Month: August 2010
Why were the measured productivity gains so high in 2009?
You'll find the BLS statistics here, with a broader list of tables here. For the "Business Sector, output per hour," 2008 shows an overall growth rate of 1.1 percent.
The quarters of 2009 yield 6.1, 7.2, 8.3, and 3.5 percent growth rates.
The quarters of 2010 show 3.5 and 1.1 percent growth rates.
Total hours worked are falling through 2008 and falling at more than five percent by the third quarter of 2008.
In other words, there was a lot of "productivity growth" precisely when workers were being laid off, and not so much before or after. I interpret the "high productivity innovation" as the decision to lay the workers off, and the selection of workers, not the sudden advent and withdrawal of some new high productivity technology.
Assorted Links
1) "The justification to ban the mosque is no more rational than banning a
soccer field in the same place because all the suicide bombers loved to
play soccer." Ron Paul on the mosque controversy.
2) Interesting review (pdf) of the health care bill from NCPA.
3) Philosopher Galen Strawson defends my most absurd belief.
4) "We've learned more about cooking in the past 15 years than we had in the previous 15,000 years." Video interview with Wylie Dufresne. By the way, I don't think this is true–we have learned more why but the previous 15,000 years developed a lot of how. Surprising amount of political psychology in cooking, how to sell an unfamiliar food idea. FYI, don't forget the book.
Chinese traffic jam comment of the day
“Everybody has to use this road as the other is too expensive, it should be free.”
That's from a Chinese truck driver and Tom Vanderbilt offers further comment. Damien Ma at The Atlantic has this to report:
"The police blame the monstrous jam on highway roadwork, compounded by minor accidents and a few breakdowns," the Christian Science Monitor writes. "In fact, the mega blockage – the second in two months on a stretch of road about 130 miles northwest of the capital – is a tale of deceit and criminality that speaks volumes about China's breakneck economic development. And behind the traffic chaos stands King Coal."
Much of the coal in China is now loaded onto trucks rather than freight trains because China's rail system has numerous bottlenecks and is often over-taxed, which ends up creating supply shortages to the coast. Though it's impossible to know how many of the trucks are actually loaded with coal, the Christian Science Monitor is right that there's a good chance many of them are delivering "black gold" to the urban centers–whether the products are legal or illegal.
The highway on which the jam has occurred leads to Inner Mongolia–now the biggest coal-producing province in China.
There are still only 63 million cars in China, as of last year.
Why nerds like games
That's a topic from Robin Hanson. I'm not sure "nerds" is the right word here (or if there is a correct single word), but I get what Robin is trying to say:
Another explanation is that while nerds like to socialize, they are terrified of making social mistakes…Games let nerds interact socially, yet avoid mistakes via well-defined rules, and a social norm that all legal moves are “fair game.” Role-playing has less well-defined rules, but the norm there is that social mistakes are to be blamed on characters, not players.
I endorse this explanation (I am not sure if Robin does) and I notice some testable predictions. If nerds are otherwise constrained and thus underconsuming social experiences, nerd-run games should be especially boisterous and enjoyable. Nerds should invest more resources to play these games than non-nerds will find explicable; to non-nerds the games will seem superfluous. Nerds should seek out games with intensely social elements. In my limited sample of experience (I don't like these games myself, but every now and then they are played in my place of employment), I see these predictions being validated.
Assorted links
Sentences on bond bubbles
7. As asset maturities get shorter, the noise trader risk is diminished. This means that we can rely more on the prices of short term treasuries when formulating public policy. Temporary tax cuts are a no-brainer, while it is much harder to reliably measure the NPV of infrastructure investments with long payback periods.
8. The most important noise trader in the interest rate markets is China. Authorities are pushing for a much higher level of the savings than can be justified by the preferences of the Chinese people.
Here is a bit more.
The supply curve slopes upward
For background, Cyprus allows commercialization of the practice and many European nations do not:
According to a 2010 study by the European Society of Human Reproduction and Embryology, nearly 25,000 egg donations are performed in Europe for fertility tourists every year. More than 50% of those surveyed traveled abroad in order to circumvent legal regulations at home. The Cypriot government estimates that, each year, 1 in 50 women on the island between the ages of 18 and 30 sells her eggs. One NGO analyst says that among the island's Eastern European immigrants, the rate may reach 1 in 4, and some women give up their eggs several times in a year. By comparison, only 1 of every 14,000 eligible American women donates.
Here is the full story, the article is interesting throughout. Can you guess which women face the highest demand for their eggs? I thank Alex Mann for the pointer.
What do I think of diplomacy?
Diogo, a loyal MR reader, asks:
How do you see diplomacy as a profession? If you could be nominated US Ambassador to a country, which country would you choose? What good novels are there about diplomacy and diplomats?
I see diplomacy as a stressful and unrewarding profession. A good diplomat has the responsibility of deflecting a lot of the blame onto himself, and continually crediting others, while working hard not to like his contacts too much. And how does he or she stay so loyal to the home country when so many ill-informed or unwise instructions are coming through the pipeline? Most of all, a good diplomat requires some kind of clout in the home country and must maintain or manufacture that from abroad. The entire time on mission the diplomat is eating up his capital and power base, and toward what constructive end? So someone else can take his place? And what kind of jobs can you hope to advance into?
Diplomats are in some ways like university presidents: little hope for job advancement, serving many constituencies, and having little ability to control events. Plus they are underpaid relative to human capital. They must speak carefully. They must learn how to wield power in the subtlest ways possible.
Who was it that said?: " Diplomacy is the art of saying "Nice Doggie" until you can find a stick"
Presumably diplomats either enjoy serving their country or they enjoy the ego rents of being a diplomat or both. It is a false feeling of power, borrowed power from one's country of origin rather than from one's personal achievements. For the spouse the required phoniness is even worse.
