Claims about Mexico

by  Tyler Cowen in

From John Paul Rathbone:

For the first time in a decade there are good reasons to be less bullish about China – and thus Brazil. There are also good reasons to be more bullish about the US – and thus Mexico. China has lost competitiveness because of rising wage and transport costs. North American corporate supply chains are already shortening. If the US economy recovers, Mexican manufacturers should do well.

Mexico has also become a global car producer. The industry generated $23bn of exports last year – more than oil or tourism. Nor are these cheapo maquiladora operations: Volkswagen and Nissan use Mexico’s web of trade agreements to export their cars to the whole world. As for Mexico’s “drugs war”, the once dizzying increase of violence has slowed and in some areas fallen. Why is not clear, but a 74 per cent increase in federal security spending will eventually make a difference, anywhere.

Read the whole thing, well argued throughout.

What if we live longer?

by  Tyler Cowen in

From Timothy Taylor:

The IMF asks what would happen if life expectancy by 2050 turns out to be three years longer than current projected in government and private retirement plans: “[I]f individuals live three years longer than expected–in line with underestimations in the past–the already large costs of aging could increase by another 50 percent, representing an additional cost of 50 percent of 2010 GDP in advanced economies and 25 percent of 2010 GDP in emerging economies. … [F]or private pension plans in the United States, such an increase in longevity could add 9 percent to their pension liabilities.  Because the stock of pension liabilities is large, corporate pension sponsors would need to make many multiples of typical annual pension contributions to match these extra liabilities.”

This is one reason (of several) why “doing fine against the baseline” does not much impress me as a fiscal standard.  I hope to cover that broader topic soon.

Assorted links

by  Tyler Cowen

1. World’s first commercial 3-D chocolate printer, story here, beware noisy video at that link.

2.  Cardboard arcade made by a nine-year-old boy, hat tip to Karina and Chad.

3. Tightening antibiotic use for livestock; let’s hope it works, a partial but not complete Coasian trade says it won’t, in a pinch farmers will buy vets.  More here.

4. Proof that I am needed.

5. The electrical efficiency of computing.

Publication day for *An Economist Gets Lunch*

by  Tyler Cowen in

Adam Ozimek writes:

Cowen’s history of how American food came to be so mediocre is a strong counterargument to those who look to blame the phenomenon on commercialization, capitalism, and excess of choice. In contrast to the usual narrative, Cowen tells us how bad laws have played an important role in shaping our food ecosystem for the worse over time. This includes prohibition’s negative and long lasting impact on restaurants, and the government aggressively limiting one of our greatest sources of culinary innovation: immigration. This is not to lay the blame entirely on the government. Television and a culture that panders to the desires of children have also incentivized poor culinary trends.

The book contains many other other important arguments against popular food ideas, including defenses of technology and agriculture commercialization against critiques of locavores, slow foodies, and environmentalists. For example, if you live in an area where it takes a lot of energy and resources to grow food — like the desert — the most environmentally friendly way may be to grow it somewhere else and ship it. An apple grown locally may be refrigerated for months, which consumes a lot of energy, whereas it may be both fresher and better for the environment to grow it elsewhere and ship it in from afar by boat. He also defends genetically modified crops as the likely cures to the biggest food problem we have today, which is not obesity but malnutrition.

But Cowen is not an apologist, and he doesn’t argue that we can just deregulate our way to a better food system. In fact he has many words of support for policies and values often supported by progressives.

…If there is one overarching lesson it is that looking at food through the framework of supply and demand can help you both understand our food system better, and also help you be a smarter consumer and get more out of every meal.

You can pre-order the book on Amazon here.  For Barnes & Noble here.  For Indiebound.org here.

The Chicago School

by  Alex Tabarrok in

In Launching the Innovation Renaissance I wrote:

In the United States, “vocational” programs are often thought of as programs for at-risk students, but that’s because they are taught in high schools with little connection to real workplaces. European programs are typically rigorous because the training is paid for by employers who consider apprentices an important part of their current and future work force. Apprentices are therefore given high-skill technical training that combines theory with practice—and the students are paid!

In the United States there are some experimental programs moving in this direction. One of the most interesting is being pushed by Chicago mayor Rahm Emanuel:

Chicago Public Schools (CPS) students will have the opportunity to attend five Early College STEM Schools (ECSS) that focus on technology skills and career readiness – as well as earn college credits– under a partnership agreement with five technology companies, CPS and City Colleges of Chicago, Mayor Rahm Emanuel announced…

The five technology companies, IBM, Cisco, Microsoft Corporation, Motorola Solutions and Verizon Wireless, will help develop a unique curriculum at each new school to teach students the skills required in that marketplace, as well as provide mentors and internships.  Upon graduating from these tailored programs, the students will be prepared for careers in science and technology.

