Month: January 2011

Important 2010 movies that weren’t released in most of the USA

These are the ones that are popping up most often on the "Best of 2010" lists, although some of them have earlier formal release dates, often because of Cannes.  Most of these have been shown only in New York and Los Angeles, but they all are likely to appear on Netflix and some are there already.

1. Valhalla Rising, an English-language but Danish production about early Scandinavian visitors to the New World.  It's violent and arty at the same time and it was one of my favorite movies of the year.

2. Vengeance: a good mix of French noir and Hong Kong action drama, with a dose of Memento, starring Johnny Halladay and set in Hong Kong and Macau.

3. Everyone Else (Alle Anderen): A German chronicle of a dysfunctional relationship between two young people on vacation, standing in for a story about Germany itself.  It asks whether the intelligent, indecisive Germans are simply aspiring to become thoughtless jerks.  A strong film, with a dose of Roissy. 

The ones I have not seen (not yet on Netflix) are:

4. Enter the Void, French, bombastic, receives very mixed reviews.

5. The Strange Case of Angelica, Portuguese, by a 102-year-old director.  I am likely to see this movie today.

6. Vincere, a Mussolini love story, has that been done before?

7. No One Knows About Persian Cats: The rock scene in Iran, by Bahman Ghobadi, who did the excellent "A Time for Drunken Horses."

8. Monsters: Northern Mexico, immigration, and visiting space aliens in a UK production; most people seem to like this one.

9. Secret Sunshine: A long Korean drama from 2007, which receives very strong reviews.

Explaining France, a reader request

France. Explain

By which I mean this: relying solely on prejudice and snippets of information, it would seem to me that France should be an economic backwater. The rate of taxation, cost of labor, early pension age, large public sector, high welfare payments, etc., none of this suggests a highly dynamic and performative economy fit for the 21st century. Certainly, it would seem, nobody would use France as a model for restructuring their economy, but the country does seem to emerge from each crisis more or less unscathed, and remains highly prosperous, with an admirable quality of life. Why is this? What are they doing right? Are they just lucky? Or (more likely) am I just poorly informed?

In all fairness, previous talk of a "Franco-German economic alliance" has dwindled and Germany is now seen as the key to EU financial decision-making.  And France has gone from the world's number one cultural power to a minor player.  Still, the French economy has held up relatively well.  A few points:

1. The French elite work very hard and are educated very well.

2. Contrary to stereotype, France has arguably the strongest work ethic in the world.  Given the rates of taxation, and the difficulty of being fired, most people still do a fair amount of work and they do it fairly well.  If that's not a work ethic, what is?

3. Esteem and approbation are especially important in France, as incentives.  This is one reason, not always voiced as such, why immigration in such an issue there.  It breaks down prevailing forms of status competition.

4. France has been well-positioned to benefit from the growth and economic integration of Europe.  The more open the economy, the less domestic economic policy matters.

5. The French are very smart and able, and have been so for a long time.  You'll note that a wide variety of French companies, whether Dannon or Carrefour, do well around the world.  The French are preeminent globalizers.

6. The foreigners' view of France, and its charm, would be very different if all of the country's buildings dated from after World War II.

7. The French are the very best, and wisest, consumers in the entire world, whether it be for clothing, music, food, or for that matter Hollywood movies and American blues and jazz.  The French government tries to influence this activity, or put up some nominal protectionist measures, but for the most part this French specialty and strength remains unregulated.  It helps account for the very high living standard there.

8. If you see a "World Music" recording from a French record label, buy it.

Personally, what I find most distressing about France is the limited number of dimensions for status competition.  Very often there is one right way to do things, to dress, and so on.  But that's also part of what makes the place work.

Should we subsidize or tax research into time travel?

Treat this as a balanced budget question, so it's not about fiscal policy.  Alternatively, imagine yourself as a benevolent philanthropist: should you support this area of research if you can do so as a free lunch?  Or should you try to hinder it?

I believe no one understands the underlying science much at all.  But there is some chance that the old science fiction movies are correct and that by time-traveling you alter the course of history, thereby obliterating the universe we used to have.  I'll count that as a net negative, while noting there is some chance we end up with a better universe.

