X Prize News
The X Prize Foundation has received $7m in new funding to develop more X prizes and The Aeronautics and Cosmonautics Romanian Association (?!) says they will try to land a robot on the moon within the next 3 months.
China/Syria Fact of the Day
I have been talking with GMU President Alan Merten, who is also in Kunming via Syria. In Syria, Alan was surprised when he was asked to meet with President Bashar al-Assad. Even more surprising, the President wanted to talk about entrepreneurship, GMU, and how Syria can benefit from better economics.
Later, talking with the Finance minister, Merten learned one of the key drivers of this new openness. The Finance minister explained that he was meeting with a counterpart in the Chinese government. "What can we do," the Syrian Finance minister asked, "to increase Chinese investment?" "Well," the Chinese minister replied, "before we invest in Syria you most open your markets, cut your subsidies, and reduce regulation…"
China Fact of the Day
I was just speaking with an expert on the Chinese banking and finance system and I asked him what were the major problems with the Chinese banking system. He replied, "Well, housing prices are falling and many banks have bad loans and if prices fall much further the borrowers won’t have the money to pay the loans back." I kid you not.
Also, contra the U.S. the Chinese Central Bank is reducing the growth in the money supply to combat inflation. Interesting times.
The King Monopolist
At the "Silk Market" in Beijing you can buy high quality goods from "Chanel," "Gucci," "Ralph Lauren" and just about any other famous brand. Prices are very, very low ;). But there is one brand that no one copies and for which you must pay full price – the 2008 Olympics brand. It’s not good to offend the King monopolist.
China’s Silver Lining
An hour and a half out of central Beijing, traveling through orchards of apples and pears and still the smog blankets the fields obscuring the view. Pollution like this I have never seen.
And yet the intensity of the pollution makes me optimistic. Pollution in China isn’t like the demise of the snail darter or some wispy thing that might take a few weeks off your life if you live long enough. Pollution here irritates, it chokes and it kills young and old. Pollution like this people are willing to pay to avoid and as the economy grows the Chinese are willing to pay more and more. James Fallows, who is living in Beijing, suggests that pollution could be China’s Silver Lining, and ours. I read the piece before arriving but after being here a while it rings true.
More Sex is Safer Sex
In More Sex is Safer Sex Steven Landsburg famously argued (based on work by Michael Kremer) that if more people, especially more sexually conservative people, had sex the AIDS epidemic could be reduced. Landsburg wrote:
Imagine a country where almost all women are monogamous, while all men
demand two female partners per year. Under those circumstances, a few
prostitutes end up servicing all the men. Before long, the prostitutes
are infected; they pass the disease on to the men; the men bring it
home to their monogamous wives. But if each of those monogamous wives
were willing to take on one extramarital partner, the market for
prostitution would die out, and the virus, unable to spread fast enough
to maintain itself, might well die out along with it.
In The Wisdom of Whores (see also my earlier post) Elizabeth Pisani says that such a country exists, it’s Thailand, and the results of more sex was safer sex – exactly as Landsburg argued. Here’s Pisani’s story:
Thailand used to fit the the classic ‘virtuous girls, philandering boys’ model. At the start of the 1990s, 57 percent of twenty-one-year-old men in Northern Thailand trooped off to the brothel to do their philandering. More than half the sex workers who soaked up their excess energy were HIV-infected….
Then…the Thai economy boomed. Girls were getting better educations than ever before…Educated girls were waiting longer before getting married, but not before having sex. By the end of the 1990s, 45 percent of girls aged 15-21 in northern Thailand admitted to having sex with boyfriends before marriage, compared to less than a tenth of that in a nationwide survey in 1993.
…So at the end of the decade, we have a lot more premarital sex and not all that much condom use with girlfriends. But now that these young, cash-strapped guys can have sex without paying, they’ve stopped handing over cash for sex. By the end of the 1990s, only 7 percent of young men were paying for sex, and HIV prevalence in sex workers had come down too.
….In short, more women having premarital sex equals less HIV.
Pisani cites neither Landsburg nor Kremer so I believe her account is independent. Note that Pisani also credits Thailand’s successful condom program.
Size Matters
Beijing has more modern architecture than perhaps any other city and more of it is going up every day. Judging by the buildings you would think China is a rich country and it is but China is a rich country composed of poor people. What China loses in per-capita terms it makes up for in volume. We are used to thinking of total and per-capita wealth as highly correlated – the EU and the United States being key examples. We need to rethink some issues such as inequality, power and foreign policy when they are not so correlated.
By the way, the architecture is great but hard to see! Visibility is limited to 3 or 4 blocks after which everything is a grey haze. I haven’t seen the sun for days.
Also, I found a way to access Marginal Revolution using an anonymizer. This is good since the thought that one billion could not access the wisdom at MR was deeply disturbing.
At the Beijing Airport
At the Beijing airport as the customs official questions you, you get to rate them – there is an electronic box, hidden from their view, that asks for your rating of service. Damn, this is better than democracy! I was "extremely satisfied."
On the other hand, MarginalRevolution is blocked but I can still access Typepad.
Krugman gets a Rotten Tomato
Paul Krugman is attacking Milton Friedman (again) for rotten tomatoes. Here’s Krugman in 2007:
These are anxious days at the lunch table. For all you know, there
may be E. coli on your spinach, salmonella in your peanut butter and
melamine in your pet’s food and, because it was in the feed, in your
chicken sandwich.Who’s responsible for the new fear of eating?
Some blame globalization; some blame food-producing corporations; some
blame the Bush administration. But I blame Milton Friedman.…Without question, America’s food safety system has degenerated over the past six years.
and here he is today repeating himself:
Lately, however, there always
seems to be at least one food-safety crisis in the headlines – tainted
spinach, poisonous peanut butter and, currently, the attack of the
killer tomatoes.How did America find itself back in The Jungle?
