Month: June 2008

Japanese gadget of the day

No, it’s not the glasses-cleaning machine or for that matter the Tenga.  Rather, if it is raining, and you enter one of the fancier department stores, they put out a machine which allows you to very rapidly shrink wrap your umbrella.  You just plunge your umbrella in and it takes about two seconds.  The point is that you don’t drip water from your umbrella across the whole department store.  Simple, no?

And if that doesn’t convince you to visit Japan, maybe Human Tetris will.

Norman Borlaug on the Food Crisis

Here is Norman Borlaug, father of the green revolution, from about a decade ago but highly relevant today:

Yields can still be increased by 50-100% in much of the Indian sub-Continent,
Latin America, the former USSR and Eastern Europe, and by 100-200% in much of
sub-Saharan Africa, providing political stability is maintained, bureaucracies
that destroys entrepreneurial initiative are reigned in, and their researchers
and extension workers devote more energy to putting science and technology to
work at the farm level….

I now say that the world has the technology – either available or
well-advanced in the research pipeline – to feed a population of 10 billion
people. The more pertinent question today is whether farmers and ranchers will
be permitted to use this new technology. Extremists in the environmental
movement from the rich nations seem to be doing everything they can to stop
scientific progress in its tracks. Small, but vociferous and highly effective
and well-funded, anti-science and technology groups are slowing the application
of new technology, whether it be developed from biotechnology or more
conventional methods of agricultural science. I am particularly alarmed by those
who seek to deny small-scale farmers of the Third World -and especially those in
sub-Saharan Africa – access to the improved seeds, fertilizers, and crop
protection chemicals that have allowed the affluent nations the luxury of
plentiful and inexpensive foodstuffs which, in turn, has accelerated their
economic development.

And here is an awesome graph showing how much land has been saved by improved agricultural productivity in the United States. 
Nblfig1

Cap and trade vs. carbon tax

Robert Samuelson writes:

Unless we find cost-effective ways of reducing the role of fossil fuels, a
cap-and-trade system will ultimately break down. It wouldn’t permit satisfactory
economic growth. But if we’re going to try to stimulate new technologies through
price, let’s do it honestly. A straightforward tax on carbon would favor
alternative fuels and conservation just as much as cap-and-trade but without the
rigid emission limits. A tax is more visible and understandable. If
environmentalists still prefer an allowance system, let’s call it by its proper
name: cap-and-tax.

Mark Thoma gets upset at this passage, here is Ryan Avent, Brad DeLong and Matt Yglesias, all upset.  Avent was the fount of the opposition:

Yowza. As any economist worth his or her salt will tell you, a cap and
trade plan with auctioned permits is essentially identical to a carbon
tax. That also happens to be exactly what Barack Obama is proposing.
So, another way for Samuelson to have written this column would have
been to title it, “Barack Obama has a good plan to reduce carbon
emissions."

But Samuelson is correct here and Avent is misleading.  When there is uncertainty about the location of the social optimum, and uncertainty about elasticities, a carbon tax and cap-and-trade are by no means equivalent.  If you see very high costs from setting the binding cap too low and choking off growth — as Samuelson mentions — you should prefer the carbon tax.  The price of carbon is more certain and you bear less risk from uncertainty about how fast solar power and other technologies will develop.  Alternatively, you might say that risk is transformed into price risk rather than "you can’t exceed this cap no matter what" risk.

Of course the postulated uncertainties are realistic in this context and you don’t have to invoke uncertainty about the science of global warming. 

If there is very high environmental risk to having emissions above a certain level, and we are unsure about the relevant elasticities (again, uncertainty about the pace of technological development can drive this), that militates in favor of cap and trade.  It is then easier to ensure that emissions do not exceed a particular level.

You can see that we are comparing the "growth threshold problem" to the "environment threshold problem."  Samuelson is apparently more worried about the former than the latter.  Maybe he shouldn’t be so sure he is focusing on the right problem, but on the economics he is on the mark in the criticized passage.

Addendum: Here is Mark Thoma with more on the topic, here is Megan McArdle on same.

