Month: December 2007
Prescription for Reform
[In Italy] small proposals bring protesters to the streets, one hurdle to
making changes as protected interests seek to preserve themselves.
Pharmacists shut their doors this year when the government threatened
to allow supermarkets to sell aspirin. The cost for just 20 aspirin
tablets at a pharmacy is $5.75.
That is from an excellent article in the NYTimes on Italy’s malaise. We may snicker when we think that Italians couldn’t buy aspirin at the supermarket but our prescription-only system isn’t much better. Kerry Howley, writing in Reason, says Basta!
Who will be next to fall?
Who’s next? Paddy Power, the Irish gambling site, has decided to tap
the wisdom of crowds and set odds on who the next C.E.O. casualty will
be.At the top of the site’s list, odds-wise, is Bear Stearns‘
James E. Cayne. Paddy Power is quoting 13-8 odds on a bet that he will
be ousted by June 30, 2008. The odds, better than 2-1, represent a
relatively high expectation that he will soon be out of a job. That
probably reflects some serious setbacks at Bear Stearns under his
watch, including the collapse of two internal hedge funds this summer.
Here is the story, thanks to John de Palma for the pointer. And here is Robin Hanson on CEO Futures, the idea originates from Robin.
Hotel Theory
Being-at-home, Heidegger says, is not the "primordial phenomenon." "Not-being-at-home" is more fundamental. To be not-at-home may mean to be at hotel.
That is from Wayne Koestenbaum’s recent Hotel Theory, which is possibly the funniest book I have read, with the caveat that a satire of queered Heidegger theory, combined with a fictional story of Lana Turner and Liberace, may not be your thing. I also loved The Queen’s Throat; Koestenbaum is one of the most original writers working today. Here are reviews of the book.
Why does NBER want your $5?
John Eckstein, a loyal MR reader, writes:
NBER is still charging $5 to download a working paper [for non-academics]. Don’t economists want to get their work out to the broadest audience possible? Given the number of downloads for most economic working papers it seems like the fee is just enough to discourage the dissemination of information, but not enough to raise significant funds. The budget is not on the NBER website so I can’t check it myself.
I get these papers free, but that is because GMU pays a fee to NBER. The real source of money, Alex suggests, is from selling NBER membership to universities (inelastic demanders, just ask Kluwer), and that requires a nominal fee to stop professors from downloading it themselves. Still, so many other institutions offer free access, and now with the advent of blogging many non-academics want to read NBER papers too. Cannot the current system be reformed?
Steve Randy Waldman on the new Fed plan
Here (hat tip to Mark Thoma):
I am caught between a million things. But when I woke up the the Federal Reserve’s press release about the TAF, my jaw dropped. It was one of those moments when the world shook, everything was the same, but everything had changed…this plan is brilliant.
I’m a bit more blase than that, but I did think it worth a blog post. The core innovation is that the Fed announces a quantity of funds to be auctioned, and the market sets the price. That is in contrast to the Fed targeting the Federal Funds rate; price-quantity equivalence results do not hold when credit rationing is present. It’s like forcing a certain amount of discount window borrowing. This means that new funds will get to banks, and to banks with credit problems, it will be interesting to see at what price.
The skeptical Jim Lowe, over at Mark Thoma’s, says:
The primary problem facing credit markets is not lack of liquidity but rather a combination of capital inadequacy and fears of credit/counterparty risk. I don’t see how another liquidity injection addresses these problems.
In response, the Fed seems to be promising to "hold the bag" on the collateral offered by the soon-to-be borrowing banks. Could this be a collateral pledge disguised as a liquidity injection? Or is the main goal simply to reroute liquidity injections away from the main banks and toward the troubled cases?
Here is Greg Ip as well.
Addendum: Comment #1 gives what is apparently the Fed’s schedule for evaluating collateral, mortgages appear to receive very favorable treatment.
Rodrik vs. Stiglitz
Here is Dani’s account. Maybe it’s unfair to let him do the describing, but his post accords with my impressions as well. I call #1-3 in Rodrik’s favor, with #4 maybe a draw.
Faux Indian government
A fake government office has been discovered in northern India that collected taxes, provided civic services and even handed out birth and death certificates, a report said Monday.
An office was set up outside Jhansi town in Uttar Pradesh state and 20 people were employed to carry out jobs such as street sweeping.
I liked this part:
"He later seems to have decided to carry on with the office as it did not appear to be a loss-making proposition," an unnamed police officer was quoted by Times of India saying.
The scam only came to light after some employees complained about salary problems to superiors in the actual government department, the report said.