I was curious so I collected data from the Center for Disease Control on Foodborne Disease Outbreaks from 1998-2006. The data only go back to 1998 because in that year the CDC changed its surveillance system creating a discontinuity but note that we are covering a chunk of the Clinton years and are well within the time frame over which Krugman says the safety system has degenerated. Here’s the result:
What we see is a lot of variability from year to year but a net downward trend. You can also look at cases per year which are more variable but also show a net downward trend. No evidence whatsoever that we are back "in The Jungle."
Your Favorite Things China?
I’m off to China next week. A few days in Beijing, then Kunming in the South then Hong Kong – two weeks in all. Recommendations, reviews, ideas are all welcome.
How the military subsidizes is subsidized by private industry
An American military supercomputer, assembled from components
originally designed for video game machines, has reached a
long-sought-after computing milestone by processing more than 1.026
quadrillion calculations per second.
From the NYTimes.
Rodrik on Foreigners
Rodrik writes:
So the "us" and "them" characterization that Tyler attributes to irrational nativism perhaps has more to do with the absence of a common set of international rules on labor standards, environment, consumer safety, and so on.
Tyler responds ably here, I will add a few more comments. A testable implication of Rodrik’s hypothesis is that people will be more upset about international trade than immigration since foreigners in foreign countries obey different rules but immigrants obey the same rule as us. In reality, people are more upset by immigration than by trade and as a result we are much closer to free trade than to free immigration.
Rodrik has a very Ivory-tower view of what people care about. Rodrik may be upset that people in other countries have poor on-the-job safety but (for the most part) workers who lose their jobs to foreigners really don’t give a damn. What U.S. workers are upset about is losing their job and if asked to name the problem the U.S. worker will almost certainly say it’s the low wages of foreigners not their poor working conditions. Moreover, the worker’s diagnosis of the problem (problem to him or her that is) is correct and Rodrik’s diagnosis is wrong. Why? Because higher safety standards in foreign countries would cause foreign wages to fall and thus would not much reduce competition from abroad, which is what the worker cares about. I assume that Rodrik knows this even if the worker does not.
Rodrik’s deeper argument is also peculiar, especially for a liberal economist. A liberal economist should understand that for the most part labor, environmental and consumer safety standards are chosen not imposed (not always, of course, but for the most part in the long run). In the United States we have a lot of job safety because we are wealthy and are willing to pay for job safety with a reduction in our (already high) wages. In other words, Americans buy a lot of on-the-job safety for the same reasons we buy a lot of smoke alarms and DVD players. (OSHA has very little effect on job safety.) Job-safety is thus a choice Americans make about what to consume – we use some of our wealth to buy safety both at home and at work and some of our wealth to buy DVD players. Thus, to argue that we shouldn’t trade with foreigners because they don’t have the same job safety as Americans makes about as much sense as arguing that we shouldn’t trade with foreigners because foreigners don’t buy as many DVD players as Americans.
Food Fight
In a story rich with irony the Senate, led by Democrat Dianne Feinstein, has voted to privatize its restaurants and food services. The House privatized twenty years ago. The result? Sort of like East and West Berlin.
In a masterful bit of understatement, Feinstein blamed [millions of dollars in losses] on "noticeably
subpar" food and service. Foot traffic bears that out. Come lunchtime,
many Senate staffers trudge across the Capitol and down into the
basement cafeteria on the House side. On Wednesdays, the lines can be
30 or 40 people long.House staffers almost never cross the Capitol to eat in the Senate cafeterias.
Naturally some of Feinstein’s colleagues were not pleased.
In a closed-door meeting with Democrats in November, she was
practically heckled by her peers for suggesting it, senators and aides
said.
"I know what happens with privatization. Workers lose jobs, and the
next generation of workers make less in wages. These are some of the
lowest-paid workers in our country, and I want to help them," Sen. Sherrod Brown (D-Ohio), a staunch labor union ally, said recently.
The reporter adds without comment, "The wages of the approximately 100 Senate food service workers average $37,000 annually." Who says we can’t get a better press corps?
Feinstein had an ace in her sleeve, however, and when push came to shove she unleashed her threat. Feinstein warned "that if they did not agree to turn over the operation to a private
contractor, prices would be increased 25 percent across the board." Well that was it – the Senate voted to privatize.
Buffett’s Big Bet
Warren Buffett recently bet an ambitious hedge fund operator $1 million that
they won’t beat the returns of S&P 500 after their extremely hefty fees are
accounted for. Buffett claims investors will do as well with a no-load index
fund over the ten years of the bet. He has long been critical of the performance
claims of hedge funds, and his bet is intended to put his money where his mouth
is.
Details here. Of course, my money is with Buffett. Even if he doesn’t win the bet he is correct about the advantages of index funds. The academic research on this topic is voluminous and the lesson is straightforward – mutual fund managers don’t beat the market on average. Note that this doesn’t mean the market is perfectly efficient but it does mean that *you* are unlikely to beat the market. For more see my earlier post and also one of Tyler’s.
The Wisdom of Whores
She explained, as if to an enthusiastic but slightly dim child, that a waria who is hanging around on a street corner to be interviewed by a research team is a waria who is not with a client. ‘You are talking to all the dogs, obviously’.
Not something I learned in the lecture halls of London…but Ines is quite right. Our sample is biased towards the ‘dogs,’ who get picked up less than the cuter girls. So the study results underestimate the true number of clients per seller…
Ines’s comments…prodded us into changing the sampling strategy…now we work with the powers-that-be (the mami, the pimps, the brothel owners) to arrange off-hours time for data collection. The principle….is that you are not cutting into people’s work time, so there is less chance of talking only to the remnant sex workers who can’t get a client.