Markets in everything, Japanese edition

The Otaku are at it again:

So the niches are always getting narrower. Maid cafes have been the rage for about four years now, and a true otaku
would never be satisfied to go to any old one. There must be a fetish
about the experience. Perhaps you’d like to put your head on the maid’s
lap and let her groom your ears. "Let me show you an extra-special
level of nuttiness," Lewis says. He leads me to a shop called Candy
Fruit, where a maid cafe once stood. It’s now a shop selling glasses to
two specific breeds of client: women who want glasses to wear with
their maid uniforms. And men who want to buy their glasses from a woman
in a maid’s costume wearing glasses.

The entire article is interesting.

Does fast food really make us fat?

Matsa and Anderson next looked at data on individual eating habits from
a survey conducted between 1994 and 1996. When eating out, people
reported consuming about 35 percent more calories on average than when
they ate at home. But importantly, respondents reduced their caloric
intake at home on days they ate out (that’s not to say that people were
watching their weight, since respondents who reported consuming more at
home also tended to eat more when going out). Overall, eating out
increased daily caloric intake by only 24 calories.

The researchers also find that greater access to fast food restaurants, as created by new highway construction, doesn’t much matter for weight.  Here is more, including a link to the original paper.

Hegel, or Department of Yikes

Eric, a loyal MR reader, asks:

Could you comment on
Hegel?  What do you make of his argument regarding the desire for
recognition as a fundamental driving force of history.  I have not read
much of Hegel, but this idea was attributed to him in Francis
Fukuyama’s "The End of History."

My competence here is low but who I am to turn down a loyal reader?  I have looked at every page of Hegel’s Phenomenology of Spirit — usually considered his most profound work — but I can hardly claim to have read it.  Maybe the Master-Slave dialectic was profound at the time but, frankly, I considered the book a waste of time and I couldn’t keep on paying attention.  Philosophy of Right and Philosophy of History are more coherent (the writings on aesthetics also) and every now and then Hegel is striking prescient or otherwise brilliant, such as when he is writing about the forthcoming nature of bourgeois commercial society.  But "every now and then" is the operative phrase here.  Mostly you read him because he has been an influential thinker.  A few points:

1. He is more of a classical liberal than most people think.  The correct translation does not in fact have him writing: "The State is the march of God in the world."  And he had a very well-developed theory of property rights.

2. "Thesis-Antithesis-Synthesis" is a very bad representation of what Hegel believed.

3. The whole Hegelian structure becomes more plausible once you see it as motivated by the belief that philosophy had become truly, absolutely stuck after Hume and Kant.  Hegel thought that his "moves" were required to get out of the mess that preceded him.  I prefer the pragmatic turn myself.

4. I very much like Charles Taylor’s book on Hegel.  I do not think it is what "Hegel really meant" but perhaps it is what "Hegel would have had to have really meant, had some smart people like Robin Hanson pinned his back against the wall, lectured him about futarchy, and made him write shorter sentences to boot."

5. I believe that the secondary literature on Hegel is fraught with danger and is highly unreliable.

On the desire for recognition, yes it is a fundamental driving force (ask any blogger) although it was a well-known eighteenth century idea.

Overall I don’t think much people should spend much time with Hegel, although if someone tells me he found it a revelation, I don’t think him crazy.

Michael Stack, a loyal MR reader, asks

When I was in 5th grade I participated in a charity event called "Jump Rope For Heart". People donated a certain amount of money per rope jump. I found myself wondering why it was structured that way – after all, people didn’t really care whether I jumped or not.

Many charitable events are structured this way, though typically they involve public walking.

Why do they work this way? Why not ask for lump-sum donations rather than having a bunch of people dig fence post holes? Is it make-work bias? Is it the labor theory of value? Maybe instead my willingness to jump/walk or otherwise participate indicates my commitment to the cause and in some sense certifies the event? A band-wagon effect? Maybe the dollar amount per unit of effort (jump, miles walked, etc) is so low that it induces people to donate more money than they would otherwise?

Rather than paying somebody to do busy-work, why not instead pay people to do something productive, such as soliciting even more donations?

Consider publicity as the main scarcity a charity faces.  If you elicit volunteers to walk, run or skip rope for you, those persons will talk up the activity — and the charity — to their friends, both ex ante and ex post.  They’ll even wear your T-Shirt "Cystic Fibrosis Marathon."

