Month: March 2009
The fifteen strangest college courses in America
Via Jason Kottke, here is the list. Call me warped, but I was impressed at how sensible the offerings were. "Learning from YouTube" strikes me as more valuable than 80 percent of what is currently on tap. I also think it is often useful to teach science through the medium of a TV show or to teach philosophy through The Simpsons. It fosters personal involvement and if you don't, most of the students aren't learning anything anyway.
But I have to say (call me a philistine if you wish), I was dismayed at "Underwater Basket Weaving," as it is taught at the University of California, San Diego. Might they have Mark Machina give a guest lecture on the relevance of non-expected utility models for underwater basket weaving?
Maybe not.
Markets in everything, until they are cancelled
Is this good or bad for the macroeconomy?:
In Los Angeles County, cities are buying federal stimulus funds from
each other at deep discounts, turning what was supposed to be a
targeted infusion of cash into a huge auction.
In two cases $500,000 in stimulus funding was selling in the range of $310K to $325K. (What does that tell us?) But wait, the Los Angeles County MTA has now cancelled these swaps.
I thank Jerry Brito and Todd Myers for the pointer.
Three TED Talks
My TED talk isn't up yet but three of my favorites are:
- Pattie Maes from MIT demonstrated some very cool technology. Check it out – you will want it.
- Eric Lewis knows how to pound the piano – he is going to be big.
- Aimee Mullins gave a good talk. Not super-exciting per se but notable in so clearly marking the point at which post-humanity has begun. (Note how misdirected her heartfelt conclusion is.)
The most technologically progressive decade of the 20th century
Can you guess? According to economic historian Alexander Field, it is (controversially) the 1930s. Opening paragraph:
Because of the Depression’s place in both the popular and academic imagination, and the repeated and justifiable emphasis on output that was not produced, income that was not earned, and expenditure that did not take place, it will seem startling to propose the following hypothesis: the years 1929–1941 were, in the aggregate, the most technologically progressive of any comparable period in U.S. economic history. The hypothesis entails two primary claims: that during this period businesses and government contractors implemented or adopted on a more widespread basis a wide range of new technologies and practices, resulting in the highest rate of measured peacetime peak-to-peak multifactor productivity growth in the century, and secondly, that the Depression years produced advances that replenished and expanded the larder of unexploited or only partially exploited techniques, thus providing the basis for much of the labor and multifactor productivity improvement of the 1950’s and 1960’s.
More concretely, we have this:
Within manufacturing, advance took place across a variety of fronts (Michael Bernstein, 1987, especially Ch. 4). There were, to be sure, older industries such as textiles, leather goods, and apparel, where productivity growth was slow or nonexistent. But there were also a remarkable number of dynamic sectors, generating new process and product innovations, with varying levels of commercial exploitation before the war. Petrochemicals is an obvious example. At companies such as Dupont, advances in chemical engineering generated a host of new products, including Lucite (sold as Plexiglas by a rival manufacturer), Teflon, and Nylon (Peter H. Spitz, 1988; Stephen Fenichel, 1996). Even in an older industry such as automobiles, innovation and product quality improvement during the decade proceeded at a rapid rate. Indeed, Daniel M. G. Raff and Manuel Trajtenberg (1997) view the decade as the last one in which there were truly revolutionary improvements in internal combustion engine powered vehicles. But progress was not limited to manufacturing: communications services, electric utilities, and transportation were also standouts. TFP [total factor productivity] growth in the telephone industry accelerated significantly after 1929 before falling precipitously during the war years. In electric utilities, MFP [multi factor productivity[ growth more than doubled comparing 1929–1941 with 1919–1929; in contrast to the telephone case, high rates persisted after 1941…
Labor productivity in railroads — still one fourth of the U.S, capital stock at the time — grew as well. Using steel with concrete also became far more productive.
I found the link to this well-known article in a very interesting post on economic recovery from the Depression.
The highly worthy Ross Douthat
…is soon to be Bill Kristol's replacement at The New York Times. This is a Pareto improvement for everyone but The Atlantic Monthly and readers of Ross's old blog (hey, that's a lot of people!). Let's hope that he, like Krugman, continues to blog in addition to writing his column. In the meantime, do you all have advice or requests for Ross?
Addendum: He will still blog!
Markets in everything: home tending
CW McCullagh sends me this:
Home tending is the practice of allowing someone to live in a home
while it's for sale. Real estate experts say this strategy helps sell homes a
lot faster than vacant homes. It's also a great way for some Houstonians during
these tough times to stretch their dollar.
