Month: September 2012

Greek Islands for Sale

Telegraph: As international inspectors in Athens scrutinise the country’s fitness to receive the latest aid payment, Prime Minister Antonis Samaras has said commercial exploitation of some islands could generate the revenue lenders need to see to continue funding the country.

The shortlist includes islands ranging in size from 500,000 square meters (5.4 million square feet) to 3 million square meters, and which can be developed into high-end integrated tourist resorts under leases lasting 30 years to 50 years, Mr Taprantzis said.

…The fund reviewed 562 of the estimated 6,000 islands and islets under Greek sovereignty. While some are already privately owned, such as Skorpios by the Onassis shipping heiress Athina Onassis, the state owns islands such as Fleves, which is near the coastal resort area of Vouliagmeni, and a cluster of three islands near Corfu. Mr Taprantzis declined to identify any of the islands.

Legislation needs to be passed to allow development of public property by third parties and reduce the number of building, environmental and zoning permits needed before the plan can proceed, Taprantzis said.

It’s a good idea to move these assets into private hands. The U.S. Federal government also has a lot of land that could be privatized. (For the U.S. see map and note that only a small portion is parkland).

Dutch markets in everything

The Netherlands is rolling out some 6,000 smart garbage cans that can only be used when residents scan an RFID-enabled ID card.  Besides monitoring just how much trash someone disposes of, the cans will also measure and charge the user based on how much refuse they tossed.

Here is more.  Can they join the Pigou Club?  Not so clear.  Still, oddly enough, I don’t think this will do much to encourage littering or illegal garbage disposal.  It may encourage the purchase of less packaging and waste.

For the pointer I thank @ModeledBehavior.

*The Revenge of Geography*

The author is Robert D. Kaplan and the subtitle is What the Map Tells Us About Coming Conflicts and the Battle Against Fate.  I thought it was an excellent and also highly readable book, though without agreeing with every claim or the rather relentless method.  Here is one excerpt:

China’s solution has been notably aggressive.  This may be somewhat surprising: for in many circumstances, it can be argued that naval power is more benign than land power.  The limiting factor of navies is that despite all of their precision-guided weapons, they cannot by themselves occupy significant territory, and thus it is said are no menace to liberty.  Navies have multiple purposes beyond fighting, such as the protection of commerce.  Sea power suits those nations intolerant of heavy casualties in fighting on land.  China, which in the twenty-first century will project hard power primarily through its navy, should, therefore, be benevolent in the way of other maritime nations and empires in history, such as Venice, Great Britain, and the United States; that is, it should be concerned mainly with the free movement of trade and the preservation of a peaceful maritime system.  But China has not reached that stage of self-confidence yet.  When it comes to the sea, it still thinks territorially, like an insecure land power, trying to expand in concentric circles in a manner suggested by Spykman.

Here is one of the book’s bottom lines:

There is an arms race going on, and it is occurring in Asia.  This is the world that awaits the United States when it completes its withdrawal from both Iraq and Afghanistan.

That point doesn’t get enough attention.  My favorite parts of the book were those about China, the South China Sea, India, Pakistan, and Afghanistan.  The sections on Turkey and the United States were less interesting.  Here is a good critical review of the book.

It’s not just monetary policy, it’s Scott Sumner day

I haven’t seen anyone else say it yet, so I will.  The Fed’s policy move today might not have happened — probably would not have happened — if not for the heroic blogging efforts of Scott Sumner.  Numerous other bloggers, including the market monetarists and some Keynesians and neo Keynesians have been important too, plus Michael Woodford and some others, but Scott is really the guy who got the ball rolling and persuaded us all that there is something here and wouldn’t let us forget about it.

I disagree with Scott on a number of points (I think he overrates the importance of sticky nominal wages for instance, and I would like to force him to admit that the private sector can manufacture nominal gdp), and I see the net gains from this policy as smaller than he does.  Still, Scott  deserves our highest level of applause in this matter.

Here is Scott’s very latest blog post on the Bernanke press conference.

The Fed announcement

Get the details almost anywhere else, read Scott Sumner too.  I’ve been tied up, but I have been able to follow my Twitter feed.

Evan Soltas wrote:

It needs to be said that today’s FOMC statement is a major intellectual win for econ bloggers and academics.

Neil Irwin:

What they’re doing is basically the Evans approach minus explicit numerical targets for unemployment/inflation that trigger tightening.

Ross Douthat:

When the true history of the Obama era is written, it will be a joint biography of Ben Bernanke and John Roberts.

Binyamin Applebaum:

Bernanke: We’re not trying to increase inflation, but we might act more slowly to reduce inflation if it should happen to happen.

I say the rate of price inflation is going up.  I see this as a free lunch, and I am quite curious to find out just how big or small of a free lunch it is going to be.

The science of conducting?, and homage to Clive Granger

From The Economist:

DO ORCHESTRAL conductors do anything useful? Alessandro D’Ausilio of the Italian Institute of Technology, in Genoa, and his colleagues tried to answer that eternal question in a study published in the Public Library of Science.


Each violinist had an infra-red reflector attached to the tip of his bow, and the conductors had them attached to their batons. Dr D’Ausilio and his team were thus able to follow the movements of both bows and batons by bathing their little orchestra in infra-red light, which their cameras could see, but human beings cannot. They then used the movements of the reflectors to analyse who was affecting whom.

To do this, Dr D’Ausilio employed a mathematical trick called the Granger causality test…

And the (tentative I would say) result:

The findings are in harmony with what conductors knew all along: that baton-toting despots, like the late Herbert von Karajan, do add value—but only if they rein in the uppity musicians in front of them.

