Month: March 2007
You have written about how to (and who should) become an economist at a research university, but what are the differences for those at teaching colleges? How much are they expected to publish?
I would like to hear from the bloggers and commentors at teaching colleges. My aggregated sense is that teaching colleges expect more publishing, or even more fundraising, than before. That said, five non-top tier articles is probably enough at most teaching schools, provided of course you are a good teacher. As to who should work at a teaching school, the naive answer — those who love teaching — is essentially the correct one.
My warnings about teaching departments would concern their size and the departmental cliques; I am a fan of anonymity and sorting, which is most likely in larger departments. Teaching schools tend to be small schools, and if you are on the outs, life can be pretty tough.
#25 in a series of 50.
Jason Kottke reports on Will Wright:
Notes from Will Wright’s keynote at SXSW 2007. "Movies have these wonderful things called actors, which are like emotional avatars, and you kinda feel what they’re feeling, it’s very effective. Films have a rich emotional palette because they have actors. Games often appeal to the reptilian brain – fear, action – but they have a different emotional palette. There are things you feel in games – like pride, accomplishment, guilt even! – that you’ll never feel in a movie."
#24 in a series of 50, and yes I do recommend you read the Wright speech, which deals with the human need for stories.
A loyal and possibly even addicted MR reader writes:
El Salvador has been dollarized since 2001. What the overwhelming majority of Salvadorans tell me is that, *everything is much more expensive since we switched to the dollar.* Now I feel like this cannot be wholly true. For sure the transaction cost of receiving remesas has been reduced (is the reduction significant to the individual receiving $200 a month?), it will protect against volatile inflation, and eliminate any double currency issues, but I have little more understanding than that. El Salvador’s monetary policy decisions are now made in Washington, D.C. and thus not all of the policies made will be in the best interest of El Salvador, but would it be naÃ¯ve to believe that prices have not actually risen any more than they normally would have with the colon?
I too felt that El Salvador was relatively expensive for its income level, as is Panama. (I haven’t been to Ecuador since the shift to the dollar, but that is an obvious natural experiment.) But why?
1. Dollarization makes the El Salvador exchange rate hostile to strong "reserve currency" demands for dollars.
2. Dollarization makes it easier to compare prices with the U.S., which leads to more arbitrage, different expectations, and could be inflationary. I know that sounds lame, but we have seen similar effects in the Eurozone.
3. The trick is to figure out whether the Bela Balassa argument applies. In 1964 Balassa noted that an exchange rate is determined mostly by a country’s tradeables. So if compared to the U.S. El Salvador is less productive in tradeables, but comparably productive in some untradeables (e.g., haircuts), the haircuts will be especially cheap in El Salvador. U.S. productivity in tradeables makes the dollar very strong in terms of the non-tradeables. That’s one reason why people go to Thailand for you-know-what.
Think of the El Salvador haircut as (previously) cheap for two reasons: low real wages in El Salvador, and the dinky value of the (former) colon. When El Salvador moves to the U.S. dollar, the latter reason goes away and the haircut becomes more expensive.
You might think that everything should be neutral in terms of the currency unit, but the demand for money matters too. This means the Balassa effect is a special case of #1 above.
So, following dollarization, the relative price of the El Salvador non-tradeables is higher for people coming from the United States. Those relative prices are also higher for El Salvadorans working in their country’s tradeables sector.
Or so I believe. I’ve been worrying about this one for weeks, folks. Get a life!
#23 in a series of 50.
A loyal MR reader requests:
…your thoughts on fiat currency vs currencies backed by precious metals.
could a return to the gold standard for the US dollar, as advocated by
US congressman Ron Paul, bring about a superior economic system?
A gold standard has few advantages over a responsibly run fiat currency, as we have had since about 1980. A real, laissez-faire gold standard involves a pro-cyclical money supply, and who wants that? Why let the money supply shrink during bad times? Some prices and wages are sticky in nominal terms, if only because people feel they are being taken advantage of, not "holding their ground," or losing relative status. Just read Truman Bewley’s book. Nominal stickiness is rooted in human nature.
Maybe we could get used to periodic or ongoing deflation, but it would take some doing. In the meantime two percent inflation is not so bad. On the other side of the debate, the resource costs of the gold standard have been overplayed.
