Month: December 2010
There is only one legal gun store in all of Mexico, and the military serve as the clerks, and yet in the country guns are still bought and sold:
Alberto Islas, a security expert based in Mexico, said it is common knowledge that the easiest way for the average citizen to buy a gun is to ask a friendly local police officer.
"The cop will bring it to your house and show you how to load it," Islas said. "Of course, it is technically illegal."
Here is police reform in Mexico.
That is an email notice from David Boaz.
"It’s too bad 'You Shall Know Our Velocity' isn’t a novel about monetary policy."
That's Matthew Yglesias, and it got me wondering about whether there are any novels about monetary policy. There's "The Wonderful Wizard of Oz," which some believe to be an allegory for the debate over the gold standard. If you're willing to include novels about the effects of monetary policy, pretty much any novel about the Great Depression counts, and "The Grapes of Wrath" is particularly eloquent on the subject. But is there anything more on-topic than that?
I am reminded of Paul Cantor on Thomas Mann on hyperinflation. Specialists may wish to consult Friedrich Achberger, "Die Inflation und die zeitgenossische Literatur," in Aufbruch und Untergang: Osterreichische Kulturzwischen 1918-1938, Franz Kadrnoska, ed. (Vienna: Europa, 1981), pp. 29-42; there are monetary policy themes in Musil, Zweig, and Broch, among others. Hans Fallada too. Is there a monetary theme in H.G. Wells's The Last War?; Wells was a follower of Frederick Soddy. How about from 19th century England? From science fiction? Isn't there mutual banking in Eric Frank Russell?
Do you know the old saying "A picture is worth a thousand words"? How about a new saying: "197 words is worth a thousand words"?:
To take one example: Lehman’s holding company (LBHI) filed for bankruptcy, but at the last minute its US broker-dealer (LBI) was kept out of bankruptcy by the NY Fed. The problem was that no one knew about this – most people thought LBI had filed too. Lehman had all sorts of problems getting employees to even show up for work; JPMorgan, which was LBI’s clearing bank, unilaterally shut off LBI’s access to its accounts for several days, and actually started seizing assets of LBI’s prime brokerage clients (a huge no-no); clearinghouses improperly limited LBI’s trading activity; the NSCC mistakenly seized a large amount of LBI’s customer securities; Lehman’s European broker-dealer (LBIE) stopped payments to LBI’s omnibus account even though LBI continued to make payments to LBIE; incoming customer securities to LBI weren’t getting properly segregated; counterparties simply stopped posting collateral they owed on OTC derivatives with LBI; and so on. That first week, the biggest challenge was simply getting someone at Lehman on the phone. (I saw a 63-year-old senior partner do a fist-pump you’d have to see to believe when he finally got an account executive at Lehman on the phone. Unquestionably the highlight of my week.)
The full article is here, hat tip goes to Matt Yglesias.
Jacob, a loyal MR reader, writes to me:
I am a research assistant involved in an evaluation of the quality of mental health care. It turns out that much of “quality” from a clinician's perspective involves coercing/convincing/luring patients into treatment – patients should show up quickly (“initiation”) and repeatedly (“engagement”) and for a really long time (“continuation-phase treatment”). For example, health plans are graded on the proportion of depressed patients that they can keep on antidepressants for 6 months (link – pg 23).
So, how do you think about markets and individual-level-decision making among the severely mentally ill. On one hand, it feels inadequate to throw up ones hands and say everyone is the best ruler of themselves. But it also feels inadequate to defer fully to the experts. I’m sure this topic has been tackled elsewhere but a thoughtful analysis has evaded me so far.
A few points:
1. Here are some recent reported results about conceptualizing mental illness; I cannot vouch for them.
4. Here is one story of rational economic man.
5. I disagree with Bryan Caplan's argument that mental illness is a false category; he is making an odd turn toward behaviorism. That the behavior can be reduced to preferences and constraints does not mean that is the best or only way of understanding the phenomenon (which is not just about behavior).
7. You won't find the answers to your questions in any of those places, or here. I do, in the meantime, hold two views. First, historically the concept has been used — indeed abused — to incorrectly rationalize a lot of forcible institutionalization. Second, it is not a meaningless concept, though fractured it may be.
