Month: March 2011
Among the tools at Salazar’s disposal is the good ol’ cryosauna, which works like this:
A container of liquid nitrogen turns to gas and is pumped into the cylinder where the athlete stands, plunging the temperature below negative 200 degrees Fahrenheit for a short burst of time. The body believes that it is dying and rushes blood to protect its vital organs. Two minutes later, when the athlete emerges from the container, the concentrated and enriched blood rushes back through the body, providing an instant cleanse and relief.
3. Japan explains its nuclear problems to children (video).
6. Markets in everything: “One of Taiwan’s top Japanese restaurants is offering diners the use of a radiation gauge before they eat in case of any nerves in the wake of Japan’s nuclear disaster.” And here are hoof shoes.
7. Right now, only Canadians need this. Soon many more millions will want it.
Here is a well-known but now somewhat dated (1991) paper by Zaller and Chiu. It suggests two regularities:
1. U.S. press coverage tends to take its positions from the range of views which exist within government (“indexing”).
2. When a foreign conflict goes well, the U.S. press becomes more hawkish; when the conflict goes less well, the press becomes more dovish. The press swing in opinion is stronger than the swing of opinion from official sources.
Here is an empirical paper, applying this framework to the Libya crisis of 1985-1986. Here is a general look at the indexing hypothesis, again dated and pre-blogosphere. Here is a 2008 paper, showing greater influence for media, relative to the distribution of opinion within government.
The unemployed hairdresser wants her nails done. The unemployed manicurist wants a massage. The unemployed masseuse wants a haircut. If a 3-way barter deal were easy to arrange, they would do it, and would not be unemployed. There is a mutually advantageous exchange that is not happening. Keynesian unemployment assumes a short-run equilibrium with haircuts, massages, and manicures lying on the sidewalk going to waste. Why don’t they pick them up? It’s not that the unemployed don’t know where to buy what they want to buy.
If barter were easy, this couldn’t happen. All three would agree to the mutually-improving 3-way barter deal. Even sticky prices couldn’t stop this happening. If all three women have set their prices 10% too high, their relative prices are still exactly right for the barter deal. Each sells her overpriced services in exchange for the other’s overpriced services….
The unemployed hairdresser is more than willing to give up her labour in exchange for a manicure, at the set prices, but is not willing to give up her money in exchange for a manicure. Same for the other two unemployed women. That’s why they are unemployed. They won’t spend their money.
Keynesian unemployment makes sense in a monetary exchange economy…it makes no sense whatsoever in a barter economy, or where money is inessential.
Rowe’s explanation put me in mind of a test. Barter is a solution to Keynesian unemployment but not to “RBC unemployment” which, since it is based on real factors, would also occur in a barter economy. So does barter increase during recessions?
There was a huge increase in barter and exchange associations during the Great Depression with hundreds of spontaneously formed groups across the country such as California’s Unemployed Exchange Association (U.X.A.). These barter groups covered perhaps as many as a million workers at their peak.
In addition, I include with barter the growth of alternative currencies or local currencies such as Ithaca Hours or LETS systems. The monetization of non-traditional assets can alleviate demand shocks which is one reason why it’s good to have flexibility in the definition of and free entry into the field of money (a theme taken up by Cowen and Kroszner in Explorations in New Monetary Economics and also in the free banking literature.)
During the Great Depression there was a marked increase in alternative currencies or scrip, now called depression scrip. In fact, Irving Fisher wrote a now forgotten book called Stamp Scrip. Consider this passage and note how similar it is to Nick’s explanation:
If proof were needed that overproduction is not the cause of the depression, barter is the proof – or some of the proof. It shows goods not over-produced but dead-locked for want of a circulating transfer-belt called “money.”
Many a dealer sits down in puzzled exasperation, as he sees about him a market wanting his goods, and well stocked with other goods which he wants and with able-bodied and willing workers, but without work and therefore without buying power. Says A, “I could use some of B’s goods; but I have no cash to pay for them until someone with cash walks in here!” Says B, “I could buy some of C’s goods, but I’ve no cash to do it with till someone with cash walks in here.” Says the job hunter, “I’d gladly take my wages in trade if I could work them out with A and B and C who among them sell the entire range of what my family must eat and wear and burn for fuel – but neither A nor B nor C has need of me – much less could the three of them divide me up.” Then D comes on the scene, and says, “I could use that man! – if he’d really take his pay in trade; but he says he can’t play a trombone and that’s all I’ve got for him.”
