Month: April 2012

What I’ve been reading

1. Barb Stuckey, Taste: What You’re Missing: The Passionate Eater’s Guide to Why Good Food Tastes Good.  A very good and interesting look at how and why food tastes as it does, from a professional food developer.

2.Robert J. Sampson, Great American City: Chicago and the Enduring Neighborhood Effect.  I’m still grappling with this book, which I find difficult to parse.  It’s a very detailed empirical study of the strength of neighborhood effects, with reference to Chicago.  I thought I would give the book its own post, but it is difficult to excerpt.  I don’t quite understand how he distinguishes neighborhood effects from selection effects, though I have read his discussion that selection effects are themselves neighborhood effects, ultimately.  I feel there is a good deal of interesting social science in here, but the book should be far more transparent.  William Julius Wilson called it “…one of the most comprehensive and sophisticated empirical studies ever conducted by a social scientist.”  Here is a Harvard story on the book.  For sure some of you should pick this one up, but I am myself still torn.

3. Lifeboat: A Novel, by Charlotte Rogan.  A genuinely gripping story of a bunch of people in a sinking lifeboat, facing the usual philosophical dilemmas.  Maybe that doesn’t sound thrilling, but I pressed on eagerly and read it to the end.

4. Free Market Fairness, by John Tomasi.  Here is Matt on the book: “Without being by any means a libertarian, I do think that people of a left-wing orientation sometimes give short shrift to the non-pecuniary aspects of economic freedom. Whether or not you buy that barber licensing rules are a big deal economically, the specter of the government throwing a person in jail for participating in an exchange of haircuts for money between consenting adults should bother liberally inclined people for basically the same reasons that all random state interference in the conduct of private life is bothersome.”

5. India After Gandhi: The History of the World’s Largest Democracy, by Ramachandra Guha.  Both informationally dense and conceptual, in a good way.

Dual coverage from The New York Times

Damon Darlin liked my new book, An Economist Gets Lunch:

It’s a sports bar, which seems like an unlikely choice, but not to Professor Cowen’s way of thinking. He chose it precisely because it was an unlikely choice. An American sports bar might mean Buffalo wings and cheeseburgers, but an Ethiopian sports bar? “They are making no attempt to appeal to non-Ethiopians,” he said.

…As for the food at Eyo’s Sports Bar, it persuaded me on his thesis that immigrants rejuvenated the American palate and it was best to leave the finicky children, or teenagers, at home.

Dwight Garner did not like it:

Reading Mr. Cowen is like pushing a shopping cart through Whole Foods with Rush Limbaugh. The patter is nonstop and bracing. Mr. Cowen delivers observations that, should Alice Waters ever be detained in Gitmo, her captors will play over loudspeakers to break her spirit.

These observations include: “There’s nothing especially virtuous about the local farmer”; “buying green products seems to encourage individuals to be less moral”; and — a contender for Orwellian sentence of the year — “technology and business are a big part of what makes the world gentle and fun.”

I think it’s Orwellian that he thinks this is Orwellian.  On the two errors he claims to have found in the book, he is wrong in both cases.  Brad DeLong adds appropriate comment on the first.  My estimate for the Google search number claims was correct and multiply checked when I did it, and these days it comes in at around the high 400,000s, nothing near his 115,000 figure.

You can pre-order the book on Amazon here.  For Barnes & Noble here.  For here.  It is due out tomorrow.

Transcript of my interview with Peter Singer

It is here, now written out, courtesy of the excellent Jeff Kaufman.  The original visual and audio of the interview is here.  Here is one bit:

Cowen: …If we could imagine an alternative world, where people were, say, only 30% as committed to their personal projects as are the people we know, say the world is more like, in some ways, an ant colony, people are committed to the greater good of the species. Would that be a positive change in human nature or a negative change?

Singer: Of course, if you have the image of an ant colony everyone’s going to say “that’s horrible, that’s negative”, but I think that’s a pejorative image for what you’re really asking …

Cowen: No, no, I don’t mean a colony in a negative sense. People would cooperate more, ants aren’t very bright, we would do an ant colony much better than the ants do. …

It is one of my favorite outputs of me.