The first house we saw had a gourmet kitchen, an elaborate chandelier
and a grand master bath. The asking price? Be ready to shell out $794,000.
"The house is mine, while I am here," said home tender Eurika
Coleman.
Coleman tends a River Oaks home. She pays $750 a month plus utilities.
"I am saving money, I am a recession sheik chick," laughed
Coleman.
Coleman started home tending about eight years ago and since then has
lived in lavish homes for a monthly fee.
Assorted links
1. $5 million advance for Audrey Niffenegger's new book (she wrote "The Time Traveller's Wife").
2. Happy and sad states (Utah wins, WV loses).
3. Showdown: Brad DeLong vs. Luigi Zingales.
4. Glenn Loury: America is a nation of jailers.
Questions that are rarely asked, a continuing series
Robin Hanson proceeds with "Who Likes Band Music?"
Smiling politely through yet another performance by my son's school
band tonight, I wondered: why do school bands play music so different
from what the kids, or even their parents, choose in their free time?
Music at parties, movies, etc. is pretty different. The novels kids
read in English class differ from the novels they or their parents read
in their free time, but most people accept that school novels are
deeper, subtler, etc., so that kids learn more by studying them. But
do most people really accept a similar claim about band music? What
gives?
Maybe the point of band music is that many of the instruments are relatively easy to play, or at least they are easy to play poorly. The noise drowns out the children who cannot play much at all. More children playing recruits more parental support and also more support from administrators, who like to point to participation. What numbers would you get if the students had to learn Hindemuth's sonatas for solo viola? Yes, conformity and discipline have some social value but still this does not look like a Pareto optimum to me either.
Inside the Fed
I enjoyed this book, which is written by Stephen Axilrod and has the subtitle Monetary Policy and Its Management, Martin Through Greenspan to Bernanke.
I liked this part:
John Ehrlichman's arrival toward the end of our visit was the main event, unadvertised as it had been. He had something very definite to say to us.
His speech went something like this: "When you gentlemen get up in the morning and look in the mirror while you are shaving, I want you to think carefully about one thing. Ask yourselves, "What can I do today to get the money supply up?" That was it; that was why we were there — not to explain, but to hear.
p.167 has an interesting (though not quite accurate) discussion of what distinguishes some top economics scholars from obsessive-compulsives.
The economics of car towing
Yahel, a loyal MR reader, asks:
What's
the model of towing? I live in Philadelphia, and have noticed one
particular company, Lew Blum, seems to have most of the market cornered
for towing cars parked illegally in private parking spots. How does one
acquire market share? Do the owners of private parking spots pay for
having someone like Lew Blum come and tow the cars that are taking
their spots? Or does Lew Blum offer money for the right to tow their
problematic cars (as they charge the owner of the car $150 to get the
car back, and $25 for every day it sits in their lot.) I can imagine
rationales for either model. On the one hand, Lew Blum is providing
owners of the spots a service by clearing out the vagrants. On the
other, he's guaranteed $150+ for every car he tows, so he (and all of
his competitors) wants to maximize the number of spots/lots they
'protect', and that competition should drive the 'cost' of the service
down to at least $0, if not negative $ (ie paying for the right).
A Google search on "economics of towing" doesn't turn up much. This site indicates that tow trucks were "deregulated" in 1995 and free entry, without traditional municipal permits, became the norm. That same post has a long discussion of "rogue towing," which I suppose is not hard to figure out. In many locales they are supposed to wait an hour before towing your car, even if it is illegally parked.
Here are the San Francisco towing regulations.
I'm puzzled that I can't find any discussions of towing company kickbacks to merchants, for giving them the towing call. Why isn't this more common? Surely the marginal profits on a tow are positive.
Overall towing seems like a "tragedy of the commons" problem, with an incentive for overly rapid and indiscriminate towing. If towing is a natural monopoly, the monopolist may be less quick to tow, because the alternative is that the firm will likely "capture" your car anyway. So if overtowing is a problem, monopoly may be preferred.
What else can you tell us about the economics of towing?
House of Cards
The author is William D. Cohan and the subtitle is A Tale of Hubris and Wretched Excess on Wall Street. It's the story of the recent history of Bear Stearns. Here is an NYT review. Here is a Business Week review. Here is an L.A. Times review; note that all reviews are very positive.
