Month: January 2007

Menzie Chinn’s daring claim

We evaluate whether the Renminbi (RMB) is misaligned, relying upon conventional statistical methods of inference.  A framework built around the relationship between relative price and relative output levels is used.  We find that, once sampling uncertainty and serial correlation are accounted for, there is little statistical evidence that the RMB is undervalued.  The result is robust to various choices of country samples and sample periods, as well as to the inclusion of control variables.

Here is the paper

My take: Even I don’t go quite that far.  The authors attach more weight to purchasing power parity than I would, and not enough weight to what I call the "newspaper protestations" of investors and capital market analysts, who all seem to want into China.  Nonetheless this paper has real arguments and real numbers.  I see the value of the Chinese currency as vulnerable over time, and this piece is a useful corrective to the many exaggerated claims made on the other side of the debate.

How to lose weight: don’t eat fruit

Michael Pollan has a somewhat different take:

I would submit that the ideology of nutritionism deserves as much of
the blame as the carbohydrates themselves do – that and human nature.  By framing dietary advice in terms of good and bad nutrients, and by
burying the recommendation that we should eat less of any particular
food, it was easy for the take-home message of the 1977 and 1982
dietary guidelines to be simplified as follows: Eat more low-fat foods. 
And that is what we did.  We’re always happy to receive a dispensation
to eat more of something (with the possible exception of oat bran), and
one of the things nutritionism reliably gives us is some such
dispensation: low-fat cookies then, low-carb beer now.  It’s hard to
imagine the low-fat craze taking off as it did if McGovern’s original
food-based recommendations had stood: eat fewer meat and dairy products.

Many people eat healthy foods to assuage their consciences, and then they proceed to eat bad foods to satisfy their cravings.  Start by boycotting the healthy stuff that doesn’t do you much good, like fruit, and you’ll munch on fewer pastries.  You will feel the need for more conscience in your dietary portfolio, and maybe you’ll cut meat, dairy, and processed foods, which is what you should be doing.  Do keep on eating those plants, though.

Gambling markets in everything?

Colonial Downs, which offers betting on horse races at 10 sites across
Virginia, is pushing for changes in state law so that it can offer a
new form of gambling, called historical racing, on which people wager
on horse races that have already taken place
[emphasis added].

Sounds stupid, no?  On closer examination, the bets have the logical structure of otherwise-illegal slot machines:

In historical gambling, which is also called instant gaming,
customers would put as little as a nickel and as much as $5 into a
video terminal that resembles a slot machine.  The terminal randomly
selects a race from an archive of at least 10,000 previous horses races
from tracks around the country.  Customers review a graphic showing the
odds and statistics for each horse before deciding which one to bet on.

race appears on the monitor.  If the chosen horse wins, the patron will
receive a payout based on the odds, how much was bet and that day’s

Markets in everything, lunar edition

Israelis own 10 percent of the privately owned
area on the moon, according to Tom Wegner, a spokesman for Crazyshop, a
company that sells plots of moon land to private individuals in Israel.

About 10,000 Israelis have purchased moon property since it
became available in 2000.  Of the 10 million acres sold worldwide, 1
million are owned by residents of Israel, Wegner said Wednesday.

Here is more, those who read Hebrew can buy some moon here.  I don’t understand the legality of these claims but I hope the price is appropriately low.  The pointer is from Natasha, the Natasha.

Are Americans saving too little for retirement?

Maybe not, here is an interesting article:

Mr. Scholz said he and his co-authors of a study, “Are Americans
Saving ‘Optimally’ for Retirement?” found oversaving across all
economic and education levels and most ethnic or racial groups as well.
(It found that Hispanics tended to save less.)  Those who were not
saving enough were usually missing their target by only a small amount.

The one exception to this optimism involves people who enter
retirement single, either because their spouse died early, they
divorced, or they never married.  The studies found this group did not
save enough…

The starting point for most retirement plans is the so-called
replacement rate.  It says an American needs an annual income in
retirement equal to 75 percent to 86 percent of what he or she earned
in the final year of employment.  Someone making $100,000 would
typically plan for about $85,000 a year in retirement.

…Mr. Kotlikoff’s calculations showed that Fidelity’s online calculators
typically set the target of assets needed to cover spending in
retirement 36.4 percent too high.  Vanguard’s was 53.1 percent too high. 
A calculator offered by TIAA-CREF, one of the largest managers of
retirement savings, was 78 higher than his calculation.

Those very same financial planners earn money only to the extent you save.  Here is one previous post on savings.  Here is my post on how to spend less money.  Here is my post suggesting most Americans are saving enough.  Read them all, if you haven’t already.

The Essential Norman Mailer

It is easy to hate his self-important puffery, but Norman Mailer remains one of America’s best writers.  His books include:

1. The Naked and the Dead – Outdated, but still full of powerful writing, and lacking many of the later objectionable mannerisms.