"We were shocked to hear this as we ourselves were not aware that our department had a branch office," R. Kulkshreshtra, an official with the Jhansi Municipal Corperation, told the newspaper.
Here is the story, here is another. Thanks to Sarah Jeong for the pointer.
Or if you’re interested in Indian outsourcing, try this, courtesy of Peter Clark.
The Magazine Subscription problem
I subscribe to many many magazines and I love them all. I was recently very disappointed to learn that I had missed two issues of The New York Review of Books.
My problem is that magazines send me multiple renewal notices. Being a busy guy, or at least an inattentive guy, I don’t know if I have already renewed. Or I fear I will renew yet again a week later when the next notice comes.
So I get a renewal notice and I am suspicious. Should I send in a check? Should I wait? I know I’ll get another one.
No, I’m not willing to type the information into my iPhone. I want an optimal rule for deciding "on the fly." I’m still trying to figure out a) their optimal sending policy, b) my optimal response policy, and c) what the market equilibrium looks like.
It would work if they would credibly signal to send renewal notices no more frequently than every five weeks. Then I could always renew. I would never get a multiple notice because they would have processed my check already. But they send more frequently than that. Plus infrequent notices would mean that a multiplicity of notices would have to start truly early in the subscription cycle, and that might cause readers to dismiss the value of such notices altogether.
Another part of the problem is that many people are uncertain renewers. So every renewal notice must be breathless, even though I require only simple reminders and a scream only toward the end, when an actual subscription lapse is approaching.
I would describe my current strategy as "write a check only if their current plea really really makes it sound like this is the last minute before expiration." This cannot be a stable solution over time and indeed it is why the market has brought such an inflation of warning signs.
I believe that many acquaintances face similar problems in trying to maintain their friendly relationships.
Here is my previous post The Tennis Ball Problem.
On a Fast Track to Nowhere?
Periodically when the FDA is criticized for slowing the approval of new drugs they announce a new policy like Fast Track. I’m skeptical of these announcements since they are inconsistent with the FDA’s incentives. A recent investigative report in the Cleveland Plain Dealer seems to suggest that I am right to be skeptical but in the end makes me wonder whether Fast Track may be useful after all. Here’s the part that supports my skepticism.
A decade ago, the Food and Drug Administration introduced a Fast
Track designation for drugs in development that was intended to speed
the availability of medical treatments for serious diseases.However, a seven-month investigation by The Plain Dealer shows that
this government blessing has not increased the number of drugs approved
or moved them to market faster.…Dr. John Jenkins, director of the FDA’s Office of New Drugs,
acknowledged that the Fast Track designation only gives companies the
same access to FDA programs that was already in place when they lobbied
Congress for the provision in 1997."There’s really not much other, if any, benefit for Fast Track," he said.
The report, however, makes a big deal of the fact that stock prices do respond positively to Fast Track designation. The report spins this as pump and dump with the FDA in effect doing the pumping and insiders and hedge funds doing the dumping.
…frenzied trading occurs regularly when companies announce Fast Track
status. The number of shares bought and sold more than doubled on 49
percent of days that companies announced Fast Track designations.
Trading was 10 times higher than the day before in 22 percent of
instances….hedge funds and others who [short the stock] bet that the price of a
stock will fall – and it often does after the initial jump a company
receives from Fast Track designation.
But I’m also skeptical of stories that suggest markets are systematically fooled by non-events and the numbers presented do not seem wildly inconsistent with a modest but real positive signal from being listed as Fast Track.
Stock prices of companies that trade on the New York Stock Exchange
rose just 1 percent after Fast Track announcements… Excluding these companies, most of which are major
pharmaceutical firms, Fast Track announcements boosted stock prices
11.5 percent.
I’ll call this one a draw until further information arrives. What wisdom does the crowd offer?
Hat tip to Mike Giberson at Knowledge Problem.
Electrocution
Successive versions of this George Bellows lithograph remove the witnesses one by one until only the executioner and his victim remain.
That Cyber #*$! Stole My Credit Cards
A program that can mimic online flirtation and then extract personal
information from its unsuspecting conversation partners is making the rounds in
Russian chat forums, according to security software firm PC Tools.The artificial intelligence of CyberLover’s automated chats is good enough
that victims have a tough time distinguishing the "bot" from a real potential
suitor, PC Tools said. The software can work quickly too, establishing up to 10
relationships in 30 minutes, PC Tools said. It compiles a report on every person
it meets complete with name, contact information, and photos.
"As a tool that can be used by hackers to conduct identity fraud, CyberLover
demonstrates an unprecedented level of social engineering," PC Tools senior
malware analyst Sergei Shevchenko said in a statement.
