Category: Travel

Travel philosophies for the well-traveled

by  Tyler Cowen in

How should you choose your next trip?  I can see a few general philosophies on the table:

1. Prioritize those countries and regions you haven’t visited yet.  For me that might mean Montenegro, Lithuania, Bangladesh, and Saudi Arabia.  But the downside is waking up one morning and saying “Hey, what the hell am I doing in Sardinia!?”

2. Get to know some of your favorite places truly in depth, most of all major cities that are easy to reach and often are connected to free or paid invitations.  For me that would imply more trips to London, Paris, Tokyo, Berlin — you get the picture.  Under this view, the returns to variety are diminishing.  And have I ever regretted stopping in on those places?

3. Try to visit “events,” especially temporary events.  Right after the Berlin Wall came down, I did a big car trip around Eastern Europe.  Loved it.  Perhaps these days I should be stopping in at Neom, flying to Lviv, and so on.  Those historical moments will never be recaptured.  And usually such trips are memorable.

4. Do more trips with the friends you value most, and go wherever will maximize their interest and participation.  You already know the world, people are what make life special, and now it is time to “give back” your expertise.

How to decide!?  WWGPTS?

There is also the approach I discussed with Nabeel:

5. Figure out, within the bounds of safety and reasonable expense, where you really don’t want to go.  Then go there!  Expectations and surprise are everything, right?  And how else are you to develop a truly diversified portfolio?  Won’t you this way learn the most?

I am indebted to Ben Casnocha for a relevant conversation here, though without holding him liable for any of these views.

Addendum: GPT-4 opts for #3:

As an experienced traveler, if I were to pick only one of the philosophies, I would choose to visit events and historical moments (Philosophy 3). The reason for this choice is that it allows for unique, once-in-a-lifetime experiences that capture the essence of a particular time and place. Such trips often become memorable stories that you’ll cherish for a lifetime.

By prioritizing events and historical moments, you immerse yourself in situations that reveal the true character of a destination and its people, as well as provide valuable insights into the forces that shape societies and cultures. Additionally, this approach can lead to a greater appreciation for the world’s interconnectedness, as you witness firsthand the impact of global events on different regions.

While this philosophy might not cover all aspects of a well-rounded travel experience, it offers a powerful way to engage with the world and create lasting memories that will enrich your life beyond the confines of a single trip.

In Praise of the Danish Mortgage System

by  Alex Tabarrok in

When interest rates go up, the price of bonds goes down. As Tyler and I discuss in Modern Principles, the inverse relationship between interest rates and prices holds for any asset that pays out over time. In particular, as Patrick McKenzie points out, when interest rates go up, the value of a loan goes down. McKenzie suggests that you can use this fact to buy back your mortgage from a bank when interest rates rise.

For example, suppose you get a 500k 30-year fixed rate mortgage when interest rates are 3%–that loan obligates you to pay $2108 per month for 30 years. Now suppose that interest rates go to 6%, now that same stream of payments is only worth, in present value, about $358k. Thus, the bank should be willing to let you buy your mortgage for $358k–that is, after all, what the market would pay for such a stream of payments if your mortgage was securitized.

I am skeptical that I could find the right person at the right bank to actually authorize a deal like this but it turns out that the Danish mortgage system is built to allow this relatively easily. The Danish mortgage system is built on the match principle:

JYSKE Bank: The match-funding principle entails that for every loan made by the mortgage bank, a new bond is issued with matching cash-flow properties. This eliminates mismatches in cash-flows and refinancing risk for the mortgage bank, which also secures payments for the bondholder. In the Danish mortgage system the mortgage bank functions as an intermediary between the investor and borrower. Mortgage banks fund loans on a current basis, meaning that the bond must be sold before the loan can be given. This also entails that the market price of the bond determines the loan rate. The loan is therefore equal to the investment, which passes through the mortgage bank.

In essence, in the Danish system, mortgage banks are more like a futures clearinghouse or a platform (ala Airbnb) than a lender–they take on some credit risk but not interest rate risk.

