Year: 2012
Foreign Students
Good piece in the New York Times making three points about foreign students in U.S. universities 1) State budgets for education have been slashed, 2) foreign students are way up and because they are paying much higher tuition than in-state students they are supporting education for citizens, 3) selling education services is one way our trade deficit with China is balanced.
This is the University of Washington’s new math: 18 percent of its freshmen come from abroad, most from China. Each pays tuition of $28,059, about three times as much as students from Washington State. And that, according to the dean of admissions, is how low-income Washingtonians — more than a quarter of the class — get a free ride.
Not everyone is happy, however. Here is one (ironic?) complaint:
“Morally, I feel the university should accept in-state students first, then other American students, then international students,” said Farheen Siddiqui, a freshman from Renton, Wash., just south of Seattle.
The negotiations over refunding Greece
Here is one very effective understatement:
The two sides were “quite far apart” over projected cuts of 25 per cent in private sector wages, 35 per cent in supplementary pensions and the immediate closure of about 100 state-controlled organisations with thousands of job losses, a Greek official said.
Coase may yet kick in, but it looks pretty tough to me. Here is a good post on what it means if there is no public lender haircut.
Assorted links
1. Is manufacturing special?, by Christina D. Romer.
2. The gains from trade model, slide show, recommended for all.
3. Andrei Shleifer, lessons from communist transitions.
The cultures that is Italy
Responsible for one of the most stupid shipping accidents of all time, not to mention the death of thirty or so passengers, Schettino was nevertheless greeted in his home town of Meta di Sorrento (on the south side of the bay of Naples) by a crowd waving banners in his favor and complaining, priest included, that the man’s bad press was the result of a general prejudice against their community. “Every Italian,” Giacomo Leopardi dryly remarked in 1826 “is more or less equally honored and dishonored.”
Here is more, interesting throughout.
The West Rt. 50-Gallows feed
There are three lanes, with the left two lanes narrowing into one. A slight bit further ahead, the traffic from Gallows Road merges into the right lane, map here.
Many people from the far left lane merge “unethically,” driving ahead as far as they can, and then asking to be let in at the near-front of the queue. The traffic from Gallows Road, coming on the right, merges ethically, as it is a simple feed of two lanes nto one. They have no choice as to when the merge is, although de facto the construction of the intersection puts many of them ahead of the Rt.50 drivers.
The left lane merge is slightly quicker than the right lane merge, in part because not everyone is an unethical merger. Yet it is more irksome to drive in the left lane, because you feel, correctly, that people are taking advantage of you (unless you are an unethical merger yourself, which I am not).
In recent times, I have switched my choice to the right lane.
Why does Arnold Bread have forty different kinds of bread?
100% whole wheat, 12 Grain, 7 Grain, German Dark Wheat, Health Nut, Healthy Multi-grain, Honey Whole Wheat, Oatnut, Country Oat Bran, Country Wheat, Country White, Country Whole Grain White, Healthfull 10 Grain, Healthfull Flax and Fiber, Healthfull Hearty Wheat, Healthy Nutty Grain, Double Fiber, Double Protein, Grains & More Flax and fiber, Triple Health, Dutch Country 100% whole Wheat, Butter Split Top, Extra Fiber, Premium Potato, Premium White, Rye Everything, Rye and Pump, Pumpernickel, Rye Seedless, Melba Thin, Rye with Seeds, Soft Family 100% Whole Wheat, Soft Family Classic White, Soft Family Honey Wheat, Soft Family Whole Grain White, Brick Oven Whole Wheat, Brick Oven Premium White, Premium Italian, Stone Ground, Light 100% Whole Wheat.
Here is more, from William Gadea. The hypothesis:
The motivator here isn’t making the customer happier, it’s the oft-neglected fourth ‘P’ of marketing: placement. Even if the supermarket carries only half the varieties that Arnold offers, all of a sudden they are hogging a big part of the bread aisle. Arnold is the bread that is most likely to be close to your hand.
For the pointer I thank William Gadea.
$35.9 million says subjective value theory is correct
One related story is here.
