Month: April 2012
Assorted links
1. Eight things he learned reading The Economist.
2. Economist J. Barkley Rosser has a very unusual review of my recent book.
3. Wilkinson on Gray on Haidt, also read Gray on Haidt.
4. Markets in everything, the demand for concealed carry wear.
5. Economists on health care licensing, and on the other side stranded cities and an argument for airline reregulation.
Some simple public choice observations about the periphery
1. Their governments have been obsessed with protecting insider interests for decades.
2. They use “make work” jobs as macroeconomic automatic stabilizers. A “pro growth” plan would eliminate these jobs, but of course in the short run and possibly medium run too, that would lower the rate of growth for Keynesian reasons. They are stuck.
3. There does not exist any coherent, workable, political incentive-compatible plan whereby these governments borrow more, spend more, and “invest for growth.”
4. There does not exist any coherent plan whereby Germany invests in the periphery at a level which will boost growth.
5. Their governments are in various stages of “clinging to power,” and that makes true pro-growth policies, and tackling major interest groups, more difficult.
6. As Angus has pointed out, “they’re tired of austerity” really means something more like “they want a greater backstop from the Germans.” Of course they do.
7. A boost to AD will not bring them back to where they were five years ago or anything close. Their competitiveness has been revealed to be weaker, their institutions have been revealed to be weaker, EU institutions have been revealed to be weaker, their financial systems have been revealed to be weaker, and there is the possibility of macroeconomic multiple equilibria with no flip switch to get back to where they were. AD is obviously a problem, but the notion that this is a nearly exclusively AD-based phenomenon is an idea which is held by many academics and bloggers but hardly anyone in those countries themselves.
8. Probably he was joking, but in this post Paul Krugman seems to suggest that France needs higher taxes.
The falling returns to venture capital
Noah Smith has a very interesting post on this topic, here is one picture, explained more at his link:
Noah wrote:
…that graph sure looks like a structural break to me. Something looks like it broke the VC business model after the dot-com crash. Maybe the new tech bubble (Facebook, etc.) will pump those returns back up, but there have been some big IPOs and some big acquisitions in Tech Bubble 2.0, and VC returns haven’t really bounced back yet, so I’d be cautious. What’s more, I’m starting to read about a slump in venture funding…Could this be the (temporary) end of the VC industry? If so, is it a harbinger of technological stagnation, or simply the passing of a financial fad?
He is drawing upon this recent paper by Harris, Kaplan, and Jenkinson (pdf). As I remarked at a party recently: “We are all stagnationists now.”
Addendum: Tim Worstall adds comment.
Development economics of education bleg
What should I read? There is no need to re-recommend Banerjee and Duflo, Lant Pritchett, or James Tooley on this topic, namely education in developing countries. What else? I thank you in advance for your counsel.
The reductio
For instance, what if you are yourself a beautiful woman? What if you are a beautiful woman who wants to dine out with a number of your beautiful friends? According to Mr. Cowen, you shouldn’t go to whatever restaurant you happen to go to.
Here is more, from the Toledo Blade.
Assorted links
1. Is this a golden age for inventors? And what is the asteroid-mining business plan?
2. Is this a golden age of Hunger Games econometrics?
3. Should gamblers be made to stand?
4. “The fundamental question is: “Why is government’s share of the voluntary donations market so damn small?” “, more here. Furthermore “There are plenty of redistributionist goals which do not require concerted collective action or threshold levels of contribution.”
5. Shout it from the rooftops! (some results about auction pricing)
*The Great Recession: Market Failure or Policy Failure?*
By Robert Hetzel, market monetarist, now out, I very much liked the draft I read. For the pointer I thank David Levey.
In Europe, now what?
That is today’s NYT symposium, here is my short piece — “Democracy is having its say” — and links to the pieces of others. My opening sentence is this:
Today, very few countries in the euro zone are capable of making credible commitments or binding agreements with the others.
I am still predicting that it will end badly. It already has ended badly, in fact. And the “better than expected” scenario is not easy to see, much less bring about.
The factory farm?
There are no professors in Virginia Tech’s largest classroom, only a sea of computers and red plastic cups.
In the Math Emporium, the computer is king, and instructors are reduced to roving guides. Lessons are self-paced, and help is delivered “on demand” in a vast, windowless lab that is open 24 hours a day because computers never tire. A student in need of human aid plants a red cup atop a monitor.
The Emporium is the Wal-Mart of higher education, a triumph in economy of scale and a glimpse at a possible future of computer-led learning. Eight thousand students a year take introductory math in a space that once housed a discount department store. Four math instructors, none of them professors, lead seven courses with enrollments of 200 to 2,000. Students walk to class through a shopping mall, past a health club and a tanning salon, as ambient Muzak plays.
I reserve judgment, but note this:
…Virginia Tech students pass introductory math courses at a higher rate now than 15 years ago, when the Emporium was built. And research has found the teaching model trims per-student expense by more than one-third, vital savings for public institutions with dwindling state support.
