Month: September 2012

The equilibrium (with apologies to Daniel Klein)

On September 5, the first Sleeping Beauty in Polataiko’s exhibition awoke to a kiss from another woman. Both of them were surprised. Polataiko shot photos of them laughing and looking at each other. Then he posted the images to his Facebook profile, where he has been live-blogging the entire event. Now the Sleeping Beauty must wed her “prince,” thus queering the historically heteronormative fairtytale. Gay marriage is not allowed in the Ukraine, however, so these two women will have to wed in a European country that does allow for same-sex marriage.

Here is more.  I believe that none of you had solved for this equilibrium.  For the pointer I thank Eapen.

Code is Law

Geeta Dayal, Wired: On Tuesday, some visitors trying to get to the livestream of Michelle Obama’s widely lauded speech at the Democratic National Convention were met with a bizarre notice on YouTube, which said that the speech had been blocked on copyright grounds….

On Sunday, a livestream of the Hugo Awards — the sci-fi and fantasy version of the Oscars — was blocked on Ustream, moments before Neil Gaiman’s highly anticipated acceptance speech. Apparently, Ustream’s service detected that the awards were showing copyrighted film clips, and had no way to know that the awards ceremony had gotten permission to use them.

…As live streaming video surges in popularity, so are copyright “bots” — automated systems that match content against a database of reference files of copyrighted material. These systems can block streaming video in real time, while it is still being broadcast, leading to potentially worrying implications for freedom of speech.

It is not just patent law which is out of control. If a copyright bot takes down a video for which there is fair use there ought to be grounds for a counter-suit.

There is no great stagnation (remote-controlled cockroach edition)

Built-in power supply? Check. Ability to survive anything? Check. Easy to control? Okay, anyone who’s had a cockroach as an uninvited houseguest knows that’s not the case. So, rather than re-inventing the biological wheel with a robotic version, North Carolina State university researchers have figured out a way to remotely control a real Madagascar hissing cockroach. They used an off-the-shelf microcontroller to tap in to the roach’s antennae and abdomen, then sent commands that fooled the insect into thinking danger was near, or that an object was blocking it. That let the scientists wirelessly prod the insect into action, then guide it precisely along a curved path, as shown in the video below the break. The addition of a sensor could allow the insects to one day perform tasks, liking searching for trapped disaster victims — something to think about the next time you put a shoe to one.

What’s it like trying to climb the IQ gradient with this device?  There are videos at the link, and for the pointer I thank magilson.

From the comments, on eurozone sterilization

From this post, on the ECB and the new bailout procedures:

No, but it can tighten policy just as easily by raising the rate paid on cash in its deposit facility. Indeed, this is part of its usual operating procedure: the headline “repo rate” lies at the center of a corridor, with the deposit rate at the bottom. Already there are enough excess reserves sloshing around that the deposit rate is arguably the true risk-free short rate. There are currently 350 billion euros in the deposit facility (so this is the marginal rate paid on cash for a lot of banks!), and the EONIA overnight rate is at 0.1%, far closer to the 0% deposit rate than the 0.75% repo rate.

As long as this continues, the ECB can just follow its normal operating procedure, keeping in mind that the “true” rate is 75 basis points below the rate it’s announcing. There’s no real effect from having greater or fewer excess reserves outstanding; in my view, the “sterilization” program is a meaningless way of appeasing people who still hew to some kind of crude monetarism and don’t understand how the ECB’s policy actually works.

The critics are right about one thing, though; the taxpayers are the residual claimants here. If the ECB buys lots of Italian and Spanish debt and then they either default or leave the Euro, a hole will be blown in its balance sheet, and if insolvent it will require a taxpayer bailout. (And even if it’s not insolvent, profits that would otherwise have been remitted to taxpayers will disappear.) This is a fairly likely scenario.

Help Robin Hanson

At lunch the other day we discussed trends in world population. Some of the newer attendees were puzzled when Robin Hanson matter of factly predicted that there would soon be trillions of people. Bryan Caplan had to interject to explain that by “people” Robin means artificial intelligences, which includes robots and ems (brain emulations) plus flesh and blood people. Robin is writing a book on this topic and he needs a word to denote the class of natural plus artificial intelligences; people is obviously confusing. Vote for your favorite term here. Robin is especially interested in what the bots think would be appropriate, as he does not wish to offend his many future readers.

The Distribution of Summer Temperatures,1950-2011

Here is an animation from NASA showing the distribution of summer temperatures in the Northern Hemisphere. The initial smooth distribution is based on data from 1950-1980. The video advances in yearly increments showing data for 10 year periods from 1950-1960 through to 2001-2011. As the data advances one can see a pronounced shift in the curve to the right and also, a little less clearly, the curve gets shorter and fatter. Thus, not only are we seeing an increase in the mean temperature but also a greater possibility for extremes in temperature around the increased mean.

The visualization is an extension of ideas from a paper by Hansen et al. which includes additional, global data.

Addendum: Here are graphs using 1930-1980 as the baseline.

Who will on-line education help?

