Tim Kane and Glenn Hubbard have a new blog
Find it here, balanceofeconomics.com.
In defense of the Wittfogel thesis
There is a new paper (pdf), “Irrigation and Autocracy,” by Jeanet Sinding Bentzen, Nicolai Kaarsen, and Asger Moll Wingender. Here is the abstract:
We show that societies with a history of irrigation-based agriculture have been less likely to adopt democracy than societies with a history of rainfed agriculture. Rather than actual irrigation, the empirical analysis is based on how much irrigation potentially can increase yields. Irrigation potential is derived from a range of exogenous geographic factors, and reverse causality is therefore ruled out. Our results hold both at the cross-country level, and at the subnational level in premodern societies surveyed by ethnographers.
Assorted links
1. The economics of Spanish football clubs.
2. William Thurston, On Proof and Progress in Mathematics, and his obituary is here. He seems to have been a special thinker.
3. “Studies in pre-commitmentphobia,” best article title I’ve seen in a long time.
4. New statistics for predicting (U.S.) football outcomes.
5. Speculative claims about the possible abduction of Boris Spassky.
6. The psychological dispositions of self-identified libertarians (a research paper).
Mexico’s investment in the United States
No, I am not referring to immigration. The net flow of immigrants is negative, but capital investment is rising:
Cemex, the Mexican cement and building materials manufacturer, is now the largest producer in its segment in the US – commanding 10.5 per cent of a highly fragmented market.
In 2010, Grupo Bimbo, the Mexican baker, announced the purchase of Sara Lee, the US baker, in a deal initially estimated at US$959m. The acquisition, which received approval from the US Department of Justice late last year on condition of some divestitures, consolidated Bimbo as America’s biggest breadmaker.
Televisa, the Mexican broadcaster, significantly deepened its exposure to the US market in 2010, investing $1.2bn in Univision, the US’s largest Spanish-language network. It took an initial 5 per cent stake and debentures convertible into an additional 30 per cent equity stake in the future.
Probably the most recognised Mexican brand in the US in the past 20 years is Corona Extra, the beer in the clear glass bottle served, in the US at least, with a wedge of lime in the neck. Corona is now the best-selling imported beer in the US – a title it has held every year since 1997.
Even Alfa, the Mexican conglomerate with interests stretching from petrochemicals to food processing, has started to drill for natural gas – not in Mexico, where the country’s constitution restricts private investment, but in Texas in a partnership with Pioneer Natural Resources and Reliance.
Between 2006 and 2011, the US received US$8.4bn in direct investment from Mexico, according to data from the US Department of Commerce’s Bureau of Economic Analysis. The figure is higher than that for any previous six-year period (though 2000 was the highest year on record with US$5bn).
The article gives further good economic news about Mexico, a country which is oddly understudied in the United States.
The bottom line on Asia
Read it and weep, from the excellent Emily Kaiser (follow her), based on a pointer from David Leonhardt.
The fiscal clifflet
From Greg Ip:
Here’s the real threat. Even if the Bush tax cuts are extended and the sequester delayed, a huge amount of fiscal drag remains in place. They include the expiration of the payroll tax cut, the expiration of extended unemployment insurance benefits, imposition of a new 3.8% Medicare investment tax on the wealthy, and the bite to discretionary spending embedded in the Budget Control Act and prior continuing resolutions. ISI Group projects $220 billion of fiscal tightening in 2013, or 1.4% of GDP. JPMorgan, noting that many Recovery Act programmes are rolling off at the same time, puts the hit at a slightly higher $266 billion, or 1.7% of GDP. The IMF reckons fiscal policy will tighten more in America next year than in Spain, Italy or Portugal. Though smaller than the full fiscal cliff, the fiscal clifflet still poses a significant headwind to the economy. If enough other bad stuff is going on, it could push the economy back into recession.
Here is more, and John Cochrane comments.
Garbage landfills around the world
In Germany zero percent of the garbage goes into landfills, and two-thirds goes for recycling/composting. The same figure is one percent in the Netherlands and Austria, with sixty and seventy percent respectively going to recycling/composting.
In Spain it is 52 percent to landfills, and in the United States it is 68 percent, with 24 percent going for recycling/composting.
That is from the recent book by Edward Humes, Garbology: Our Dirty Love Affair with Trash.
Assorted links
Are the conservative books winning out?
Amazon has introduced a heat map of the political books sold in the U.S. An overwhelming lean toward red hues suggests that conservative-themed books are outselling left leaning ones coast to coast.
Amazon is quick to point out that the system isn’t scientific. The map presents a rolling 30-day average of book-buying data and classifies them as red or blue depending on promotional materials and customer classifications. And there’s no sliding scale. A book is either red or blue, so there’s no nuance for centrists. “Just remember, books aren’t votes,” Amazon says on the heat map site. “So a map of book purchases may reflect curiosity as much as commitment.”
