Month: June 2007
John Nye’s new War, Wine, and Taxes: The Political Economy of Anglo-French Trade, 1689-1900 argues that 19th century Britain was not nearly as free trade as is commonly supposed. Here is one summary of that argument.
Nye also argues that an odd industrial policy, as applied to alcohol, drove the rise of the British nation-state (and thus modernity as we know it). As a result of the wars of 1689-1713, the British placed very high taxes on French spirits. British domestic production grew, and to make up for the lost revenue, the British applied heavy domestic taxes to alcoholic production. The British spirits industry became oligopolistic — in large part by governmental design — and the resulting monopolies were a cash cow for their owners and for the government alike. The taxes on alcohol helped finance the British state on the backs of consumers, without requiring higher taxes on capital or land.
Here is a sample chapter of the book, which promises to be one of the most important works in economic history in recent times. I am pleased that John will be joining us as a colleague at George Mason this coming year.
Your suspicion is correct, there is a contestant named Elmer. The winning inventor with the best new idea, as determined by a four-person panel, gets a million dollars and national fame on this ABC show. The jury includes George Foreman, who says yes to almost everything, and a sour but articulate British gentleman, who says no to virtually everything. One of the panel members praises the development of an inflatable neck brace to prevent people from "drownding."
The ideas included a foot pedal to lift the lid on toilets at night, a funnel for toilet use, a bra with no strap in the back (isn’t that old?), a hands-free flashlight which attaches at the neck and projects upright and forward, a way to rub down the back of your spouse using the TV remote, a computer program which matches strangers in a bar according to their pre-programmed interests (didn’t I blog that once?), a jacket which helps deaf people feel the vibrations from music, and a foam cushion which holds up the heads of small babies.
The winners of this episode came from MIT and Harvard Business School. Two nerdy guys produced and demonstrated a way of storing bikes vertically in a garage; I wasn’t impressed.
The main lessons are twofold. First, many people pour years of their lives and love into projects which are absurd on the face of it and could be revealed as such within seconds.
Second, when it comes to the (possibly) good inventions, it is very very difficult to tell what is a good idea and what isn’t. Without sector-specific knowledge, how do you know if that no-strap-in-the-back bra is a novelty? It sounded good and indeed it looked good but I just don’t have the experience (or the attentiveness?) to say.
The real world doesn’t judge inventions with a panel of four quasi-celebrities (sadly Charles Nelson Reilly is now dead) and most valuable novelties are process innovations, produced while someone is working full-time doing something pretty similar.
In my evil, wicked fantasy world I imagine economics graduate students presenting their new Ph.d. dissertation ideas to a jury of four: Paul Lynde, Fred Thompson, Charles Barkley, and Kenny Smith.
I thank several loyal MR readers for the pointer.
The massively multiplayer online game, EVE Online, has hired a PhD economist. Dr. Eyolfur Guomundsson writes:
In the real world, economic information is the cornerstone for our
daily business; everyone takes note when news on inflation, production
and interest rates are announced and traders try to predict beforehand
what the news will be. There is a constant game between the market and
authorities on predicting each other’s move and for that everyone needs
information. Though EVE is a virtual world, the basic needs are the
same. Players, designers and the company leaders at CCP will all
benefit from having a central figure to monitor inflation and trends
and provide a focused insight into what is happening within that
virtual world so that everyone can make better decisions.
As the lead economist for EVE, my duties will include
publishing economic information to the EVE-Online community. My duties
will also be to coordinate research cooperation with academic
institutions as the academic world has expressed quite an interest in
doing research on this phenomenon (which shows how important MMOGs
might become in future research into economic and human behavior).
Thanks to Derek Guder for the link.
****ing libertarians. I swear to God, you guys act the same every
single time. EVERY time I post something about a societal trade off,
you instantly, passionately and irrevocably identify yourself with one
and only one side. Why? WHY? WHY do you do that? I thought this one
might be harder for you. I mean, two picturesque resource extractors. I
thought the salmon fishers might get some love from you. Two years
they lost their entire livelihood and way of life! But no. Instead you
write with a fanatic dedication to the potential costs to the farmers!
Why?! What did you choose on? Seriously, it was "rippling back muscles
of the fisher as he winches his nets out of the sea, man on his boat
against the elements" versus "his thigh muscles flexing, the grower
squats to take a handful of soil, surveying the new growth on his
alfalfa before whistling for his dog". How the hell did you choose?
These days, if a TV show is going to draw me in as a viewer, it has to be really, really good.
Imagine a cross between Memento and The Time Traveler’s Wife and you get halfway there. There’s also plenty on when cheap talk equilibria matter (I hope you’ve seen Saw) and some visual influences from graphic novels and alternative typographies. In any case it should become a big hit.
A fifth of the population of Mali, for instance, already moves to Ivory Coast during drought years.
Here is the link.
Many of you have asked for posts on the most underrated books. Today will start a short flirtation with this topic ("underrated week," which of course starts on Friday) and we’ll break books down by category.