Thus, if a Danish borrower takes out a 500k mortgage at 3% interest and then rates rise to 6%, the value of that mortgage falls to $358k and the borrower could go to the market, buy their own mortgage, deliver it to the bank, and, in this way, extinguish the loan. Since the value of homes also falls as interest rates rise this is also a neat bit of insurance. Remarkable!

The Danish mortgage market appears to be very successful and so may be a model for American reform:

JYSKE Bank: The Danish Mortgage Bond Market is one of the oldest and most stable in the world, tracing its roots all the way back to 1797 with no records of defaults since inception. Furthermore, the market value of the Danish Mortgage Bond Market is approx. EUR 402bn, making it the largest mortgage bond market in Europe.

Indonesia observations (from my email)

by  Tyler Cowen in

These are from Khalil Manaf Hagerty:

I’m half Indonesian by ethnicity (one-quarter Bugis, one-quarter Minangkabau, half bule, what we refer to as ‘blasteran’ or mixed race) and have worked on and off there for the past 15 years. Here are some observations:

The internal market is enormous. Unlike many SE Asian countries Indonesia really isn’t dependent upon exports. Domestic demand is massive and the middle class is growing. Combined with a cultural life social structure that allows for upward mobility (more than, say, India), many Indonesians have seen and experienced significant improvements in the quality of life over the past 25 years, post-Suharto. They have a lot of democracy and increasing wealth.

So, adding to this: There are 17,000 islands and if someone wants to ‘make it’, they can quite easily go to Jakarta, a city of around 15 million people, depending on whose estimate you are using. Even within the less urbanised islands, there have still been significant rural agricultural opportunities for smallholder farmers operating on 10ha or so to meet domestic demand for food. So these are big improvements for many people and the success or changes in wealth are all relative.

Think of the narrative of President Jokowi: born and raised in a slum, now President.

On emigration: I’m sorry, but the West still tends to treat Indonesians as though they are Muslim terrorists. The immigration and visa requirements for Indonesians entering Australia for example are (informally) tougher than those entering from Malaysia, the Philippines, Thailand and Singapore (obviously), e.g. there is no easy-to-obtain 30-day holiday visa for Indonesians.

With foreign education, Indonesians are likely to go to Australia for higher ed, it’s cheaper and closer, and the objective is generally an English-language education. There’s a small number of wealthy folks that can afford the US system. There’s a generation of folks who were educated in the US system under the Colombo Plan and its successors, but that has thinned out. You will occasionally meet a guy who went to Purdue for this Masters.

Following on from this, why do Indonesians go home after their degree? Most folks will have very, very strong ties to their community in Jakarta, rural Indonesia or both. This often expresses itself in Islam but is present in Javanese/Sumatran/Malay culture more broadly.

On the entrepreneurial spirit, it very much exists in the country, but as noted above the growth is higher and the cultural barriers to entry are lower domestically. The Chinese community is arguably the best at this, but they see bigger or as many opportunities across the region — particularly through informal Chinese diaspora networks across Asia. Ethnic Chinese are much less persecuted now across the region than they were 25 years ago.

Finally, Indonesia is a big country and the sense of national identity is getting bigger. The US-China thing is a good example; Indonesians believe they can carve their own path without having to choose between the West (and there is still a great deal of resentment towards Europe after 1945-1949) and China. The country’s population is expected to overtake the US within a couple of decades.

If I was to summarise: opportunities at home are big, real and probably easier.

Here was my initial query.

Russia fact of the day

by  Tyler Cowen in

Turkish Airlines plans to run daily flights from Istanbul to Buenos Aires from September, up from four times a week in 2022. Weekly flights to São Paulo will increase from seven to 11 times this year, the company said. While the airline explained that demand for these routes was “quite balanced” between the countries, travel agencies in Argentina indicated that it was primarily due to flights from Turkey.

