Month: June 2009
For years I've been promising Bryan Caplan and Robin Hanson that I would play an afternoon game with them, if only once. And for years I've held out. Since I used to play chess, Scrabble, and other games I cannot claim an intrinsic dislike of gaming. Yesterday I tried to play Kremlin with them but I had to give up after thirty minutes. My head hurt and I was not motivated to impose interesting structure on the game as a life activity. I'm still looking for a simple model of my failure. One hypothesis is that anyone who deals with university administration, as I sometimes do, will have no marginal taste for playing Kremlin.
Megan McArdle writes:
There's a lot of sadness on liberal blogs these days. What happened to
Hope and Change? Climate change is coming sometime next year, maybe.
Financial regulation also isn't coming anytime soon, and what's
proposed is the minimum set of politically feasible propositions rather
than a sweeping overhaul. And health care?
There is more at the link and I suspect it is mostly or fully correct. Here is Ezra on health care reform and the very big chance that it might fail. I'd just like to repeat a simple question I asked at the beginning of the Obama administration: which would you rather have, the fiscal stimulus or $775 billion in public health programs?
Even better, how about $300 billion in stimulus — the immediate stuff like aid to state governments — and $475 billion in public health programs?
At the time no one except a few progressives thought such a question was particularly relevant.
Note that the economy has seemed to stabilize, more or less, and well under ten percent of the stimulus money has been spent to date. Moving forward, if no further major programs will be put into place, how would you like to spend the rest of that cash?
And I don't mean this post as a poke at Democrats in particular. Conservatives, libertarians, etc. all commit their own versions of this error, at least if they find their way to power. The basic mechanism is simply that policy advocates underestimate the opportunity costs of the measures they propose, as they tend to see those measures as more "win-win" than others are willing to believe.
Because of the downturn, friendships between two people whose Saturday night spending and overall class status used to calibrate precisely have now turned into trickier relationships between one person who still has money and one person who doesn’t. The sudden uneven footing isn’t easy to negotiate, as I’ve learned from the responses I got to my question about the effect of the recession on friendships.
Do income classes become more clannish in hard economic times? There is either a very deliberate trade of favors for money, or you stick with those who can spend as you do. An alternative model is that it becomes easier to ask what the other person can afford, and more gains from friendlly trade are opened up across a variety of income classes.
I thought these sentences from Mrs Romer’s piece were excellent: "As
someone who has written somewhat critically of the short-sightedness of
policymakers in the late 1930s, I feel new humility. I can see that the
pressure they were under was probably enormous."
bottom line. With Mrs Romer's piece we have one of the world’s great
macroeconomists, yet not quite being allowed to play that role.
In part I was referring to this:
I am least happy with the sentence: "By coupling the expansion of
coverage with reforms that significantly slow the growth of health-care
costs, we can dramatically improve the long-run fiscal situation
without tightening prematurely." So far we have every reason to believe
that Congress–and indirectly the American voter–will not allow the
growth of health-care costs to be slowed. Mrs Romer's sentence could
have been rewritten: "Congress is unlikely to significantly slow the
growth of health-care costs, so we cannot dramatically improve the
long-run fiscal situation without tightening prematurely."
If you're wondering, all that talk of "Mrs Romer" is a Britishism added by The Economist (should I have offered her a "lovely biscuit" as well?). I get a kick out of seeing myself having "written" that, but being from New Jersey what I sent in was simply "Romer"; next in line would have been "Professor Romer," "Ms. Romer," or even "Mrs. Romer."
1. Sushi robots.
2. The market for hugs: not a Bertrand equilibrium.
7. More from Paul Samuelson; read for instance his bits on Larry Summers.
1. The Future of Thinking Differently
2. Hidden Creativity
3. Why Modern Culture is Like Marriage, in all its Glory
4. IM, Cell Phones, and Facebook [this chapter discusses Twitter as well]
5. The Buddha as Savior and the Professor as Shaman
6. The New Economy of Stories
8. Beauty isn't What You Think
9. Autistic Politics
10. The Future of the Universe
This is definitely a book you should buy. And unlike Discover Your Inner Economist, no more than a page or two of its content has been presented on MarginalRevolution.
I take this as a signal to go short the metal:
Germans, long attracted to the safety of solid gold, will soon be able to sate their appetite for the yellow metal as easily as buying a chocolate bar after plans were announced yesterday to install gold vending machines in airports and railway stations across the country.
…He hopes to install "Gold to go" machines in 500 locations in German-speaking countries this year.
Gold prices from the machines – about 30 per cent higher than market prices for the cheapest product – will be updated every few minutes.
A camera is installed to monitor possible attempts to launder money by buying gold, Mr Geissler said.
I thank Alex L. for the pointer. Here is a related article. It discusses the use of test explosives to make sure that the machines cannot be carted off or ripped open.
Addendum: One more thing: I know this was reported in both the FT and the NYT, but this skeptical blogger still doesn't think it will ever happen or come close to happening. I believe it is a publicity stunt (or fraud) and that some top reporters were simply tricked. We'll see.