…All of the new schools will open in September 2012 with a class of ninth graders.  Each student will be able to graduate in four-years with a high school diploma with college credits, with a goal of graduating within six years with an Associate of Science (AS) degree in Computer Science or an Associate in Applied Science (AAS) in Information Technology. The college courses will be taught by professors from CCC.

Emanuel is also redesigning the City Colleges of Chicago along similar lines:

Rahm fired almost all the college presidents, hired replacements after a national search, and decreed that six of the seven city-run colleges would have a special concentration. Corporations pledging to hire graduates will have a big hand in designing and implementing curricula. “You’re not going for four years, and you’re not going for a Nobel Prize or a research breakthrough,” he says. “This is about dealing with the nursing shortage, the lab-tech shortage. Hotels and restaurants will take over the curriculum for culinary and hospitality training.” Already AAR, a company that has 600 job openings for welders and mechanics, is partnering with Olive-Harvey College; Northwestern Memorial Hospital is designing job training in health care for Malcolm X College.

It’s too early to judge these developments but Emanuel’s op-ed on this subject was surprisingly good. The key question, which I haven’t yet seen answered, is whether the the companies will have real skin in the game, which I see as critical to success.

Hat tip: Ben Casnocha.

Exponential economist meets Physicist

by  Tyler Cowen in

Here is an imaginary dialogue between a physicist and an economist who is not Georgescu-Roegen.  The physicist is skeptical about the prospect for continued exponential growth, excerpt:

Physicist: Well, we could (and do, somewhat) beam non-thermal radiation into space, like light, lasers, radio waves, etc. But the problem is that these “sources” are forms of high-grade, low-entropy energy. Instead, we’re talking about getting rid of the waste heat from all the processes by which we use energy. This energy is thermal in nature. We might be able to scoop up some of this to do useful “work,” but at very low thermodynamic efficiency. If you want to use high-grade energy in the first place, having high-entropy waste heat is pretty inescapable.

…we’re too close to an astounding point for me to leave it unspoken. At that 2.3% growth rate, we would be using energy at a rate corresponding to the total solar input striking Earth in a little over 400 years. We would consume something comparable to the entire sun in 1400 years from now. By 2500 years, we would use energy at the rate of the entire Milky Way galaxy—100 billion stars! I think you can see the absurdity of continued energy growth. 2500 years is not that long, from a historical perspective. We know what we were doing 2500 years ago. I think I know what we’re not going to be doing 2500 years hence.

For the pointer I thank Sam Penrose, Jim Nichols, Jason Ketola, and Mark Weaver.  It is interesting throughout, though I expect war to intervene at some point to break the exponential growth.

Addendum: Here is a related paper by Robin Hanson.

The continuing course of Canadian monetary innovation

by  Tyler Cowen in

Canadian money authorities just can’t sit still. Like a hyperactive kid, they have revamped Canadian cash, first introducing plastic bills and then killing the penny. Now they want people to play with glow-in-the-dark quarters.

The Royal Canadian Mint’s latest collectible coin features a dinosaur whose skeleton shines at night from beneath its scaly hide.

It’s actually two images on one face, which could be a world’s first. The other side depicts Queen Elizabeth. Her Majesty does not glow in the dark.

Made of cupronickel, the coin has a face value of 25 cents but is much larger than a regular Canuck quarter.

Here is more, and for the pointer I thank Eva Vivalt.

Mysteries of growth

by  Tyler Cowen in

Matt writes:

To me the most pointed contrast is between the Soviet Bloc and pre-reform China. Why was East Germany so much poorer than West Germany? That’s easy—Communism! And that’s why North Korea is poorer than South Korea. It’s also why Taiwan is richer than China. But Communism hardly explains why the Soviet Union was always much richer than China. But it was a lot richer despite broadly similar political systems and ideological commitments, and the human suffering involved in the PRC’s failure to implement Communism as successfully as the USSR was enormous.

I would say this: Stalin favored industrialization (albeit of a strange sort) more than did the Chinese communists, China had a more damaging heritage of conquest and civil war, Russia was far more urbanized, Russia had greater access to European ideas (some of them bad of course), and the Russian experience of nation-building was mostly behind them, whereas China is still going through this process.  For Russia/Soviet Union, the major structures of 20th century European growth were largely in place, though “liberal institutions” were rejected.  Russia had an advanced European educational system in place, albeit not for everyone.  If you look at the economic history of the more Asiatic “Stans,” which of course were part of the Soviet Union communist experience, the importance of already-industrializing and European connections looks all the more stronger.  The relative prosperity of Estonia also bears out this thesis, though it would be interesting to ponder Kaliningrad/Königsberg in this regard.

