Month: March 2008

China fact of the day

There are some forty thousand Chinese restaurants in the United States — more than the number of McDonald’s, Burger Kings, and KFCs combined.

That is from the often quite interesting The Fortune Cookie Chronicles: Adventures in the World of Chinese Food, by Jennifer 8. Lee (yes, readers, her middle initial is the number "8").  Of course arguably most of these restaurants do not count as Chinese food at all.

At the end of the book the author undertakes a global pilgrimage to discover the very best Chinese restaurant outside of China.  The winner?: Zen Fine Chinese Cuisine, just outside of Vancouver.  The number two choice came — justly — in Mumbai (Nelson Wang’s China Garden).  I’ve never been to Richmond but I believe all of my top picks would come in India.  Hunan, in London, deserves consideration as well.  The author is correct that Chinese chefs, for whatever reason, do not flourish in France.  Recommended.   

What if we elected a Muslim black nationalist?

Reading Matt Yglesias, I couldn’t help but wonder.  Assume the candidate was intelligent and had a responsible temperament.  What would it actually be like?  Presumably such a President would limit or cut off aid to Israel and directly support a Palestinian state.  (We might keep some aid for purposes of leverage.)  In the Arab world we would probably take some different sides, and more specific sides, than we do now.  I fear we would end up embroiled in a Muslim religious civil war in the Middle East.  When needed, we would likely intervene to help out Muslims in the Balkans or in Kuwait.  Might we get more free trade?  After all most Muslims live abroad and would like to sell their goods here.  The President could try to up the immigration quotas from Muslim countries but I doubt if Congress would accede.  Public and Supreme Court support for the separation of church and state would go up, not down.  Haven’t Muslim black nationalists, historically, had a big interest in prison reform?  Would our President give the bomb away to Muslim nations?  Would it be easier to find Koranic recital CDs in Borders?  Would the President pressure the Fed to drive nominal interest rates close to zero, thereby implementing Milton Friedman’s optimum quantity of money?

Why did the Houston Rockets draft Yao Ming?

Yao Ming is (was?) a very good player and of course he looked great on paper.  He’s now injured for the third season in a row and out for the year.  He has never been past the first round of the playoffs and it is not clear he will ever be healthy.  It is clear that players over 7’4" almost always have persistent injury problems; human beings with that frame were not meant to play professional sports, least of all contact basketball.  There are plenty of people that tall, but who has had the most successful basketball career?  I believe the answer has to be the not totally impressive Rik Smits

So why did the Houston Rockets draft Yao Ming?  They couldn’t not draft him.  The lessons for financial markets are obvious.  Drafting Yao Ming is like writing the disguised naked put.  You see the money in front of you, you see the return in front of you, you see the potential in front of you, none of the alternatives are so glamorous, and so you can’t not do it. Besides, other players get injured too.

Yao Ming, the naked put.  Think about it.

Should we waive legal liability for FDA-approved drugs?

So asks Megan McArdle.  The argument runs as follows:

I don’t understand quite why FDA approval of drugs and medical devices
hasn’t long provided legal safe harbor for their manufacturers. The
defects that show up, such as the Vioxx and Fen-Phen problems, are
discovered long after approval precisely because they’re so rare that
they don’t show up in ordinary clinical trials. If the government
experts, who are presumably highly motivated to avoid catastrophes,
can’t spot the danger, why do we expect the drug companies to?

I can think of three possible rebuttals:

1. We simply can’t trust the bureaucrats to find the flaws with drugs.  But note this is inconsistent with both the rhetoric of FDA defenders ("the FDA can work") and FDA critics, who argue we are overinvesting in drug safety as it is.

2. Lawsuits encourage the companies to look for problems once a drug is already approved.  Regulation does not.

3. People need lawsuits as a way of emotionally striking back.  If they are denied that privilege, they will demand ridiculously oversafe levels of regulation in the first place.  In this view regulation is as much about building consumer confidence in a health care system as it is about protecting people.

I do not currently have a view on this matter.  Do you?  Kevin Drum is opposed.

A Million Years of Logic, the End of Economics, and the Sociological Future

This entry is cross-posted at, the social science and management blog. Also, please check out my on book politics and universities, From Black Power to Black Studies. Thanks for reading!

            We’ve reached the end of Logic of Life, Tim Harford’s engaging tour of economics and its lessons for everyday life. Harford ends the book on a highly speculative note about technology, economics, and growth. Tim does a good job summarizing the emerging consensus. The “normal” state of human life is poverty and near zero economic development. Once a community establishes reasonable institutions for commerce and trade, people can quickly produce and exploit technological advances. The effects are cumulative: once a nation allows markets to work beyond a certain threshold, the population experiences exponentially increasing benefits. The economists’ summary of world history is: “no capitalism = no growth, some capitalism = growth, growth, growth!!”

