Month: August 2010

Don’t obsess over interest rates

After doing an extensive quantitative study, Glaeser, Gottlieb, and Gyourko report (ungated here):

Interest rates do influence house prices, but they cannot provide anything close to a complete explanation of the great housing market gyrations between 1996 and 2010.  Over the long 1996-2006 boom, they cannot account for more than one-fifth of the rise in house prices.  Their biggest predictive influence is during the 2000-2005 period, when long rates fell by almost 200 basis points.  That can account for about 45 of the run-up in home values nationally during that half-decade span.

The second strangest headline I read today

Or is it the strangest?  In any case, I never thought it would be so close:

Mongolian neo-Nazis: Anti-Chinese sentiment fuels rise of ultra-nationalism

Don't neglect the photo.  The subheader is:

Alarm sounds over rise of extreme groups such as Tsagaan Khass who respect Hitler and reject foreign influence

Tsagaan Khass, by the way, means, rather incongruously, "White Swastika."  I wonder if they know that Hitler was an Austrian ruling Germany?  And, excuse me for sounding silly, but isn't respecting Hitler, in addition to all of its other problems, accepting foreign influence?  I guess "foreign" here means "Chinese."

The strangest headline I read today

Monkeys hate flying squirrels, report monkey-annoyance experts

Yet the subheader is arguably yet stranger:

Japanese macaques will completely flip out when presented with flying squirrels, a new study in monkey-antagonism has found. The research could pave the way for advanced methods of enraging monkeys.

That is from the Christian Science Monitor.  Hat tip goes to Andrew Sullivan.

*Risk and Business Cycles* is now available in paperback

That is my 1998 book on business cycles.  Mario Rizzo writes:

I am happy to report that Tyler Cowen’s book, Risk and Business Cycles: New and Old Austrian Perspectives  is now available, as of July 15th, in a reasonably-priced paperback edition from Routledge…

This is not an orthodox Austrian approach. In fact, Cowen criticizes that version. However, the “new Austrian” inspired version he presents seems especially relevant in view of the widespread, but not uiversal, agreement that the pre-recession period of very low interest rates contributed to the search for yield and greater risk taking. As the title indicates, Cowen’s theory emphasizes the importance of low interest rates on risk-taking.

This book appears in the Routledge series, “The Foundations of the Market Economy” edited by Larry White and me. Tyler’s book is well worth reading as are many books in this series (now approaching thirty books).

Here is another blog post discussing the book.  Here is the Amazon listing.  At the time this book was published, it was unpopular to suggest that everyone simply might take too much risk at once, leading to an eventual overextension and collapse.  Yet theories of that nature have held up relatively well, in light of the financial crisis.

My one-sentence summary of the book is that it offers various accounts of how an economy might end up in the position of taking too much risk and how that can help explain business cycles.  And since these scenarios involve risk, rather than direct negative productivity shocks, they can look fairly innocuous in advance.

Elephant Jumps, Thai food in Merrifield

8110 A Arlington Blvd, Falls Church, 22042, (703) 942-6600, in the Yorktowne Center, more on Gallows than Route 50, home page here.

Home-style Thai food, with four levels of spicy, culminating in “Thai spicy.”  It’s not as good as Thai X-ing, but it’s probably better than any other local Thai competitor.  They will watch you sweat and they will giggle.


Here is one good review of the restaurant.  Here is a short bit on how elephants were viewed in antiquity.  Here is my favorite book on elephants


After we exchanged impressions of the other local Thai restaurants, the proprietor said to me: “You know a lot about food and you get around — you should be a food critic.  You could write up what you think about all these places!”


If we’re not going to have much more economic growth, we can at least have a few locales like this.  

Health care and revenue competition in Britain

Elite NHS foundation trusts are gearing up to lure private patients from home and abroad as health budgets are squeezed – a decision made possible after health secretary Andrew Lansley said he would abolish the cap limiting the proportion of total income hospitals can earn from the paying sick…

With a £20bn black hole opening up in NHS budgets, a group of top performing trusts are seeking to profit from paying patients and use the money to fund public healthcare in Britain.

Previously,

Labour's cap had meant most hospitals were unable to generate more than 2% from private income.

Here is more, although full details are not yet clear, it seems doctors will be much more in charge, in a decentralized manner.  Here's one opinion:

"What's to stop US healthcare companies coming over here to poach patients. Or GPs sending patients to India for cheap operations? Or English hospitals raiding Scotland for sick people?" said Alan Maynard, professor of health economics at the University of York. "It could be a real mess."

How long will it be before the entire NHS, as it was known, goes down as a collapsed model?  What exactly caused the collapse?  (I was surprised to read that Labour had tripled the budget since 1997.)  Will "the line" be that evil ideologues are dismantling a working system?  How will greater competition for patients alter our assessments of various national health care systems?  Is empowering doctors going to cut costs?  How much loyalty will patients, and voters, show to the old NHS model?

Haiti facts of the day

Here's how the public sector is doing:

…one-sixth of its staff died, virtually all its buildings were damaged, and its meagre tax revenues fell by 80%.

Here's how the private sector is doing:

…over 1m people are still packed into 1,300 tent cities in and around the capital. The camps’ population is rising. Haitians who fled to the countryside after the disaster have returned in search of jobs and services. And soaring property prices–inevitable after the ruin of so much of the country’s housing–have put rents beyond the reach of most of the displaced.

That's a heap of bad news, but the part about the growing tent cities is perhaps the worst bit.  It means that whatever you read about the tent cities is reflecting the more desirable side of life in Haiti.

Robert Shiller on direct government employment

Big new programs to create jobs need not be expensive. Suppose the cost of hiring a single employee were as high as $30,000 a year, several times typical AmeriCorps living allowances. Hiring a million people would cost $30 billion a year. That’s only 4 percent of the entire federal stimulus program, and 0.2 percent of the national debt.

There is more here.  Do any of you know of a policy paper on whether any labor market deregulation (e.g., Davis-Bacon?) would be required for this to happen?  Davis-Bacon did precede some of the major Roosevelt jobs programs, so I've never understood how this fits together.  How was it ruled that the relatively low-paying jobs of the WPA satisfied the Davis-Bacon requirement?

*Agora*

I am surprised this film, set in ancient Alexandria, has not occasioned more controversy.  It is the most pro-science, pro-rationalist, anti-Christian movie I have seen — ever. — and it does not disguise the message in the slightest.  The director and scriptwriter is Spanish and Chilean, namely Alejandro Amenábar.  It offers a Voltairean portrait of Judaism, as an oppressed rabble, most of all responsible for the crime of having birthed Christianity.  There are some not-so-subtle parallels shown between the early Christians and current Muslim terrorists.  

The visual rendering of antiquity is nicely done and without an excess of CGI.

Here is a positive New York Times review.  Here is a positive Guardian review.  Not everyone will like this movie.