Turkey is less hospitable to Russian migrants than before, and thus it comes to this:

So many Russian babies are being born in the Brazilian city of Florianópolis that parents are banding together to hire an Orthodox priest to baptise the newest members of their families.

Here is the full FT story by Lucinda Elliott.  I also would point your attention to this excellent FT long read on the decline of Barcelona.  Remember the Catalonian independent movement?  Well, here is what that actually brought about — a shrinking of maintenance and investment.

Erika Fatland’s *High*

by  Tyler Cowen in

The subtitle is A Journey Across the Himalaya Through Pakistan, India, Bhutan, Nepal, and China.  This is the first great book of 2023, at least that I have seen.  Bravo!  Travel books are hard to summarize, but I will note that most of them are bad or at best mediocre.  They assume you care about the author’s adjectives, or that the interesting nature of experienced events will translate automatically to the page.  This work, in contrast, is a wonderful blend of fact, history, political observation, and narrative.  I read every page, and it would likely make my list of my favorite thirty travel books of all time.  Here is the author’s home page, she is by background a Norwegian anthropologist who speaks eight languages.

My excellent Conversation with Paul Salopek

by  Tyler Cowen in

Here is the transcript and audio, here is the summary:

Paul Salopek is a Pulitzer Prize-winning journalist and National Geographic fellow who, at the age of 50, set out on foot to retrace the steps of the first human migrations out of Africa. The project, dubbed the “Out of Eden Walk,” began in Ethiopia in 2012 and will eventually take him to Tierra Del Fuego, a distance of some 24,000 miles.

Calling in just as he was about to arrive in Xi’an, he and Tyler discussed his very localized supply chain, why women make for better walking partners, the key to crossing deserts, the most difficult terrain to traverse, what he does for exercise, his information prep for each new region, how he’s kept the project funded, why India is such a good for walkers, which cuisines he’s found most and least palatable, what he learned working the crime beat in Roswell, New Mexico, how this project challenges conventional journalism, his thoughts on the changing understanding of early human migration, and more.

Here is one excerpt:

COWEN: What’s true is true. How is it that you crossed the desert? You’ve been through some of the Gulf States, I think.

SALOPEK: Yes, I’ve been through several deserts. The first was the Afar Desert in north Ethiopia, one of the hottest deserts in the world, and then the Hejaz in western Saudi Arabia, and then some big deserts in Central Asia, the Kyzyl Kum in Uzbekistan.

You cross deserts with a great attentiveness. You seem to want to speed up to get through them as quickly as possible, but often, they require slowing down, and that seems counterintuitive. You have to walk when the temperatures are congenial to your survival. Sometimes that means walking at night as opposed to the day. It means maybe not covering the distances that you would in more moderate climates.

Deserts are like a prickly friend. You approach them with care, but if you invest the time, they’re pretty inspiring and remarkable. There are reasons why old hermits go out into the deserts to seek visions. I was born in a desert. I was born in the Mojave Desert of Southern California, so I’m partial to them, maybe even by birth.

COWEN: Do you find deserts to be the most difficult terrain to cross?

SALOPEK: No, I find alpine mountains to be far trickier. Deserts can be fickle. Deserts can kill you if you’re not careful. Of course, water is the most limiting factor for survival.

But alpine mountain weather is so unpredictable, and a very sunny afternoon can turn into a very stormy late afternoon in a very quick time period. Threats like rock falls, like avalanches, blizzards — those, for me, are far more difficult to navigate than deserts. Also, I guess having been born in the subtropics, I don’t weather the cold as well, so there’s that bias thrown in.

COWEN: What do you do for exercise?

Recommended, interesting throughout.

Privatization Improves Airports

by  Alex Tabarrok in

Laurent Belsie summarizes a new NBER paper, All Clear for Takeoff: Evidence from Airports on the Effects of Infrastructure Privatization:

When private equity funds buy airports from governments, the number of airlines and routes served increases, operating income rises, and the customer experience improves.