A sobering thought

The United States circa 2012 is one of the most productive economies of all time, arguably the most productive if you take into account size and diversification (rules out Norway, etc.).  Internationally speaking, in the richest and most productive global economy of all time, which is our most competitive sector?

Hollywood?  Maybe, but it could well be higher education.  Students from all over the world want to go to U.S. higher education.  If we had nicer immigration authorities, this advantage would be all the more pronounced.

In other words, I work in what is perhaps the most competitive and successful sector in the most competitive and successful economy of all time.

And yet what I see around me is a total, total mess.  And I believe my school to be considerably above average in terms of how well it is run.

The wisdom of David Brooks

As Tyler Cowen reports in a fantastic article in The American Interest called “What Export-Oriented America Means,” American exports are surging.

Here is much more, read the whole thing.  Here is one more bit:

A rift is opening up. The first, globalized sector is producing a lot of the productivity gains, but it is not producing a lot of the jobs. The second more protected sector is producing more jobs, but not as many productivity gains. The hypercompetitive globalized economy generates enormous profits, while the second, less tradable economy is where more Americans actually live.

Indian education under the British empire

It turns out it was worse than I had thought.  I’ve been reading some papers by Latika Chaudhary on this topic, and I learned that educational expenditures in India, under the British empire, never exceeded one percent of gdp.  To put that in perspective, for 1860-1912 in per capita terms the independent “Princely states” were spending about twice as much on education as India under the British.  Mexico and Brazil, hardly marvels of successful education, were spending about five times as much.  Other parts of the British empire, again per capita, were spending about eighteen times as much.

Obviously, there is a “small number of British just couldn’t reach those hundreds of millions of Indians in the countryside” effect going on here.  Still, from what I am seeing education simply was not much of a priority.  There was some ruling, some building of infrastructure, and some resource extraction going on.  Education ended up as a side show, and ultimately the gears of empire were attuned toward self-maintenance and that meant only a minimal emphasis on education.

Primary schools were especially weak, as was education for girls, no surprise on either count.  In per capita terms, spending on education in Bombay was ten times higher than in Orissa.

Revised TFP growth for Singapore looks much better

From Chang-Tai Hsieh, plucked out of the 2002 AER, via @dtimesd:

This paper presents dual estimates of total factor productivity growth (TFPG) for East Asian countries. While the dual estimates of TFPG for Korea and Hong Kong are similar to the primal estimates, they exceed the primal estimates by 1 percent a year for Taiwan and by more than 2 percent for Singapore. The reason for the large discrepancy for Singapore is because the return to capital has remained constant, despite the high rate of capital accumulation indicated by Singapore’s national accounts. This discrepancy is not explained by financial market controls, capital income taxes, risk premium changes, and public investment subsidies.

The initial context is given here.  Via Dave Backus, here is another relevant paper.

Addendum: Scott Sumner adds comment.

I enjoyed this post

But there’s a good-versus-evil story just below my surface, pitting reasonable, constructive, iconoclastic people who agree with me against the benighted masses and their emotional, whiny, conventional intellectual apologists.

Here is more, from BC, interesting throughout.  It starts with this:

I’m a libertarian, a natalist, an atheist, a credentialist, an economist, an optimist, a behavioral economist, an elitist, a public choicer, a dualist, a Szaszian, a moral realist, an anti-communist, a pacifist, a hereditarian, a Masonomist, a moral intuitionist, a free-market Keynesian, a deontologist, a modal realist, a Huemerian, a Darwinian, the other kind of libertarian (=a believer in free will), and much more.  I could spend hours adding additional labels to the list.

New Cities

In 2009, the percentage of the planet’s population living in urban areas crossed the 50% threshold…this year the population of the world’s cities will grow by a further 65 million people, equal in size to the total population of France…

As recently as 1990 the United States had the highest number of one million plus inhabitant urban agglomerations globally with a total of 33….by the year 2020 China will lead the world with 121 followed by India with 58…

Remarkably, in 2009 China generated some 40.9% of GDP from just 16.6% of its population living in the 35 largest cities.

From an interesting Credit Suisse report, Opportunities in an urbanizing world (pdf).