Subprimes and the threat of lawsuit
I thought this was quite interesting, albeit exaggerated and overly polemic. It’s an example of what can happen when securities buyers threaten to rebel against a high level of background fraud (which is otherwise just priced into average values). And here is Jim Surowiecki’s column on the subprime crisis, which I liked very much.
Elsewhere on Mark Thoma’s site, I learn that Jim Glassman has a new job.
Addendum: Here is Felix Salmon on the topic.
Would it have helped to give freed slaves land?
Melinda Miller says yes, based on a clever natural experiment:
Although over 140 years have passed since slaves were emancipated in the United States, African-Americans continue to lag behind the general population in terms of earnings and wealth. Both Reconstruction era policy makers and modern scholars have argued that racial inequality could have been reduced or eliminated if plans to allocate each freed slave family “forty acres and a mule” had been implemented following the Civil War. In this paper, I develop an empirical strategy that exploits a plausibly exogenous variation in policies of the Cherokee Nation and the southern United States to identify the impact of free land on the economic outcomes of former slaves. The Cherokee Nation, located in what is now the northeastern corner of Oklahoma, permitted the enslavement of people of African descent. After joining the Confederacy in 1861, the Cherokee Nation was forced during post-war negotiations to allow its former slaves to claim and improve any unused land in the Nation’s public domain. To examine this unique population of former slaves, I have digitized the entirety of the 1860 Cherokee Nation Slave Schedules and a 60 percent sample of the 1880 Cherokee Census. I find the racial gap in land ownership, farm size, and investment in long-term capital projects is smaller in the Cherokee Nation than in the southern United States. The advantages Cherokee freedmen experience in these areas translate into smaller racial wealth and income gaps in the Cherokee Nation than in the South. Additionally, the Cherokee freedmen had higher absolute levels of wealth and higher levels of income than southern freedmen. These results together suggest that access to free land had a considerable and positive benefit on former slaves.
Here is the paper, she is on the job market this year from University of Michigan. The abstract is vague on magnitudes, for more detail see pp.29-30, for instance:
The livestock calculations find that the difference in the wealth gaps was substantial, and ranged from 46% to 75%. For crop income measures, the difference in the gap was smaller, but still substantial. My estimates place it between 20 to 56%.
Meta-recommendations
I’ve spent lots of time scouring this year’s "Best of" lists, and I thought I should pass along what I have learned. These are not my recommendations (though I often approve), these are what I have gleaned from the recommendations of media critics. They are my judgment of the most common selections on the "Best of" lists, noting that I did not check the lists from publications I do not enjoy and thus there is an implicit filter being applied.
So here is my aggregation:
1. Non-fiction book: Alex Ross, The Rest is Noise.
2. Fiction book: Tree of Smoke, or The Savage Detectives.
2. Miscellaneous book: Letters of Ted Hughes. Everyone loves this, I haven’t read it yet.
3. Movie: No Country for Old Men. The Diving Bell and the Butterfly gets lots of picks, given that it is playing in only two cities.
4. Classical CD: Lorraine Hunt Lieberson Sings Peter Lieberson, "Neruda Songs." Read the excellent Ed Uyeshima review on Amazon, it is first.
5. Popular music: LCD Soundsystem, Sound of Silver, or possibly Neon Bible, by Arcade Fire.
I still can’t figure out the consensus jazz CD of the year. Any help?
I might add that the non-meta me basically approves of this list, with two caveats. First, the Lieberson CD, while quite good, in part received so many mentions because the singer, Lorraine Hunt Lieberson, met a young and tragic death this last year. It was her husband who composed these songs for her. Second, I don’t myself have clear picks for popular music. I do a lot of my popular music buying in December, when the "Best of" lists come out. I did put on LCD Soundsystem this morning but was bored by it on first listening.
Is human evolution accelerating?
This paper says yes, over the last 40,000 years. The basic mechanism is that more people result in more adaptive mutations, plus environments have changed rapidly, due largely to technology and culture. Here is an LA Times summary, it claims that the pace of human evolution has accelerated hundredfold [sic] since the invention of agriculture (some reports indicate "ten to hundredfold").
How about this summary:
Prof Hawks says: "We are more different genetically from people living 5,000 years ago than they were different from Neanderthals."
As far as I can tell this looks legitimate. Here are one hundred different news summaries, here is Scientific American.
Thanks to several loyal MR readers for the pointer.
Addendum: Read this for explanation, it gets even more interesting toward the end, another implication is that viruses are more dangerous than we used to think.