Economists who are clergy

Your post on economist/artists got me thinking about economists/clergy.
Obviously the most famous is Reverend Malthus. A Google search for “Economist Catholic priest” didn’t turn up much. “Economist rabbi” discloses that Israel Kirzner is the rabbi of a congregation in Brooklyn. “Economist clergyman” turned up Richard Jones but I’ve never heard of him. Economist/Jesuit turned up a number of names, all of them obscure to me.
Asher Meir also writes to me:

My favored explanation is that “clergy” is an artificially higher bar than “artist”. Probably a large number of economists are and were devout people with learned and creative views on religion without having been ordained. E.g. Karl Homann is a first-rate theologian but not a priest. Robert Aumann is a first-rate Talmud scholar but not a rabbi. If the bar for “clergy” were parallel to that for “artist” these fellows would certainly make it.

Who else comes to mind?  The School of Salamanca, and going back many medieval theologians wrote on economic issues.  Paul HeyneHeinrich PeschGaliani was an Abbey.  Philip Wicksteed was a Unitarian theologian.  The still underrated Richard Whately was the Archbishop of Dublin.  Bishop George Berkeley wrote on monetary theory, as did Reverend Jonathan Swift.

The 18th century clergyman John Witherspoon wrote on monetary economics.  Thomas Chalmers, who wrote on the Poor Laws and theories of underconsumption in the early 19th century, was ordained in the Church of Scotland.

Did all these 19th century figures really want to be economists, really want to be clergy, or both?

I thank Maria Pia Paganelli for a useful discussion of this point.

What do barter exchanges imply about depressions and recessions?

As was the case during the Great Depression, parallel currencies and barter exchanges are springing up around Spain and some other parts of Europe.  Here is one account:

Psychologist Angels Corcoles recently taught a seminar about self-empowerment for women, and when she finished the organizers handed her a check with her fee. The amount was in hours, not euros.

But Corcoles didn’t mind. Through a citywide credit network that allows people to trade services without money, the 10 hours Corcoles earned could be used to pay for a haircut, yoga classes or even carpentry work.

At a time when the future of the euro is in doubt and millions are unemployed or underemployed with little cash to spare, a parallel economy is springing up in parts of Spain, allowing people to live outside the single currency.

In the city of Malaga, on the country’s southern Mediterranean coast just 80 miles from Africa, residents have set up an online site that allows them to earn money and buy products using a virtual currency. The Catalonian fishing town of Vilanova i la Geltru has launched a similar experiment but with a paper credit card of sorts. It implements a new currency worth slightly more than the euro when it is used at local stores.

You can find another series of accounts here.

One interesting feature of these enterprises is that they push a bit of emphasis away from sticky wage and price theories of depressions.  In essence the sellers participating in these exchanges are price discriminating, by trying to sell more of their output — for lower prices — through credit or barter mechanisms.  Getting back credits in return really is like receiving a lower price or wage.  So these exchanges show that at least some people are wildly willing to cut prices, wages, and returns, if only to sell more.

(Please, no need for a lecture here on Keynes and downward price spirals; the ECB is keeping a price floor at the very least.)

So which factors behind depressions receive marginal support from the prevalence of these practices?  First, these exchanges are a substitute for dysfunctional credit markets.  Second, these exchanges attempt to solve the buyer-seller-buyer coordination problems analyzed by Clower, Leijonhufvud, and others.

Addendum: Here is Alex’s earlier post on barter and recessions.  And Scott Sumner comments.

Get your Arnold Kling fix here

Here is Arnold on on-line education.  Excerpt:

I am optimistic about tablets in large part because I believe that a magic bullet in educational technology is the adaptive textbook. By that, I mean an electronic textbook that adjusts to the cognitive ability and learning style of the student. Adaptive textbooks will query students in order to make sure that they understand what they have been studying. They will also respond to student queries. Adaptive textbooks will implement the many-to-one teaching model.

A glimpse of what lies in store can be found at the Inquire Project, which describes “an iPad app that combines the popular Campbell Biology textbook with a knowledge representation and reasoning system that answers students’ questions about the material.”

why are americans less stylish than europeans/japanese?

From Bob Unwin:

i mean style in clothing, but the same question could be asked about taste in architecture, interior design and other domains. (blog post by a fashion person:

1. greater average distance to a major fashion center. both physical and cultural distance.

2. less urbanization [these points 1&2 were maybe more important in the past]

3. distance from europe and few of the relevant european style-leaders emigrating

4. different signaling aims (more internal cultural diversity and weaker class distinctions; male clothing needing to be less ‘gay’ and more conventional).

5. any relation to the late blooming of US visual art and music on the world scene?

6. american is more informal in style and has been an influential exporter of informal styles (this doesn’t undermine the general point about the style difference)

related question: are there any fashionable american economists? i’d be especially interested in any that dress like artists or literary intellectuals.

An empirical look at Austrian trade cycle theory

From Robert B. Lester and Jonathan S. Wolff:

Austrian Business Cycle Theory, as espoused by Mises (1912,1949) and Hayek (1935), predicts changes in the economy’s structure of production following an unexpected change in monetary policy. In particular, the theory predicts that following a credit expansion the production and price of goods further away from final consumption increase relative to the production of other goods in the economy. Despite the emphasis on the importance of relative prices and the structure of production, most of the existing empirical work discussing the relevance of the theory uses aggregate data. We rectify this, by using stage-of-process data to illustrate the relevance of the theory. We find that mechanisms emphasized by the theory are either not supported by the empirical results or are of second order importance in explaining the e ffects of monetary policy.