2. Advertisements for Myself – A collection of journalism, a mixed bag, but the peaks are high.

3. Armies of the Night – About the 1968 Chicago Convention, I’ve never read it but it gets consistent raves.

4. Of a Fire on the Moon – The story of America’s space program, and one of the best non-fiction books period.  As a writer, one of the books I most envy.

5. The Executioner’s Song – The story of Gary Gilmore, the first half is incredible — a candidate for "The Great American Novel" — although the second half meanders.

5. Oswald’s Tale: An American Mystery – I usually hate historical fiction but this is gripping.

6. Harlot’s Ghost – His best book, 1168 pages of panache and joy.  One of the most underrated and underread of the important American novels. 

The thing is, he has many other books too.  His new The Castle in the Forest, a psychological autobiography of the young Hitler, is better than his bad books but it does not compare to the books on this list.

Burning Annie

A loyal MR reader mailed me a copy of his movie, Burning Annie.  A depressed college guy fails in love and lust because he obsesses over the pessimistic Woody Allen movie Annie Hall.  (You can put it in your Netflix queue, and it plays in NYC 2/7, here are reviews).  He refuses to tell bed-ready, nubile young women that he loves them, or even likes them, because he is unwilling to make himself vulnerable and open to rejection.  I wonder how much truth-telling stems from this motive. 

What are the best novels about politics?

Queried here, I will simplify and make it books, period, but restrict it to fiction, not counting philosophy.  My list of five:

1. Shakespeare’s Henriad, a no-brainer at #1, if you count it as more than one book it still should take up as many slots as it needs.  Psychology is primary and stands above politics, and libertinism is by no means unrelated to power.

2. Jonathan Swift, Gulliver’s Travels, vanity, pride, and self-deception are the keys to understanding political behavior, plus Swift shows an understanding of "the rules of the game."

3. Montesquieu, Persian Letters, yikes, have you ever seen that Monty Python skit "Summarize Proust"?

4. Sophocles, Antigone, the claims of the family vs. the claims of the state continue to plague Iraq and many other places.

5. Homer’s Odyssey and Iliad, the former is not just a good tale but also a profound comparative study of regimes, the latter is the brutal truths of war.

Interestingly none of these are proper novels.  I read Kafka’s The Trial as more about theology than worldly affairs.  As for politics as a profession, the source from The Economist recommends "Primary Colors", C.P. Snow’s "The Corridors of Power", and "All the King’s Men".

It is less fruitful and less fun to guess at the best novels about business and economics, perhaps because the relevant truths seem banal in a fictional context.

The demerits of RSS

Is RSS going mainstream?

I’ve had my RA set up this technology for me but I still don’t appreciate it or even use it.  First, I like the look of individual blog pages.  More importantly, reading blogs for me is a matter of mood.  Right now I feel like reading, say Jacqueline Passey rather than EconBrowser, or vice versa, and I don’t want all the new posts thrust in front of my nose at the same time.  I also fear that ongoing use of RSS would lead to reading inflation; I would add new blogs to my feed because it is easy to do so, but encounter the intransitivity of indifference.  I would end up overloaded.

My current reading method "by hand" takes more time, but hey reading blogs is fun and it should stay fun at the margin.  Who wants to be satiated in liquidity?  My current method also brings more discipline.  Do you all have thoughts on this matter?

Onion or not Onion?

Death Row
inmates say the three-drug cocktail used in lethal injections have
not been approved by the Food and Drug Administration for executions and want a
federal judge to issue an injunction to stop the state from using the drugs
until it complies with federal drug laws.

According to sources at the Allstate Insurance Company, CIA
Director Michael Hayden purchased nuclear-attack insurance Wednesday, paying a
$100,000 monthly premium for his homes in suburban Washington, Pittsburgh, and
near Cheyenne Mountain, CO.

Thanks to Monique van Hoek and Daniel Rothschild for pointers.

Bypassing computers to speak with a human being

Interrupt. Press 0 (or 0# or #0 or 0* or *0) repeatedly, sometimes quickly. Unfortunately, the same keystroke does not always work for each company. Many IVRs will connect to a human after a few "invalid entries," although some IVRs will hang up. 

Talk. Say "get human" (or "agent" or "representative") or raise your voice, – or even just mumble. The IVR might connect you to a human being after one of these key or unknown phrases. 

Just hold, pretending that you have only an old rotary phone. 

Connect to account collections or sales or account cancellation. These groups always seem to answer quickly. When you reach a real live person, immediately ask for the representative’s name and rep number. This way, the rep knows that you are writing it down and is thus are more likely to help you. Then ask the rep to transfer you to the department you need. Sometimes you’ll be put ahead of the queue, but at other times, you will be sent to the end. In that case, you’re back where you started. 

Make a toll call. For service on credit cards, if the expected wait time is too long, hangup and try to call back on the company’s non-toll-free number, as these numbers often have shorter queues.

I’ve done best with number four.  "Small steps toward a much better world," as they say.  The pointer is from Natasha.