Month: December 2009
In recent years, a broad swath of African countries has begun to show a remarkable dynamism. From Mozambique’s impressive growth rate (averaging 8% p.a. for more than a decade) to Kenya’s emergence as a major global supplier of cut flowers, from M-pesa’s mobile phone-based cash transfers to KickStart’s low-cost irrigation technology for small-holder farmers, and from Rwanda’s gorilla tourism to Lagos City’s Bus Rapid Transit system, Africa is seeing a dramatic transformation. This favorable trend is spurred by, among other things, stronger leadership, better governance, an improving business climate, innovation, market-based solutions, a more involved citizenry, and an increasing reliance on home-grown solutions. More and more, Africans are driving African development.
Question: How does focusing on successes change our view of development?
Hat tip J-J Rosa.
3. www.oliversacks.com is now up.
6. Thomas Boswell: "Long ago, I asked Gene Mauch what was his worst day was as a manager. Random question. But Mauch actually thought about it, then said, "The day you realize you care more than the players do."
Russia's space chief said Wednesday his agency will consider sending a spacecraft to a large asteroid to knock it off its path and prevent a possible collision with Earth.
Anatoly Perminov said the space agency will hold a meeting soon to assess a mission to Apophis, telling Golos Rossii radio that it would invite NASA, the European Space Agency, the Chinese space agency and others to join the project once it is finalized.
When the 270-meter (885-foot) asteroid was first discovered in 2004, astronomers estimated the chances of it smashing into Earth in its first flyby in 2029 were as high as 1-in-37.
Further studies ruled out the possibility of an impact in 2029, when the asteroid is expected to come no closer than 18,300 miles (29,450 kilometers) above Earth's surface, but they indicated a small possibility of a hit on subsequent encounters.
Excellent news! Here is my earlier post, Asteroid Deflection as a Public Good.
Menzie Chinn discusses the evidence on sectoral shifts hypotheses. See also the piece by Valletta and Cleary.
These are intriguing and useful studies but I don't think they get at the core of the matter, mostly because sectoral shifts and aggregate demand shocks are so closely intertwined in this recession.
Here's a very simple story. The prices of homes and stocks fall, plus there is some panic, so people spend less. On the surface, that's an AD story, following from an economy-wide negative wealth effect. But it's also a sectoral shifts story, because people are not cutting spending proportionately on all items. For instance luxury consumption and debt-financed consumption have been hit especially hard, not to mention real estate and financial services (for other reasons). And since I do not expect a quick rebound of real estate or stock prices, this is more or less a permanent change in sectoral priorities. Still, in the data the AD shock might well absorb most of the "credit" for what happened.
We're also seeing job losses in virtually every sector. It's not for instance a "sectoral shift away from services and into matchstick production and tungsten." It's a shift out of jobs which are revealed as unprofitable and a lot of people not knowing where the new jobs will be created.
If someone wants to insist that "this is really an AD shock, not a sectoral shift," I'm not so keen on fighting to keep one term over the other. I would insist, however, on an issue of substance, namely that not all AD shocks are alike. If we are going to switch terminology, it could be said that this is a real AD shock and not just a nominal AD shock. (Though there have been nominal AD shocks too.) A nominal AD shock can be offset more easily by goosing up some mix of M and V and restoring the previous level of nominal demand. If you want an example of a nominal AD shock, imagine a more neutral change in monetary variables and indeed those have happened in the postwar era. Or read David Hume's parable of the money under the pillow. In those cases you don't need to make people feel wealthier in real terms, you just need to get the flow of spending up again. Today, part of the problem is that people feel less wealthy in real terms and that influences the content of their spending and investment decisions.
When a real AD shock comes, policy still should be expansionary in response, but there is an important difference. In absolute terms, nominal expansion won't much help the labor market, which still has to reallocate workers from some sectors to others, given the collapse in asset prices and expectations.
You'll see indirect recognition of this from many current Keynesian writers, when they talk of the jobless recovery or fear that the economy will fall back next year after the stimulus money runs out. In general I agree with those points. Yet these writers are less willing to consider the implied conclusion that a bigger stimulus won't much help — and may hurt — the longer-run adjustments which are required. Boosting MV will restore employment only to a very limited extent. It's still the case that recovery will require a great deal of sectoral readjustment and that will take a good bit of time.
We sometimes describe fiscal policy as determining the overall level of the public debt, while monetary policy determines the composition of that debt between money and interest-bearing federal obligations. By that definition, the Fed has clearly now entered the realm of implementing fiscal policy, by issuing debt directly in the form of interest-bearing reserves, reverse repos, and now term deposits.
That's from James Hamilton. His upshot?:
I fear that as this marriage between fiscal and monetary policy becomes consummated, an amicable divorce is not the most likely outcome.
My advice would be the sooner the Fed can return to plain vanilla central banking, the better.
I had a fantasy in which the Fed and the TSA (Transportation Security Administration) switched roles.
If a bank failed at 9 a.m. one morning and shut its doors, the TSA would announce that all banks henceforth begin their business day at 10 a.m.
And, if a terrorist managed to get on board a plane between Stockholm and Washington, the Fed would increase the number of flights between the cities.
The piece is here and the pointer is from Felix Salmon.
Today, Paul Krugman writes, under the headline "Stop, you’re killing me" the following:
Eight and a half years ago, when I dubbed the first Bush tax cut the Throw Momma from the Train Act of 2001,
I didn’t really think that we’d get to the point where there would be
strong financial incentives for wealthy heirs to bump off their parents
before the legislation expired, and the estate tax was reinstated….[but] it’s really happening.