Still, there’s no getting around the fact that even reliably blue states like California come out in shades of red in the Amazon map. According to publishing-industry analyst Michael Norris, of Simba Information, that might be due to the right’s ability to connect with its readers. “I can tell you that there are conservative imprints and conservative publishers that are just brilliant at figuring out what kind of books their audience wants to read,” Norris told Wired. “There just aren’t aggressively left-leaning imprints like that.”
Caveat emptor, but an interesting perspective. The full article, with some visuals, is here. Addendum: Ezra Klein comments.
*Restless Empire*
The author is Odd Arne Westad and the subtitle is China and the World Since 1750. Excerpt:
…the Chinese on Cuba joined others in rebellion. Two thousand fought in the Cuban forces in the first war of independence in the 1870s. Some of the Chinese soldiers must have had battle experience, probably from the Taiping Rebellion, and they played a substantial role in the struggle for Cuban freedom up to 1902. A monument to the fallen Chinese in Havana has the following inscription: “There was not one Cuban Chinese deserter, not one Cuban Chinese traitor.”
I found this to be an excellent book and a very good starting place for unraveling the current foreign policy crises in Asia. It does a very good job explaining the sore spots from the past.
As you may know, one of my views is that most people underrate the chance of a (non-trivial) war in Asia in the next twenty years. I regard this chance as at least p = .05, and I do not think it is priced into securities markets at nearly that high a level. Historically, wars are not always easily predicted in advance. They tend to be correlated with the rise of major powers and with regional disruptions. In many countries nationalism and regional rivalries run rampant. It is not obvious to me that the United States is in a position to hold the whole region together.
In any case, this book will make my “one of the best of the year” list.
Ciudad Juarez fact of the day
In 2010, the peak, there were at least 3,115 aggravated homicides, with many months posting more than 300 deaths, according to the newspaper El Diario.
But the fever seems to have broken.
In July, there were just 48 homicides — 33 by gun, seven by beatings, six by strangulation and two by knife. Of these, 40 are considered by authorities to be related to the drug trade or criminal rivalries.
And why?:
Authorities attribute the decrease in homicides to their own efforts — patrols by the army, arrests by police, new schools to keep young men out of gangs and in the classroom.
Yet ordinary Mexicans suspect there is another, more credible reason for the decrease in extreme violence: The most-wanted drug lord in the world, Joaquin “El Chapo” Guzman, and his Sinaloa cartel have won control of the local drug trade and smuggling routes north.
The full story is here.
Sentences to ponder
…I find it remarkable that I have yet to receive a thank you note for paying my taxes. When I fill out my taxes, I notice that even receipts for $25 donations have thank you notes attached. But for the tens of thousands of dollars I give each year to help keep our wonderful Republic afloat, nothing. Can’t we do a little more as a nation to honor our taxpayers individually?
…And how about a dinner at the White House honoring the top 100 taxpayers in the country? Not the 100 richest people in the country, but the top 100 taxpayers. One might object that they would just use the opportunity to lobby for lower taxes, but if they did, they wouldn’t get invited the next year.
That is from Miles Kimball. Of course very often these individuals are criticized for not wanting to pay higher taxes.
*Science Left Behind*
The authors are Alex Berezow and Hank Campbell, and the subtitle is Feel-Good Fallacies and the Rise of the Anti-Scientific Left. I agree with many of the particular claims in this book, and also I find those undervalued in broader intellectual discourse. Nonetheless I am struck by a mismatch between the book’s message and some of its tone, as well as the sense that one side should be singled out for condemnation (the same point can be made about left-wing books on related topics).
This excerpt made me giggle:
…despite what some progressives will contend, the purpose of this book is not to demonize all progressives. We just want to demonize the loony ones.
Assorted links
1. The truly important use for drones.
2. Peter Orszag on competitive bidding for Medicare.
3. Comments from an Irish burglar, and Caplan defends Bastiat.
4. The culture that is Finland, don’t miss the tag at the end.
6. What levels of immigration would be needed…?
7. Dean Baker on how much housing policy could have helped.
That’s a lot of links for today but they are worthy.
Jeff Sachs reviews Acemoglu and Robinson
As you might expect, he stresses geography rather than institutions:
In places where production is expensive because of an inhospitable climate, unfavorable topography, low population densities, or a lack of proximity to global markets, many technologies from abroad will not arrive quickly through foreign investments or outsourcing. Compare Bolivia and Vietnam in the 1990s, both places I experienced firsthand as an economic adviser. Bolivians enjoyed greater political and civil rights than the Vietnamese did, as measured by Freedom House, yet Bolivia’s economy grew slowly whereas Vietnam’s attracted foreign investment like a magnet. It is easy to see why: Bolivia is a landlocked mountainous country with much of its territory lying higher than 10,000 feet above sea level, whereas Vietnam has a vast coastline with deep-water ports conveniently located near Asia’s booming industrial economies. Vietnam, not Bolivia, was the desirable place to assemble television sets and consumer appliances for Japanese and South Korean companies.
The review is interesting throughout, though I would stress the old saying: “As usual, the truth lies somewhere in between.”