Matt Yglesias has an analysis and a hypothesis:

Tyler Cowen and Alex Tabarrok, proprietors of one of the finest economics blogs on the Internet, are launching a cool new venture that they’re calling Marginal Revolution University aimed at doing online economics education and launching with a course on development economics.

It’s pretty clear that big change is coming to the higher education space through digital technology, but it’s also worth asking who’s going to really benefit from this kind of change. The key winner, it seems to me, is someone who’s intelligent, focused, and motivated but whose parents don’t happen to have much money.

There is more analysis at the link.  Matt makes this very good point:

Last but by no means least, some of the biggest winners here will be people living in poor countries where the basic logistical barriers to accessing quality higher education are often very high. I suspect it’s no coincidence that development economics—a subject likely to be of particular interest to that demographic—is where MRU is starting.

What’s up with the new Draghi plan?

I won’t recapitulate my core views on the euro crisis (see this talk), but here are a few points:

1. The aggregate numbers are workable, but the eurozone needs a unified solution of some kind.  Putting any single country “in charge” would yield a solution, although the quality of solution would vary with the country.  Still, it would be a solution.

2. The danger is that quasi-solutions will appease all countries in the short run, not really solve the core problems, and thereby walk the eurozone further down the plank of doom.  This is the outcome I have been predicting, though it is not necessary in any logical sense.

3. The new plan puts the ECB in charge, and in fact gives the ECB semi-dictatorial powers over the weaker eurozone economies.  If Draghi says “jump,” you had better jump.  Many will consider this an untenable abrogation of democracy, see the remarks of Matt Yglesias and more generally ponder the Rodrik trilemma.  I don’t know how long this arrangement can last.  Up through now, and still, my view has been that at least one of these democracies will “crack” and pull the plug on whichever non-democratic dictatorial scheme happens to be in place at the time.   I don’t see that the chance of that has gone down.

4. Some portray this as a loss for Germany and the Bundesbank, but I wonder.  I tend to see the ECB as the new enforcer.  The more the ECB is responsible for the money it hands out, and the larger the role the ECB takes in governance of the weaker economies, the more the perspective of the ECB will approach that of Germany.  That the ECB can “money print” its way out of insolvency I don’t see as so important for the true incentives facing ECB leaders.

5. By the way, the ECB has renounced its senior place in line, at least for the new bond buying, how generally I am not sure from published reports.

6. Does the ECB have the stones to cut off or not start up with countries violating the terms of their bailouts?  Greece and Spain are already way out of line.  Yet it seems this new plan is directed at Spain, at the very least, so how credible can it be?  I say the ECB becomes even more of a fudger.

7. The notion of “unlimited” but “sterilized” bond-buying interventions is a problematic one.  How much “Dran-O” is there to remove the newly created money?  Surely the ECB can’t respond by selling from its current portfolio of periphery bonds.

8. The afflicted countries now have an incentive to load up on short-term debt.

9. The theory of bureaucracy suggests that Draghi has delivered somewhat different messages to Merkel and to the periphery nations as to what this scheme really will mean.

In a few words I would say “The ECB as Old Testament God.”  He wasn’t omnipotent either, and in Genesis you also will find intimations of henotheism.

Let’s see how good a job they do.

Advertising markets in everything

Ally Bank’s new ad campaign highlights their commitment to customers. Watch “Predictions,” one of the first ads from this series, below. It features Nobel Prize-winning economist Thomas Sargent–bonus!

The video is here, Sargent is central to it, it is full of economic content, and for the pointer I thank Jonathan Falk.  I guess Sargent doesn’t think Fed commitments are credible!

MR University is announced at the World Bank

As our blog posts went up (here and here), our plans for MR University were presented to an audience of World Bank economists, researchers, and practitioners, courtesy of PREM.

You can find the presentation here.  The segment on MRUniversity starts at about 29:30, with the earlier part of the talk covering ideas related to The Great Stagnation.

You can sign up at  Our class on development economics starts October 1, and we are pleased to have been able to present it at the World Bank, and to you all, to start it off.

Yesterday was an interesting day for development economics

The government of Honduras has signed a deal with private investors for the construction of three privately run cities with their own legal and tax systems.The memorandum of agreement signed Tuesday is part of a controversial experiment meant to bring badly needed economic growth to this small Central American country.

Here is a bit more, and for the pointer I thank M.

Kaushik Basu named as World Bank chief economist

Annie Lowrey has the scoop.  Excerpt:

A paper he released last year caused a bit of a stir: While advising the Indian government, Mr. Basu argued that countries could reduce the incidence of “harassment bribes” – e.g., “I’ll approve this home renovation project for you for a small fee…” – by making it legal to give a bribe, though not to receive one.

“This will cause a sharp decline in the incidence of bribery,” Mr. Basu said. “After the act of bribery is committed, the interests of the bribe giver and the bribe taker will be at divergence. The bribe giver will be willing to cooperate in getting the bribe taker caught. Knowing that this will happen, the bribe taker will be deterred from taking a bribe.” (Mr. Basu notably argued against giving an amnesty for past incidents of bribery.)

Mr. Basu is to start at the bank Oct. 1. In the meantime, you can follow him on Twitter.

And do not forget:

He is also the creator of the two-player board game Dui-doku.  He is also a Woody Allen fan.