Category: Current Affairs

Russian bonds now investment grade

Baa3, that is. Here is the Financial Times story.

Russia’s debt to gdp ratio is 28 percent, Japan’s is 140 percent, but obviously Japan has more accumulated trust.

How much do these ratings make sense?

On May 31 the U.S. credit-rating agency Moody’s Investors Service lowered by two notches Japan’s credit rating on yen-denominated bonds issued by the government. Japan’s previous credit rating was Aa3, the fourth highest grade and already the lowest among developed nations. This was downgraded to A2, placing Japan below such nations as Chile and Botswana and on par with Israel, Poland, and the Republic of South Africa. As a reason for the downgrade, Moody’s stated, “There exists nothing within present financial policy that can put the brakes on the worsening debt situation.” The outlook for the credit rating is “stable,” so the series of downgrades appears to have ended for the time being. In addition, Japan’s government bonds issued overseas maintained their Aa1 rating with a “stable” outlook. Moody’s had announced in February that it was considering downgrading Japanese bonds and continued considering the matter based on the state of the Japanese economy and government finances.

Here is the link for the Japanese comparison. You might note that Botswana, although it received a higher rating than Japan, has Japan as its largest creditor.

Ghetto version of Monopoly causes outrage

That’s Monopoly the game, not the (related) economic concept.

Black leaders are outraged over a new board game called “Ghettopoly” that has “playas” acting like pimps and game cards reading, “You got yo whole neighborhood addicted to crack. Collect $50.”

The creator of Ghettopoly, David Chang, did not immediately answer e-mails or phone calls seeking comment about the game. On his Web site, Chang is unapologetic, and promises that more games — Hoodopoly, Hiphopopoly, Thugopoly and Redneckopoly — are coming soon.

[Note that I have added the link, it is not in the original Cnn.com article.]

I am surprised to hear it is being sold at Urban Outfitters, for the whole story click here. I give it the half-life of terrorism futures at the Pentagon. Here are some outraged people, scheming how to stop Chang.

French cultural protectionism

…the homogenization in question, which today is perceived most often as Americanization, is (insofar as it exists) American only in its most superficial and least durable aspects. It is above all the vehicle for popular culture–the entertainment, clothing styles, and fast foods favored by the young, and popular music (but not all of it, by any means). Here the word “culture” is being used in the rather loose sense that has prevailed because it is the entertainment industry that leads the choir in lamenting American influence. This influence may present a problem, but to identify the whole of cultural life with entertainment is a travesty.

Contrary to what Jacques Chirac maintained, globalization is not a “cultural steamroller.” It is and always has been an engine of enrichment. Think, for example, how the French artistic sensibility was revitalized by the discovery–or rather fuller knowledge–of Japanese painting afforded at the end of the nineteenth century, or by the arrival in France of African art ten or twenty years later. There are plenty of similar cases.

This is Jean-Francois Revel, writing in the latest New Criterion.

It is hard to tell you just how much I liked this article. Consider this:

And if the French film industry in 2001 has recaptured market leadership at home and found successes abroad, this is not because it is more subsidized than formerly, but because it has managed to produce a handful of films whose quality was appreciated not only by their auteurs, but by the public. A commercially successful French cinema, with international appeal, evidences a more authentic diversity than the kind preached by tedious diversity-mongers.

This article is just full of excellent bits:

…in the domain of languages too, globalization leads to variety, not uniformity. The spread of English facilitates communication and mutual influence between cultures; it is hardly a trivial matter when, thanks to the lingua franca, Japanese, Germans, Filipinos, Italians, Russians, French, Brazilians, etc., can participate in the same colloquium, sharing information and ideas.

Or how about this:

…the endowment of Harvard, certainly not the largest university in America, is close to $20 billion–more than twice the annual expenditure of France on its entire university system.

Here is another:

Giancarlo Pajetta, an important Italian Communist leader, once said: “I have finally understood what pluralism is; it’s when lots of people share my point of view.”

Highly recommended, go through the full text yourself, and prepare for the forthcoming book, entitled Anti-Americanism.

Most Amish kids have cell phones

At least once they turn sixteen, or so I learned from the recent DVD release The Devil’s Playground, a 77-minute award-winning documentary, which I rented at my local Hollywood video. An Amish ritual called “rumspringa” (“running around,” note that the link shows, among other things, Amish youth drinking beer) allows youths to sample the previously forbidden delights of the outside world to their heart’s content. At this age Amish youth start having wild parties (organized by cell phone), premarital sex, and often hard drugs as well. The Amish elders believe that the youth must be allowed to sow their wild oats, if they are ever to become good Amish later. One Amazon.com reviewer wrote:

I was not prepared to see a trailer full of Amish teens drugged up to their eyeballs right on Amish land. The Amish Rumspringa teens careen around and throw such wild parties that people come from all over America to attend. Apparently, it is well known (except by me) that “Amish kids have the best parties.”

