Month: August 2010
Australian fiscal policy
Ivan, a loyal MR reader, requested:
Thoughts on Australian fiscal policy? Stiglitz is a fan, but it seems to me there was much more room for monetary expansion.
http://www.project-syndicate.org/commentary/stiglitz128/English
The subtext is that Australia has not experienced a downturn comparable to that of other developed countries. Here is a very good FT piece on the topic, maybe it is gated. It points out a few facts:
1. Australia was running surpluses in good times and now, even after some fiscal stimulus, their debt-gdp ratio is only six percent.
2. Australia has experienced ongoing positive shocks from Chinese demand; even in the last year Chinese two-way trade went up 30 percent for them.
3. Their "initial fiscal stimulus package heavily focused on cash hand-outs to pensioners and low earners." In other words, it possessed some aspects of a helicopter drop, being combined with expansionary monetary policy. Note that lately they have been tightening on the monetary front.
4. Some people believe that the Australian property bubble simply has yet to burst. Here is a related chart. Maybe they're simply behind the times.
Their high-risk, high-return strategy of cultivating Chinese demand could blow up in their faces. We're still in the high-return phase of that cycle. This is exactly the sort of scenario I analyze in my earlier book Risk and Business Cycles, now in paperback.
Capitalism’s Mecca
Wow, just wow. Brad DeLong sends us to this 2001 article in Slate on the architecture of the World Trade Center.
Yamasaki received the World Trade Center commission the year
after the Dhahran Airport was completed. Yamasaki described its plaza as "a
mecca, a great relief from the narrow streets and sidewalks of the surrounding
Wall Street area." True to his word, Yamasaki replicated the plan of Mecca's
courtyard by creating a vast delineated square, isolated from the city's bustle
by low colonnaded structures and capped by two enormous, perfectly square
towers–minarets, really. Yamasaki's courtyard mimicked Mecca's assemblage of
holy sites–the Qa'ba (a cube) containing the sacred stone, what some believe is
the burial site of Hagar and Ishmael, and the holy spring–by including several
sculptural features, including a fountain, and he anchored the composition in a
radial circular pattern, similar to Mecca's.At the base of
the towers, Yamasaki used implied pointed arches–derived from the
characteristically pointed arches of Islam–as a transition between the wide
column spacing below and the dense structural mesh above. (Europe imported
pointed arches from Islam during the Middle Ages, and so non-Muslims have come
to think of them as innovations of the Gothic period.) Above soared the pure
geometry of the towers, swathed in a shimmering skin, which doubled as a
structural web–a giant truss. Here Yamasaki was following the Islamic tradition
of wrapping a powerful geometric form in a dense filigree, as in the inlaid
marble pattern work of the Taj Mahal or the ornate carvings of the courtyard and
domes of the Alhambra.The shimmering filigree is the mark of the holy. According to Oleg Grabar,
the great American scholar of Islamic art and architecture, the dense filigree
of complex geometries alludes to a higher spiritual reality in Islam, and the
shimmering quality of Islamic patterning relates to the veil that wraps the
Qa'ba at Mecca. After the attack, Grabar spoke of how these towers related to
the architecture of Islam, where "the entire surface is meaningful" and "every
part is both construction and ornament." A number of designers from the Middle
East agreed, describing the entire façade as a giant "mashrabiya," the tracery
that fills the windows of mosques.
Assorted links
Pakistan fact of the day
To put matters in their depressing context, the number of children who perish daily from water-related diseases is several times higher than the rate at which people perished in last week's devastating floods.
There is more here. The article, which is interesting throughout, focuses on the multiple problems in Pakistani water policy.
LA Times Ranks Teachers
The LA Times investigative report on teacher quality is groundbreaking. The teacher’s union has already started a boycott but, as the shock recedes, I think this is going to be emulated throughout the country. It should have been done decades ago.
The Times obtained seven years of math and English test scores from the Los Angeles Unified School District and used the information to estimate the effectiveness of L.A. teachers – something the district could do but has not.
