Month: May 2011

Glasgow markets in everything

A parking fine in Glasgow is £30 if paid promptly, £60 otherwise. Our entrepreneurs have other ideas. They’ll sell you a used parking ticket with a specific time on it for a tenner, which you can send to the council to “prove” that you were wrongly fined.

Here is more, pointer via Greg and also Yahel.  The intro to the story is this:

If you park your car or walk through the Osborne St car park near my flat, you are quickly approached by one or more rough looking types asking if there is any time left on your parking ticket. They’re rude and slightly threatening, so most people give up their used ticket. If it’s valid for any significant amount of time (ie. you’ve paid for the whole day or a several hour stretch and there is time remaining) they will stand by the ticket machine and sell your ticket on to the next punter. They’re not the type of people you say no to so they no doubt do a roaring trade.

But that’s not all. If you protest that your parking ticket is about to expire and is therefore useless they’ll demand it anyway. Why? This is where it gets interesting.

When the parking inspectors come past the thugs keep a keen eye on which cars they catch. On a driver returning to their car and discovering that they’ve been fined the thugs move in.


The European Court of Human Rights ruled on Tuesday that lawyers for Mikhail B. Khodorkovsky, the former Russian oil tycoon who was jailed after clashing with the Kremlin, had failed to prove that his case was politically motivated, as they had long contended.

If you read through the actual story, you will see the court’s decision is in fact more nuanced than that.  It was found that his human rights were violated in prison, that procedural violations were committed before the trial, and that he had not proved a political motivation to his prosecution, not that no such motivation was present.  Nonetheless in such issues, it really is the headlines and opening sentences which matter.  Imagine how this will play in Russia.  The Court should have written an opinion so the headline would read “European Court of Human Rights condemns Russian tyranny and human rights abuses.”  Instead we get “European Court Backs Kremlin in Khodorkovsky Case.”

Update: A little later, I see the NYT changed it to “Partially Backs Kremlin,” still not nearly good enough for a court of human rights.  By the way, it is an insult for the Court to call for the Russian government to pay Khodorkovsky a $35,000 fine.  For a start, for two months he had only four square meters in his prison cell.

Radical claims about recalculation

Via Interfluidity, Noah Smith writes:

In a typical microeconomic model, the market clears, because price adjusts to balance supply and demand. In a PSST world, this does not happen. The pattern of specialization and trade will not always be disturbed by small changes in prices, because the global pattern itself represents a stable equilibrium (i.e., is “sustainable”). How many computers I buy and sell will depend not only on the price of computers, my desire for computers, and my cost of producing computers; it will depend on the prices, desirabilities, and costs of a bunch of other goods throughout the whole economy. The economy will be riddled with network externalities, and the resultant weakening of the price mechanism means that any market may or may not tend toward efficiency on any given time scale. In other words, in a PSST world, there is no invisible hand.
This opens the door for a hugely expanded role for government (or other large, centralized actors) in the macroeconomy. If global patterns matter as much as local prices, then an actor large enough to perceive and affect the overall pattern might be capable of nudging the economy out of a bad equilibrium and into a better one. Dani Rodrik has been saying this for a long time in connection with newly developing economies, but the same may be true in rich countries when faced with disruptive technological change or globalization.
Believe it or not, that’s not exactly my view.  The most serious network externalities problem is most likely underinvestment in new innovation and its supporting infrastructure.  Subsidies to basic research can yield very high returns, as they have done for the computer, the internet, and through NIH.  Otherwise, when it comes to recalculating the resource allocation on top of the basic scheme of knowledge, I am skeptical that the public sector will do a very good job, for both information and public choice reasons.  Private sector rigidities and rules of thumb generally will mean that readjustment is too slow, not that it will fly off the rails into hyperspace, finance being one notable exception.  Education and confidence building can speed readjustment, as can nominal gdp stabilization, but if anything the public sector is especially sluggish itself.  Traders rang the alarm bell on the subprime crisis, and its later and broader offshoots, well before the regulators did.  Has the EU been ahead of the curve on Greece?  I don’t think so.

What is on the horizontal “Q” axis of this female demand curve?

Scott Peterson, who was convicted in California of murdering his wife and unborn child, had dozens of women pleading for his mailing address the first day he arrived in prison. “The more notorious, the stronger the allure,” says Jack Levin, a criminologist at Northeastern University who has studied what he calls “death row groupies.” “These are usually women who would love to date a rock star or rap idol, but if they wrote to a musician, they might get a letter. Here they could get a marriage proposal.” At the same time, he says, “The inmate is seen as evil by society, but only these women see the gentle side of their man. That makes them feel important.” The husband’s legal case adds purpose to her life.

Here is much more, hat tip goes to The Browser.  Oh, don’t forget this part of the story:

Most wives, when they learn something about their husband’s past, don’t have to confront the idea that he burned a toddler’s mouth with a cigarette and broke the child’s arms and legs.

…Crystal, who had recently heard someone describe Randy as “someone who breaks the arms and legs and skull of a baby,” apparently had never heard all the details of the crime.

“What are they talking about?” she asks.

There is fascinating dialogue between the couple, at the link, and then it comes to this:

She goes silent again.


No response.

“I’m sorry about all this,” he tells her.

“I know you are,” Crystal says as she changes the subject back to the driving trip. “I’m behind a big yellow bus.”

