Month: May 2007

Grant McCracken on France

by  Tyler Cowen in

Yes Sarkozy is on the verge of winning, but will there be much change?  It is worth reading Grant McCracken:

This may be the only Western culture in which the phrase "creative destruction" is fully paradoxical.  All of us balk for a moment at the phrase, but the French, I think, must just shake their heads and say, "no, it’s creative or it’s destructive."  This is a culture that approaches perfection, and for a world like this all of the things that make other Western economies go, innovation, responsiveness, competition and innovations, these, in France, are wrong.  These contradict the the French style of life.   

The English could invent punk because there wasn’t very much to keep them from the aesthetic violence it required.  The Germans could rebuild the nation state because all it demanded of them was that they tear down a place stinking of cabbage and soft coal.  Americans could push us all down the bobsled of post modernity because all it meant was surviving the bouleversement of Silicon Valley in the late 1990s. 

But the French, for them change must feel lapsarian, a fall from an exquisitely accomplished grace.  The rest of us blunder from a uncertain present into the maw of a chaotic future, but then as one of my French respondents said, "it’s not like you’ve got very much to lose."  The French, you see, pay dearly for change, and sometimes they just can’t bring themselves to budge. 

Travel book panic

by  Tyler Cowen in

As the weeks before a trip approach, I assemble piles of books on the dining room table.  Each pile is constructed with care.  There is a travel guide pile, a fiction pile, a "needed for work" pile, and a "maybe I won’t take this one at all" pile.  The most important is the "I’ll probably read this one before the trip comes along" pile.

The books take on a life of their own.  At times I lose track of the planned trip and I think of it as little more than a chance to read, free of the usual interruptions.

The excitement mounts.  I frequently visit the piles and think about how it will be to experience those books.

But the day or two before the trip, panic sets in.  The piles seem totally inadequate.  Totally inadequate for my reading.  Totally inadequate for my development as a human being.  Most of all, totally inadequate for the trip.

I rush to Borders and buy a whole new set of books.

Hrak!

What I’ve been reading

by  Tyler Cowen in

1. House of Leaves, by Mark Danielewski.  This experimental novel, written with varying typefaces, page layouts, and interjected footnotes, is a fun mock of the academization of literature.  It has a large cult following but can be enjoyed by the general reader.  Don’t be intimidated by the heft, a third of the pages are essentially blank.  It felt great making so much progress so quickly.

2. The Grid: A Journey Through the Heart of Our Electrified World, by Phillip F. Schewe.  Better than no book at all, but this important topic still awaits its definitive treatment.

3. The Triumph of the Thriller: How Cops, Crooks, and Cannibals Captured Popular Fiction, by Patrick Anderson.  A good guide and overview, the author argues that Raymond Chandler is overrated relative to say Macdonald or Kehane.

4. Vasily Grossman, Life and Fate.  This Soviet-era masterpiece, which covers the Battle of Stalingrad, bored me.  I have no complaint about its quality, I simply felt the time in my life is past to further digest those themes in an emotionally meaningful way.

5. Michael Chabon, The Yiddish Policemen’s Union: A Novel.  This comic detective story is based on an alternative reality in which Israel loses the 1948 war and the surviving Jews settle in Alaska.  It’s the first book of his I’ve liked, though I don’t think it has much substance.

6. Don Boudreaux recommends ten books.

Beggars and rent exhaustion

by  Tyler Cowen in

Tim Harford, The Undercover Economist, reports:

Rent exhaustion is no economists’ fantasy – go to any place with
rich tourists and poor locals (Dar es Salaam, the first African city I
visited, fits the description nicely), and you’ll see lots of people
waiting for the one generous tip or overpriced taxi fare.  If the
tourists become more generous or gullible, the local guides don’t get
richer, they just multiply.  The bigger paydays become less frequent.

Tyler
Cowen – an economics professor with a popular blog – argues in his
forthcoming book, Discover Your Inner Economist, that for these reasons
you may wish to give money away by wandering around a poor country, far
away from the tourist trail, and handing cash to people who look busy.

Vicious fights over prime begging spots are yet another example of rent exhaustion in this context.  If the begging spot is worth say $50 a year, beggars will devote up to $50 a year to keep the spot.  Here is my previous post on whether you should give money to beggars.

Ranking Economics Journals

by  Alex Tabarrok in

In New Approaches to Ranking Economics Journals (or here) the authors rank journals based on citations from a larger sample of journals than has been used in the past, they distinguish overall journal impact from the impact per article and they break down impact into impact within economics, impact within all of social science, impact within policy and impact outside of economics. 

When impact is measured by citations from journals within economics, journal impact and impact per article are pretty much what you would expect with the AER, QJE, JPE and Econometrica all scoring highly.

Expanding the citation list to all social science, however, has some big effects especially on impact per article.  Most notably, the Journal of Law and Economics has the highest overall impact ranking per article.

Frankly, I was thrilled to see the JLE rank so highly since I have published a number of papers in that journal.  Come to think of it, the latter obviously explains the former!  Note, by the way, that the citation list does not include law journals so if anything the JLEs impact may be under-weighted.

Kudos must also go to Robert Barro, Ed Glaeser and Lawrence Katz, the editors of the Quarterly Journal of Economics, which is the only journal to rank in the top 5 categories no matter how you break down the data.      

Here is a previous post on Great Editors.  Thanks to Healthcare Economist for the pointer.