            This discussion is interesting because of the connections to ideas outside the normal realm of economics, especially in areas like psychology and, my own area, sociology. Here’s just one example. Harford discusses the idea that population size should correlate with innovation. Simply put, if you have a hundred million people, you’ll get a least a few geniuses. The inventions of these geniuses can be mass marketed, which fuels later growth episodes. Fair enough.

But where do “geniuses” come from? Turns out, there is a fascinating literature on creativity and achievement. A few names: R. Keith Sawyer, a sociologist/psychologist, writes eloquently on the emergence of genius from networks and groups. Sociologist Randall Collins wrote a highly regarded book on prominent philosophers showing that “genius level” philosophers tended to be clustered in space and time, suggesting that genius is made possible by very specific kinds of “hot house” situations. Other research, pioneered by Florida State psychologist Anders Ericsson, shows that high level performance isn’t just a matter of talent. It’s also a matter of specific training techniques and immersion in a topic. Basically, it’s not just talent that leads to achievement, it’s also the right kind of social environment.*

What’s the point? It’s this: Economics, as understood for hundreds of years, has played out. The major problems of econ 101 have been solved. We know about supply and demand, marginal utility, choice under uncertainty, and budget constraints. We have a wide variety of tools, ranging from game theory to econometrics, that help us identify  these processes in situations ranging from war, to car sales, to dating. We are also seeing how these processes plug into classic macroeconomic issues, such as growth and international trade.

However, the market system itself, as indicated by Tim’s concluding chapter, depends on population, innovation, and liberal economic institutions. These, in turn, depend on psychology, group culture, and networks, the domain of sociologists, psychologists, historians, and anthropologists. Economists have shown how the market system processes the inputs, but there’s still much, much more to be said about where the inputs come from. That’s what’s going to be exciting in the decades to come, and I can’t wait to see it.

* Author David Shenk nicely covers this research on his blog The Genius in All of Us.

The Case for Foreclosures, by Steven Landsburg

None of these foreclosed houses is going to disappear. After a
foreclosure, one family moves out, and another moves in. We see the sad
faces of the people moving out, but we don’t as often see the happy
faces of the new homeowners moving in. Nevertheless, those happy faces
are out there, and we should not discount them.

Here is more.  I take the case against foreclosures to be the following.  The people getting kicked out lose their credit ratings and in the medium term they spend less.  The people moving in presumably have higher credit ratings but they probably aren’t rich.  They transfer a big chunk of their liquid wealth to a possibly-low-propensity-to-spend financial institution.  So foreclosures lower nominal aggregate demand and in times of a downturn this can be bad.

Landsburg’s title may just be provocative but I would make a distinction between the case for allowing foreclosures (I do not advocate that the federal government rewrite the mortgage contracts, although renegotiation could be made easier) and the case for foreclosures.  I should note he is quite correct to insist that foreclosure victims are hardly among the world’s — or even America’s — neediest cases.  If you think government can do anything well at all, ask what it can do for underprivileged young children.  On both justice and efficiency grounds the greatest potential gains lie there.  And continued home ownership is not the main thing they need.

The Spanish idea of the film canon

I’ve been reading César Vidal’s El Camino Hacia la Cultura, which might translate roughly as "The Path Toward Culture."  Imagine a Spanish Harold Bloom, yet trying to be more representative than idiosyncratic in his canonical picks.  Overall his choices are what you would expect, albeit with a strong emphasis on modernism and in fiction he stresses the Continental novel of ideas.  The very useful poetry list is full of Spaniards.  Here is his list of the best movies (worldwide) since the 1990s:

Jacob’s Ladder (TC: I love this movie), Dances with Wolves, Dreams (Kurosawa), JFK, Glengarry Glen Ross, Malcolm X, Groundhog Day, Schindler’s List, Forrest Gump (ugh), The Shawshank Redemption, Braveheart, Fargo, The English Patient, Titanic, The Apostle, Saving Private Ryan, Matrix, Magnolia, The Sixth Sense, Nueva Reinas, El hijo de la novia, Gladiator, Return of the King, De-Lovely, Apocalypto (TC: !…another winner).

The absence of traditional indie cinema and most European cinema is striking.  Sadly Asian movies are missing altogether, except for Kurosawa.  Overall I am struck by a) the gutsiness of this list, and b) the author doesn’t seem to see it as gutsy at all.