Before he lets it go, Randy tells her that he’s really good with children. “You know how some people are just natural with children? That’s me.”

After just a few minutes of discomfort, they are back to small talk and professions of love. They exchange “I love you”s at the end of nearly every 15-minute call, so often that Crystal starts to joke about their “soap-opera moments.”

“Honey, I just want to look at you. I don’t have to eat,” she says, in a soap-star voice.

Assorted links

1. Has Singapore’s growth been on top of negative TFP?  (This result is not a strong endorsement of their industrial policy.)

2. James Heckman to work on health economics at Dublin, but too late to change the country’s fundamental path.

3. Is the New Zealand boom finally arriving?

4. Why is it so hard to learn Danish?

5. I agree with Krugman on core inflation, but still this is a sobering thought.

6. Rumors of Greek bank runs, original story here (in Greek).  I am afraid that I agree with this broader radical assessment.  Let history prove me wrong, as it probably will.

Do “gifted and talented” sections improve educational outcomes?

Maybe not, according to Sa A. Bui, Steven G. Craig, and Scott A. Imberman (ungated versions here):

In this paper we determine how the receipt of gifted and talented (GT) services affects student outcomes. We identify the causal relationship by exploiting a discontinuity in eligibility requirements and find that for students on the margin there is no discernable impact on achievement even though peers improve substantially. We then use randomized lotteries to examine the impact of attending a GT magnet program relative to GT programs in other schools and find that, despite being exposed to higher quality teachers and peers that are one standard deviation higher achieving, only science achievement improves. We argue that these results are consistent with an invidious comparison model of peer effects offsetting other benefits. Evidence of large reductions in course grades and rank relative to peers in both regression discontinuity and lottery models are consistent with this explanation.

Do the smarter kids choose a peer group to maximize…– what variable?  Maybe it’s a mistake to hang around with people who are too much smarter than you are and maybe a lot of kids know that.  How well do they choose their peer groups?  Can the authorities improve the outcomes of non-troubled kids by manipulating their peer groups?  Here is another new paper on peer effects.

In yet another new paper, early kindergarten seems to hurt not help children’s subsequent educational outcomes.

The licensing of witches

Matt Yglesias probably wishes he were blogging this story, via Salem, Massachusetts:

Just as Ms. Szafranski predicted, the number of psychic licenses has drastically increased, to 75 today, up from a mere handful in 2007. And now Ms. Szafranski, some fellow psychics and city officials worry the city is on psychic overload.

“It’s like little ants running all over the place, trying to get a buck,” grumbled Ms. Szafranski, 75, who quit her job as an accountant in 1991 to open Angelica of the Angels, a store that sells angel figurines and crystals and provides psychic readings. She says she has lost business since the licensing change.

“Many of them are not trained,” she said of her rivals. “They don’t understand that when you do a reading you hold a person’s life in your hands.”

The article is interesting throughout and for the pointer I thank Ryan.

In praise of driverless cars, don’t regulate them into oblivion

My column is here, one excerpt is this:

The benefits of driverless cars are potentially significant. The typical American spends an average of roughly 100 hours a year in traffic; imagine using that time in better ways — by working or just having fun. The irksome burden of commuting might be lessened considerably. Furthermore, computer-driven cars could allow for tighter packing of vehicles on the road, which would speed traffic times and allow a given road or city to handle more cars. Trips to transport goods might dispense with drivers altogether, and rental cars could routinely pick up customers…

The point is not that such cars could be on the road in large numbers tomorrow, but that we ought to give the cars — and other potential innovations — a fair shot so that a prototype can become a commercial product someday. Michael Mandel, an economist with the Progressive Policy Institute, compares government regulation of innovation to the accumulation of pebbles in a stream. At some point too many pebbles block off the water flow, yet no single pebble is to blame for the slowdown. Right now the pebbles are limiting investment in future innovation.

A few points:

1. I couldn’t fit it in the column, but it is an interesting question why there is no popular movement to encourage driverless cars.  Commuting costs are very high and borne by many people.  (Here is Annie Lowery on just how bad commutes can be.)  You can get people to hate plastic bags, or worry about a birth certificate, but they won’t send a “pro-driverless car” postcard to their representatives.  The political movement has many potential beneficiaries but few natural constituencies.  (Why?  Does it fail to connect to an us vs. them struggle?)  This is an underrated source of bias in political outcomes.

2. In the longer run a lot of driverless cars would be very small.  Imagine your little mini-car zipping out and bringing you back some Sichuan braised fish, piping hot.

3. If a traffic situation gets really hairy, the driverless car can be programmed to pull over and stop.  Oddly I think that perfecting the GPS system might be a trickier problem than making them safer than driver-run cars.  Computers don’t drink, but they will drive around the same block forever and ever if they don’t understand the construction situation.  Even the best chess-playing computers don’t very well “understand” blockaded positions and perpetual check.

4. This isn’t a column about driverless cars at all.  It’s about our ambivalent attitudes toward major innovations.  It’s also about how the true costs of regulation are often hidden.  A lot of potentially good innovations never even reach our eyes and ears as concepts, much less realities.  They don’t have tags comparable to that of the driverless car.

5. Via Michelle Dawson, here is a list of driverless trains.  Here are links on robot-guided surgery.