…As of 2020, nearly 20 percent of the world’s airports had been privatized. Private equity (PE), usually through dedicated infrastructure funds, is playing an increasing role in privatization, purchasing 102 airports out of a total of 437 that have ever been privatized.

…A key metric of airport efficiency is passengers per flight. The more customers an airport can serve with existing runways and gates, the more services it can deliver and the more earnings it can generate. When PE funds buy government-owned airports, the number of passengers per flight rises an average 20 percent. There’s no such increase when non-PE private firms acquire an airport. Overall passenger traffic rises under both types of private ownership, but the rise at PE-owned airports, 84 percent, is four times greater than that at non-PE-owned private airports. Freight volumes and the number of flights, other measures of efficiency, show a similar pattern. Evidence from satellite image data indicates that PE owners increase terminal size and the number of gates. This capacity expansion helps enable the volume increases and points to the airport having been financially constrained under previous ownership.

…PE firms tend to attract new low-cost carriers to their airports, which in turn may lead to greater competition and offer consumers better service and lower prices. With regard to routes, PE acquirers increase the number of new routes, especially international routes, more than other buyers. International passengers are often the most profitable airport users, especially in developing countries.

A PE acquisition is also associated with a decline in flight cancellations and an increase in the likelihood of receiving a quality award. When an airport shifts from non-PE private to PE ownership, its odds of winning an award rise by 6 percentage points. The average chance of winning such an award is just 2 percent.

The fees that airports charge to airlines rise after airport privatizations. When the buyer is a PE firm, there is also a push to deregulate government limits on those fees. For example, after three Australian airports were privatized in the mid-1990s, the price caps governing airport revenues were replaced with a system of price monitoring that allows the government to step in if fees or revenues become excessive.

The net effect of a PE acquisition is a rough doubling of an airport’s operating income, due mostly to higher revenues from airlines and retailers in the terminal rather than cost-cutting. The driving forces behind these improvements appear to be new management strategies, which likely includes greater compensation for managers, alongside investments in new capacity as well as better passenger services and technology.

The future of public transit?

by  Tyler Cowen in

Via the excellent Samir Varma.

Africa’s Megalopolis

by  Alex Tabarrok in

An interesting piece in The Guardian by Howard French on Africa’s megalopolis and the difficulties of pulling together five countries with very different governments and colonial histories:

There is one place above all that should be seen as the centre of this urban transformation. It is a stretch of coastal west Africa that begins in the west with Abidjan, the economic capital of Ivory Coast, and extends 600 miles east – passing through the countries of Ghana, Togo and Benin – before finally arriving at Lagos. Recently, this has come to be seen by many experts as the world’s most rapidly urbanising region, a “megalopolis” in the making – that is, a large and densely clustered group of metropolitan centres.

…In just over a decade from now, its major cities will contain 40 million people. Abidjan, with 8.3 million people, will be almost as large as New York City is today. The story of the region’s small cities is equally dramatic. They are either becoming major urban centres in their own right, or – as with places like Oyo in Nigeria, Takoradi in Ghana, and Bingerville in Ivory Coast – they are gradually being absorbed by bigger cities. Meanwhile, newborn cities are popping into existence in settings that were all but barren a generation ago. When one includes these sorts of places, the projected population for this coastal zone will reach 51 million people by 2035, roughly as many people as the north-eastern corridor of the US counted when it first came to be considered a megalopolis.

But unlike that American super-region, whose population long ago plateaued, this part of west Africa will keep growing. By 2100, the Lagos-Abidjan stretch is projected to be the largest zone of continuous, dense habitation on earth, with something in the order of half a billion people.

The culture that is New Jersey

by  Tyler Cowen in

The digital alerts that debuted on Garden State highway signs last month may have displayed a bit too much Jersey attitude.

As of Wednesday afternoon, messages such as “Get your head out of your apps” and “mash potatoes — not your head” are no longer visible on the New Jersey Department of Transportation’s network of 215 permanent digital alert signs throughout the state. Similar messages have been used in other states, including Utah, Pennsylvania, Delaware, California, and Tennessee.

