Category: Uncategorized

Markets in everything the culture that is Denmark

by  Tyler Cowen in

The Spermbike.

It is intended as an environmentally friendly way to carry sperm to fertility clinics scattered around Copenhagen.

But is it actually environmentally friendly or is it, as is so often the case, an advertising gimmick?  The bike has its own cooler and:

Producing the Sperm Bike was no easy task. It was constructed by the Danish company 10 Tons – who specialise in zoological and botanical models as well as paleontologic reconstructions, including full-size whales and dinosaurs.

With the tail, the bike is 2.9 metres long and fully-loaded with… um… sperm… it weighs 50 kg.

For the pointer I thank James Hohman.

*The Long Goodbye*

by  Tyler Cowen in

That is Meghan O’Rourke’s new book about dealing with the death of her mother.  It is difficult to excerpt usefully, but I found it striking and memorable.  It melds prose and poetic styles very effectively (O’Rourke is a well-known poet and a very good one) and it covers some relatively unexplored emotional space.  I don’t know a better book on grief.

Here is one good review of the book (1/20).  Here is another good review (1/20), combined with a justfied attack on the (to me) virtually unreadable new Francisco Goldman book.

A convincing smile is difficult to fake

by  Tyler Cowen in

Here is a new paper by a few authors, including Paul Seabright:

We test the hypothesis that “genuine” or “convincing” smiling is a costly signal that has evolved to induce cooperation in situations requiring mutual trust. Potential trustees in a trust game made video clips for viewing by potential trusters before the latter decided whether to send them money. Ratings of the genuineness of smiles vary across clips; it is difficult to make convincing smiles to order. We argue that smiling convincingly is costly, because smiles from trustees playing for higher stakes are rated as significantly more convincing, so that rewards appear to induce effort. We show that it induces cooperation: smiles rated as more convincing strongly predict judgments about the trustworthiness of trustees, and willingness to send them money. Finally, we show that it is a honest signal: those smiling convincingly return more money on average to senders. Convincing smiles are to some extent a signal of the intrinsic character of trustees: less honest individuals find smiling convincingly more difficult. They are also informative about the greater amounts that trustees playing for higher stakes have available to share: it is harder to smile convincingly if you have less to offer.

Here is another paper by Paul and co-authors, about the end of low-hanging fruit in the pharmaceuticals market.

Why do Brazilians emigrate so infrequently?

by  Tyler Cowen

It is a populous country, yet there are few major Brazilian communities in the United States.  Only parts of Massachusetts, Queens, and Newark, New Jersey come to mind.  The U.S. Census estimates about 250,000 Brazilians living in the United States, which is many fewer than come from El Salvador, namely about two million.  Why is there such a difference?  The Brazilian number may well be an undercount but unofficial estimates still lie well below those of El Salvador.

1. Could it be that Brazil is too much fun to leave?  Or too much fun to generate the norms of upward mobility which encourage poorer people to leave for greater ambition?  If you live on the beach in northeastern Brazil, what exactly do you aspire to?

2. Do inhabitants of large, populous countries face larger cultural costs in leaving and adjusting their perspective?

3. Has Brazil had so much construction (including Brasilia), in its fairly wealthy sectors, that internal migration is a good enough substitute for external migration?

4. Brazil has a particular history of viewing the United States as a rival; El Salvador does not.

5. It seems that most Brazilian emigrants are ashamed to admit that they are emigrating to the United States, instead they claim they are simply “passing through,” or something similar.

What other points are relevant?  Here is a study (pdf) of Brazilian migrants to Massachusetts.

Brazil also does not attract many (recent) migrants, even though in some sectors the economic opportunities are strong.  It could be that external migrants have to compete too strongly with internal migrants from the poorer regions of Brazil.

Leonardo Monasterio restates the initial question in Portuguese.