I was surprised at how close the association is between state level GDP and the urbanization rate (Ryan Avent in The Gated City and Matt Yglesias in The Rent is Too Dammed High make similar points.)

Urban dwellers also have much lower levels of carbon dioxide production than rural dwellers [Addendum: this seems to be per unit of GDP]. Moreover, the half of the world’s population that lives in cities occupies only approximately 2.7% of the world’s land area.

Hat tip: Gulzar at Urbanomics.

Markets in Everything: Prison Consultants

NYTimes: Mr. Levine is a prison consultant. The business — which entails advising people who are facing jail time on how to prepare for life on the inside, deal with medical issues, transfer to other prisons and even reduce their sentences…The consultants [also] teach prison etiquette.

For example? “Never walk across a wet floor,” Mr. Mulholland advised, saying you might mess up the work of the prisoner manning the mop. And then he might kill you.

Prison consultancy seems to be one of the few businesses where the owners aggressively advertise their criminal record:

Mr. Levine said he thought the competition would thin out over time because the competitors lack marketing smarts. Besides, he argued, he has the criminal CV to back up the marketing.

If they handed out diplomas for prison savvy, he said, “These guys have maybe an associate degree. I have like a Ph.D. or above.”

Indeed, “some prison consultants say that others are so lacking in expertise that their businesses are practically criminal enterprises.”

From the pen of Interfluidity

Post-Keynesians did predict a crisis, on broadly the terms that we actually experienced. They argue that there are adverse side effects to using monetary policy to manage aggregate demand. Although in theory this might be avoidable, post-Keynesians point out that in practice monetary stabilization, even above the zero-bound, seems to engender increasing indebtedness and financial fragility, and to distort activity towards overspecialization in finance and real estate. They pay much more attention to the details of financing arrangements than the other schools, and emphasize that vertiginous collapses of aggregate demand are nearly always accompanied by malfunctions in these arrangements. Aggregate demand, post-Keynesians argue, cannot be managed without concrete attention to the operation of financial institutions and the conditions that lead to their fragility. Post-Keynesians make the deep and underappreciated point that fiscal policy, even if it is conventionally tax-financed, can deleverage the private sector and reduce financial fragility in a way that monetary operations cannot. Monetary operations, if you follow the cash flows, amount to debt finance of the private sector by the public sector. The central bank advances funds today, in exchange for diverting precommitted streams of future cash from the private sector entities to the central bank. Fiscal expansion is more like equity finance of the private sector by the public sector. Public funds are advanced, and captured by parties with weak balance sheets as well as strong. But taxes are not withdrawn on a fixed schedule. They are recouped “countercyclically”, in good times, when private sector agents are most capable of paying them without financial distress. Further, the private sector’s tax liability is distributed according to ex post cash flows realized by individuals and firms, while debt obligations are distributed according to ex ante hopes, expectations, and errors. So tax-financed fiscal policy acts as a kind of balance-sheet insurance. Both by virtue of timing and distribution, taxation is less likely than monetary-policy induced debt service to provoke disruptive insolvency in the private sector. Plus, during a depression, fiscal expansions may never need to be offset by increased taxation…Never-to-be-taxed-back fiscal expenditures, if they are not inflationary, shore up weak private-sector balance sheets without putting even a dent into the financial position of the strong. They represent a free lunch both in real and financial terms.

Here is more, and it is insightful throughout.  I would add two points, both in the skeptical direction:

1. I so rarely hear the post Keynesians utter the word “Congress” in discussions such as this.

2. Fiscal policy does best when it is obvious what should be produced, and there is a political consensus to make that stick, as was the case in 1940-45 for instance.

Assorted links

1. Peter Boettke’s new paper on Henry Hazlitt.

2. Where do people go when they drop out of the labor force?

3. The sovereignty of American Indian tribes, interesting throughout.

4. Deregulation has lowered the prices of coffins.

5. Susan Sontag, an appreciation, and Doris Lessing, an appreciation.  They are both still underappreciated, especially on “the Right.”  It is easy to dismiss them for their worst utterances, but they both have been brilliant writers, albeit in very different ways.

6. Which entrepreneurs are benefiting from the violence in Syria?