“The FHWA [Federal Highway Administration] has instructed us to cease posting these creative safety messages,” Stephen Schapiro, NJDOT’s press manager, said in an email Wednesday afternoon.

In a statement, the FHWA said that it “is aware of the changeable message signs and has reached out to NJDOT.” Representatives from FHWA did not comment on why New Jersey was told to stop using the messages.

Here is the full story, via Mike Doherty.

Ranking of major tourist sites

by  Tyler Cowen in

Mike asks:

Tyler’s ranking of major world heritage/tourist sites (could be buildings, national parks, etc.) in terms of which far exceed/underwhelm expectations derived from casual internet surfing.

This is off the top of my head and not pondered for very long, with eleven or more in the top ten:

1. Northern Arizona/southern Utah, various national parks, culminating in the North Rim of the Grand Canyon.

Yes, #1 in the whole world and overall I am not such a travel nationalist.  So it must be really, really good.

2. Iguassu Falls.

I have seen only the Brazilian side, Argentina would make it better yet.  Beware the coatimundis who like to sniff your balls!

3. Ålesund, Norway.

4. The architecture of Brasilia.

I like modernism.  The view from the Rio Christ statue is pretty good too.

5. The architecture of Helsinki.

Kind of follows!

6, Macchu Picchu, seen properly.  Or maybe Lalibela?

Now the former is too full of crowds, I suspect.

7. Swiss Alps, including the integration of natural beauty, landscape, and human footprint.

Get a car, don’t talk yourself into the train only.

8. Sikh Golden Temple and surrounding site, Amritsar, Punjab.

9. Niagara Falls.

10. Ginza district, Tokyo.

11. Singapore, Marina Bay Sands area, most of all the view from the Infinity Pool, looking out in all directions.

Other contenders: Istanbul on the water, view from the Eiffel Tower, Yunnan province in China, average quality of beauty in New Zealand, the new parts of Copenhagen and also Hamburg on the waterfront, cruising in Mexico City, the very old parts of Rome, Venice in a fast water boat, Marrakesh, Busan, Korea, Faroe Islands, many different parts of Chile including Patagonia, random geothermal parts of Iceland.

I am sure I have forgotten plenty!

Open the Skies!

by  Alex Tabarrok in

Here’s a list of the world’s top ten airlines:

  1. Qatar Airways
  2. Singapore Airlines
  3. Emirates
  4. ANA (All Nippon Airways)
  5. Qantas Airways
  6. Japan Airlines
  7. Turkish Airlines
  8. Air France
  9. Korean Air
  10. Swiss International Air Lines

The airlines in this list have at least two things in common: None of world’s best airlines are US owned and none of them are allowed to operate domestically in the United States. The two common elements are related because so-called “cabotage laws” prohibit foreign airlines from serving domestic travelers.

Imagine what international travel would be like if you could only fly on a US owned airline? Ok it’s not that hard to imagine. Restricting international flights to domestic airlines would make international travel much more expensive and more inconvenient. The US State Department rightly lauds the Open Skies Agreements that have brought competition to international flights:

Since 1992 the United States has pursued an “Open Skies” policy designed to eliminate government intervention in airline decision-making about routes, capacity, and pricing in international markets…Open Skies agreements expand cooperative marketing opportunities between airlines, liberalize charter regulations, improve flexibility for airline operations, and commit both governments to high standards of safety and security.  They are pro-consumer, pro-competition, and pro-growth, and facilitate countless new cultural links worldwide.

True! But US domestic flights fly on Closed Skies. Europe has opened up competition to all European airlines. Indeed, Europe is also substantially open to US carriers, but the US is closed to foreign carriers for domestic flights. Cabotage laws are, in effect, a Jones Act for the airlines.

In an good review, Scott Lincicome summarizes:

Europe’s deregulatory experiences—and our own—show that nixing cabotage restrictions would not only put additional downward pressure on fares but also likely improve route coverage and maybe even customer service.