For mystery, I’ll nominate the works of Henning Mankel, although arguably he is not underrated any more by critics. Verissimo’s Borges and the Eternal Orangutans is my other pick. Or how about Charles Palliser’s The Quincunx?
Readers, comments are open…
The subtitle is Behind the Scenes at the Metropolitan Museum of Art, and the content is a series of varied, first person, quasi-biographical reports of how the Met works:
1. "We received our art education at home, where we were fortunate enough to be surrounded by Impressionist paintings…"
2. "The building is in pretty good condition considering the amount of use it gets. There have to be at least thirty bathrooms in this place, and in each of those bathrooms you have six or seven toilets, four or five urinals, four or five sinks, plus you have the locker room for the employees, with showers and things like that."
3. "I think it’s very important to have art in the world. I am somebody who is not terribly impressed with people. The only thing which is really exceptional about humans is art; apart from that, we are animals."
Who would you most like to be?
Pollution is more globalized too:
Bruce Hope, a senior environmental toxicologist at the Oregon Department of Environmental Quality, estimates that global sources contribute 18 percent–more than four times the local share–to Oregon’s air pollution. Increasingly, the ozone on the west coast will be determined by China. In California, for example, some researchers believe at least one-third of California’s fine particulate pollution–known as aerosol–originates from Asia. These pollutants could potentially nullify California’s progress on meeting stricter Clean Air Act requirements. In May 2006, University of California-Davis researchers claimed that almost all the particulate matter over Lake Tahoe was from China. The great irony is that these pollutants are mainly due to the burgeoning demand of U.S. and EU consumers for cheap Chinese goods–which is driving the Chinese economic development. Some estimates cite that 7 percent of China’s CO2emissions are due to production of U.S. imports.
Even on a clear, sunny day, the people who keep the subway going have to pump 13 million gallons of water away. Otherwise the tunnels start to flood.
Jane Galt writes:
Everyone knows the unified queue is the best way to move checkout traffic. So how come every time customers in a crowded drugstore try to form a single queue, the cashiers force us to line up at the registers? Do they get some kind of psychic job from knowing in advance which customer they’ll check out?
You might try to argue that the indirect utility function is convex (risk-loving) in prices, and that people, when they realize that their personal line-choice algorithms result in shorter (longer) waits, make more (fewer) trips to the store. Samuelson once proved a theorem about that in the QJE. The intuition is that consumers can take advantage of price variability, in this case "time price" variability, and come out ahead. Admittedly the notion of "going to the store more often when your innate line-choosing algorithm turns out to be good" requires a mental stretch.
People also might like knowing that the end to waiting is in sight. On the phone they put you on hold and tell you the expected wait time, or they should. At least five times in my life I’ve bolted a supermarket and abandoned the groceries, simply because the lines appeared too long. It is harder to estimate how long a single line will take, and it is harder to compare single lines across supermarkets.
And might there be "line price discrimination"? Hurried people like me can scout out the best lines (don’t you have visual algorithms for speedy cashiers?…young girls are best), whereas the conversation-starved, check-writing old ladies might even prefer a slower line.
There are thousands of papers on queuing theory, but I’ve never seen a good study of when single lines are to be preferred. How sad indeed is my profession…
He will also be speaking at a Cato luncheon for his book on Tuesday July 17 at noon. More information here.
Do you eat the best thing first or save the best for last? Most people fall into one of these two categories and according to Brian Wansink’s Mindless Eating there is a simple economic explanation. The people who eat the best thing first tend to have grown up as younger children from large families. The people who save the best for last are more often first borns. Need I say more?
Mindless Eating, by the way, masquerades as a diet book but it’s really about research design! Highly recommended.
Here is one nomination for the most overrated novel of the 20th century.
I wonder about Gide and Sartre as well. J.D. Salinger is too easy a target, as is John Barth. How about Harper Lee’s To Kill a Mockingbird? I keep on thinking there is an obvious and juicy British nomination (just look up how the Penguin Guide to Classical Music treats Elgar recordings), but I can’t settle on a single glaring name which stands above all others.
For the most overrated major author, I’ll pick Carlos Fuentes. I love Mexico (and I’ve tried reading his works in Spanish), but I find he deadens the place rather than bringing it to life. Had he not been around for the fashionably left-wing, anti-imperialist 1960s, he’d just be another guy with a pen.
The most overrated good book is Henry James’s Portrait of a Lady, which although very good is far from his best work.
What are your picks?
I am proposing that the Son and the Father Singularities guided the worlds of the multiverse to concentrate the energy of the particles constituting Jesus in our universe into the Jesus of our universe.
That is from Frank Tipler’s The Physics of Christianity.
But wait, there is competition for the honor:
If Jesus indeed rose from the dead using the mechanism described in Chapter 8, namely electroweak tunneling to convert matter into energy, and if indeed this was done with the intention of showing us how to use the same process, then we ourselves should be able to learn how to turn matter into either electromagnetic energy or neutrinos within a few decades.