“Very well,” cries Chic or Marie, “A’s boy is looking for a trombone and that solves the whole problem, and solves it without the use of a dollar.
In the real life of the twentieth century, the handicaps to barter on a large scale are practically insurmountable….
Therefore Chic or somebody organizes an Exchange Association… in the real life of this depression, and culminating apparently in 1933, precisely what I have just described has been taking place.
What about today? Unfortunately, the IRS doesn’t keep statistics on barter (although barterers are supposed to report the value of barter exchanges). Google Trends shows an increase in searches for barter in 2008-2009 but the increase is small. Some reports say that barter is up but these are isolated, I don’t see the systematic increase we saw during the Great Depression. I find this somewhat surprising as the internet and barter algorithms have made barter easier.
In terms of alternative currencies, the best data that I can find shows that the growth of alternative currencies in the United States is small, sporadic and not obviously increasing with the recession. (Alternative currencies are better known in Germany and Argentina perhaps because of the lingering influence of Heinrich Rittershausen and Silvio Gesell).
In sum, the increase in barter and scrip during the Great Depression is supportive of the excess demand for cash explanation of that recession, even if these movements didn’t grow large enough, fast enough to solve the Great Depression. Today there seems to be less interest in barter and alternative currencies than expected, or at least than I expected, given an AD shock and the size of this recession. I don’t draw strong conclusions from this but look forward to further research on unemployment, recessions and barter.
2. Margaux Fragoso, Tiger, Tiger: A Memoir. This book raises questions about the meaning of consent, but despite its quality I was unable to get all the way though it. Too brutal for me.
3. The Tiger’s Wife, by Tea Obreht. The author may be 25, Serbian, beautiful, and feted everywhere, but still I found it contrived and overwritten. The substance-obsessed Laura Miller nails it. Against my better judgment I enjoyed and finished Kevin Brockmeier’s The Illumination.
4. David Gilmour, The Pursuit of Italy: a History of a Land, its Regions, and their Peoples. So far released only in the UK, in this excellent book Gilmour claims that for a while, in the 19th century, Garibaldi was the most famous person in the world.
5. Pramoedya Ananta Toer, The Mute’s Soliloquy. The first third is a superb humane and philosophical response to adversity, namely imprisonment on Buru Island. Of the rest, which is never sent letters to his family, at least half is very good.
6. Vaclav Smil, Creating the Twentieth Century: Technical Innovations of 1867-1914 and Their Lasting Impact. Perhaps the best book on what its subtitle indicates.
Sunstein got in such an involved conversation with a voter that he left [Austan] Goolsbee and [Samantha] Power outside, shivering in the snow. The three joked that, between their three sprawling areas of expertise, they had almost any potential question about Obama covered. They failed at the first door, when a voter wanted to know the location of the nearest caucus.
Sunstein and Power, who is 39, soon went on a date, and she asked him if he ever fantasized about doing anything else. “I expected him to say he dreamed of playing for the Red Sox,” she told me. “His eyes got real big and he said: ‘Ooh! OIRA!’ ”
“And I said, ‘What the hell is that?’ ”
The article is here (beware Canadians, not worth the click!). Here is a recent article on Samantha Power as the architect of Obama’s Libya policy. Here is an article on why last chapters disappoint.
Has a new dystopian form of urban organization been invented, or rather reinvented in the Western hemisphere, namely the aid-supported tent city?:
A large but unknown number of people in the camps are choosing to stay in them. Life is better there than in the sprawling, gang-infested slums. Camp-dwellers pay no rent. Nor do they have to pay for sanitation, because latrines are often provided by the aid agencies, or clean water, since that is often supplied by the agencies or by the government. Medical services are also easier to find and, again, probably free, courtesy of agencies like UNICEF or charities like Médecins Sans Frontières. A cholera epidemic makes that all the more vital.
