Style and Virginia Postrel
From time to time we will be posting book reviews on this site, until our software improves some of them will go on a separate web page, connected by a link. Many of you probably already know Virginia Postrel, she is a columnist for The New York Times, former editor of Reason magazine, and a well-known blogger. I was very taken by her recent book, The Substance of Style, about the rise of aesthetic value under capitalism, here is my review.
A recent Milton Friedman interview
Read Milton Friedman on Howard Dean, George Bush, the tax cuts, divided government, the Great Depression, and other topics. My biggest surprise: he appears to be more sympathetic to the Euro than before, though he still needs to be convinced it will work.
The power of quality certification
“Consumer Reports has become so influential among car shoppers that some automakers now send preproduction cars to the magazine’s test engineers for suggested changes before the vehicles hit showrooms.”
At least forty percent of car buyers consult Consumer Reports for information about their forthcoming purchase, at least sixty percent of minivan buyers. The company refuses to accept advertising from automakers. Suzuki and Isuzu have sued the magazine for making false statements and “product disparagement.” For the full story, click here.
Arguments against micropayments
Why not use web technology to charge people very small bits for downloading songs, or reading blogs for that matter? An earlier note of mine discussed mental transactions costs — having to ponder the small charge each time — as a potential problem. An excellent post by Daniel Davies provides further, and better, ammunition against the micropayments idea. His key point: at some point micropayments have to clear through real financial institutions and the real shuffling of paper. Right now we don’t have the technology to do this more cheaply than credit card companies do, and they don’t find very small transactions to be worth their while.
Addendum: Here is a good response in defense of the practicality of micropayments.
Why the EU won’t become a federal government
I was struck by Larry’s Siedentop’s words from today’s Financial Times (subscription required):
…the new member states will be very assertive once the formalities of enlargement are over. We can expect an unapologetic defence of national interests, a suspicion of encroachments from Brussels and an intense dislike of what might be called lurking double standards in the EU…It will be a pluralist vision rather than a unitary one, a preference for something more like a confederation than a federation. For behind the quasi-federalist form projected for Europe that is promoted, at least intermittently, by France, such countries detect a wish to give the EU some of the attributes of a unitary state. Their contribution could decisively shift the balance of the debate away from that particular vision.
The value of a lone dissenter
People will often abandon their opinions to conform to what a group expects of them, but a lone voice of reason can save the day. Cass Sunstein’s new book, Why Societies Need Dissent, reports the following (see chapter one):
You can give people a problem and allow them to solve it. Also give them a group of confederates, who unanimously advocate the wrong answer to the same problem. One confederate, proclaiming the wrong answer, will have little influence on the problem solver. Two confederates increased errors to 13.6 percent. Using three confederates increased errors to 31.8 percent. Under some results, more than three confederates do not increase the error rate, although this is controversial. But putting one voice of sanity in the group, who knows and proclaims the right answer, makes a big difference. “Conformity errors” were reduced by an average of three quarters, even if a strong majority of the group leaned the other way. Sunstein draws upon the work of Robert Baron, at the University of Iowa.
The economics of diets
Meat sales are up and bread sales are sluggish. The Atkins diet tells us to dump bread, pasta, and rice, and allows us to eat plenty of meat. Could it be driving this trend? Slate examines the economic impact of diets and offers a cautionary note. Only six million people –about three percent of national population — have tried the Atkins diet. Most people are buying convenience, the growth is beef sales is centered in ready-to-serve products. By the way, sales of Krispy Kreme donuts grew last year. In case you didn’t already know, they are forbidden under the Atkins plan. Cookie and potato chip purchases are up as well. When it comes to weight gain, some economists blame sedentary jobs and cheap, readily available foods.
Addendum: Today’s Wall Street Journal reports that Krispy Kreme sales are now sagging, though keep this in perspective, the company has averaged a 63% growth in operating earnings, per quarter, over the last ten quarters.
Which philosophers will last the ages?
Yes MarginalRevolution is about economics, but most of all it is about ideas. The blog Crooked Timber and legal scholar Lawrence Solum both offer fascinating takes on which contemporary philosophers will still be read decades or centuries from now.
My personal nomination is Derek Parfit. I think his Reasons and Persons will provide a source of conundrums for undergraduates, graduate students, and researchers for many years to come. Parfit is not just a philosopher, he is also a social choice theorist. He challenges our very notions about what it means to say that one outcome is better than another. He ponders how we should think about the timing of costs and benefits, whether personal identity matters for just distribution (who cares what you got yesterday?), how we should regard moral theories that are self-defeating when implemented, and how we should value future generations.