The best and indeed only argument for gold is the view that we must, sooner or later, return to rampant inflation. That has been the rule for fiat money throughout most of human history. I think today seigniorage is not an important source of government revenue and financial markets punish politicians for inflation pretty quickly. So I am willing to wait for the "later" to come before making any switches away from fiat money. Keep in mind, people can already denominate their contracts in terms of gold, and hardly anyone wishes to do so.
#22 in a series of 50.
It is the genius of the United States, a profoundly conservative country in ways that Europeans find difficult to fathom, to have elaborated a form of conservative thinking that celebrates the new rather than the old.
That is from Susan Sontag’s new At the Same Time: Essays and Speeches. This volume is not her best work, but it is still better than what almost anyone else comes up with.
Should we refrain from consuming the cultural products of those producers who hold morally objectionable views, when our consumption of such products will benefit said producers?
I think of this as a Ramsey tax problem: we are willing to sacrifice a certain amount of goods and services to do the world some good, how can we do so at minimum damage to our utility?
Just as lump sum taxation is efficient, so should we give away money, rather than distort the MB=MC ratios on our consumption decisions. So my inclination is to avoid boycotts. It is better to just send money to the people or groups you wish to help.
Sometimes boycotts are motivated by the wish to hurt other people — the target of the boycott – rather than by desires to help some oppressed group. Or punishing a group’s critics may be the best way to help that group. Then boycotts make more instrumental sense, especially if the target of your hate has a declining MC curve, as would a movie star or music star with an easily reproducible product. There is less point in boycotting someone in a relatively competitive industry, who is earning little on selling extra units of the product.
Note that if you are facing a monopolist with a durable good, boycotts can make that monopolist better off by helping him to restrict quantity. In other words, boycott rock stars, not painters or sculptors.
A boycott also might be preferable to sending money if your action has a snowball effect on the behavior of others, but that will not be the general case. In fact boycotts often give more publicity to the person or cause you are trying to oppose. "You opposing X" is not, in the eyes of the world, always a negative signal about X.
#21 in a series of 50.
Addendum: See also my post on fair trade.
1. Ice, by Vladimir Sorokin. A totally lurid, highly sexed, contemporary Russian, pre-apocalyptic mix of science fiction and horror. I finished it.
2. The Once and Future King, T.H. White. Oddly absent from Law and Literature syllabi, I’m teaching this in my next class. This is many people’s favorite book. It’s written in a simple manner, but it cumulates in an oddly beautiful way.
4. How to Improve Your Marriage Without Talking About It, by Patricia Love and Steven Stosny. The claim: talking about relationship problems is an inherently shameful activity for the man and thus it will fail; the couple should just read this book and do what is best.
5. Econoblog with Ed Glaeser and Daron Acemoglu, on democracy and economic growth. If Greg Mankiw can debate Jacqueline Passey, Ed can cite Borat as evidence in a dialog with a world-class economist.
6. Invading Mexico: America’s Continental Dream and the Mexican War, 1846-1848 by Joseph Wheelan. If you wish to embarrass your friends (and yourself), ask them whether they would in retrospect support the U.S. conquest of territory from Mexico.
I’ve been sampling the Bach box and I pronounce it worth buying. Compared to the available full-price recordings, I give it a 7 out of 10 and that is for 65 cents per disc. The sound is generally quite good, the performances of the chamber music are excellent, the harpischord occasionally stale (I prefer Bach on piano), the masses and passions are above average, and most of the cantatas are "good enough." It won’t displace my very favorite Bach recordings, but these make good second choices pretty much across the board. To be frank, even among experienced classical music listeners, no more than one person in ten can tell the difference and yes that means you.
Yesterday Jane Galt asked "how much music is enough." Ha! But two days earlier, after receiving the new Amon Tobin CD, I vowed not to buy another CD for an entire year. It’s not a question of money, rather I am looking for a new listening experience.
Let’s see how long I last, I’ll let you all know when I snap.