Every now and then, there is some evidence for the moral progress of mankind. Looking back in time, Wikipedia reports:
One particularly pernicious rumor was that Koreans were taking advantage of the disaster, committing arson and robbery, and were in possession of bombs. In the aftermath of the quake, mass murder of Koreans by brutal mobs occurred in urban Tokyo and Yokohama, fueled by rumors of rebellion and sabotage. About 6,600 Koreans were murdered. Some newspapers reported the rumors as fact, which led to the most deadly rumor of all: that the Koreans were poisoning wells. The numerous fires and cloudy well water, a little-known effect of a large quake, all seemed to confirm the rumors of the panic-stricken survivors who were living amidst the rubble. Vigilante groups set up roadblocks in cities, towns and villages across the region. Because people with Korean accents pronounced “G” or “J” in the beginning of words differently, 円 銭 (jū-go-en, go-jū-sen) and がぎぐげご (gagigugego) were used as a shibboleth. Anyone who failed to pronounce them properly was deemed Korean. Some were told to leave, but many were beaten or killed. Moreover, anyone mistakenly identified as Korean, such as Chinese, Okinawans, and Japanese speakers of some regional dialects, suffered the same fate. About 700 Chinese, mostly from Wenzhou were killed.
On modern-day Japan, Edward Hugh has an excellent post.
The President does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation.
Senator Barack Obama, Dec. 20, 2007.
Hat Tip: Radley Balko.
Although the streets in India aren’t exactly paved with gold, a few in Ahmadabad are at least flecked with it.
Motivating her are the estimated 5,000 gold and silver shops in this western city. As the 40,000 workers from the shops come and go, flecks of gold fall from their hair and clothes, to be scooped up by Gohel and other dhul dhoyas. Some enterprising collectors even follow workers home, raiding their sewer pipes for the muck from their showers.
And on the other side of the market:
Two miles away, in the Gomtipur neighborhood, Abdul Wahid Ansari buys bags of gold-flecked dirt for his workshop, which is straight out of the Middle Ages except for the vats of Technicolor chemicals. Young men bend over 2,000-gallon water tanks, panning the dirt as coal fires roar in the unlighted room, emitting smoke through a hole in the roof.
The modern-day alchemist says he can tell at a glance how much gold a handful of dirt contains. The dirt is washed, mercury and nitric acid are added, and the mixture is “cooked” at a high temperature to separate the gold for melting back into bars or ingots.
“Our life is with the silver and gold,” he said through rotting teeth stained red from betel nut. “Let the copper be.”
I liked this part:
The dirt is most gold-laden during the peak October-to-February wedding season and just before the Hindu Diwali festival, when shops scrub their machines, walls and floors. At these times, dust prices can jump to $12 to $15 a bag, compared with $7 during monsoon season, when heavy runoff dilutes the mix.
And this part:
Gohel denies that she’s ever found a sizable nugget in the dirt, although the crew at Ambica Touch is skeptical.
“Of course they hit the jackpot sometimes,” said Paresh Soni, Nitesh’s brother. “When I lose a piece, do you think I’ll get it back? This is India.”
The story is here and for the pointer I thank Daniel Lippman.
2. No gains from trade, the worst date ever? (with lots of euphemisms, I love Date Lab).
One of the older definitions of the liquidity trap is that excess cash balances get absorbed into hoards. That clearly isn’t going on today because sales are booming. The unwillingness of people with liquid assets to invest is another common aspect of the traditional definition; that’s not the case today either, even though we might wish investment were stronger.
Is there a “trap” at one portfolio margin or at all margins fanning out from cash balances? It makes a big, big difference. Today there is a trap at the money-bonds margin (and even then not all bonds), but not at most other margins. Not the money-goods margin, for instance.
Whether we are in a liquidity trap is not always an either/or proposition. An economy could face some zero bound constraints on particular kinds of monetary policy without a full liquidity trap model applying across the board.
It makes a big difference how many margins are covered by “traps.” When there is a bottomless demand for money hoards, and all margins encounter traps, the correct model does seem to invert the slope of its AD and AS curves, as Krugman sometimes suggests. Empirically, that is not the case today and probably never has been the case.
When there is a trap only at the money-bonds margin, it is a mistake — both empirically and theoretically — to invert the slopes of the AD and AS curves.