Spanking and Sex

Here are some more oddities about the study.  According to this report:

"the study found that 29 percent of the
male and 21 percent of the female students had verbally coerced sex
from another person….The percentages of those who physically forced sex were much lower: 1.7 percent   of the men and 1.2 percent of the women…."

Don’t these percentages seem very high? Especially for the women?

And get this,

"Straus found that 15 percent of the men and 13 percent of the women
had insisted on sex without a condom at least once in the past year.

Using the four-step corporal punishment scale, Straus found that of
the group with the lowest score on the corporal punishment scale, 12.5
percent had insisted on unprotected sex. In contrast, 25 percent of
students in the highest corporal punishment group engaged in this type
of risky sex."

13 percent of the women insisted that the man not use a condom?

More importantly, I believe that there is a causal connection between child abuse (rather than spanking) and later problems of violence but to me a connection between the kid being spanked and later engaging in risky sex is especially suggestive that the connection is a risk-loving person.  Children who take a lot of risks, like running out on to the street a lot, are going to get spanked more.  Later these same children also engage in risky activities.  Not having seen the data I would be willing to bet that spanking is also correlated with skydiving, not wearing your seatbelt, gambling, and many other risky behaviors which are plausible not caused by spanking.

Finally, how about this for a non sequitur of the day:

"because over 90 percent of U.S. parents spank toddlers, the potential
benefits for prevention of sexual and relationship violence is large,”
Straus says."

What’s the real European growth rate?

During my visits in England and Spain — admittedly two of the winners — I was wondering if we haven’t underestimated European growth rates.  It is well known that when new commodities are entering the market, measured growth rates can significantly understate the real increase in well-being.  (Imagine that the price of an iPod fell from infinity in 1995 to $200 or so today; measuring this gain in terms of "more bundles of $200 in value" is missing some of the very high gains from those people who love iPods but were previously "at a corner" of no purchases, due to unavailability.)

So how does this apply to Europe?  I’m not mainly talking about iPods.  Rather migration is rampant.  When a Pole moves to London he can buy many more goods and services.  It’s a big move up in real income plus lots of new goods are introduced to the consumption basket.  So when there is lots of voluntary movement from poorer to richer regions, changes in measured income will understate some of the true gains.

Frequently I stressed to Spanish reporters just how big a success their country and economy has been; they almost didn’t believe me.  When I said things like: "Spain is in a much better competitive position than China, which still doesn’t have half the per capita income of Mexico" they were truly shocked.

Is federalism unfair to urbanites?

Ed Glaeser writes:

Poor people come to cities because urban areas
offer economic opportunity, better social services, and the chance to get by
without an automobile. Yet the sheer numbers of urban poor make it more costly
to provide basic city services, like education and safety, and those costs are
borne by the city’s more prosperous residents. Taking care of America’s poor
should be the responsibility of all Americans. When we ask urban residents to
pick up the tab for educating the urban poor, then we are imposing an unfair
tax on those residents. That tax artificially restricts the growth of our
dynamic cities.

It is fair to say that urban dwellers receive higher positive and negative externalities from their neighbors, relative to suburbanites.  I’m not sure why the bundle as a whole is unfair, least of all to the wealthier city residents (or why there is so much talk of unfairness to the wealthy in the first place), or for that matter why it is a significant marginal distortion.  The net value of the externalities is surely positive for people who live in cities and pay the higher rents.  All taxes involve some distortions but it seems like what is essentially a tax on city land does not involve a higher distortion than the average tax, if anything the contrary.  What’s really the case for lower property taxes and higher federal income taxes, combined with a move against federalism?

If there is any unfairness, maybe it is toward the people can’t afford to live in desirable cities but would like to.  If we lower the property tax burden in cities, rents will rise and this problem will become worse rather than better.  The more general point is that urban land owners, not all residents, benefit disproportionately from good policy changes.  Urban improvements have unfair distributional effects by the very nature of city land.

If there is a case for federalizing urban education and welfare, surely it refers to what will help the poor (if indeed that would), not what will help the urban non-poor.  And are city residents even a meaningful class of people to which the concept of fairness applies in a significant way?  Glaeser is very very smart but frankly I found most of this piece puzzling; perhaps I have misunderstood him.

Are there countercyclical cultural trends?

In other words, which trends or tendencies flourish when the economy is underperforming?  This source makes a (weak) case for facial hair.  In 1926 George Taylor claimed that hemlines went up with strong economies; presumably skirts become longer when times are bad.  This post and chart suggest that dystopian science fiction movies go away in bad times.

Which of these tendencies — if any — are the most reasonable to actually believe?