“When I first came here, I was like, ‘This is the dumbest thing ever,’” said Mike Bilynsky, a freshman from Epping, N.H., who is taking calculus. “But it works.”
No academic initiative has delivered more handsomely on the oft-stated promise of efficiency via technology in higher education, said Carol Twigg, president of the National Center for Academic Transformation, a nonprofit that studies technological innovations to improve learning and reduce cost. She calls the Emporium “a solution to the math problem” in colleges.
It may be an idea whose time has come. Since its creation in 1997, the Emporium model has spread to the universities of Alabama and Idaho (in 2000) and to Louisiana State University (in 2004). Interest has swelled as of late; Twigg says the Emporium has been adopted by about 100 schools.
You can read more here.
One reason why Japan allows deflation
• Why do Japanese investors keep buying their own public sector debt, which is racing to 250% of GDP by 2015, twice the level that got Greece in trouble? Part of the explanation is what we call financial repression, where thegovernment puts pressure on domestic institutional investors, frequently through regulations. But much of the explanation is likely deflation, which creates acceptable real return to bonds, that are not taxed. The eventual JGB crisis must await 2015 or later, when demographics drive the country into an external balance that requires foreign borrowing, something that will not be possible at current yields.
The post offers good points on other topics too. Here is more on Japan’s future funding issues.
Assorted links
Technology and human rights
President Obama will issue an executive order Monday that will allow U.S. officials for the first time to impose sanctions against foreign nationals found to have used new technologies, from cellphone tracking to Internet monitoring, to help carry out grave human rights abuses…Although the order is designed to target companies and individuals assisting the governments of Iran and Syria, they said, future executive orders could name others aiding other countries through technology in crackdowns on dissent.
Here is more, and I thank a loyal MR reader for the pointer.
Podcast with Russ Roberts
About An Economist Gets Lunch, you will find it here.
Does Not Compute
Steven Salzberg from Forbes is right about this:
Wow, no one saw this coming. The University of Florida announced this past week that it was dropping its computer science department, which will allow it to save about $1.7 million. The school is eliminating all funding for teaching assistants in computer science, cutting the graduate and research programs entirely, and moving the tattered remnants into other departments.
Let’s get this straight: in the midst of a technology revolution, with a shortage of engineers and computer scientists, UF decides to cut computer science completely?
Salzberg, however, is critical of Florida Governor Rick Scott for cutting university funding overall (Scott famously decried anthropology degrees in favor of STEM). Salzberg also finds it “unintentionally ironic” that in announcing a new polytechnic just two day ago Gov. Scott said:
“At a time when the number of graduates of Florida’s universities in the STEM [science, technology, engineering, and mathematics] fields is not projected to meet workforce needs, the establishment of Florida Polytechnic University will help us move the needle in the right direction.”
Rather than ironic I see this as illustrating how university incentives are not always aligned with those of the Governor or with the social interest. As Governor, Scott can more easily direct new funds towards STEM than tell entrenched university bureaucracies how to reallocate funds among existing programs. In particular Scott wants to promote STEM and computer science graduates for the externalities they produce but universities don’t get paid for producing externalities they get paid based on student enrollment. Thus, this is not surprising:
…Meanwhile, the athletic budget for the current year is $99 million, an increase of more than $2 million from last year. The increase alone would more than offset the savings supposedly gained by cutting computer science.
Two gloomy views on consumer tech
Via @ModeledBehavior, one is by Alexis Madrigal and from Atlantic Monthly, excerpt:
On the mobile side, we’re working with almost the exact same toolset that we had on the 2007 iPhone, i.e. audio inputs, audio outputs, a camera, a GPS, an accelerometer, Bluetooth, and a touchscreen. That’s the palette that everyone has been working with — and I hate to say it, but we’re at the end of the line. The screen’s gotten better, but when’s the last time you saw an iPhone app do something that made you go, “Whoa! I didn’t know that was possible!?”
Those are high (and somewhat impatient) standards. How about this line?:
…I think we’re into the mobile social fin de siècle.
What about making Siri better, or real on-line education through an iPad? Nonetheless the article makes many excellent points, for instance about the increasing obsession with filling out niches, or this point:
I return to Jeff Hammerbacher’s awesome line about developers these days: “The best minds of my generation are thinking about how to make people click ads.”
Via Noah Smith, here is Ashlee Vance from Bloomberg, and here is his subtitle:
Tech bubbles happen, but we usually gain from the innovation left behind. This one—driven by social networking—could leave us empty-handed
And this bit:
“My fear is that Silicon Valley has become more like Hollywood,” says Glenn Kelman, chief executive officer of online real estate brokerage Redfin, who has been a software executive for 20 years. “An entertainment-oriented, hit-driven business that doesn’t fundamentally increase American competitiveness.”
In relative terms, those two make me look like a tech optimist, not just about the more distant future (which has always been the case), but about the present as well.