The diamond oceans of Uranus and Neptune

by  Tyler Cowen in

Neptune and Uranus may have diamond icebergs floating atop liquid diamond seas closer to home. The surprise finding comes from the first detailed measurements of the melting point of diamond, Discovery News reports.

Scientists zapped diamond with a laser at pressures 40 million times greater than the Earth's atmosphere at sea level, and then slowly reduced both temperature and pressure. They eventually found that diamond behaves like water during freezing and melting, and that chunks of diamond will float in the liquid diamond.

The full story is here, with pictures, and I thank Gregory Rehmke for the pointer.  Don't think, however, that a commercial mission to these planets could pay for itself — elasticity of demand!

Haiti and the problems with foreign aid

by  Tyler Cowen in

There are lots of recent comments chiding me for not recognizing the well-known problems with foreign aid, when it comes to Haiti.  "Why embrace planning?" is one question.  One reader wrote:

I have to say that Tyler disappoints me here; all of the discussion of the effectiveness of aid, and what type of aid works, is thrown out the window as soon as a real crisis hits.

I still believe that foreign aid does not raise economic growth rates, on average.  But aid can alleviate human misery, such as when a visiting doctor gives vaccines or hands out medicine.  (In fact per capita income may fall, as a result, if some "weaklings" are kept alive.) 

I also believe that the U.S. military can make a huge difference in the immediate aftermath of catastrophes.

Imagine U.S. troops liberating Buchenwald.  Would any commentators say the following?  "Don't give him that blanket, sell it to him!"  "Hey buddy, get a job!"  "Moral hazard: they'll just go get captured again."  etc.  I don't think so.

That's one way to look at aid for Haiti, noting that perhaps as many as three million Haitians currently stand at risk.  Just for a start, someone has to rebuild the port and it's going to be a foreign effort, organized by governments.  The market-oriented solution is more immigration, but even that requires a lot of governmental organization and best of all would be if Obama threw his considerable international prestige behind a coordinated effort to take in Haitian refugees.

A related question is how well Haiti can do as an anarchistic society.  Haiti is one right now and arguably many parts of the Haitian countryside have been quasi-anarchistic for a long time, ruled by either custom or gangs.  So this is an option, and indeed it is the default option, but I don't see it as desirable, any more than it helped Somalia (recant, Peter Leeson!).  In essence it would mean rule by gangs, funded by drug-running revenue.

It is striking how much cooperation and heroism we've seen in Haiti.  It's evidence that the Haitian social fabric is a lot stronger than many people thought.  It also suggests that economic growth models with a one-dimensional "trust" variable are not furthering our understanding very much.  I do expect the violence to get worse, as hunger and thirst continue, but so far the Haitian people have a lot to be proud of.

Haitian public opinion

by  Tyler Cowen in

This is from a few years back:

Surprisingly, given the limited outreach of basic services in Haiti and their reputedly poor performance, the large majority of Haitians interviewed expressed confidence in schools, health services, and the police (see Table in Appendix G). All of these are given an “approval rating” of more than 60 percent by the rural population, and somewhat less in the cities. The schools rank highest with a 95 percent approval, which is far higher than school enrollment rates. Rather than an evaluation of performance, the statistics are best viewed as an expression of people’s expectations of the various institutions. Thus political institutions- including parliament, the popular organizations, and the political parties-received a very low approval rating in 2001. Again, approval is positively correlated with the distance from those institutions: in rural areas, approval of political institutions is nearly double that in the metropolitan area. Surprisingly, traditional religious institutions, voodoo, and houngans receive the lowest approval rating of any of the institutions surveyed.

I wonder how the houngans would do if you took out the Protestant respondants.  And to what extent are the houngans viewed as responsible for the quality of all the other institutions?  Or is it again a distance effect, namely that almost everyone knows a houngan?

The source document is here.

Markets in everything: the uncollectible artwork

by  Tyler Cowen in

Felix Salmon reports:

A Tool to Deceive and Slaughter is an artwork by Caleb Larsen, currently for sale on eBay. If it hasn’t sold in the next couple of days – the minimum bid is $2,500 – it will go back on eBay. On the other hand, if it does sell, it will still go back on eBay. That’s what it does, as clearly explained in the legal contract accompanying the work:

Artist has created a work of art titled “A Tool to Deceive and Slaughter (2009)” (“the Artwork”) which consists of a black box that places itself for sale on the auction website “eBay” (the “Auction Venue”) every seven (7) days. The Artwork consists of the combination of the black box or cube, the electronics contained therein, and the concept that such a physical object “sells itself” every week.

