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.
Darwinian politics
Have you ever wondered if political failures might somehow be rooted in man’s nature as a biological being? Paul Rubin has just published a book, Darwinian Politics, Arts and Letters Daily offers this review and summary.
Rubin argues that humans have a long biological experience with constructing political alliances, and our inherited propensities continue to shape our politics. What else does he argue? We often view society as a zero-sum game because early competition for mates was in fact a zero-sum game. We carry this worldview with us. The desire for liberty springs from our early days in hunter-gathered societies, where we were relatively free in political terms. Sports are a reenactment of hunting and bonding rituals. Women are more risk averse than men. We have too much envy for the effective working of modern society, this springs from a tendency to wish to cut down the dominant males in groups. You will note that this is not a politically correct book.
Critics will make two charges. First, Rubin is not a professional biologist and the arguments are not based on his primary research. Second, the major arguments are “just-so” stories rather than the results of testable experiments. Both may be true, but I still would rather read a book that explores interesting and important topics.
Rubin admits his libertarian orientation, but he recognizes that the overall argument does not support libertarianism in every way. For instance he realizes that the desire for paternalism may be rooted very deeply. (Note that Peter Singer tries to ground left-wing ideas in Darwinian argument.) My view is that biological approaches, if you buy into them, strengthen the case for a conservative worldview, and I mean the word conservative in its literal rather than political sense. If politics is rooted in biology, political failures may be very hard to cure. This will support a mix of right-wing and left-wing policies, apologizing for institutional failures on both sides of the partisan spectrum, without necessarily making us feel better about them.
Thanks to Bryce Wilkinson for the pointer, note that readers are encouraged to write to us about bloggable material.
Medieval technology was better than you would think
The Australian BBC reports: “Medieval recipes for gunpowder produce nearly the same firepower as today’s manufactured equivalent, according to recent weapons tests, providing clues as to how the British fleet became one of the largest fighting forces in the world.” The full account is can be obtained through www.cronaca.com.
Liberalization of capital markets
How much does liberalizing capital markets spur economic growth in developing countries? It depends on what kind of country you look at, according to a recent paper by Kenneth Rogoff, formerly chief economist at the IMF, also Professor at Princeton.
He suggests that financial integration should be “approached cautiously.” Many of the benefits kick in only after countries have achieved a particular level of financial integration. Improvements in integration, starting from low levels of integration and development, often have increased the volatility of consumption. Trade integration is associated with faster increases in health and infant mortality, but financial openness is not.
Rogoff sees four problems with financial integration for poorer countries: investors engage in herd behavior, investors engage in speculative attacks on unsound currencies, the risk of contagion, and governments may use financial globalization to overborrow. Financial integration can, in principle, bring great benefits but it is not always used responsibly.
We should take these results seriously. Rogoff is a highly respected economist and he has no starting bias against market globalization. Read his open letter to Joseph Stiglitz, which offers a good statement of his overall perspective on global markets.
Did you know that Rogoff had an earlier career as a chess grandmaster? Read the story he once wrote for Seventeen magazine on this time in his life.
Thoughts on blogging
Daniel Drezner is an excellent political scientist and a first-rate blogger. Here is his recent take on why he has found blogging worthwhile (400,000 unique visits to his page, in the first year).
Here is his advice to new bloggers. He says yes do it, think quality over quantity, and draw attention to your blog by writing about religion and Harry Potter.
For his earlier posts on how blogging has evolved, click here and here. He predicts the ascendancy of academic bloggers, who are used to giving away ideas for free. He also argues that blogging promotes excess certainty of opinion. He cites a Rand Corporation document on how easily electronic communications are misunderstood and lead to unnecessary hard feelings.
An argument why micropayments for Internet content will never work
Will advanced technology allow suppliers to charge people very small amounts for reading web sites, blogs, and other kinds of material? No, says Clay Shirky, mental transactions costs will remain. Here is his bottom line:
The people pushing micropayments believe that the dollar cost of goods is the thing most responsible for deflecting readers from buying content, and that a reduction in price to micropayment levels will allow creators to begin charging for their work without deflecting readers.
This strategy doesn’t work, because the act of buying anything, even if the price is very small, creates what Nick Szabo calls mental transaction costs, the energy required to decide whether something is worth buying or not, regardless of price.
Read more:
Weblogs, in particular, represent a huge victory for voluntarily subsidized content. The weblog world is driven by a million creative people, driven to get the word out, willing to donate their work, and unhampered by the costs of xeroxing, ink, or postage. Given the choice of fame vs fortune, many people will prefer a large audience and no user fees to a small audience and tiny user fees. This is not to say that creators cannot be paid for their work, merely that mandatory user fees are far less effective than voluntary donations, sponsorship, or advertising.
Because information is hard to value in advance, for-fee content will almost invariably be sold on a subscription basis, rather than per piece, to smooth out the variability in value. Individual bits of content that are even moderately close in quality to what is available free, but wrapped in the mental transaction costs of micropayments, are doomed to be both obscure and unprofitable.
Little-known literary gatekeepers
Publishers Weekly, Kirkus, Library Journal, and Booklist are among the first reviewers of most new books. They are not widely read but often they are treated as gospel by the publishing trade. Their evaluations determine how seriously a book is taken by other reviewers, by media, by bookstores, and by filmmakers looking for new script sources. Read this Slate piece on how these outlets work, and why the Internet is decreasing their influence.