Since most of the people are exercisers anyway, the charitable activity doesn’t cost them much on net.  In fact the exercise is one way of expressing a greater commitment to the charity and may encourage subsequent donations.  Commitment, of course, is not infinitely elastic in supply.  So some of the person’s commitment may be transferred to the charity and away from the ideal of personal exercise.  Counterintuitively, in the long run the person may end up less fit but more committed to the charity.  In other words you’re paying with some of your health and discipline rather than with your money.

What your funeral music says about you

Here’s an interesting article about the Brits, many of whom prefer "Always Look on the Bright Side of Life," the Monty Python song, for their funerals.  My probably unrealistic (and not morally binding) vision of my funeral is to forbid any tributes or even spoken words but make everyone sit through Brahms’s Ein Deutsches Requiem (Kempe or Klemperer versions, about 79 minutes long) and then simply close the event and send everybody home.

Whether this is an aesthetic preference, or whether I don’t want to let them talk themselves out of weeping over my death, I am not sure.

eBook sales are way up

Penguin has reported that e-book sales from the first four months of
2008 have surpassed the house’s total e-book sales for all of last
year. According to the publisher, the spike is "more than five times
the overall growth in sales, year-on-year, through April 2008." Penguin
Group CEO David Shanks said he attributed the jump, in large part, to
the growing popularity of e-book readers. 

Here is the link and right here you can buy Discover Your Inner Economist in Kindle form (it’s also available as a Sony eBook) and paperback as well, here is the Amazon link.

Addendum: Here is more on the economics of Kindle.

The Economics of Sawdust

I was in Vermont over the weekend and talking to a dairy farmer about the rising price of milk.  I was surprised when she said that higher sawdust prices was one of the causes.  Sawdust?  Sawdust, it turns out, is used for bedding the cows and the price of dust has doubled in the past year.  I surmise that the downturn in housing construction has meant a reduced demand for lumber and thus less sawdust.

The connection between the housing market and the milk market is an interesting example of the dense connectedness of markets, "general equilibrium" in the language of economics.

The economics of sawdust also reminds us that the capitalist production system minimizes waste – entrepreneurs search out ways to extract the most value from every input and from every output.  Thus even sawdust, as trivial a waste product as one could imagine, is turned into an input into milk production as well as into particle board, fuel nuggets, mulch and other useful products.

Addendum: The WSJ has more on sawdust.

Advice for visiting a developing country

William, a loyal MR reader, asks:

What advice do you have for an aspiring development economist visiting a developing country for the first time?

He is a rising sophomore from a very good university and has strong interests in economics.  The locale is Cape Town, although the question is about general advice.  My tips are the following:

1. Learn as quickly as you can what is safe and what is not.  In Brazil taxicabs are pretty safe, in Mexico City they are not.  This will take some doing and in the meantime be very careful.  Have a prearranged safety net if you lose everything to a thief.

2. Do not get drunk take drugs or patronize prostitutes.  Really,  It is a path to trouble and if you want to do it save it for a more familiar environment.

3. Try out the various transportation networks in the region, the more inconvenient the better.

4. Attend a religious ceremony or fiesta or both.

5. Make sure you visit some small farms.

6. Immerse yourself in the music of the place — I don’t mean the most commercial musics — before you go and then of course after you arrive.  This is more valuable and more "real" than reading the literature, which is often intended for outsiders.  Of course read some non-fiction on the place as well.

7. See if you can teach or attend a class in a local school.

8.  Eat the street food.

9. Do not rule out the idea of romance, keeping #2 in mind and noting that cross-cultural romantic signals are often misunderstood.  This is a tricky one but it is the #1 teacher if it works out not to mention the romantic benefits.

10. Count the number of Indians and Chinese and Lebanese (and sometimes Koreans) around and draw inferences from that data.

11. If you can, arrive with a well-defined hypothesis in mind.   But don’t think you can collect all the data on one trip, you probably can’t.

12. Realize that you probably won’t understand all the times that people are telling you "no."

Learning the language goes without saying.  I suspect Chris Blattman can add to this list, can you?

Addendum: Here are Chris’s tips.