Second addendum: Here is a video.
Kevin Drum says no:
If you're going to create some kind of system risk regulator at all –
about which I'm sort of agnostic in the first place – you want to give
the authority to an agency that's institutionally dedicated to reducing
risk and considers it a primary task. That ain't the Fed. It's just
going to get buried in the bureaucracy and forgotten there.
Assuming we are going to do it, I think it has to be the Fed, whether we like it or not. It's the Fed who is the fireman with the awesome power to print money, move markets, lend to the banking system on a large scale, and now even conduct fiscal policy, all without Congressional approval. Our textbooks speak of the Fed as a lender of last resort but very often it is the lender of first resort too.
If you stuck another agency into that mix, it would end up waiting for the Fed's go-ahead, once an actual crisis arrived.
OK, so the systemic regulator is the Fed. But then you can't make the systemic regulator too accountable to Congress without eliminating the quasi-independence of the central bank. There's not any comfortable point on the power-accountability continuum, mostly because we don't trust Congress to run monetary policy.
The stinger on the tail is this: we want the Fed to deliver low inflation. That means we let it be influenced by financial creditor interest groups but not so much by populist interest groups (Adam Posen had a good piece on this but I cannot recall the reference). Right now a lot of people are asking for more populist regulation without realizing that also requires more populist monetary policy.
It's very hard to get financial regulation right. It's the populist stuff that Obama wants to strip into a separate agency (for consumer protection) but it is difficult for such an agency to cover the major elements of systemic risk.
Find it here, run by Conor Clarke. Excerpt:
Milton Friedman. Friedman had a solid MV = PQ
doctrine from which he deviated very little all his life. By the way,
he's about as smart a guy as you'll meet. He's as persuasive as you
hope not to meet. And to be candid, I should tell you that I stayed on
good terms with Milton for more than 60 years. But I didn't do it by
telling him exactly everything I thought about him. He was a
libertarian to the point of nuttiness. People thought he was joking,
but he was against licensing surgeons and so forth. And when I went
quarterly to the Federal Reserve meetings, and he was there, we agreed
only twice in the course of the business cycle.
It is on theology and religion and you will find it here. They list some of the specific topics as follows:
For me it was a very interesting exchange, but given the topic I cannot predict that everyone will feel the same way. Other points we touched upon were the beautiful elements in Islam and its notion of religious ecstasy, the appeal of Sufism, why Unitarianism is not more popular, the pagan polytheistic versions of Catholicism, penalty and punishment in Haitian voodoo, the preconditions of tolerance, my views on meta-ethics, what does the concept of God really mean anyway, why dogmatic atheism is so unfortunate, and what is the real metaphysical problem that everyone needs to face up to. Bob of course just wrote a book on religion but from my end I view this as a personal dialog rather than me communicating verified scholarly information in an educational manner.
You can buy Bob's book, The Evolution of God, here.
Is there anything to say, other than rehashing old debates about regulation and blame?
As the NYT notes:
A key element in the plan will be creating an independent Consumer
Financial Protection Agency to write and enforce rules on fair lending
and other matters.
Maybe that's where one chance to get tough lies. We are creating an agency which will have plenty of incentive to limit risk by installing plain vanilla products, and yet it will have little stake in preserving economic growth.
It is possible that the real action is in the future flow of financial innovation rather than how we treat the stock of extant financial innovation (recall Arnold Kling's chess game analogy). I suspect the Obama plan is tougher on the former than on the latter.
I would say we still don't know what is actually going to be done.
Zotero is a free program for citations management and bibliography generation designed to be competitive with Endnote and similar products. I've been using it for a couple of weeks. Zotero lives as a Firefox extension and it's best feature is the ease with which you can import citations from the web. If you are looking at a paper on JSTOR, for example, you can "one-click import" the citation. One-click import is also available from Amazon, Cite-Seer, ABI-Inform, the Library of Congress, many university library catalogs, Medline, Google books and many others.
Thus it's very easy to generate a citations list in Zotero by visiting a handful of large databases – this is especially easy for books and not too hard for recent articles but it's more difficult to find older articles in online databases. Zotero's interface is somewhat clunky so entering citations by hand is not as convenient as I would like. In addition to grabbing the citation, Zotero can grab entire PDFs so you can keep articles and citations in one database. Exporting of the citations in a variety of bibliographic format is clean and well done.
Zotero is only available as a Firefox extension (the developers take a perverse pride in this fact). The developers are at GMU, although I don't know the team at all. Zotero will import citations from another citations management program so switching is low cost. Worth checking out.
2. Autistics solve problems forty percent faster.
4. The first chapter from Peter Leeson's The Invisible Hook; buy the book here.
This is welcome news and in combination with recent events in Iran provides an interesting commentary on the state of free expression in the world today.
Caving to public pressure, China on Tuesday said that use of its controversial "Green Dam Youth Escort" software is not required….The ministry official added that while all computers sold on the mainland will feature the filtering software, individuals are free to decide whether they use it.