The Times used a statistical approach known as value-added analysis, which rates teachers based on their students’ progress on standardized tests from year to year. Each student’s performance is compared with his or her own in past years, which largely controls for outside influences often blamed for academic failure: poverty, prior learning and other factors….
In coming months, The Times will publish a series of articles and a database analyzing individual teachers’ effectiveness in the nation’s second-largest school district – the first time, experts say, such information has been made public anywhere in the country.
Not much data is available yet but what is astounding is that the LA Times will release information on individual teachers. The graphic below, for example, is not an illustration it is real information on the real teachers named. To understand the importance of these differences note that:
After a single year with teachers who ranked in the top 10% in effectiveness, students scored an average of 17 percentile points higher in English and 25 points higher in math than students whose teachers ranked in the bottom 10%. Students often backslid significantly in the classrooms of ineffective teachers, and thousands of students in the study had two or more ineffective teachers in a row.
With better information there is a possibility that teachers will improve. Simply knowing that other teachers do better will encourage the lower performing teachers to ask why and to emulate best practices.
Unfortunately, we have little idea how to train good teachers. The best we may be able to do is to throw a bunch of people into the classroom and measure what happens but for that strategy to work it needs to be followed up with firings. Indeed, one recent study (see here for another explanation) found that the optimal system–given our current knowledge and the importance of teacher effects–is to hire a lot of teachers on probation and then fire 80% after two years, yes 80%.
I don’t blame the unions for being up in arms and I feel for the teachers, for some of them this is going to be a shock and an embarrassment. We cannot simultaneously claim, however, that teachers are vitally important for the future of our children and also that their effectiveness should not be measured. As systems like this become more common students will benefit enormously and so will teachers.
Moreover, I see this as a turning point. Once parents have this kind of information who will allow their child to be in a class with a teacher in the bottom ranks of effectiveness? And if LA can do it why not Chicago and Fairfax?
Many people said that information technology would revolutionize teaching but few had this in mind.
Addendum: Details on methods here.
Game-theoretic allegations about branding and Snooki
Allegedly, the anxious folks at these various luxury houses are all aggressively gifting our gal Snookums with free bags. No surprise, right? But here's the shocker: They are not sending her their own bags. They are sending her each other's bags! Competitors' bags!
Call it what you will – "preemptive product placement"? "unbranding"? – either way, it's brilliant, and it makes total sense. As much as one might adore Miss Snickerdoodle, her ability to inspire dress-alikes among her fans is questionable. The bottom line? Nobody in fashion wants to co-brand with Snooki.
The full story is here and I thank Morgan Warstler for the pointer.
Will there be a helium crisis?
Is it possible that the relative price of helium will rise in nearly unprecedented fashion? Robert Richardson voices his opinion:
[The US government should] Get out of the business and let the free market prevail. The consequence will be a rise in prices. Unfortunately party balloons will be $100 each rather than $3 but we'll have to live with that. We will have to live with those prices eventually anyway.
He notes:
There is no chemical means to make helium. The supplies we have on Earth come from radioactive alpha decay in rocks. Right now it's not commercially viable to recover helium from the air, so we have to rely on extracting it from rocks. But if we do run out altogether, we will have to recover helium from the air and it will cost 10,000 times what it does today.
Yet helium is the second most abundant element in the universe and it accounts for 24% of the mass of our galaxy, according to Wikipedia. The marginal cost curve stands between plenty and scarcity.
We also use helium in machines designed to detect radioactivity. Right now the government is committed to selling off its strategic reserve of helium, located near Amarillo, Texas, by 2015. Here is a dialog on helium extraction. Here is a dialog on the forthcoming helium crisis. Here is another short article. Here is a book chapter on the helium reserve. Richardson claims the helium crisis will arrive in twenty-five years' time.
Rental markets in everything
…parents in nearby Johannesburg were themselves renting their children to beggars for as little as 20 Rand a day – just under £2.
The full story is here and I thank James Jenkins for the pointer.
