Assorted links

1. Garett Jones and the role of Fannie and Freddie.

2. The Bloomberg best books of the year list.

3. Rogoff comments on the stagnationists, and are we running out of phosphate reserves?

4, MIE: precious friends become precious gems.

5. Christmas video about macro, will offend some of you.  Worth a view in any case!  By John Popola, and it considers Malthus on aggregate demand.

6. Outcompeting the driverless car (does the theory of comparative advantage apply to dogs?), caveat emptor.

7. Cass Sunstein is now on Twitter.


3. My new computer is slower than my old computer. That can be explained away. The clincher is that the notepad.txt(s) that I've resorted to using are as buggy as they've ever been, if not moreso. I don't want explanations for why my notepads are buggy or why I have to wait just as long for my computer to provide me with the same utility as 30(!) years ago. I want them fixed!


Enough of this debate. Let's settle...with chess!

If you're serious about the notepad thing, check out notepad++.

Notepad.exe is a terrible program. There are many substitutes and most are much better. Textpad is a decent one.

2. I agree with Charles Dallara about the Queenan book. It was a really fun read about reading.

And shouldn't Darling mention he wrote the forward to the book he recommends?

5. So now Keynes and Malthus are like Mohammed?

Haha. Yeah, was wondering that myself.

5. Wait, doesn't Tyler always say you're better off spending your money today than saving it and spending it "tomorrow"?

Haha, Brad DeLong's book suggestion has to be self-parody.

#3 Peak Phosphorus fear-mongering:

"Phosphorus comprises about 0.1% by mass of the average rock, and consequently the Earth's supply is vast, although dilute."

Therefore, in the very long run it is really peak uranium that we ought to worry about.

He's hardly the first. Not even the first mentioned by Tyler here.

I think the funniest part of it is where is basically insults him for saying we're in trouble in the long term because of this, then mentioning that we have about 350 years left at present rates. And this is from a group that's in favor of growing America.

"His direst example is “the impending shortage of two fertilizers: phosphorus (phosphate) and potassium (potash). These two elements cannot be made, cannot be substituted, are necessary to grow all life forms, "

Anybody that makes this statement with a straight face is not someone who knows a whole lot about chemistry. ;)

re #4:
Best version of a "girl's best friend..." joke wins 10 internet points.

their tagline could be: "turning man's best friend into a girl's best friend"

Ok, so the US will easily rival the Roman Republic/Empire because at current rates of phosphate use there is as much as 370 years supply, so don't be alarmed by the economists who argue that getting the other two-thirds of the population to gro food like the West does which triples phosphate use, well that still leave more than a century, and 235+150 years is greater than 500-600 years.

But not to worry, you can ignore all those environmentalists who say we need to consume less, recycle, and eat less meat to avoid polluting ourselves to death, because we waste phosphates which we see in the pollution and if we consume less, recycle our poop, and eat less meat, then we will be fine.

In other words, all we need to do is kick the can down the road - the environmentalists are correct, but we can just maintain the status quo plunge to collapse for the few decades I'm living and let my kids and grand kids make the sacrifice I won't, to compensate for me and themselves wasting resources today.

Just borrow and spend, borrow and spend - winning is dying with the largest debt.


Calm down. The fact that we have 370 years of global phosphate reserves does not mean that the stuff will all be gone in 370 years. It means that that's how much of the stuff industry has found and determined to be extractable at current prices.

For a given supply of phosphate, as supplies dwindle, its price rises. As its prices rises, the relative price of alternatives drops. So there is substitution.

But the higher price also permits suppliers of phosphate to reach sources that were not previously cost effective to reach. So global supply rises.

And that is assuming constant technology. Manufacturers could figure out how to make phosphate more effective in smaller quantities, or find a cheaper substitute. They might develop cheaper extraction techniques.

The quality of goods that are compliments to phosphate could change, reducing its demand.

