Category: Uncategorized

Assorted links

by  Tyler Cowen

1. The global trade in meteorites.

2. Offshoring pregnancy and birth to India, and helping workers relocate.

3. The chess player who outsmarted JPMorgan.

4. What happens when a company tries truly transparent pricing?  It is an interesting link.

5. 25 (!) “Propuestas” by XSiM, how to fix the Spanish crisis, in Spanish, how many of the twenty-five do they need?  Consider this one: “19. Meritocracia.“

A Power Vacuum is Killing the Eurozone

by  Tyler Cowen in

That is the title of my latest column, here is one excerpt:

We thus face the danger that the euro, the world’s No. 2 reserve currency, could implode.  Such an event wouldn’t be just another depreciation or collapse of a currency peg; instead, it would mean that one of the world’s major economic units doesn’t work as currently constituted.

We are realizing just how much international economic order depends on the role of a dominant country — sometimes known as a hegemon — that sets clear rules and accepts some responsibility for the consequences.  For historical reasons, Germany isn’t up to playing the role formerly held by Britain and, to some extent, still held today by the United States.  (But when it comes to the euro zone, the United States is on the sidelines.)

THERE appears to be a power vacuum, and the implications are alarming. We may be entering a new world where international cooperative arrangements, in environmental areas as well as finance, are commonly recognized as impossible.  If the core European nations cannot coordinate effectively, what can we expect in dealings with China, Russia and other countries that have less of a common background and understanding?

I consider this a big deal, even beyond its immediate macroeconomic ramifications, which of course are a big deal too.

There is a second, more technical point too:

…some of the banking systems in the periphery nations may be too broken for monetary policy to take hold.  Imagine the European Central Bank trying to infuse new money and credit into Spain, while bank deposits move quickly to Germany, Switzerland and other safer places.  Again, why would anyone want to keep money in the bank of a fiscally troubled nation?  That loss of confidence will not be easily repaired.

At this point, probably euro-wide deposit insurance is needed before monetary policy can help in Greece or Spain (that wasn’t true two years ago).  Yet creating a eurozone-guaranteed safe asset in those economies ultimately boils down to the eurobond idea, which of course the Germans are reluctant to do.

Here is a related Op-Ed from Mark Mazower, focusing on the theme of a collapse of European and international cooperation.  Here is a good article on why plans for tighter political union in Europe will not easily work.  There is talk the UK will cut off migrants if the euro collapses.  Switzerland may introduce capital controls.  What else?  I do not see this turning out well.

Which are the undervalued countries these days?

by  Tyler Cowen in

With the eurozone falling apart, and growth in China, India, and Brazil slowing down, which countries remain undervalued?  I have a few — and I stress that word few — selections:

1. Philippines.  Their rate of growth has been picking up as of late, they have plenty of “low hanging fruit,” they don’t rely too heavily on durable goods exports to the wealthier countries (that’s the bad news too, of course), and sooner or later they are due for a burst of investor attention.  I don’t wish to oversell this one, but we are talking “undervalued” here, not “the next Singapore.”  One danger is 14.9% of their exports going to China, another is bad institutions.  Still, articles about this country use the phrase “bucking global trends.”

2. Pakistan.  Most of all, the bad news here is already on the table.  As far as the economic data, here is a quick review of where they are at.  I’m not claiming it is impressive.  Still, all they need is a bit of peace and order to prosper more, and while I am not predicting that in an absolute sense, it is mostly uncorrelated with the economic performances of the wealthier countries.  Think of the country as a kind of risk-free asset, in the covariance sense that is.  Keep in mind that until the late 1980s they usually had higher rates of economic growth than India did.  They stand a good chance of playing catch-up, especially if they are willing to accept a subordinate place in India’s economic orbit.  Which right now they are not, but arguably that is the future trend, and indeed Bangladesh has made exactly that leap in terms of economic self-image.

3. Mexico.  I’ll be writing on this more elsewhere, so I’ll save up my arguments for now.  One point is that China’s slowdown, and the relative economic stability of the U.S., both augur well for the Mexican economy.

4. Gujarat.  Just pretend it is a country, after all it has more than fifty million people.  They have averaged more than 10 percent growth for the last seven years.

You can make a case for Ghana and Rwanda as well, mostly because of their satisfactory record in agricultural productivity.  Most other places are due for a fall.

Addendum: Via Michael Clemens, here is a related article.  I view Turkey and Poland as “capitalized,” however.