The Haitian police

by  Tyler Cowen in

Haiti has one of the world’s weakest police forces. There are 63 police officers per 100,000 people, less than a quarter of the regional average of 283 per 100,000 and only a third of the average for sub-Saharan African countries. Moreover, a significant number of members of the Haitian National Police (HNP) are alleged to be involved in criminal and violent activities, including direct involvement in the past year’s wave of kidnappings, according to human rights organizations and police officials themselves.

That's pre-earthquake.  Here are 118 pp. on other Haitian social and political indicators.

Other ways to help Haiti

by  Tyler Cowen in

1. Repeal tariffs on Haitian sugar and lower remaining restrictions on Haitian garment imports.

2. Give expedited approval, in terms of food safety rules, to the importation of Haitian mangoes.

3. Set up a Term Loan Auction Facility for Haitians, or alternatively apply quantitative easing to the market for Haitian mud cakes.  It's worked for every other macro problem.  Alternatively, get out the helicopter, I have heard worse ideas.  Stabilize Haitian nominal GDP!

4. Find someone from the government to give a radio address.

5. In Port-Au-Prince and environs, define squatter's rights.

6. Invite Haitians to occupy the empty homes in the run-down parts of New Orleans.

7. Set up nearby charter cities which would welcome Haitian migrants.

8. Redefine the mission of Guantanamo to help Haiti.

9. Shift the capital to Cap-Haitean, if only temporarily, and build up Cap-Haitien in the meantime.  That may be a better investment than PAP.  As it stands, people will flow into Cap until living standards across the cities equalize.

10. Move Citigroup to St. Marc, which is underbanked (hat tip).

11. Offer special Haitian coffees at select shops, to boost employment in a more or less intact sector of the Haitian economy.

12. Continue military and special operations assistance.  Reconstruct the port as quickly as possible.

13. Let more Haitians enter the United States and organize a consortium to accept refugees.

Addendum: Here is Whirled Citizen, a very good new blog on Haiti, which will eventually turn into a blog on development in general, Africa too.

Haiti: what’s at stake

by  Tyler Cowen in

Maybe you thought Obama was the "health care President" or perhaps the "Afghanistan President", but to my eyes right now he looks like the "Haiti President."  I predict we'll have over a million Haitians living in refugee camps for the foreseeable future.  (It depends how many of the homeless of those can be absorbed by northern Haiti.)  If people don't make it into camps they will be sleeping on the street with little or no means of food or water or employment.

It's a mistake to think there's any brick-by-brick way out of that predicament.  It's not like the earthquake in Armenia or for that matter eighteenth century Lisbon.  Haiti has no functioning government, no working legal system, and very little remaining infrastructure.  There's no formal means to make decisions about reconstruction and no capital to clear away the mess.  As I've written, the country as we know simply doesn't exist any more (view the second video or try these photos).  Port-Au-Prince is destroyed and the city was the heart of the country, economically, politically, and otherwise.  Léogâne, Jacmel, and other significant locales are mostly destroyed as well and they're not receiving much assistance.

Obama will (and should) do something about this situation.  First, I believe he sincerely wants to help but also he cannot ignore his African-American constituency, especially after former President Clinton devoted so much attention to Haiti and especially if health care reform doesn't go through as planned.  Yet he will have a festering situation on his hands for the rest of his term.  If "looting" (a bad word in this context) increases or continues, how quickly will the American people lose sympathy with the Haitians?  How can the "reconstruction" possibly go well?  Ugly gang rule isn't even the worst case scenario.

Obama now stands a higher chance of being a one-term President.  Foreign aid programs are especially unpopular, especially relative to their small fiscal cost.  Have you noticed how Rush Limbaugh and others are already making their rhetoric uglier than usual?  It will be a test of the American populace; at what point will people start whispering that he is "favoring the other blacks"?

Just as it's not easy to pull out of Iraq or Afghanistan, it won't be easy to pull out of Haiti.

