Month: March 2007
A loyal MR reader asks:
When does Italy leave the EC? What are the likely costs of doing so?
Italy won’t leave the EC anytime soon, why should they? I also don’t think Italy will leave the Eurozone. It does give them an overvalued currency, but that is only the nominal exchange rate. In the long run prices of exports can fall so the real exchange rate ends up where it should be. In other words, the problem will cure itself with the passage of time, noting that Italian wages and prices are often sticky. But everything adjusts, sooner or later. If Italy can live with the Euro today, tomorrow will be just a wee bit easier.
Leaving the Eurozone would make it very hard for Italy to borrow at good rates again. Plus the real value of their debt would rise considerably. Nope, I don’t think they will do it.
#whatever in a series of 50.
I try to avoid shopping anywhere but Whole Foods, Wegmans, Shoppers FoodWarehouse, and ethnic groceries. But several times lately I’ve stopped at food marts at gas stations. Each time I’ve noticed how much better they are than the average 7-11, most of all for selection. There are plenty of such marts, so I’m wondering why I should ever go to a 7-11 again.
Are the prices at the gas station food marts so much higher? Are my data points too few? Or is the rest of the world discovering this same truth?
1. Institutions are affected by technology perhaps even more than by ideology.
2. In 1800, the United States was a large country relative to the
transportation and communication technologies that were available at
that time. Further, it was very divided, both politically and
economically, over slavery. Thus, one does not see major national
institutions of any sort, private or public.
3. The rise of powerful industrial corporations and the rise of a
large public sector in democracies over the past 150 years are results
of changes in technology. Economies of scale have increased, because
transportation costs have fallen and communication is faster and
I agree with #1-3. Here is more. I would add that American government grew big as soon as it had the technological ability to do so; that suggests to me that the latent demand for big government, for better or worse, was already in place. I await Brad DeLong’s book-length treatment of this topic.
Prophet of Innovation: Joseph Schumpeter and Creative Destruction, by Thomas K. McCraw. It is beautifully written, suspenseful throughout, full of love and intrigue, a story of European migration, also a history of Harvard economics, reassesses Schumpeter’s thought, and is as good a biography of an economist as has ever been written. I do not make the latter claim lightly.
My family [Genovese] made a lot of money from gambling and the numbers rackets. We got money from gambling, but our real power, our real strength, came from the unions [emphasis added]. With the unions behind us, we could shut down the city, or the country for that matter, if we needed to get our way. Our brugad [crime family] controlled a number of different unions, some of which I personally dealt with, some of which I knew about from other amico nostra. In some cases, we got money from our dealings with the unions, in some cases we got favors such as jobs for friends and relatives — but most importantly, in all cases, we got power over every businessman in New York. With the unions behind us, we could make or break the construction industry, the garment business, the docks, to name but a few.
That is mobster Vincent Cafaro, cited in James B. Jacobs’s excellent Mobsters, Unions, and Feds: The Mafia and the American Labor Movement. This book, which is avowedly left-wing and pro-union, chronicles the grisly and underrecorded history of mob influence over unions. Today the mob’s presence in the Teamsters, the Laborers, the Hotel and Restaurant workers and the Longshoreman’s union has largely dissipated, but keep in mind why. Our government has spent the last twenty years busting these unions, using arrests, RICO, and federal monitoring and control. That should not be forgotten the next time you hear talk of new legal privileges for unions.
In Italy until recently, you could not get your hair cut on a Monday. You could not close a bank account without paying a hefty fee. You could not sell your motorbike unless a notary drew up some tortuously worded contract.
That is from The Financial Times, 28 February 2007, p.13.
Colin Frazier, a loyal MR reader, writes:
I noticed you occasionally post e-mails from loyal MR readers. That made me wonder:
– How do you know if readers are being loyal?
– What is required of me to be a loyal reader? Is it just that I frequently read the site? Must I forego reading other sites like Mankiw’s or McArdle’s blogs? Disavow other economists? (I’ve sworn off Krugman!)
– Is there an oath?
– Is there a loyalty program in which I could earn points for posts I read and redeem them for valuable economic insights?
Your devoted (and–I think–loyal) reader
Only a truly loyal MR reader would ask questions of this kind.
That book is by David Colander of Middlebury. Can I do better than to quote that weird blogger guy who wrote the blurb?:
The Making of an Economist, Redux is self-recommending. David Colander’s work on the profession of economics is by far the best we have. A significant follow-up to his book of twenty years ago, it will become the standard account of what economics graduate school is like.
This book isn’t for all MR readers, but if you think it might be for you, it is. Here is the book’s home page.
The Center for Responsible Lending estimated that in 2005, a
majority of home loans to African-Americans and 40 percent of home
loans to Hispanics were subprime loans. The existence and spread of
subprime lending helps explain the drastic growth of homeownership for
these same groups. Since 1995, for example, the number of
African-American households has risen by about 20 percent, but the
number of African-American homeowners has risen almost twice that rate,
by about 35 percent. For Hispanics, the number of households is up
about 45 percent and the number of homeowning households is up by
almost 70 percent.
And do not forget that the vast majority of
even subprime borrowers have been making their payments. Indeed, fewer
than 15 percent of borrowers in this most risky group have even been
delinquent on a payment, much less defaulted.
Here is more.
Sitting here in the Frankfurt Airport, on my way, I’m not going to rehash the Ghiberti-Brunelleschi feud, so let’s stick to the twentieth century:
Painter/artist: There is Morandi, Lucio Fontana, and the Arte Povera group, all of whom remain underrated. The Futurists are dated, but early de Chirico hits the spot. This category is strong. For sculptors throw in Manzu, Burri, Merz, Marini, and many others.