Ninety percent of Amish youth later decide to join the church and give up such wanton ways. Never before in history has a higher percentage of the Amish remained in the fold.

Organ trafficking

I learned the following today:

1. Most sales of body organs involve kidneys.

2. Patients who receive a kidney from a living donor have a much better chance of surviving.

3. In the developing world the going rate for a kidney is between $1000 and $2000.

4. In the Philippines there is essentially a free market in bodily organs. The “grey market” is growing rapidly in many countries.

5. Two different studies suggest that kidney sellers do not benefit in the long run. Most sellers pay off debts with the money, and end up back in debt, their acts of desperation do not succeed. Many end up with long-run health problems, or can no longer perform heavy labor.

From this week’s New York Review of Books (electronic subscription required), “The Organ Market,” by Sheila and David Rothman. The authors are involved with an “organ watch” movement, which seeks to stop organ sales abuses.

My take: I can believe the “behavioral irrationality” argument that most kidney sellers do not benefit very much, if at all. But the Rothman piece never tries to estimate how many lives are saved by the practice. Furthermore, many of the selling “victims” might have performed some other desperate act instead. So the organ selling idea, although repugnant to many people, in my mind remains in the running as a serious policy proposal.

There is a moral hazard problem, namely hospitals and doctors may take kidneys from people when they shouldn’t. Or a hospital or doctor may let a patient die, to harvest the kidneys. Are more lives lost through the moral hazard problem than are saved through the kidney sales? I doubt it. Do the kidney buyers benefit more than the kidney sellers lose? Probably.

Utilitarian calculations are not the only value at stake here, but so far they point toward allowing organ sales. The best argument against is to cite the likelihood of accompanying rights violations, which are real, and claim that such a factor outweighs the utilitarian benefits of the practice.

Addendum: On point number two, the authors write: “patients who receive an organ from a living donor have far better prospects than those who receive an organ from a cadaver.” Co-blogger Alex sends me the following link, which shows a correlation of about ten percentage points more of survival, if you receive an organ from a living donor, the causal relationship may be weaker, given the differing ages of various recipients. Alex wonders if allowing kidney demanders to “buy from the dead” would reduce the problems of sale from the living. This is a good point, but I am not sure it eliminates the basic problem. First, sales from the dead may not displace sales from the living; I cannot determine whether the Philippines (not to mention other locales) restricts sales from the dead but it is not obvious that such differential restrictions exist. Second, many of the buyers are relatively wealthy. If a “live kidney” raises the chance of survival by only a single percentage point, they may still pay for that, which would continue to prop up the market in kidneys from the living. Kidney middlemen may find it easier, and more profitable, to buy from the living for a thousand or two, rather than pursue cadavers, where the quality of the kidney is presumably harder to determine.

Kissing Cousins (More)

A John Tierney article in today’s NYTimes argues that the Iraqi tradition of cousin marriage and consequent clan loyalties make it difficult to establish democracy. (See Tyler’s earlier post for a map and some other links.) Most interesting claim is that the Western taboo against cousin marriage was promoted by the church explicitly in order to reduce loyalty to the clan and promote universal love. Key quote:

Cousin marriage was once the norm throughout the world, but it became taboo in Europe after a long campaign by the Roman Catholic Church. Theologians like St. Augustine and St. Thomas argued that the practice promoted family loyalties at the expense of universal love and social harmony. Eliminating it was seen as a way to reduce clan warfare and promote loyalty to larger social institutions – like the church.

By the way, recent genetic research indicates that cousin marriage does not lead to dramatically higher abnormalities in children.

Wal-Mart Facts

Wal-Mart is the largest company in the world, measured by sales, $245 billion last year.

McKinsey estimates that one-eighth of the productivity gains of the late 1990s came from Wal-Mart.

Its $12 billion of imports from China account for a tenth of total U.S. imports from China.

It is estimated that Wal-Mart saved U.S. customers $20 billion last year.

82% percent of American households made a purchase at a Wal-Mart last year.

On the darker side, it pays lower wages and “censors” music and magazines.

