much time does one need to fall in love anyway?

Affectionately Yours, Trudie"