Duncan Foley on the growth slowdown

by  Tyler Cowen in

Via Rortybomb, there is a new paper:

Service industries such as Finance, Insurance, and Real Estate, Education and Health Services, and Professional and Business Services, for which value added is imputed from incomes, are included in Gross Domestic Product, distorting measures of recession and recovery. An alternative index, Narrow Measured Value Added, which excludes all services, has similar historic correlations with employment to GDP, and tracks employment in recent business cycles better. The U.S. economy as measured by NMVA has a lower long-term real rate of growth. Long-term macroeconomic policy requires attention to some version of the productive-unproductive labor distinction of the classical
political economists.

The short paper is interesting, and speculative, throughout.  Here is one of the reproduced graphs.  I am comfortable distinguishing “productive” from “unproductive” activities on the grounds of rent-seeking and signaling considerations, but I would not push the distinction beyond that point.  I am not sure where Foley draws the line, and he stresses in the paper that his numerical measure is not conceptually perfect but rather given by the limitations of the data.

*The Origins of Political Order*

by  Tyler Cowen in

That is the new book from Frank Fukuyama and the subtitle is From Prehuman Times to the French Revolution.  A few points:

1. Every page is intelligent and reasonable.

2. It is a useful general overview of what we know about the origins of states, with full coverage given to the non-Western world, most of all China.

3. My single sentence summary would be: “I am showing you how some polities developed workable, strong states, based in accountability, and how others did not.”  If that is it, I would rather that the empirical material were more focused on the “model” and less on overall general narrative.  Ultimately the organization sprawls.  Nonetheless, this book is an important implied revision of public choice economics, with the focus on history and the question of how strong states get built.

4. In its scope and method, this book feels late 19th century.

5. I am not convinced by the discussion of why earlier China did not progress, found in the range of 51% on Kindle.  Fukuyama seems to suggest they simply weren’t interested in doing better.  I would be happier if so much did not rest on that question.

6. One implication of the analysis is that we should not be very optimistic about the current revolutions in the Middle East.

7. Try this sentence: “The very lateness of the European state-building project was the source of the political liberty that Europeans would later enjoy.”

8. The section on biology could use a major dose of Robin Hanson.

Here is one useful review.  Here is a review from The Economist.

Nouriel Roubini on Austro-Chinese business cycle theory

by  Tyler Cowen in

At Project Syndicate, he writes:

When net exports collapsed in 2008-2009 from 11% of GDP to 5%, China’s leader reacted by further increasing the fixed-investment share of GDP from 42% to 47%.

Thus, China did not suffer a severe recession – as occurred in Japan, Germany, and elsewhere in emerging Asia in 2009 – only because fixed investment exploded. And the fixed-investment share of GDP has increased further in 2010-2011, to almost 50%.

The problem, of course, is that no country can be productive enough to reinvest 50% of GDP in new capital stock without eventually facing immense overcapacity and a staggering non-performing loan problem. China is rife with overinvestment in physical capital, infrastructure, and property. To a visitor, this is evident in sleek but empty airports and bullet trains (which will reduce the need for the 45 planned airports), highways to nowhere, thousands of colossal new central and provincial government buildings, ghost towns, and brand-new aluminum smelters kept closed to prevent global prices from plunging.

Commercial and high-end residential investment has been excessive, automobile capacity has outstripped even the recent surge in sales, and overcapacity in steel, cement, and other manufacturing sectors is increasing further. In the short run, the investment boom will fuel inflation, owing to the highly resource-intensive character of growth. But overcapacity will lead inevitably to serious deflationary pressures, starting with the manufacturing and real-estate sectors.

Eventually, most likely after 2013, China will suffer a hard landing. All historical episodes of excessive investment – including East Asia in the 1990’s – have ended with a financial crisis and/or a long period of slow growth.

Do read the whole thing.

Assorted links

by  Tyler Cowen

1. Brink Lindsey on frontier economics, and a related comment on education.

2. Advertising markets in everything.

3. Short Gary Gorton bit on CDS and excess transparency.

4. What is the consumer surplus from computers?  And is retirement stagnating?  And engines of stagnation.

5. Optimism about solar power.

6. In case I hadn’t made it clear, contrary to its critics the city of Brasilia works reasonably well.