And do you worry about monopoly or monopsony power? In this context I don’t, frankly, except for the cultural/censoring issue, but still it is worth noting that Wal-Mart’s U.S. market share of consumer staples could hit 50% by the end of the decade.

From Business Week , which has a long cover article, “Is Wal-Mart Too Powerful?”

Here are two more facts:

1. It is the biggest employer in 21 states, with more people in uniform than the U.S. Army

2. Every year the company loses $2 billion in theft, this “enterprise” alone would rank #694 on the Fortune 1000.

From Straybulletins.com.

How have newspapers changed since the early 1960s?

1. They devote more space to news, about twice as much.

2. Hard news gets lower priority for space. Business coverage, sports, and special features have all risen in relative prominence, business coverage doubling in percentage terms.

3. Front pages are much more local in their orientation. Foreign stories are down from 20 percent to 5 percent.

4. Female bylines have increased from 7 to 29 percent.

5. Stories are longer.

6. Papers print more letters to the editor.

And what about overall feel?

Papers of the 1960s seem naively trusting of government, shamelessly boosterish, unembarrassedly hokey, and obliging. There was apparently no bottom to the threshold for local news and photos. Writing was matter of fact, and stories were surprisingly often not attributed at all, simply passing along an unquestioned, quasi-official sense of things. The worldview seemed white, male, middle-aged, and middle-class, a comfortable and confident Optimist Club bonhomie. With it came a noblesse oblige sense of purpose. A paper was inextricably woven into its community, a self-anointed major player almost preening with pride and duty.

From a 1999 study by Carl Sessions Stepp, recently republished in Breach of Faith: A Crisis of Coverage in the Age of Corporate Newspapering.

Addendum: Bruce Bartlett adds: “You neglected to note that over the same period, newspaper circulation fell like a rock. Perhaps people would read more papers if they were more like those in the ’60s.”

OPEC, Iraq and Taxes

OPEC unexpectedly announced a cutback in production today. I wonder if the administration tacitly encouraged the cutback? At the very least, I suspect that they are secretly pleased. The increase in oil prices will mean greater funds for rebuilding Iraq – funds that the administration is having difficulty getting Congress to approve. Unlike a tax, the increase in oil prices does not require Congressional approval.

What caused the London power blackout?

Today’s Financial Times offers an interesting Op-Ed (registration and subscription required), here are two bottom lines:

First, since the 1990s the rate of investment in the British electricity grid has nearly doubled.

Second, British electricity is more reliable than ever before:

The halcyon days when ‘things were better’ never existed. Since privatisation, the number of power cuts has fallen by 10 per cent and the duration of those cuts has fallen by nearly a third.

OK, the author is Callum McCarthy, chief energy regulator in the UK, and he presumably has a vested interest in defending the status quo. And I don’t understand his convoluted take on overcapacity and price history, as I read McCarthy he is committed to both high and low prices at the same time, these equivocations make me more skeptical about his conclusions. Still, his perspective deserves wider circulation.

Smuggling amongst the Amish

“A smuggling ring operated for several months in Ohio’s largest Amish community, transporting hundreds of illegal immigrants from Mexico and Guatemala, investigators said.” So notes Cnn.com. It says something about the power of good institutions that it still makes economic sense to smuggle workers into a community that limits its use of modern technology.

One man’s vice…

Here is a new blog devoted to the economics of public policy for the vices, namely the regulation of drugs, gambling, and prostitution, see vicesquad.blogspot.com. I am reading a bit in here, but overall the perspective rings sympathetic toward various methods of legalization or decriminalization. Click here if you wish to read about the attempt of Los Angeles to ban lap dancing.

Here is the blogmeister’s self-description: “My name is Jim Leitzel and I am an economist and co-chair of the public policy concentration in the undergraduate college at the University of Chicago. For the past five years I have taught a course on vice policy, and I have recently started to write a secondary text for the class.”

Thanks for Peter Boettke for the pointer.

The Eric Rasmusen controversy

Eric Rasmusen of Indiana University has long been well-known as an excellent microeconomist. I taught from his Games and Information for many years, I still have his article “Stock Banks and Mutual Banks” on my Industrial Organization reading list.

Lately Rasmusen has been the center of much controversy. Usually I like to summarize the links I use, however briefly. But in this case I am not sure how to explain events without offending anybody, I know Rasmusen a bit plus I have numerous gay friends. So just read here on the episode. Here is Rasmusen’s frequently interesting blog. Here are Rasmusen’s views on religion. Thanks to Eugene Volokh for the Chicago Tribune link.