Addendum: Qatar, by the way, last year paid about $250 million for a Cezanne “Card Players.” The details are now coming out.
Toward a theory of praise
Rogoff’s real hero, however, was Bobby Fischer, the American chess champion of the 1970s. He remembers following the games from the famous Fischer-Spassky world chess championship in 1972, and being awed by Fischer’s play – “It was like seeing the hand of God at work; the originality, the simplicity.” He shakes his head in delight and amazement. Fischer even paid the teenaged Rogoff the compliment of analysing and praising one of his games in an article. But Rogoff did not let that go to his head. “I took that to mean that he knew I could never beat him. Because I knew he was hyper-competitive. I completely understood the message,” he chuckles.
Not sure if you can get through the FT link to the rest. It is interesting throughout.
The Chinese fapioa, or reverse tip
In China a fapioa – the official receipt used for expense claims has a resale face value of 2 – 10% of face value – leaving one behind in a restaurant or taxi is the equivalent of giving a tip (in a culture where tipping is uncommon) and not requesting one allows the person or establishment to avoid ringing the exchange through a cash register. There are two primary practices around handing out fapioa: the first is that they are printed to the exact value; the second is that the seller takes an equivalent sum from book of fapioa that contains various denominations.
In many smaller establishments the seller is reluctant to hand over fapioa since in essence it becomes declared income and it is common to have to ask twice, especially as a foreigner. But in larger service industry chains where (some) tax is a given and employees feel less loyalty to the bottom line over-paying on fapioa (handing back receipts way in excess of the actual sums purchased) is like handing money back to the customer. The social norms dictate that the seller should round up – so if the the lowest denominations are 20 RMB (about 2.5 Euro) a customer could get 40 RMB of fapioa for a 25 RMB drink.
Here is the link, and for the pointer I thank Fred Smalkin.
Assorted links
1. Markets in everything bride price decomposition the culture that is Nigeria.
2. David Cronenberg interview.
3. How exactly do we know, from the photo, that she is on the political left rather than right? Seriously. Here is her blog and profile. Here is her Twitter feed. How do we know? And that we know — should it make you less confident in your own political beliefs? WWRHS?
4. Kling on Murray.
A fragment to ponder
The RGDP growth rate has been 1.6% in the 4 quarters since late 2010, which is below everyone’s estimate of trend growth (except perhaps Tyler Cowen…
There is much more at the link, from Scott Sumner. Of course Michael Mandel, Peter Thiel, Garry Kasparov, and some others would quality as well.
The new jobs report
All good news, 243k up but lots more information in the numbers, try @JustinWolfers or @BetseyStevenson for details and interpretation. The “big loser” here?: Old Keynesianism. You really can get a recovery when the real shocks are moderately positive. You will note, as we have been told many many times by many many sources, fiscal and monetary policy have not been extremely pro-active in recent times; in fact the stimulus has been trickling to a close. The big winners, apart from the American public?: real business cycle theory. It is part of any cyclical explanation, whether one likes it or not.
Another big loser is those liquidity trap theories which tell us that positive real shocks are bad for the economy because the AD curve has a perverse slope, etc., and that negative shocks might help spur recovery. That theory is looking very weak, again. I consider it the weakest economic theory that has any currency in the serious economics blogosphere.
Thomas Sargent on federal bailouts
In 1789, the political price for our federal constitution included a bailout of the 13 indebted states. But it was by refusing to bail out the states a second time in the 1840s that the United States preserved its federal system, with substantial fiscal independence for state governments. Facing a similar moment, Europe might learn from our experience.
…Appealing to the precedent set by the 1789 bailout, state creditors asked the federal government to bail out the states once again. After an enlightening debate, in the early 1840s Congress declined, so many states repudiated their debts.
In the aftermath of those repudiations, many states rewrote their constitutions to require year-by-year balanced budgets, something they had never done before. As noted, fiscal crises, like the one in Europe today, often produce political rearrangements—at best peaceful ones like these.
There is more here. If that WSJ link doesn’t work for you, type “Thomas Sargent” into news.google.com.