On the plus side, the human race will die out anyway.  Time travel seems to yield a fairly safe haven.  As disaster approaches, keep going back in time a few days, or decades, and that asteroid will never hit you.  This is especially appealing if you are transporting back a body (upload?) which is programmed to be more or less immortal and you can take the technology with you, so as to keep on going back as time progresses.

On one side: immortal life for many of the last humans and thus immortality for the human race.  And with time they may learn how to thwart the asteriod.  On the other side: some probability of swapping universes.

So should we subsidize or tax research into time travel?

Markets in everything China fact of the day

With more Chinese people getting behind the wheel every day, traffic jams are a major headache in most cities but the gridlock has become an opportunity for some entrepreneurs who are offering an escape route – for a price.

Drivers who get stuck in traffic in some cities can now get on their mobile phones and call for a substitute to take their cars to their destinations while the frustrated drivers are whisked away on the back of a motorcycle.

Here is more and for the pointer I thank Serkan Kara.

Do falling prices make us complacent?

Tim Harford writes:

…in a competitive market, wholesale price increases will be passed through to consumers promptly. But the “feather” is more ticklish, because the same argument should work in reverse, and so wholesale price falls ought to be passed on just as quickly. That means that markets are less competitive when prices are falling than when they are rising – a rather baffling suggestion.

A plausible explanation comes from Matthew Lewis, an economist at Ohio State University: falling prices make us complacent, while rises bring out the bargain hunter inside us, even when there are no bargains to be had.

As long as the price of a product is a little lower today than yesterday, we relax. We assume there’s no need to shop around. Retailers then take their sweet time cutting prices, knowing that we consumers are immensely relaxed, addled by the fact that at least prices are moving in the right direction. Paradoxically, their profits may be higher when prices are falling than when they are rising.

The culture that is Texas

Some members of the Capitol press corps took a 10-hour concealed handgun safety and shooting class this week – an exercise less about getting a weapon than getting into the Capitol.

Visitors now must pass through metal detectors, virtually guaranteeing delays. But there's an express lane for people with a concealed handgun permit.

The theory, apparently, is that people licensed to pack heat have undergone a thorough background check and can be waved right through.

So in the name of journalism, reporters covering the Legislature who must get into Capitol daily – sometimes several times a day – took the weapons course Thursday.

It took place outside of Austin at the hunting superstore Cabela's, a sort of saturnalia of stuffed animals, food dehydrators and camo gear.

Here is more, interesting throughout ("In Texas, the martial arts of choice is the handgun," he said. "If we were in the Philippines, I'd be teaching you a stick."), and I thank Derek Mahlburg for the pointer.

Addendum: Typepad has deleted a few of your comments accidentally, our apologies!

*Inside Job*

Nick writes to me:

I'm an undergrad math/Econ double major and aspiring economist. I also read your blog (amongst others) daily. You said today that "Inside Job" was "half very good and half terrible." Critical reviews are widespread, but prominent economists haven't said much. I was wondering if you could expound on your terse critique in an email or blog post.

It's been a while since I've seen the movie, but here goes.  The best parts are on excess leverage, the political economy of the crisis, and the attitudes of the economics profession.  Overall it is remarkable how much economics is in the movie, even though some of it is quite bad.  The visuals and pacing are excellent and many scenes deserve kudos. 

The worst parts are the misunderstandings of deregulation.  Glass-Steagall repeal was not a major factor, much of the sector remained highly regulated, and there is no mention of the failure to oversee the shadow banking system.  The entire discussion has more misses than hits.  The smirky association of major bankers with expensive NYC prostitutes (on one hand based on very little evidence, on the other hand probably true) was inexcusable.  There is talk of "predatory lending," but it is not mentioned that many borrowers committed felonies, or were complicit in felonies ("on the form, put down any income you would like").  Most generally, there is virtually no understanding of the complexity of the dilemmas involving in either public service or in running a major corporation.