Composer: Puccini I’ve never loved. Scelsi is an acquired taste but for me his drones hold up. Busoni bores me once you get past the Bach transcriptions. I’ll opt for Berio, most of all the songs, Sinfonia, and Points on the Curve to Find, all excellent and surprisingly accessible.
Pianist: Maurizio Pollini started steely and evolved to poetic; try his Stravinsky/Webern disc, and his Chopin Nocturnes. Arturo Benedetti Michelangeli is pure rippling glitter, try his Ravel/Rachmaninoff disc.
Conductor: Only rarely is Toscanini’s stuttering whiplash listenable, try his Tchaikovsky #1 with his then son-in-law Vladimir Horowitz. Abbado wins this category, his Beethoven symphonies are the best available.
Maria Callas performance: I am torn between Norma and Barber of Seville, the latter with Tito Gobbi, another notable Italian.
Author: Baron in the Trees and Invisible Cities are my favorite Italo Calvino. When I courted Natasha, she was impressed that I had a working knowledge of The Cloven Viscount at my disposal. Alberto Moravia has compelling psychological portraits, Eco’s The Name of the Rose is fun.
Playwright: Pirandello and Dario Fo.
Film: Most of neo-realist cinema bores me. I do admire Umberto D, most of Pasolini (Arabian Nights as my favorite), and I’ll pick Visconti’s The Leopard as my favorite, with Sergio Leone’s Spaghetti Westerns a close second. Satyricon is my favorite Fellini, but otherwise he leaves me cold. Sadly Italian cinema has been getting worse for thirty years.
The bottom line: The twentieth century brought a remarkable cultural renaissance in Italy. This is not as widely recognized as it ought to be.
Philip Jenkins notes:
…while they’re going to grow, by American standards
Muslim minorities in Europe are not going to be that huge. The other
big issue is that when people talk about Muslim minorities, they
automatically assume that everyone of Muslim background is going to
continue to be a dyed-in-the-wool, hardcore Muslim in Europe.
a lot of evidence that they’re not. If you look at Algerian people in
France, they have a strong sense of ethnic identity, but there’s quite
a low level of religious observance. They look like Episcopalians more
than anything. Now obviously, there’s a small and potentially very
dangerous hardcore of quite extreme Islamists, and you’d have to be a
fool to ignore that. But the majority of people are very happy to
assimilate to some kind of French or Dutch or German identity.
He also says this:
The Middle East in the last 15 years is going through the
great demographic transition and that is one of the great facts in
world politics. What it should mean is that in about 15 years these
countries should be vastly more stable. The next 15 years could be a
very rocky ride, but the long-term trend is to underpopulation
Thanks to Jeremy Lott for the pointer.
Mr. Blinder’s answer is not protectionism…he accepts the economic logic that U.S. trade with large low-wage countries like India and China will make all of them richer — eventually. He acknowledges that trade can create jobs in the U.S. and bolster productivity growth. But he says the harm done when some lose jobs and others get them will be far more painful and disruptive than trade advocates acknowledge. He wants government to do far more for displaced workers than the few months of retraining it offers today. He thinks the U.S. education system must be revamped so it prepares workers for jobs that can’t easily go overseas, and is contemplating changes to the tax code that would reward companies that produce jobs that stay in the U.S.
Here is the article. Arnold Kling says technological progress will be more important than trade. I think that China is due for a crack-up and India will soon bump up against its horrible legal and educational systems. I saw that economists are listed as among the most threatened groups, but I doubt if the United States can look forward to the liberation of so much talented and witty labor. I also think that corporate welfare is a bad idea, and that universities should not train everyone to be a small town divorce lawyer. Teaching reading and writing would be a good start.
When our economists start preaching that we should look to economists and higher educators to predict the new, growing economic sectors, I again think that the Chinese are not the major problem.
There is actually [sic] a restaurant in New Jersey called Stuff Yer Face, and fast food generally is about stuffing your face: about nutrition, fueling up, taking in the calories, food as instrumentality, eaters as mere animals responding to biological imperatives.
Read Eric Rauchway’s excellent post. Excerpt:
Economic history might have moved out of history departments for market reasons as well. If, to pursue economic history, you had to master technical skills that would make you eligible for an appointment in an economics department, you would probably prefer that to an appointment in a history department: economists get paid more because they’re eligible for employment in government and business as well as universities.
Some of the economic historians are coming to George Mason; this year we hired John Nye, Werner Troesken, and Gary Richardson. New hire Peter Leeson does some economic history as well. We’ve gone from a minor player in the field to a top department for economic history.
But will they be fun at lunch?
Life without socks would be… "undignified," but no one recommends government provision or even sock vouchers. Relative to income, socks are sufficiently cheap. There is some inequality of socks, but it seems that just about everybody — even the poor — "has enough." We don’t even force people to buy socks for their kids.
Might there come a time when health care and education fall under the same rubric?
Yes, I know that, due to rising labor costs, health care and education might continue to eat up an increasing percentage of national income. But still, can’t "rich enough" people make do? Living in Aspen might cost half your income, but if you’re a multi-millionaire no one weeps for you.
Of course today’s poor aren’t rich enough for us to remove government aid. But when will the splendid era of libertarian freedom be possible? Today’s poor are much richer than the poor fifty years ago, and the poor of the future are likely to be richer yet. Won’t the welfare state, at some point, simply become unnecessary?
Readers, please tell me in the comments when the time will come for dismantling the welfare state. Will you sign your name to a pledge:
"I am a left-winger, but only until 2078"?
More elegant would be:
"I’m a 2096 libertarian."
Social democracy is but a mere transitional strategy.
If this were 1890, what Year of Libertarian Freedom would you have named?