Ezra Klein, in his response to my post on the union wage premium, directed our attention to this article about the union wage premium in service industries. The paper does find a wage premium, and in doing so offers up some juicy bits:
research suggests that unions usually have little power to inhibit subcontracting
altogether, but that they can sometimes mitigate its negative effects
on their members. The
hardest trend to fight has been the outsourcing of labor-intensive kitchen
tasks – baking, cleaning and chopping produce, making stocks and sauces.
The purchasing of prepared foods has become such a ubiquitous and fundamental
business strategy in the industry that it has been almost impossible
for unions to stop it. In the end, the economics of using pre-prepared
food are simply too compelling, and because the outsourcing is usually
done piece-meal, the union would have to fight over just one or two
jobs at a time. However, when the numbers of jobs involved are bigger
and the economic advantages less clear – for example, subcontracting
an entire laundry unit – unions have been able to focus their efforts
and have had somewhat more success, slowing the process down or limiting
Yes I can see the resulting wage premium within the union, but is this a good way to advance the state of the working man in the United States?
I never expected to write "Thorstein Veblen reminds me of Robin Hanson," but upon rereading Theory of the Leisure Class he does. Everything is reduced to evolutionary biology. Signaling and status-seeking are at the forefront of virtually every explanation. Industrial habits spring from man’s biological nature, transplanted into a new and strange environment. Had I reread this ten years (I first read it as a teen, and not since, then I hated it) ago, it would have been a revelation. Now it sounds like a typical lunch discussion with the guys, with Spence, Hayek, and Geoffrey Miller sprinkled in.
Veblen, however, is a blowhard as a writer and Robin is not.
I tried two other Veblen books and found them unreadable. The guy deserves much more credit than he gets, especially from conservatives and libertarians, but read the evolutionary biologists first.
#20 in a series of 50.
The I/B/E/S database purports to document the earnings expectations of research analysts. The database has been used by academic researchers in hundreds of papers and is also used by the industry to rate and promote research analysts.
Comparing two snapshots of the historical I/B/E/S
database of research analyst stock recommendations, taken in 2002 and 2004 but
each covering the same time period 1993-2002, we identify 54,729 ex post changes
(out of 280,463 observations), including alterations of recommendation levels,
additions and deletions of records, and removal of analyst names. The changes
appear non-random across brokerage firms, analysts, and tickers, and have a
significant impact on the overall distribution of recommendations across stocks
and within individual stocks and brokerage firms. They also affect trading
signal classifications, back-testing inferences, track records of individual
analysts, and models of analysts’ career outcomes in the three years following
Hat tip to Mike Kellermann at the Social Science Statistics Blog.
Here is my response to Brian Doherty’s CatoUnbound essay, and here is opening bit:
Brian Doherty asks: "Did this libertarian movement . . . actually accomplish anything of unquestionable significance?"
Yes: Bigger government.
Or try this:
The old formulas were “big government was bad” and “liberty is
good,” but these are not exactly equal in their implications. The
second motto – “liberty is good” – is the more important. And the older
story of “big government crushes liberty” is being superseded by
“advances in liberty bring bigger government.”
aren’t used to reacting to that second story, because it goes against
the “liberty vs. power” paradigm burned into our brains. That’s why
libertarianism is in an intellectual crisis today.
That’s the title of a fun, new book. Here is my personal selection of 10, in no particular order, and not counting the U.S.:
2. The East Coast of Taiwan, Suao down to Hualien and then into Taroko, the marble gorge. The best coastal route I know.
3. Mostar and Sarajevo, to remind us of the thinness of civilization. They’re also beautiful cities with great food and moving graveyards.
4. Susten Pass, in Switzerland, the best route through the Alps.
5. The bus from Punta Arenas to Torres del Paine, Patagonia, Chile. You see flamingos, rheas, and end up in a stunning national park.
6. The Panama Canal
— perhaps the most underrated sight; you feel like you are in the jungle,
you are in a jungle, then a large steamer comes by. The tour of
Rotterdam Harbor is a close runner-up.
7. To and through the Tiong Bahru food stalls in Singapore.
8. Thingvellir, Iceland, home of the first Icelandic Parliament. Such a long trip to see just four homes.
10. Walking Paris end to end, pick just about any route.
I’ve never been to East Africa, and I’m not counting the Iron Market in Port-Au-Prince.