Month: January 2012

The culture that is Norway?

by  Tyler Cowen in

The UK’s 2011 bestseller lists might have been dominated by cookery, courtesy of Jamie Oliver, and romance, courtesy of David Nicholls, but Norwegian readers were plumping for another sort of book last year: the Bible.

The first Norwegian translation of the Bible for 30 years topped the country’s book charts almost every week between its publication in October and the end of the year, selling almost 80,000 copies so far and hugely exceeding expectations. Its launch in the autumn saw Harry Potter-style overnight queues, with bookshops selling out on the first day as Norwegians rushed to get their hands on the new edition.

I’ve been wondering what the new religion of Europe (is Norway Europe?) is going to be.  The article is here.

Sentences to ponder, on globalization’s 2nd unbundling

by  Tyler Cowen in

…as the Thai versus Malay auto sector experiences show, thinking about localisation policies without putting global value chains at the heart of the economic logic can lead to some very misguided policies.  Today’s nations might do better to look at Thailand starting from the late 1980s, rather than Korea and Taiwan.

That is from Richard Baldwin and the paper is here.  For background, Baldwin suggests that Malaysia failed to become a major auto producers because it tried to commandeer the entire supply chain, whereas Thailand was content to fit in with the broader Japanese supply chain.  I found this an excellent read, interesting throughout, though I wish Baldwin had spent more time discussing the rather limited nature of economic progress in Thailand, including relative to Malaysia.

The paper has the title “Trade and Industrialisation after Globalisation’s 2nd Unbundling: How Building and Joining a Supply Chain are Different and Why It Matters.”  It’s the first good paper I’ve read this year, but there are more to come.  It is also a good paper for Arnold Kling to comment on; Baldwin asks for instance how South Korea will deal with the international unbundling of the national supply chains the country has created and used to back its growth.

Krugman’s response to Alex

by  Tyler Cowen in

You’ll read it here, see also various (mostly weak) responses in the comments to Alex’s original post.  Most of you, including Krugman, are missing Alex’s point.  The issue is not that Krugman changed his mind (I’ve done that plenty, Alex too).  The issue is that Krugman a) regularly demonizes his opponents, including those who hold Krugman’s old positions, and b) doesn’t work very hard to produce the strongest possible case against his arguments.

Krugman’s response shows that he has changed his mind on debt, and explained why, but Heritage has not.  It’s an “I am better than they are” response.  That is beside the point, which is about elevating the views of others not oneself.  The need to show all the time that one is better or more right than the others is itself harmful to depth, and responding with “but I really am better than them” is just falling into the trap again.

Krugman calls himself a Humean but has he studied and internalized the lessons from Hume’s Dialogues Concerning Natural Religion?  Is it easy to imagine the current Krugman writing rich multi-voiced dialogues which extend both his points and those of his intellectual opponents?  Can you imagine the current Krugman writing something sufficiently multi-faceted that you might come away thinking — because of the piece itself — that the opposing point of view was the better one?

Krugman has shown a remarkable and impressive capacity to reinvent himself, more than once.  He could reinvent himself again — in a truly Humean direction — and become the most important American public intellectual — and perhaps intellectual — of his time.  Or he could keep his current status as a sharp and brilliant someone who has an enormous number of followers but relatively little influence over actual events, and perhaps, like most of us, won’t be read much fifty years from now.

The reality is that neither the early nor the more recent Krugman is especially convincing on debt, and if anything the conjunction between the two shows that switching sides isn’t quite the same thing as changing your mind.  The odds are that government spending cuts are not literally budget balance destroyers on net.  How about writing a NYRB essay that lays out the short-run negative output gradient to austerity, presents why austerity is considered a serious option nonetheless, discusses catch-up and bounce back effects and their relevant time horizons, analyzes what kinds of policies are actually possible in a 17 (27) nation collective, engages with the best public choice arguments (including Buchanan and Wagner) on a serious level, ponders the merits and demerits of worst case thinking, and ruminates on the nature of leadership in a way which shows some tussling with Thucydides and Churchill?  Surely that is within Krugman’s capabilities and if it still comes out Keynesian or left-wing, great, at least someone will have seen those arguments through.  Such an essay would stand a far greater chance of influencing me, or other serious readers, or for that matter President Obama.  We should hold Krugman to the very high standard of actually expecting that he produce such work.  Not many others are capable of it.

There is a kind of hallelujah chorus for Krugman on some of the left-wing economics blogs.  The funny thing is, it’s hurting Krugman most of all.

Addendum: Here is a response from Krugman; note he has turned my description of “regularly demonize” to “always demonize.”

Trade between belligerents

by  Tyler Cowen in

I have been enjoying Adam Hochschild’s To End All Wars: A Story of Loyalty and Rebellion, 1914-1918, which covers the British role in World War I.  My favorite section details how the British responded when it turned out they had a drastic shortage of binoculars, which at that time were very important for fighting the war.  They turned to the world’s leading manufacturer of “precision optics,” namely Germany.  The German War Office immediately supplied 8,000 to 10,000 binoculars to Britain, directly intended and designed for military use.  Further orders consisted of many thousands more and the Germans told the British to examine the equipment they had been capturing, to figure out which orders they wished to place.

The Germans in turn demanded rubber from the British, which was needed for their war effort.  It was delivered to Germany at the Swiss border.

What are the possible theories?

1. It was a two-front war, and thus the British could offer the Germans a deal, knowing part of the costs of the rubber supply would fall on the combatants at the Eastern front, or perhaps even other combatants at the Western front.