Seriously, did you miss day 6 of Econ 101 when the teacher covered determinants of supply and input substitution?

3. Sea salt is 1.1% potassium. Currently it is extracted from the briney waters of the Dead Sea, which has about twice the concentration of potassium as sea water. Getting our potassium from seawater would be annoying as it would cost more than mining potash, but if the cost of potassium doubled it would increase the cost of our food by something like a cent or so a day per person. This is not good if you are living off $2 a day, but the world is now rich enough that the majority of the world's population wouldn't notice.

Yup, phosphate and pottasium don't get consumed, they get transformed chemically. You just need to supply the energy to do so. I'd imagine the dead zones off of the larger river esturaries are loaded.

RB, B,

All correct. In truth the only things we are running out of are oil and the carrying capacity of the atmosphere for CO2.

However, both are very, very critical.

I'm optimisitic. Here in Australia point of use solar is now considerably cheaper than electricity from the grid and we have the capacity to replace our oil use, which is almost all transportation, with electricity and natural gas any time we want. A large portion of our vehicle kilometres are already powered by LPG.

I'm optimistic. Remember when we used to be running out of gas?

"Innovation crisis of financial crisis"
Neither, its a legal crisis.

Thanks for the share, Tyler!

And for those who may allegedly take exception with the video, and presumably my failure to address increased demand for money, just know that I too think it's bad, just like John Stuart Mill, Hume, Hayek, Keynes, Friedman and everyone but Rothbardians. But this piece isn't about monetary policy. It's also trying to make a point which I believe survives the technocratic tweak about hoarding anyway. It's about the notion that consumption is a means to create growth, rather than increased productivity, which is repeated in the media and by economists who should know better. I'm happy to defend the strong position we take in the video if anyone would like to discuss it. I learn more about these ideas with every civil interaction about them. If there's one thing that this recent recession has demonstrated, with it's rapid recovery in consumer spending AND increased productivity happening along side sustained unemployment: John Stuart Mill was right. The demand for commodities is clearly not the demand for labor. But that's another song for another time... Enjoy!

Virtually all humans are lousy drivers. We should only expect that dogs, and even AI, can do as well.

Enough with the Comparative Advantage!

Grantham's recent fixation on resource limitation and his claim that the increase in commodity prices over the last 10 years represents a dramatic break from the last 1000 years or so is surprising - since he usually scoffs at "this time is different" claims. So I'd like to see a serious, informed refutation.
An AEI blogger whose evidence consists of a few minutes' googling doesn't quite cut it. If anyone has seen a better critique, please share a link!

5. Not offended, but I think a holiday themed disclaimer of the strawman parody on all sides is fitting. Maybe:

Away in an ivory tower,
no journal for his meme
the little bored strawman
laid down his weak theme.

Still I found it amusing, though my bar is probably higher for macro-themed holiday humor. How many of you have friends whose tree is named ben firnanke? Ho ho ho.


I'm curious which part of the video you consider to be a straw man. I spent a great deal of time reading the classical debate and reviewing popular treatment of consumption and saving as well as Keynes himself.

Me too.

The whole thing is a parody...but don't get me wrong it is clever and yes works in source material. I was going to use the contrast with a nuanced, down-in-the-data discussion at the workshop on the marginal propensity to consume that I attended yesterday to make my point about parodies and strawmen, but then I found a draft of my daughter's letter to Santa:

Dear Santa,

Is this year going to finally be better? Mommy told me to ignore boys who act like they know it all, but that cute little Elf Hayek seemed so smart. He told me if I saved more of my allowance, you'd bring me even presents and a better paying job for daddy. Five year, five years Santa I (and all my friends) saved more and I am still waiting. Was that little elf wrong? It sounded so simple, so easy. I know mommy always says there's no free lunch, but don't worry, Santa I will still put out milk and cookies for you and elves and carrots for the reindeer. ....

I am not trying to stoke a debate on the intellectual roots of macro stabilization policy. I am just saying with one liners and a catchy theme you can paint a lot of pictures.