Dani Rodrik replies on free trade

by  Tyler Cowen in

Here is his long post, his introduction reads as follows:

The question, if I understand is correctly, is whether I
think trade policy–and in particular trade policy which departs from free
trade–can ever do some good in a world where purely political motives and
rent-seeking are rampant.  My answer is
yes, but let me build my case point by point.

Here is one of his closing paragraphs:

…let me note the irony in how a discussion on free
trade among economists quickly ends up being a debate on its politics–that is,
a debate on whether this or that trade policy which on economic grounds is
actually desirable can also be politically feasible.  We are way beyond our area of expertise.  Your
hand-waving is as good as mine.

Here is my original query.  Read his whole response, comments are open, do let us all know what you think…

Markets in everything

by  Tyler Cowen in

Because keywords are sold through online auctions, prices often spike
for those connected with big breaking-news stories.  On the day of the
Virginia Tech shootings, the cost per click of buying phrases such as
"Virginia Tech," "Virginia Tech shooting," and "Virginia Tech massacre"
jumped as high as $5.  Over the following week, prices dropped to six or
eight cents a click, according to Reprise Media, a search-marketing
firm owned by Interpublic Group.  A longer-lasting news term, such as "Iraq war," costs on average 39 cents a click, Reprise says.

Here is the full story, and thanks to Nick for the pointer.

Schumpeter revealed

by  Tyler Cowen in

Here is my review of Thomas McCraw’s new Schumpeter biography.  Excerpt:

Prophet of Innovation is so splendid because it succeeds on so
many different levels. If the book were simply an account of the
Harvard economics department, it would stand as a lasting and
significant contribution to the history of economic thought.
Alternatively, it is one of the best treatments of what it was like for
European intellectuals to migrate to the United States.  Or are you
interested in why Austria fell apart during the 1920s, and how someone
with as little real world experience as Schumpeter became Minister of
Finance?  The book is also a love story, and an account of how a
possibly dysfunctional man can nonetheless find romantic happiness
after repeated failures and tragedies.

The future of Latin America

by  Tyler Cowen in

This paper by Sebastian Edwards sounds about right to me:

In this paper I use historical data to analyze the relationship between crises and growth in Latin America.  I calculate by how much the region’s GDP per capita has been reduced as a consequence of the recurrence of external crises.  I also analyze the determinants of major balance of payments crises.  The main conclusion is that it is unlikely that Latin America will, on average, experience a major improvement in long run growth in the future.  It is possible that some countries will make progress in catching up with the advanced nations.  This, however, will not be the norm; most Latin American countries are likely to fall further behind in relation to the Asian countries and other emerging nations.  Not everything, however, is grim.  My analysis also suggests that fewer Latin America countries will be subject to the type of catastrophic crises that affected the region in the past.  Latin America’s future will be one of "No crises and modest growth."

Here is a non-gated version.

Darth Vader’s wife likes micro-finance

by  Tyler Cowen in

Ms Portman, the 25-year-old Harvard graduate who co-chairs the Village Banking campaign, said it would seek to use social networking to galvanise her generation to support microfinance.

"I have seen that ending poverty is possible – it is just a mouse click away," said Ms Portman, whose video diary about Finca’s work will feature on its page on MySpace, the social networking website. "People check their MySpace pages 10 times a day, why not harness that tool to build support for microfinance."

Here is the story.  Complain all you wish, as celebrity activism goes this is a step up.  Here is an article on micro-finance spreading to Africa.

My question for Dani Rodrik

by  Tyler Cowen in

Politics works better in some areas than others.  Fairfax County has wonderful parks, libraries, and schools.  French politics has brought about a good health care system.  There are many other examples.  The mechanisms are various and often involve accident.  Sometimes governments luck into good institutional arrangements.  Sometimes a far-sighted visionary is at work.  Tiebout competition, or efficient Beckerian bargains across interest groups, may kick in.  Sometimes the median voter rules, that median voter is a good judge of outcomes, and what is good for the median is good for the nation as a whole.  Sometimes venal interest groups control politics, yet the desires of those groups happen to coincide with welfare maximization.

We can, in principle, rank policy areas along a spectrum.  Assign a "10" to the most efficient policy-generating areas and assign a "0" to the least efficient.  Don’t worry too much about what the scale means, this is Blog Land.

Where do you put trade restrictions along this scale? 

I give them a 1.5, at best a 2.  I think trade restrictions are hardly ever generated by processes which coincide with the general welfare.  I view trade restrictions as almost always motivated by the classic, crude "diffusion of costs, concentration of benefits"  logic.

If we redefine the problem more broadly, it could be said that trade policy as a whole gets an 8 or a 9.  Most of the wealthier countries, agriculture aside, have fairly free trade, as they ought to.  But what if we focus on evaluating only the quality of the trade restrictions?  How good are the restrictions we get in tracking the ideal welfare-improving restrictions?

I say 1.6438.  That is why I think Bhagwati is essentially correct to be fighting "the last war."  What is your number?

Use visualization to improve your life

by  Tyler Cowen in

…we tend to interpret other people’s actions as saying something about them, whereas we interpret our own actions as saying more about the situation we’re in.  So, when we picture ourselves acting in the third-person, we see ourselves as an observer would, as the ‘kind of person’ who performs that behaviour.  "Seeing oneself as the type of person who would engage in a desired behaviour increases the likelihood of engaging in that behaviour", the researchers said.

Here is the article, which claims you should envision your desired successes through the perspective of a third person, to better bring them about.