Overall, the movie's smug moralizing makes me wonder: is this a condescending posture, spooned out with contempt to an audience regarded, one way or another, as inferior and undeserving of better?  Or are the moviemakers actually so juvenile and/or so ignorant of the Western tradition — from Thucydides to Montaigne to Pascal to Shakespeare to Ibsen to FILL IN THE BLANK — that they themselves accept the very same simplistic moral portrait?  If so, most of all I feel sorry for how much of life's complexities they are missing and how impoverished their reading and moviegoing and theatregoing must be. 

Do you remember the scene in Hamlet, where Hamlet tries to judge the King by enacting a pantomime play in front of him, to see how the King would respond to a work of art?  I think of that often.

Have the rich caused middle class wage stagnation?

I don't always agree with Kevin Drum, but usually I find that he has good arguments.  In this passage, however, I think he is overreaching:

Still, I don't think that a plausible story of causation [the gains of the wealthy to the stagnation of other incomes] is really all that hard. First, take a look at middle class income stagnation. What caused that? Matt already pointed to one cause: monetary policy since the late 70s that's kept inflation low at the cost of keeping labor markets persistently loose. To that, I'd add several other trends that have marked the past three decades: trade policies that accelerated the decline of U.S. manufacturing; domestic deregulation policies that squeezed workers; stagnation in the minimum wage; immigration policies that reduced wages at the low end; and a 30-year war against labor that devastated unions and reduced the bargaining power of the working class.

First, money matters in the short-run most of all.  Tight money (unless maybe it is radical deflation, but even then the U.S. resumed growth out of the GD fairly quickly and furthermore the median worker was not unemployed) is not a plausible cause of median income stagnation over decades.  The link between trade and wage stagnation does not find support in the data.  Deregulation hurt the wages of air traffic controllers, but how many other groups?  Enough to shift the median?  Stagnation in the real minimum wage shouldn't much hurt median wage growth over a forty year period.  Unions fell mostly because of the shift to services, and furthermore the "union wage premium" in the data is a one-time ten to fifteen percent gap, not an ongoing change in rates over decades, and it is reaped by some not all workers. 

In my view the gains of the top one percent and the stagnation at the median are largely separate phenomena; note that the top gains so dramatically only in the Anglosphere, whereas growth stagnation affects most of the OECD after the early 1970s.

How then might rent-seeking in the top income brackets damage ordinary Americans, as I have myself suggested?  The most plausible mechanism is this: gains of the wealthy through capital markets come at the expense of other individuals in capital markets.  Some kinds of capital — for instance finance capital – had been profiting more and implicitly taxing other kinds of capital, often through "trading," broadly not narrowly construed.  The taxed capital "retreats" and this has adverse affects on labor, much as an increase in the corporate income tax falls partially on labor and partially on consumers (which also shows up as lower real wages).

The labor which is "subsidized" by this change in capital returns is smaller in number and more concentrated, sectorally, than the labor which is taxed.

I wouldn't say there is massively firm evidence for this hypothesis, but rather it is the major contender by process of elimination.  If you are wondering, many of the years of wage stagnation have shown relatively low shares of investment in gdp; see the new McKinsey report "Farewell to cheap capital?".

So there we have one factor connecting the gains at the top to losses at the median but still I do not think it is the major factor behind median stagnation.  I will be writing more on this.

Since I cannot reread Heinlein, I should not read a biography of Heinlein

But I can browse one.  William H. Patterson's Robert A. Heinlein: In Dialogue with His Century, Learning Curve 1907-1948, would appear to be definitive.  The very thick volume one — over six hundred pages with notes – stops at 1948.  It is very well written and engaging and connects Heinlein to broader American history.  There is plenty on Heinlein and free love, Heinlein and H.G. Wells, Heinlein in the Navy, Heinlein and Missouri, and many other topics.

Markets in everything China fact of the day

A Chinese online store is selling hacked, illegal iTunes accounts tied to active credit cards, offering $200 worth of content from Apple's service for as little as $30.

China's Global Times this week revealed that about 50,000 illegal accounts are being sold through, with prices ranging from just 1 yuan to about 200 yuan, or $30. Many of the sales are said to be stolen iTunes user accounts being re-sold by hackers.

Here is more.