Maybe you thought health care was a hard problem.  Maybe you thought that cap and trade would make health care look easy.  This may be the hardest problem yet and it wasn't on anybody's planning ledger.  Obama won't have many allies in this fight either.  A lot of Democratic interest groups might, silently, wish he would forget about the whole thing.

Mass starvation wouldn't look good on the evening news either.  What does it mean to preside over the collapse of a country of more than nine million people?  It's Obama who's about to find out, not the increasingly irrelevant Rene Preval.  Everyone in Haiti is looking to President Obama.

Markets in everything

by  Tyler Cowen in

Stab vests for the World Cup in South Africa.

From the authorities:

The national police says the company [selling the vests] was causing "unnecessary fear".

South Africa's football boss Kirsten Nematandani has assured visitors that all safety measures were in place.

South Africa has one of the world's highest rates of violent crime.  The full story is here and I thank Stan Tsirulnikov and Wes Winham for the pointer.

Writing down the principal on mortgages

by  Tyler Cowen in

It's obvious that the economy still isn't doing well.  Furthermore the rate of foreclosures won't peak until the end of 2010.  On top of that, most observers agree that the Obama mortgage modification plan has been a failure.

That all said, I'm surprised that so few commentators have leapt on the "we should write off some of the principal" bandwagon.  It's not currently a bandwagon at all.

I know that a) this idea is WRONG, b) it is terrible for the long run rule of law, and c) it is EVIL and UNFAIR.  It's also one of the few suggested economic remedies that might have worked or maybe could still work. 

How so?  It limits value-destroying foreclosures.  It gives homeowners the right marginal incentive to keep on making payments and maintain the value of the home and to maintain their credit capabilities.  It gives the housing market a fresh start rather than this waiting/coordination game where we wait for everyone to move on down a notch in house quality, thereby freezing parts of the housing market and choking off required recalculations.  (How can you have a well-functioning housing market when so many people have negative equity?  I've read estimates of twenty percent of the U.S. population.)  It also limits the problem of future ARM resets, once interest rates rise in the future.

It's all about long-run vs. short-run and I usually side with the long run.  But the short run modification of property rights has so many defenders in other contexts, so why not here?  Call it "clearing up financial logjams" if you wish.

Is it a better marginal incentive than suddenly increasing the taxes on banks?

Bernanke himself once suggested the idea.

I might add that by fostering an actual recovery, writing off the principal on mortgage loans might limit some of the other bad interventions that we will try or have ended up trying.  There's more than one way to toss away the rule of law.

Paul Romer doesn’t think a charter city in Haiti can work (now)

by  Tyler Cowen in

The post is here, excerpt:

Contrary to what some have suggested, a charter city in Haiti is simply not an option at this time. A charter city can only be created through voluntary agreement. Under the current conditions, the government and people of Haiti do not have the freedom of choice required for any agreement reached now to be voluntary.

He has another idea:

There are clear limits on the number of Haitian immigrants that nearby jurisdictions are currently prepared to accept. But if nations in the region created just two charter cities, they could accept the entire population of Haiti as residents. There are many locations close to Haiti where these new cities could be built, but for now, Haiti itself is the one place we should not consider.

Here is an offer for repatriation to Senegal:

Presidential spokesman Mamadou Bemba Ndiaye told reporters that Mr Wade had shared his plans with senior aides, and they involved offering voluntary repatriation and plots of land to any Haitian who wanted “to return to their origin”.

“Senegal is ready to offer them parcels of land – even an entire region. It all depends on how many Haitians come. If it’s just a few individuals, then we will likely offer them housing or small pieces of land. If they come en masse we are ready to give them a region,” he said.

Why are the images of Haiti so graphic?

by  Tyler Cowen in

By the way, I favor such graphicness, but I am wondering:

The images coming out of Haiti are more graphic than those from recent natural disasters, and the ongoing wars in Iraq and Afghanistan…

Or is Haiti simply an exception? Is there something about the essential status of the entire country and its people that gives the media new license?

The usual conventions of suggesting rather than displaying trauma seem to have been punctured, at least for now. Bodies caked in dust and plaster, faces covered in blood, the dead stacked in the streets without sheets to hide them — these are all violations of the unwritten code that death can only be seen, in the established etiquette of the mainstream media, by analogy or metaphor or discreet substitute.

Here is more detail.  You'll note there is a long history of portraying Haiti in lurid terms.