I've read only fifteen or so pages and I'm already convinced it's one of the must-read books relevant to the financial crisis. The other two books which come to mind are Lords of Finance and The Partnership, neither of which covers the crisis directly but both offer essential background.
Assorted Links
- Everything you want to know about smart grids from the very smart Lynne Kiesling.
- "In the hubbub surrounding President Obama’s
decision to cap salaries of commercial-bank CEOs at $500,000 (if they
receive future federal funds), the salaries of college and university
presidents have been flying under the radar." Clarence Deitsch and Norman Van Cott look at the President's club.
- Australians denied insurance for genetic reasons. Clearly, a case for genetic insurance.
John Hempton’s radical view of banking
I genuinely do not know the extent of U.S. bank insolvency, but I do wish to pass along this contrary opinion:
Then he [Buffett] says the problem of American banks are not overwhelmingly toxic assets. This is a radical view – but it is in my view correct. The problem with the banks is that nobody will trust them and they have not been able to raise funds. The view that this is a liquidity crisis – and not a solvency crisis – has long been a staple of the Bronte Capital blog. It is radical though. Krugman, Naked Capitalism and Felix Salmon think alike – asserting – seemingly without proof – that the problem is solvency. Buffett doesn’t even think the US banks (on average) require capital – a view that most people would find startling (though again I think is correct provided appropriate regulatory forbearance is given).
And this:
Krugman is finally coming to the view that the important technical question is whether to issue that guarantee [to bank creditors]. He is right. Provided the guarantees can be issued at reasonable cost they should be issued. Both Warren and I think the cost would be reasonable in the USA. By contrast I am not sure the UK has the blanket guarantee option because the UK banks are very large relative to the UK economy and they started highly capital inadequate. US banks by contrast started with a lot of capital.
Here is Hempton's previous radical post. I thank William Utley for the pointer. Perhaps I will be pilloried for posting this, but maybe the conventional wisdom can be wrong twice in a row.
If you want a ray of hope, possibly based on lies, try this article; opening line: "Stocks are rising after troubled Citigroup said it operated at a profit during the first two months of the year."
Markets in everything, if this works it will change the world edition
Cut a deal with anyone, using a website to record the terms and conduct the negotiations.
For instance perhaps (ha) you can convince your wife to turn down the thermostat in the house in return for taking out the recycling bin every Monday. Or, more promisingly, maybe I can promise to Bryan Caplan that I won't make fun of his naive realism in return for his eating Pho with us twice a year. This site gives you a handy written record of the agreement.
Further below you read about training: "Make a sample deal with our interns."
The motto of this very ambitious site is: "Asynchronous Negotiation Favors the Underdog"
How easy is it to fill those Treasury jobs?
In a search for "non-compromised" candidates, Matt writes:
positions. Timothy Geithner needs a Deputy Secretary. And then there’s
a need for an Under Secretary of the Treasury for Domestic Finance, an
Assistant Secretary for Financial Institutions, and an Assistant
Secretary for Financial Markets. There are other positions in the
department, but those are the four where you might think that
experience with high finance specifically was vitally necessary. It’s
only three jobs. And you can’t tell me that there aren’t four people
alive in the United States who have experience with finance but lack
compromising relationship[s]. Why not Simon Johnson, for example? Give him
one of the jobs, and a quarter of your problem would be solved. Indeed,
if you even got three non-bankers to fill four of the
positions, I think that would create a lot of piece of mind. Nouriel
Roubini, to give another name well-known to the blogosphere, seems
perfectly well-qualified for a job at Treasury–he’s even worked in the
past as a “senior adviser” to Tim Geithner.
One point is that both Johnson and Roubini were born outside of this country and perhaps neither is an American citizen. More fundamentally, the job requires close to a 24/7 time commitment, a huge cut in pay (might Roubini earn 50K per talk?, along with enjoying complete personal freedom), an ability to "stick to message" and give up the right to speak one's mind in public, managerial and person-handling skills, a smooth enough temperament, the ability to tolerate a gross imbalance between responsibility and resources, the possible end of an academic career (for some people it's hard to keep on caring), and a very real chance to fail and fall flat on one's face. Toss in near-perfect tax records and regular payment of Social Security contributions for one's Green Card-holding housekeeper.
That's all without even being in charge. Is Geithner an easy guy to work with? You won't know until you say "yes."
I once, by sheer accident, ran into Johnson in the lobby of an NPR studio and he was smiling.
How many brilliant academics even manage to make good deans?