2. The deal may have appealed to commercial interests in each country.

3. Politicians may have expected to survive the war, and to have their country survive the war, and in the meantime they wanted the war for their side to go better rather than worse, for reasons of public relations or to appeal to their military lobbies.

4. The traders may have disagreed about the relative merits of what they were exchanging, as is the case on Wall Street every day.

What else?

Scott Winship on mobility in America

by  Tyler Cowen in

On net, it seems it is not going down and may be rising:

…consider what we know from previous studies of trends in intergenerational income mobility. The bulk of the existing research shows either that mobility has increased over the long run or that it has changed little in either direction. That includes both studies that I know of examining changes in upward mobility from the bottom. It also includes six studies using measures of mobility not confined to movement up from the bottom; these find either no change or rising mobility. In contrast, only two papers find a fall in mobility, each using non-directional measures. Notably, one of them shows an uptick in the mobility of the most recent two birth cohorts it examined, leaving in doubt the question of whether the longer-term decline it found would have persisted had the authors had more recent data. The other study finds somewhat mixed evidence, depending on the data source and whether children of single parents are included.

Of course this doesn’t mean mobility is “high enough.”  Scott also will be publishing a more detailed explication of these results with Brookings.

Might schooling raise IQ?

by  Tyler Cowen in

Children who have more schooling may see their IQ improve, Norwegian researchers have found.

Although time spent in school has been linked with IQ, earlier studies did not rule out the possibility that people with higher IQs might simply be likelier to get more education than others, the researchers noted.

Now, however, “there is good evidence to support the notion that schooling does make you ‘smarter’ in some general relevant way as measured by IQ tests,” said study author Taryn Galloway, a researcher at Statistics Norway in Oslo.

Findings from the large-scale study appear in this week’s online edition of the Proceedings of the National Academy of Sciences.

…In 1955, Norway began extending compulsory middle school education by two years. Galloway and her colleague Christian Brinch, from the department of economics at the University of Oslo, analyzed how this additional schooling might affect IQ.

Using data on men born between 1950 and 1958, the researchers looked at the level of schooling by age 30. They also looked at IQ scores of the men when they were 19.

“The size of the effect was quite large,” she said. Comparing IQ scores before and after the education reform, the average increased by 0.6 points, which correlated with an increase in IQ of 3.7 points for an addition year of schooling, Galloway said.

The summary is here, the paper is here, and for the pointer I thank Michelle Dawson.

Krugman v. Krugman

by  Alex Tabarrok in

Paul Krugman (Jan 1, 2012):

People who get their economic analysis from the likes of the Heritage Foundation have been waiting ever since President Obama took office for budget deficits to send interest rates soaring. Any day now!

…while debt can be a problem, the way our politicians and pundits think about debt is all wrong, and exaggerates the problem’s size.

…nations with stable, responsible governments — that is, governments that are willing to impose modestly higher taxes when the situation warrants it — have historically been able to live with much higher levels of debt than today’s conventional wisdom would lead you to believe.

Paul Krugman (March 11, 2003):

…last week I switched to a fixed-rate mortgage. It means higher monthly payments, but I’m terrified about what will happen to interest rates once financial markets wake up to the implications of skyrocketing budget deficits.

…we’re looking at a fiscal crisis that will drive interest rates sky-high….But what’s really scary — what makes a fixed-rate mortgage seem like such a good idea — is the looming threat to the federal government’s solvency.

…How will the train wreck play itself out? ….my prediction is that politicians will eventually be tempted to resolve the crisis the way irresponsible governments usually do: by printing money, both to pay current bills and to inflate away debt. And as that temptation becomes obvious, interest rates will soar.

Now to be fair, Krugman covered himself in 2003 in a credible way he said “unless we slide into Japanese-style deflation, there are much higher interest rates in our future.” Thus, I do not fault Krugman’s forecasting ability. What I do fault is that despite a 180 degree about-face, one thing remains constant in all of Krugman’s writings, anyone who disagrees with him is portrayed as a mendacious idiot. In truth, Heritage today and Krugman 2003 both have legitimate concerns about the long-term debt situation of the United States and it would have been to the credit of Krugman 2012 had he acknowledged that point more fairly.

Addendum: Krugman responds pointing out that he has acknowledged this mistake. Fair enough, although I remain puzzled as to whether we did or did not owe the debt to ourselves in 2003.

The life and times of Gordon Tullock

by  Tyler Cowen

Here is a new paper by Daniel Houser and Charles K. Rowley (pdf):

Gordon Tullock is a founding father of public choice. In an academic career that has spanned 50 years, he forged much of the research agenda of the public choice program and he founded and edited Public Choice, the key journal of public choice scholarship. Tullock, however did much more than this. This Special Issue of Public Choice honors Gordon Tullock in precisely the manner that he most values: the creation of new ideas across the vast range of his own scholarly interests.

The paper gives a better sense of Tullock the individual than the abstract alone indicates.  Hat tip goes to Andres Marroquin, who all development economists should be following on Twitter.

Assorted links

by  Tyler Cowen

1. Particle physics developments from 2011,  a busy year.

2. Are we reaching “peak text”?

3. chill.com.

4. Why are there no economists who have turned down British honours?

5. What cities do top musical tracks come from?  And is there now an Uighur [Uyghur] restaurant in Anacostia?  Please let me know if you know more about this, in the comments would be fine.

6. Timothy Snyder critique of Pinker.