How is immigration different in 2012?
Loyal MR reader V has a request:
1. Engage with the arguments by Sailer and his ilk that Mexican immigration is different than the waves of the 1920′s, 1880′s, etc.
Specifically, they cite the example of New Mexico, current Latin America, evolving California, etc. where class-based hierarchies that closely mirror IQ differences have proven remarkably stable to all sorts of interventions over the time span of centuries (whether peaceful in the case of NM or violent in the case of the Mexican revolution).
Also, they point out that communication differences as well as the changed nature of the economy now (i.e., many fewer blue collar manufacturing jobs that transition families between immigrant manual labor to white collar knowledge industry workers, fewer overall manual labor jobs such as garment factories, the presence of a welfare state, etc.) make assimilation a much harder proposition.
Interesting to see what Tyler and Alex have to say in response to these arguments…
To that list I would add that, related to TGS, the negative effect of immigration on U.S. educational norms has been more significant than it otherwise might have been. On the other side of the ledger, here are a few relevant factors:
1. The slower influx of Mexicans (100,000 a year vs. a former 500,000 a year) means that assimilation will from now on proceed more rapidly, and certainly more rapidly than the critics had been predicting.
2. The effect of Latino communities in lowering crime rates and revitalizing neighborhoods and cities has been stronger than might have been expected twenty years ago.
3. The notion that Latino migrants to the U.S. might help seed and sustain a broader Latin American economic and democratic boom has become a reality, and this was not obvious twenty years ago.
4. The idea that “the New World” will become a major trading bloc to rival “Chinese Asia” is a more important idea than it might have seemed twenty or even ten years ago. The United States needs extensive Latin connections to maintain its status as active leader of that bloc.
5. Outsourcing is more of a force than we had thought, and the possibility of outsourcing raises the (relative) gains from allowing immigration. I will write more on this in the future, so I’ll leave the details for now.
Overall, the arguments on immigration have changed quite a bit in the last ten to fifteen years, but those changes have cut in both directions.
Robin Hanson’s theory of young consultants
The puzzle is why firms pay huge sums to big name consulting firms, when their advice comes from kids fresh out of college, who spend only a few months studying an industry they previous knew nothing about. How could such quickly-created advise from ignorant college students be worth the millions paid? Why don’t firms just ask their own internal recent college grads?
Some say that consulting firms use their access to collect data on best practices, data that other firms are eager to pay for. But while this probably contributes, I find it hard to see as the main effect.
My guess is that most intellectuals underestimate just how dysfunctional most firms are. Firms often have big obvious misallocations of resources, where lots of folks in the firm know about the problems and workable solutions. The main issue is that many highest status folks in the firm resist such changes, as they correctly see that their status will be lowered if they embrace such solutions.
The CEO often understands what needs to be done, but does not have the resources to fight this blocking coalition. But if a prestigious outside consulting firm weighs in, that can turn the status tide. Coalitions can often successfully block a CEO initiative, and yet not resist the further support of a prestigious outside consultant.
To serve this function, management consulting firms need to have the strongest prestige money can buy. They also need to be able to quickly walk around a firm, hear the different arguments, and judge where the weight of reason lies. And they need to be relatively immune from accusations of bias – that their advice follows from interests, affiliations, or commitments.
All three of these functions seem to be achieved at a low cost by hiring good-looking kids from our most prestigious schools. These are the cheapest folks you can buy with our most prestigious affiliations, they are smart enough to judge where reason lies, and they have few prior affiliations to taint them with bias. They can not only “borrow your watch to tell you the time,” but can also cow you into submission in accepting that time.
Yes the information contained in consulting advice can be obtained elsewhere at a lower cost. Firms could hire most any smart independent folks, or set up a prediction market. But alas those sources don’t have the raw strength of status to cow opponents into submission, opponents who in practice can block changes no matter what a CEO declares.
So mine is a signaling and status story (surprise surprise). The weight of status often decides outcomes, no matter what the CEOs commands, and so CEOs often need to bring out status ringers, to cow opponents into submission.
Here is a bit more.