Parking fact of the day
Several studies have found that cruising for curb parking generates about 30 percent of the traffic in central business districts. In a recent survey conducted by Bruce Schaller in the SoHo district in Manhattan, 28 percent of drivers interviewed while they were stopped at traffic lights said they were searching for curb parking. A similar study conducted by Transportation Alternatives in the Park Slope neighborhood in Brooklyn found that 45 percent of drivers were cruising.
…What causes this astonishing waste? As is often the case, the prices are wrong. A national study of downtown parking found that the average price of curb parking is only 20 percent that of parking in a garage, giving drivers a strong incentive to cruise.
Here is more, from Donald Shoup.
I suppose this is good news, sort of
A court in Tanzania has sentenced a Kenyan accused of trying to sell an albino to 17 years in jail and a fine of more than $50,000 (£41,200).
Albino body parts are valued highly in parts of East Africa and many albinos have been enslaved and/or murdered as a result. It is believed that since 2007 there have been 53 albino killings in Tanzania. The full story is here and I thank Ashok Hariharan for the pointer.
File under "Thwarted Markets in Everything."
Assorted links
Who are the interesting collaborators?
Pensans, an MR reader of uncertain loyalty, requests:
How about a really systematic exploration of other contemporary collaborators with totalitarian regimes whose propaganda you would like to tout to unsettle readers? Or, would that disturb the shocking effect of your bold free thought on your readership?
The following names come to mind as "collaborators" worth reading or otherwise imbibing:
Martin Heidegger, Pablo Neruda, Jean-Paul Sartre, Jean-Luc Godard, Susan Sontag, Ezra Pound, Eric Foner, Eric Hobsbawm, and I have lost track of who exactly apologized for Castro but it is many smart people.
H. Bruce Franklin, editor of "The Essential Stalin," was a splendid teacher and he had a notable influence on me.
There's a long list of Western intellectuals and Founding Fathers who apologized for slavery and violent imperialism. Although that does not fit the word "totalitarianism" exactly, it was often a form of totalitarianism — or worse – for those who suffered under it.
Why are there so few cheap restaurants in Anacostia?
I had lunch there lately, in the new and excellent Ray's the Steaks, East River edition (superb chili, fried chicken, mac and cheese; recommended). Yet I drove around the general area for about forty minutes and hardly saw any other restaurants to speak of. The five or six other times I've been to Anacostia I had similar impressions, even more than in other "ghetto" areas I have visited.
What might be possible explanations?
1. Poverty: Yet there are other retail establishments and per capita income there is surely not so low. Plenty of poor countries have plenty of restaurants.
2. Risk and crime: Yet you will see other cash-intensive retail businesses in Anacostia. Is it so hard to hire a guard?
3. Traffic: It is easy to get in and out of Anacostia, so perhaps residents drive to eat out elsewhere.
4. Diversity: Perhaps it is the demand for different kinds of food which increases the number of restaurants; yet Anacostia is not so ethnically diverse, as it is heavily African-American.
5. Labor supply: Cheap restaurants rely on low-wage laborers who do not have cars, and it is actually fairly hard to get to, and get around, Anacostia.
6. Proximity to business lunch demand. Not so much.
7. Fast food: You will find McDonald's and Subway in Anacostia. Since they serve high volumes, maybe that lowers the total number of restaurants needed. This is related to #4.
8. Foot traffic: Not so much, although the suburbs deal with this problem just fine.
What do you think are the major factors? What have I failed to list?
In the 12:30 to 2 lunch slot, the Ray's across the Anacostia river was never more than half full, though a Ray's elsewhere will be quite crowded during those hours. In all fairness, this Ray's has not been around for long.
I thank Ross Douthat for a useful conversation on this topic.
New books in my pile
1. Economic Lives: How Culture Shapes the Economy, by Viviana A. Zelizer, home page here. From a browse I learned that many prostitutes spend their "dirty money" more quickly.
2. A Short History of Celebrity, by Fred Inglis, home page here, with chapter one pdf.
3. Valuing the Unique: The Economics of Singularities, by Lucien Karpik, from the French, chapter one pdf and home page.