I am just saying with one liners and a catchy theme you can paint a lot of pictures.

We are eagerly awaiting your next parody video.

So you got nothing. That's a shock.

Like so: the decision to add $1 trillion, less whatever we can suck out of high income people, to the federal debt in 2013 is a moral imperative.

Or: Anyone who has studied the situation can see that the problem is Americans aren't consuming enough.

Off topic, but where would you recommend a non-economist start studying the classical debate? Im sincerely interested in this topic but im having trouble getting started.

I think this is a good book, though I am not an expert. . My undergrad background in economic thought was direct by a Marxist and a Hayekian but they were balanced in their critiques of all approaches. Early on that's what you need. You will form your own opinions over time.

I would rather have that dog on the road in-front of me any day. He looks highly focused on the task at hand, and being a dog is quite likely able to stay so for far longer than any human.

"Oh, look! A squirrel!"

Uh huh.

We are running out of phosphate the same way we are running out of seawater.

@3--GM Rogoff is crazy. He does not give credit to T. Cowen, who wrote the "Great Stagnation" thesis, but to GM Kasparov. Another example of GMs picking on slightly weaker players?

More seriously, Rogoff commits this howler: "Frankly, when I think of stagnating innovation as an economist, I worry about how overweening monopolies stifle ideas, and how recent changes extending the validity of patents have exacerbated this problem." Read more at

Aside from the use of the pejorative term 'monopolies' Rogoff makes the tactical blunder of saying 'recent changes extending the validity of patents'--when my patent friends tell me it's the OPPOSITE! Recent changes in a court case heard by the Supreme Court on so-called patent obviousness in fact made it *more* difficult to get a patent, not less difficult. A real howler by the GM.

Does he refer to the business process, software, design patent precedents?

There is still a lot of phosphate in the Western Sahara. It is one of the main reasons Morocco wants to hold on to the territory. Ironically I have a few recent posts up on Western Sahara on my blog from this week.

it may be unsexy and controversial to say this, but I believe the stagnation in innovation is largely a problem of overregulation.
Yes, there are rapid advances happening on the scientific side in neuroscience, nanotechnology, biotechnology and so forth. But what does it take to turn those scientific advances into marketable products in today's regulatory environment?
Just for example, observe the opposition to applying fairly simple gene splicing technology to crops. In the last 10 years it has been impossible to get any new crop strains produced through biotechnology approved, because of public opposition to "GMOs".
The environmental lobby has adopted what is called the "precautionary principle", which basically means that no new product should be marketed unless it is proven safe (an effectively impossible task).
Similarly, we see that the breakthrough in "fracking" in natural gas has led to immediate opposition from environmental groups asserting that it causes earthquakes and poisons water supplies.

The reason so much of our innovation comes from electronic gadgets and software these days is because those innovatoins happen in the world of pure information - which has little to no physical effect on the external world. And even then of course, you have people arguing that cell phone antennas cause cancer and demanding regulations on cell phone antenna emissions.

Now imagine if someone actuall was able to make a breakthrough and develop fusion power. Or develop a new type of rocket propulsion. Immediately, you would see a whole host of people speculating upon what sort of adverse consequences could be caused by it (what are the dangers of a fusion plant blowing up? What chemical components are in this rocket exhaust? ) And even without hard scientific evidence that any of it is unsafe, you're going to see the EPA coming in and heavy handedly demanding all sorts of precautions, because that's just how we do stuff these days.

And almost nobody is out there saying that this is unnecessary and stifling to innovation because the PC thing to say is that it's important to regulate to make the public FEEL safe, regardless of whether any of it is scientifically justified.

Brian Donohue, oil is $87 a barrel here. We appear to have run out of that $5 a barrel oil. As a result, improving the efficiency of transport down here appears to be a real money saver.

I think the Sunstein Twitter link at #7 used to work, now it directs to some Dutch person.

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