Like most econbloggers, I tend to favor simple models. Yet a more complex model — with more disaggregation, with explicit distinctions between local and global properties, and with explicit stability conditions, may be needed to show this mistake. (This is one example of where “high theory” really does come in handy. In its place, offering casual remarks about the weakness of the real balance effect is asking the wrong question and does not fill the gap.) In the meantime common sense and empirics suffice to reject it.
When there is a trap only at the money-bonds margin, positive aggregate supply shocks tend to be expansionary. They generate money income, jobs, and boost real rates of return. It is a slow and painful way to recover from a recession, but indeed it is a way to recover and it’s what we have been doing.
Any claim about the duration of a liquidity trap has an implicit dual in real business cycle theory, about the enduring weakness of real rates of return. For all the brickbats thrown at rbc, the liquidity trap proponents are relying on it, while keeping real rates of return in the background of their arguments. A booming economy on the real side gets out of a one-margin liquidity trap much more quickly than does a stagnating economy.
If one wishes to do exegesis of Krugman’s liquidity trap posts, he often makes the common sense and indeed indisputable observation about a liquidity trap at one margin, money-bonds. Very often he then draws sensible conclusions from this starting point, such as the need to analyze the credibility of monetary policy. Other times (pdf) he slips into writing as if all margins were covered by traps and the AD and AS curves invert their slopes. As I’ve mentioned, that is simply a mistake and the extreme properties of those models do not follow from a world where the trap is at a small number of margins only.
Arnold Kling makes some related observations and also serves up the requisite links.
Scientific American has an excerpt from Myhrvold, Young and Bilet’s magnum opus, Modernist Cuisine, in which they discusses the often arbitrary, subjective and culturally bound nature of “food safety” rules and practices.
In decades past, pork was intrinsically less safe than other meats because of muscle infiltration by Trichinella and surface contamination from fecal-borne pathogens like Salmonella and Clostridium perfringens . As a result, people learned to tolerate overcooked pork, and farms raised pigs with increasing amounts of fat—far more fat than is typical in the wild ancestors of pigs such as wild boar. The extra fat helped to keep the meat moist when it was overcooked.
Since then… producers have vastly reduced the risk of contamination through preventive practices on the farm and in meat-processing facilities. Eventually the FDA relaxed the cooking requirements for pork; they are now no different than those for other meats. The irony is that few people noticed—culinary professionals and cookbook authors included….
After decades of consuming overcooked pork by necessity, the American public has little appetite for rare pork; it isn’t considered traditional. With a lack of cultural pressure or agitation for change by industry groups, the new standards are largely ignored, and many new publications leave the old cooking recommendations intact.
Clearly, cultural and political factors impinge on decisions about food safety. If you doubt that, note the contrast between the standards applied to pork and those applied to beef. Many people love rare steak or raw beef served as carpaccio or steak tartare, and in the United States alone, millions of people safely eat beef products, whether raw, rare, or well-done. Beef is part of the national culture, and any attempt to outlaw rare or raw steak in the United States would face an immense cultural and political backlash from both the consumers and the producers of beef.
…Cultural and political factors also explain why cheese made from raw milk is considered safe in France yet viewed with great skepticism in the United States. Traditional cheese-making techniques, used correctly and with proper quality controls, eliminate pathogens without the need for milk pasteurization. Millions of people safely consume raw milk cheese in France, and any call to ban such a fundamental part of French culture would meet with enormous resistance there….
Raw milk cheese aged less than 60 days cannot be imported into the United States and cannot legally cross U.S. state lines. Yet in 24 of the 50 states, it is perfectly legal to make, sell, and consume raw milk cheeses within the state. In most of Canada raw milk cheese is banned, but in the province of Quebec it is legal.
One point they don’t note is that there may be multiple equilibria–that is, it may be more dangerous to produce raw milk cheese in a country or region without a history of producing raw milk cheese than elsewhere. Still, this is no reason we shouldn’t be eating more horse.
One of the largest private organizations in the world dedicated to caring for former racehorses has been so slow or delinquent in paying for the upkeep of the more than 1,000 horses under its care that scores have wound up starved and neglected, some fatally, according to interviews and inspection reports.
Here is the full story.