What I’ve been reading

by  Tyler Cowen in

1. Barb Stuckey, Taste: What You’re Missing: The Passionate Eater’s Guide to Why Good Food Tastes Good.  A very good and interesting look at how and why food tastes as it does, from a professional food developer.

2.Robert J. Sampson, Great American City: Chicago and the Enduring Neighborhood Effect.  I’m still grappling with this book, which I find difficult to parse.  It’s a very detailed empirical study of the strength of neighborhood effects, with reference to Chicago.  I thought I would give the book its own post, but it is difficult to excerpt.  I don’t quite understand how he distinguishes neighborhood effects from selection effects, though I have read his discussion that selection effects are themselves neighborhood effects, ultimately.  I feel there is a good deal of interesting social science in here, but the book should be far more transparent.  William Julius Wilson called it “…one of the most comprehensive and sophisticated empirical studies ever conducted by a social scientist.”  Here is a Harvard story on the book.  For sure some of you should pick this one up, but I am myself still torn.

3. Lifeboat: A Novel, by Charlotte Rogan.  A genuinely gripping story of a bunch of people in a sinking lifeboat, facing the usual philosophical dilemmas.  Maybe that doesn’t sound thrilling, but I pressed on eagerly and read it to the end.

4. Free Market Fairness, by John Tomasi.  Here is Matt on the book: “Without being by any means a libertarian, I do think that people of a left-wing orientation sometimes give short shrift to the non-pecuniary aspects of economic freedom. Whether or not you buy that barber licensing rules are a big deal economically, the specter of the government throwing a person in jail for participating in an exchange of haircuts for money between consenting adults should bother liberally inclined people for basically the same reasons that all random state interference in the conduct of private life is bothersome.”

5. India After Gandhi: The History of the World’s Largest Democracy, by Ramachandra Guha.  Both informationally dense and conceptual, in a good way.

Dual coverage from The New York Times

by  Tyler Cowen in

Damon Darlin liked my new book, An Economist Gets Lunch:

It’s a sports bar, which seems like an unlikely choice, but not to Professor Cowen’s way of thinking. He chose it precisely because it was an unlikely choice. An American sports bar might mean Buffalo wings and cheeseburgers, but an Ethiopian sports bar? “They are making no attempt to appeal to non-Ethiopians,” he said.

…As for the food at Eyo’s Sports Bar, it persuaded me on his thesis that immigrants rejuvenated the American palate and it was best to leave the finicky children, or teenagers, at home.

Dwight Garner did not like it:

Reading Mr. Cowen is like pushing a shopping cart through Whole Foods with Rush Limbaugh. The patter is nonstop and bracing. Mr. Cowen delivers observations that, should Alice Waters ever be detained in Gitmo, her captors will play over loudspeakers to break her spirit.

These observations include: “There’s nothing especially virtuous about the local farmer”; “buying green products seems to encourage individuals to be less moral”; and — a contender for Orwellian sentence of the year — “technology and business are a big part of what makes the world gentle and fun.”

I think it’s Orwellian that he thinks this is Orwellian.  On the two errors he claims to have found in the book, he is wrong in both cases.  Brad DeLong adds appropriate comment on the first.  My estimate for the Google search number claims was correct and multiply checked when I did it, and these days it comes in at around the high 400,000s, nothing near his 115,000 figure.

You can pre-order the book on Amazon here.  For Barnes & Noble here.  For Indiebound.org here.  It is due out tomorrow.

Transcript of my interview with Peter Singer

by  Tyler Cowen in

It is here, now written out, courtesy of the excellent Jeff Kaufman.  The original visual and audio of the interview is here.  Here is one bit:

Cowen: …If we could imagine an alternative world, where people were, say, only 30% as committed to their personal projects as are the people we know, say the world is more like, in some ways, an ant colony, people are committed to the greater good of the species. Would that be a positive change in human nature or a negative change?

Singer: Of course, if you have the image of an ant colony everyone’s going to say “that’s horrible, that’s negative”, but I think that’s a pejorative image for what you’re really asking …

Cowen: No, no, I don’t mean a colony in a negative sense. People would cooperate more, ants aren’t very bright, we would do an ant colony much better than the ants do. …

It is one of my favorite outputs of me.