Rand Paul Wants to Bring European Medicine to the United States

by  Alex Tabarrok in

From a Rand Paul press release:

Today the U.S. Senate voted to pass the Food and Drug Administration Safety and Innovation Act (S.3187), which included language inserted by Sen. Rand Paul. This language would force the FDA to accept data from clinical investigations conducted outside the United States, including the European Union, to speed the process of getting life-saving drugs on the market by the FDA.

“Innovation in clinical drug trials should not be confined to the data received from trials in the United States. Findings from countries that incorporate the same rigorous requirements as we do when developing life-saving drugs and devices should be accepted by the FDA as well,” Sen. Paul said.

I agree but I would go further: Any drug or medical device introduced into say the EU, Japan, Canada or Australia ought to be automatically approved in the United States within 90 days. Such a procedure would reduce delay, eliminate needless duplication and cut costs.

Think about it this way: Europeans don’t regard the FDA as the best or final arbiter of safety and efficacy so why should we?

See FDAReview.org, especially the section on reform options, for more.

The culture that is Germany (Bavaria)

by  Tyler Cowen in

A sex shop in Munich’s main railway station has got special permission to sell condoms, porn DVDs and sexy skin lotion on Sundays after three local judges ruled they were legitimate travel supplies.

The owner of Erotic World had appealed against the city council’s decision to stop him opening on Sundays – on the grounds that shops in the railway station were exempt from Bavaria’s strict Sunday trading laws.

But this only applies if they sell products that can be considered souvenirs or travel supplies such as food, disposable cameras, newspapers, magazines, books, DVDs, and CDs.

The shop argued in court that it also had such goods on its shelves, even if their content was rather more spicy than what the station’s newsagents had to offer.

“This is the decision of the court … since the above articles can be considered ‘travel supplies,’ regardless of their content,” a court statement issued Wednesday said.

Nonetheless the rule of law prevailed:

But the judges added that the shop could not sell other erotic items in its range, such as sex toys. In fact, especially sex toys.

Three administrative judges visited Erotic World ahead of the court hearing to inspect the shop’s goods, carefully assessing whether each item might come in handy on a long journey.

Condoms were considered useful enough, but the judges ruled that the old favourite sex game “Erotic Ludo” should still be taboo on the day God has designated the day of rest.

The full article is here, and for the pointer I thank CR.

My personal tech ecosystem

by  Tyler Cowen in

Rahul, a loyal MR reader, asks:

You seem a very productive person and travel quite a bit too. Are you very cell-phone savvy and does it impact your productivity? Any apps you love or use a lot? (Do you play chess on the move! )

Can you blog about your personal cellphone selection strategy. Curious what phone(s) you use.
Ditto for Laptops. What’s your selection strategy. Small versus large screen real estate. What’s your personal optimum.

Also, Mac / PC / or Linux? What’s your ecosystem and what do you love/hate about it.

Would love a blog post on these topics! It’s convenient to imitate the choices of a productive person! 🙂

No, I am not cell phone savvy, as I still do not know how to send a text (just this year I learned how to read one).  In any case, here is my ecosystem:

1. Verizon cellphone.  Very simple, I use it only for calls, the keys are very convenient and otherwise it has no features which I either understand or use.

2. iPhone, latest edition.  I never use it for calls unless I am overseas, in which case it becomes my cellphone for receiving calls (no reason to make them in other countries).  I use it for email, and not for apps, and occasionally for visiting websites such as this one.  I have spent time with some apps to learn how they work, but for research purposes.  Overall their closed systems do not appeal to me.

3. iPad 1.0.  It’s beautiful, it was important, mine has a nice case on it, and I don’t want to part with it.  Plus I have some windows kept open on it.  By carrying around two iPads I can keep more windows open, without being confused.

4. iPad 3.0.  Better than the original iPad (which as we’ve seen is already worth carrying around), and the web connection works internationally and very well.  I now feel connected to the important information just about everywhere.  It has changed my life.

5. I don’ t know what kind of laptop I have, although I guess I could look.  It’s not optimized for anything, except perhaps my own ignorance.  It’s not an Apple Mac, I know that, and I am glad I got rid of Vista.

6. Kindle.  I still prefer real books, but for long plane rides, or sometimes even short plane rides, the carry costs of books are high.  So it gets plenty of use.

Here is an article on why so many Nigerians own more than one cell phone.

Addendum: Tim Harford lays out his system.

Assorted links

by  Tyler Cowen

1. Marc Gunther’s blog on food, sustainability, economics, and related matters.  It is analytical, not just the usual rhetoric on these topics.

2. Does Hayek’s welfare state lead to serfdom?  And how to unfold a rhino (short video).

3. Summary of the No-sterity debate.

4. Have we been underestimating the extent of the growth of the middle class in developing nations?

5. More on genes and economics.