As Paul might say, uh no. Or at least not yet. The estate tax goes away in January of 2010 so the story today is that the rich have an extra incentive to keep momma on the train or, as the WSJ correctly puts it, Rich Cling to Life to Beat Tax Man. (What happens in 2011, however, is another story although the law will almost certainly be changed by then.) Paul, it seems, just can't stop blaming Republicans for killing people or maybe he just had to make the story fit his Monty Python clip.
3. The year's best and worst: a Ukrainian perspective.
During the day I can at least request a scratch, an adjustment, a drink, or simply a gratuitous re-placement of my limbs–since enforced stillness for hours on end is not only physically uncomfortable but psychologically close to intolerable. It is not as though you lose the desire to stretch, to bend, to stand or lie or run or even exercise. But when the urge comes over you there is nothing–nothing–that you can do except seek some tiny substitute or else find a way to suppress the thought and the accompanying muscle memory.
But then comes the night. I leave bedtime until the last possible moment compatible with my nurse's need for sleep. Once I have been "prepared" for bed I am rolled into the bedroom in the wheelchair where I have spent the past eighteen hours. With some difficulty (despite my reduced height, mass, and bulk I am still a substantial dead weight for even a strong man to shift) I am maneuvered onto my cot. I am sat upright at an angle of some 110° and wedged into place with folded towels and pillows, my left leg in particular turned out ballet-like to compensate for its propensity to collapse inward. This process requires considerable concentration. If I allow a stray limb to be mis-placed, or fail to insist on having my midriff carefully aligned with legs and head, I shall suffer the agonies of the damned later in the night.
How does the environmental impact of a dog compare to that of an SUV? Via Robert Nagle in the MR comments section, here is one article defending the dog. It makes many good points but right now I am especially interested in this passage:
…most dogs DO NOT eat meat and cereals. With a few exceptions, they eat “meat” and “cereals.” The “meat,” in particular, tends to be byproducts–things that people in the US simply won’t eat, even in hot dogs.
Does that mean that the cow parts are a "free lunch," environmentally speaking? Let's say you have a dogless world and the cow organs are thrown away. Dogs come along and suddenly those organs are sold to dog food companies. The profit margin on cows increases. The supply of cows goes up, as more resources are put into raising cows, and that means more cow emissions. This process continues until the (private) costs of cow production rise, and/or the prices of cow products fall. In other words, it depends on elasticities but the dog diets do have an environmental impact.
Using Lexis-Nexis, I found an estimate of 26 Christmas cards for 1990, so that the number of all holiday greeting cards would have been a bit above — probably around the 1987 level of 29 cards across all holidays. The first big drop is visible by 1994, when the number of cards received per household was about 25% lower than in 1987. There was another drop-off starting in 2003, and during the most recent years of 2007 and 2008, the number is down about 40% from the late '80s / early '90s. This does not merely reflect the fact that there are more households now than then, which would tend to lower the ratio even if the total number of cards stayed the same. In 1987, 2.856 billion holiday greeting cards were received vs. 2.117 billion in 2007 — a decrease in sheer volume of 736 million cards.
And what is the upshot?:
1) The various signals of Christmas have been steadily fading since roughly the mid-1990s, at least a decade before the "War on Christmas" debate erupted. Rather than special interests knocking off Christmas-lovers, the general public voluntarily dropped out. None of the changes in the signals is clearly related to the internet, macroeconomic indicators, etc. The only strong association I see is the larger cultural shift away from sincerity and sentimentality toward affectation and irony.
2) They have not been replaced with new signals. Rather, we're pulling out investment from the holiday altogether and shifting it into other holidays like New Year's Eve and Halloween (which Lexis-Nexis suggests was taken over by adults also in the mid-1990s). Anything that will afford us greater opportunities to make the duckface for the cameras.
Contrary to the author's suggestion, I am inclined to see the internet at work here, even if it doesn't explain the entire series. If you stay in touch by Facebook, what's the point of the yearly reminder? This is another example of how the internet can lower measured gdp yet raise welfare.
If you scroll down on the blog, you'll find other indicators of the decline of interest in Christmas.
Coming out in paperback, March 2010, for only $20. You can pre-order now.
Mostly it's Black's views on business cycles, growth, and equilibrium. It's not an easy book for most people to read, as Black just comes out and states what he thinks, without much in the way of trappings or preliminaries or traditional narrative structure. There are also no models, just strings of statements about models. That said, virtually every sentence has substance. It is one of my favorite books in economics and it still contains many unmined insights. I'm tempted to order an extra copy, just for the pleasure of buying it.
In summary, a "world without nuclear weapons" would be a world in which
the United States, Russia, Israel, China, and half a dozen or a dozen
other countries would have hair-trigger mobilization plans to rebuild
nuclear weapons and mobilize or commandeer delivery systems, and would
have prepared targets to preempt other nations' nuclear facilities, all
in a high-alert status, with practice drills and secure emergency
communications. Every crisis would be a nuclear crisis, any war could
become a nuclear war. The urge to preempt would dominate; whoever gets
the first few weapons will coerce or preempt. It would be a nervous
Hat tip goes to www.bookforum.com.
My current take on "happiness" (not the same as Gretchen's) is:
1. I believe in the "set point" theory, at least when our health and the health of our loved ones is at an acceptable level.
2. People should strive to be more interesting and more responsible. Happiness may result as a byproduct, but those are more important values. I would like to read a book called The Interesting Project.
3. Shopping and going to the public library (i.e., shopping at p = 0) make people happier, at least for a while. You can do these activities repeatedly.
4. Most people aren't as interested in being happy as they claim, or seem to claim.
5. On net, Gretchen's tips will enhance your happiness.