The Democrats have the rich Senators
It is not even close. Look at this, the link is borrowed from Geekpress. Some of the effect may be regional, I suspect that the Republican-leaning states have less “old money” than do the Democratic-leaning states.
Globalization and poverty: a debate
The Cato Institute offers an on-line debate on globalization and poverty, here is the last installment. Johan Norberg, author of In Defense of Global Capitalism, takes on Robert Kuttner, of The American Prospect. I am closer to Norberg’s market orientation, but Kuttner gets the better of this exchange. Norberg needs to concede a clear role for government in development, in producing public goods and basic infrastructure, and emphasize that most developing countries today don’t have strong enough markets or anything close to it. That debate he could win.
Who is Leo Strauss?
Leo Strauss is often considered a leading influence behind the neo-conservatives in the Bush administration. Or perhaps you have met a “Straussian” at a Liberty Fund conference. Or perhaps you have read Allan Bloom praising Strauss. To my mind Strauss is one of the most important twentieth century intellectuals, either directly or indirectly, he taught several generations of scholars how to read classic texts. I’ve had many economists ask me about Strauss (note: I am not a Straussian), here is one good recent summary, by Steven Lenzner and William Kristol, drawn from The Public Interest.
Should we be surprised that the Cancun WTO talks failed?
Cnn.com and other major news sources use the word “collapse.” The rich countries won’t give up their agricultural subsidies, some of the poor countries won’t open up their investment and procurement rules.
A recent IMF Working Paper, “The WTO Promotes Trade: Strongly but Unevenly,” by Arvind Subramaniam and Shang-Jin Wei (not on-line) provides an account of the longer history. In the early days of WTO (GATT), developed nations used the institution to reduce their average tariff barriers from 27 to 4.5 percent. Since that time the institution grew and deteriorated in quality: “our result is a more damning indictment of the WTO than even that in Rose [the link is from me, of course, not the authors of the paper]…He found that membership in the WTO had no significant effect on trade. We find that membership has a significantly negative effect on trade…”
It is the developing countries that drive the negative result. The authors emphasize that the result is not statistically robust, but in any case this is hardly a ringing endorsement of WTO.
Addendum: The paper is now on-line.
More on student evaluations of professors
“…the correlation between Quality and Easiness is 0.61, and the correlation between Quality and Sexiness is 0.30. Using simple linear regression, we find that about half of the variation in Quality is a function of Easiness and Sexiness.” The result is from three professors at Central Michigan University, reported by the SCSU Scholars blog. An earlier post of mine cited a paper by Michael Huemer, arguing that students reward easy professors with good evaluations.
Sweden rejects the Euro
The margin is decisive, so far it looks like 56 percent against, 42 percent for, read here for one early account of the voting.
It is a tough call, but I think the Swedes did the right thing. Mostly the Swedes feared that the fiscal discipline of the EU will curtail their welfare state, but I don’t think this should have been the main issue. The Netherlands, another small country, has created a generous welfare state (albeit with some spending cuts), prosperity, and relative fiscal responsibility, all under the rubric of the EU. In the long run it is hard to see the EU curtailing Swedish spending more than international capital markets and other competitive pressures would. And it remains to be seen how binding the EU fiscal requirements will prove, after France is violating them.
What is really the advantage if Sweden had adopted the EU? Price competition would have become more intense, as buyers would have an easier time comparing prices across countries with only a single currency unit (admittedly this violates various economic theories, which suggest people “see through” the monetary unit, but it nonetheless seems to be true, noting that in the short run prices get bumped up before later falling). That counts as a real gain, but on the other side the Swedes would have given up the ability to control their own monetary policy.
The Swedes have a history of pursuing a monetary policy independently of Western Europe. The Swedish depression of the 1930s was milder than for the rest of Europe, in part because Sweden broke with gold, devalued, and avoided a disastrous deflation, for one treatment read here.
Supposedly the Swedes don’t now have the “proverbial seat at the table,” but as more countries adopt the Euro, how much is this worth anyway? They decided to keep a whole table of their own, albeit a much smaller one. Does anyone really know how the European Central Bank will operate over time, as more members join, or if a crisis hits? Some critics charge that foreign investors will now stay away from Sweden, due to exchange rate volatility, that would be one factor on the side of Euro adoption.
Perhaps it will prove most important that the Swedish government supported the change, and voters didn’t cooperate. Swedes usually have great trust in their government, more than we are accustomed to seeing in the United States. This may signal a break between Swedish elites, who often have closer ties to Europe, and many Swedish voters. The consequences of today’s vote will likely include more than just macroeconomic policy.
An interview with me, on cultural globalization
Here is the link, the interviewer is Nick Gillespie of Reason magazine, reproduced on www.aldaily.com. I talk about global cinema, music, free trade, Islam, and cultural protectionism.