At $600,000 per week the 60 metre Lürssen superyacht Solemates designed by the great Espen Oeino is one of the world’s most exclusive charter craft. It’s also one of the most cutting edge thanks to a new system that lets guests control various functions via an iPad. Don’t happen to own one? Not a problem – the captain hands each guest their own iPad when they step aboard. Via the device they can control the shipboard entertainment and climate systems, adjust the blinds and lights in their cabins, and even summon a crewmember to bring more cocktails. The sleek yacht, launched in Monaco earlier this year, boasts a top speed of 15.5 knots with a range of 7,000 nautical miles.
Until the mid-1990s, Mexico spent just 0.008% of annual economic output on law enforcement, among the lowest rates in the world. The average officer earns $500 a month, or about half the average per-capita income in Mexico. Seven of 10 finished only primary school. More than 400 municipalities have no local police at all.
Here is much more, mostly on the battle with the drug cartels.
Last week Steven Landsburg posted the classic puzzle:
There's a certain country where everybody wants to have a son. Therefore each couple keeps having children until they have a boy; then they stop. What fraction of the population is female?
Being clever and worldly you may suppose that you know the answer, just as I did. 50%, right?
Every birth has a 50% chance of producing a girl. This remains the case no matter what stopping rule the parents are using. Therefore the expected number of girls is equal to the expected number of boys. So in expectation, half of all children are girls.
Clever! Except Landsburg being even more clever shows that the correct answer is in fact less than 50% (with the exact number depending on how many families there are in the country).
Clever people don't like to be told they are wrong, however, so even after much explanation (follow Landsburg in the comments to the answer post) there remains disagreement. So Landsburg is offering a big money bet:
I am therefore offering to bet him $15,000 that I’m right (with detailed terms described below). If you agree with Lubos, this is your chance to get in on the action. I will take additional bets up to $5000 per person from all comers until such time as I decide to cut this off.
If you want in, you can read the conditions and bet against Steve here.
N.B.: The correct answer does not rely on selection effects (e.g. some families have a greater propensity to have girls) nor does it involve changing the question to the average fraction of girls in a family.
Enchiladas and crepes are especially common here, often with potatoes. The best meal cost one dollar and was bought on the sidewalk from a crouching elderly woman (for all the talk about "street food," often "sidewalk food" is where it's at). It was potato, nopalitos (cactus), finely ground white cheese, and a potent chile sauce on top of a fried blue corn tortilla.
At the local Arabic-Mexican restaurant, ten chalupas can be had for $2.10.
In Mexico never eat until you are full, because you will likely encounter something even better along your way. What is hard is not finding the food but rather enforcing the optimal stopping rule.
If you are trying to argue that Mexico is a "normal" country, this city is your Exhibit A.
The much-vaunted decline in the Mexican birth rate is somehow not in evidence here; perhaps that is an artifact of who visits the Christmas displays. Plenty of police are out with guns, as a signal to deter a potential drug gang invasion.
As Yana notes, on the streets you will see many examples of perfect competition.
Is there a better blog post title? Here is the abstract of a new paper, "Women or Wine, Monogamy and Alcohol":
Intriguingly, across the world the main social groups which practice polygyny do not consume alcohol. We investigate whether there is a correlation between alcohol consumption and polygynous/monogamous arrangements, both over time and across cultures. Historically, we find a correlation between the shift from polygyny to monogamy and the growth of alcohol consumption. Cross-culturally we also find that monogamous societies consume more alcohol than polygynous societies in the preindustrial world. We provide a series of possible explanations to explain the positive correlation between monogamy and alcohol consumption over time and across societies.
An efficient managerial labor market should compensate executives according to their contribution to shareholder value. We provide novel empirical evidence about the relationship between executive pay and managerial contribution to value by exploiting the exogenous variation resulting from stock price reactions to sudden deaths. We find, first, that the managerial labor market is characterized by positive sorting: managers with high contributions to value obtain higher pay. We find, second, that executives appear, on average, to retain about 80% of the value they create. Overall, our results are informative about the workings of the managerial labor market.