For all those reasons, and more, I would not wish to be a diplomat. I also might prefer to be a diplomat to a country I did not like, rather than to a country I did like.
As for novels about diplomats, The Constant Gardener comes to mind. The Diplomat's Wife is popular, though I have never read it. I read the Ender trilogy as about diplomacy as well. (Is there more from science fiction? It seems like a good plot device to bring people into contact with alien cultures.) Carlos Fuentes was himself a diplomat, as were Octavio Paz, Lawrence Durrell, Ivo Andriæ, Pablo Neruda, and Giorgos Seferis. That's a lot of writer-diplomats and you can add John Kenneth Galbraith (ambassador to India) to the list. Galbraith was the guy who said:
"There are few ironclad rules of diplomacy but to one there is no exception. When an official reports that talks were useful, it can safely be concluded that nothing was accomplished."
I’m feeling fortunate today
Seventeen days after the San Jose copper and gold mine collapsed, the news that all 33 men trapped inside are still alive was greeted with celebrations more than 2,000ft above them.
But their loved ones will probably have to wait until Christmas to see them again, because it will take that long to bore a new hole wide enough to pull them through.
Glucose, rehydration tablets, oxygen and medicine have made their way down from the surface through an 8cm lifeline and into the miners' refuge, which is thought to be about 50 square metres, although some reports say it could be larger.
More here.
Assorted links
1. The world's biggest message: can you guess what it says?
2. Markets in everything, spanning edition, via Chris Hayes.
3. Markets in everything, edible guns strange pictures Hessische Kultur edition.
Arnold Kling, on a roll
Old consensus: we need Freddie and Fannie in order to make housing "affordable."
New consensus: we need them in order to "prevent further house price delclines," in other words, to make housing less affordable.
It's the Goldilocks theory of home mortgage intervention. Most of all, I am curious what is the underlying theory why few private investors would not, without the mortgage agencies, fund mortgages at the right price. I would gladly write a series of blog posts examining those theories, as many of those same investors buy riskier assets, such as some equities. Or is it simply an attempt to hold a finger in the dike?
Our either real or supposed inability to do away with the mortgage agencies over a five-year time horizon is one of the major reasons to be a pessimist about the American economy today. None of the underlying theories about these agencies, and why they are needed, are very good news for any of us. And that is perhaps why those theories are not articulated very often.
David Brooks on Larry Summers
To use a fancy word, there’s a metacognition deficit. Very few in public life habitually step back and think about the weakness in their own thinking and what they should do to compensate. A few people I interview do this regularly (in fact, Larry Summers is one). But it is rare. The rigors of combat discourage it.
Of the problems that afflict the country, this is the underlying one.
The full piece is here.
The permanent jam?
K. writes and tells me that she imagines someone writing a novel based on this incident and that I will assign it in my Law and Literature class. Here is the excerpt:
A number of people have written in, or tweeted (and don’t forget to find me in the tweetosphere), to tell me about a traffic jam in China, currently in its ninth day, that seems to be on the verge of evolving, as per Cortazar’s story “The Southern Thruway” (an inspiration for Godard’s Weekend), into some kind of makeshift settlement.
This has struck an enterprising verve in some locals, notes the BBC:
The drivers have complained that locals are over-charging them for food and drink while they are stuck.
Then again, what is the “market price” for selling food and drink to 100 km traffic jams?
Instant noodles have risen to four times their market price in this new Chinese city. This account, sent to me by Joshua Hedlund, notes that the jam is 62 miles long and offers good photos.
*The Tenth Parallel*
The author is Eliza Griswold and the subtitle is Dispatches from the Fault Line Between Christianity and Islam. Excerpt:
Church is no staid ritual in Nigeria; it is a carnival. One Friday night, I went to the Redeemed Christian Church of Christ at an all-night church ground with three hundred thousand other people. The figure is larger than the number of Quakers in America — the equivalent of an entire American denomination worshipping at the edge of Lagos. With no traffic, the church ground is an hour's drive from Lagos. The choir was a phalanx of thousands of young people sitting under a tent, and I wandered among them, swallowed by the rush of their voices. Most attendees would spend the night dozing in their chairs of buying peanuts and soda and tapes and T-shirts and a host of other amusements. The service started at eight. Around midnight, I left to face hours of traffic and the sizable risk of a carjacking by the bandits who freely roamed the highways, picking off tired churchgoers.
This is the book which everyone is reading, and reviewing, right now. It has good coverage of Nigeria, Somalia, Sudan, Indonesia, Malaysia, and the Philippines, and the clash between religions in those areas. I can definitely recommend it. My major complaint has to do with framing. The author reminds us that "the main fault lines are within Islam," or something like that, etc., yet if you read only this book, or for that matter its subtitle, you would come away with a different impression altogether. The very premise of the book selects for clash among the two major religions surveyed and I don't think the author quite comes to terms with this fact. She is torn by conflicting impulses to pursue her initial premise to its logical conclusion, and yet also to provide a more politically correct account than what she sees in front of her eyes.
Is there a government bond bubble?
Here is a symposium over at The Economist:
It is better labeled a bubble in government spending (Viral Acharya)
No, there is a shortage of safe assets (Ricardo Caballero)
Bond yields are probably appropriately low (Stephen King)
Probably not, but approach low-probability risks carefully (Tyler Cowen)
Yes, and it's huge (Laurence Kotlikoff)
It's possible, but there is not enough evidence to be sure (Paul Seabright)
No, growth and deflation concerns have grown sharply (John Makin)
Current adjustments will reduce the risk of a repricing shock (Harold James)