Would I lie to you?
The subtitle is “The problem with buying sports “experiences”” and it is now up on Grantland.com. Co-author Kevin pulled out this excerpt:
The biggest issue is that our own desire for thrills often works against our better judgment. As a species, we derive pleasure from thinking about what will come — how nice that powdery snow on the slopes is going to be. So we turn off our critical faculties at the worst possible moment in hopes of maximizing the value of the anticipation and getting a bigger buzz. This is particularly bad when it comes to sports experiences, which are rife with “asymmetric information” — when the seller knows something you don’t. Your best defense, of course, is to be aware of your vulnerability and maximize your information, as any smart shopper does when in the market for a used car. But when it comes to shopping for experiences, emotions all too often rule.
Read the whole thing.
Very good sentences
The idea of the paper is that firms accumulate bad projects during a boom. They hold onto them in order to–as I would put it–save face. When someone signals the end of a boom (for example, by coming to Congress with hurried legislation to bail out banks), it becomes ok to kill off the bad projects.
That is from Arnold Kling, including a link to Grenadier, Malenko, and Strabulaev.
Why I think the Mexican government is winning the drug war
Mexico is still growing, and quite robustly, even after the drug lords have given it their best shot. The currency is up over nine percent this year.
If Mexico keeps on getting richer, and the drug lords keep on killing each other, eventually Mexico will win. Think rates of return, or think of government revenue as rising over time. I’m not saying the drug problem will ever disappear there.
Murder rates have stabilized or fallen in some key northern cities, including Juarez. Sending in the army seems to yield returns, in light of scared and corrupt local police forces.
Both the American recovery and the slowdown in China, combined with higher Chinese wages, will help Mexico and thus help the government against the drug gangs.
I fully admit this is speculation on my part, but it is my view.
Assorted links
1. Full video from the Kansas City blogger’s conference.
2. German temporary markets in everything, bet against it lasting.
4. Ryan Avent on American exports, and Yglesias on exports and rents; he is a man who understands that Ricardo remains underrated. Here is Karl Smith on related issues.
5. Thinking politically makes you callous. It really does.
Saudi Arabia fact of the day
The country is not energy efficient:
With domestic electricity demand rising 10% per year in Saudi Arabia, the kingdom now devours more than a quarter of its oil production—nearly three million barrels per day. International Energy Agency figures show that Saudi Arabia now consumes more oil than Germany, an industrialized country with triple the population and an economy nearly five times as large.
That is from Jim Krane via Brad Plumer.
Who would be a better president of the World Bank?
I see so many tweets and posts on this question. None of you know, I suspect. A few questions:
1. It is widely recognized that the Bank’s board “interferes” in WB activities too much, often meeting two times a week and also pushing through contracts which should be stopped or reexamined. Who can best stand up to that board when necessary? Can that be done at all, while keeping the contract-addicted major economic powers still interested in the Bank?
2. The WB is financially fairly dependent on China, which for whatever reason prefers to borrow from the Bank rather than use its reserves to finance projects. What should a president do if China starts seeing itself as “graduating” from this relationship? Or what if China falls apart economically? Will the World Bank end up like the UN, losing some of its talent and being hat in hand, asking for funds?
3. Let’s say the BRICS continue with their plan to set up a separate lending facility, as endorsed recently by Zoellick. How should a president keep the BRICS interested in the World Bank? Should the new lending facility be fought, co-opted, subsidized, or whatever? Competition or collusion?
4. The U.S. President tries to pressure the WB to create projects in Afghanistan or Iraq which the Bank doesn’t really want to do. Stand up to the President, fold, or meet him halfway? How should project demands involving the West Bank be finessed?
Maybe, maybe, maybe — if you knew the major candidates well — you could have some sense who would perform better at those tasks. And at about fifty others. Maybe. Maybe not.
It is hard to predict how any particular candidate would do. We do know who is likely to get the job. We don’t know what it is like to have a non-American facing those kinds of problems.
Addendum: Chris Blattman comments.
Be a travel parasite
2. Be a travel parasite.
No, this does not mean mooching off friends or family. What it means is learning how to use guidebooks to your advantage. While they are useful to have for the history of a place or the basics in itinerary planning, I rarely look to guidebooks for the name of a hostel or restaurant. Instead, I look at their recommendations as things to piggyback on. Lonely Planet recommends a place as “Our Pick”? Great, I go there, and walk two doors down to stay nearby. Rough Guides says “this is the best restaurant in town”? Perfect! Almost every one of those recommendations will spawn another restaurant within walking distance. Industrious entrepreneurs quickly learn that when these books recommend a place, they quickly get overcrowded and prices go up. The solution: they open a place right next door or nearby to handle the spillover. Without fail, those are the places that are cheaper, more delicious and not jaded. Being a parasite isn’t always a bad thing. (Having parasites? Not so much.)
There is much more at the link, all related to travel insights.
Assorted links
2. John Cochrane on the mandate, again.
3. Peter Marber’s critique of economic statistics.
4. A jobless recovery means the routine jobs never come back.
5. China markets in everything.
6. The Minerva Project, on-line higher ed., Summers chairs the advisory board.
The King’s Gambit story turns out to be false.
Someday, the unraveling of these problems will be blamed on austerity
…over the past ten years, France has lost competitiveness. In 2000 hourly labour costs in France were 8% lower than those in Germany, its main trading partner; today, they are 10% higher (see chart 2). French exports have stagnated while Germany’s have boomed. An employer today pays twice as much in social charges in France as he does in Germany. France’s unemployment rate is 10% next to 5.8% in Germany—and has not dipped below 7% for nearly 30 years.
…How can the country justify its massive public administration—a millefeuille of communes, departments, regions and the central state—which employs 90 civil servants per 1,000 population, compared with 50 in Germany? How can France lighten the tax burden, including payroll social charges, so as to encourage entrepreneurship and job creation?
Here is more. Some of the French, by the way, blame the problem on insufficiently low tax rates. Here is an article on Europe, France, and the working poor. In the periphery, of course, the problems are more likely selective regulation, rent-seeking, lack of trust, and sclerotic privileges, rather than the level of expenditure per se, topped off with the unworkable (and ultimately fiscal) commitment to peg the value of their bank deposits in line with those of Germany.
Mexico fact of the day
This year, though, the peso is up 9.3% against the dollar, making it one of the top-performing emerging-market currencies…
There is more here. I am of the unfashionable opinion that Mexico is actually winning the war against the drug lords.
Inflation fear and privileged service sector jobs
The greater the number of protected service sector jobs in an economy, the more likely those citizens will oppose inflation. Inflation brings the potential to lower real wages, possibly for good. How many insiders, if they had to renegotiate their current deals, would do just as well?
Get the picture?
This is a neglected cost of protected service sector jobs, namely that the economy’s central bank will face strong political pressures not to inflate even when a looser monetary policy would be welfare-improving.
Western Europe most of all. If you see that the young people in an economy aren’t doing nearly as well as the privileged insiders, you should suspect that the privileged insiders fear renegotiation and thus fear inflation.
Inflation is easier to sustain in rapidly growing economies where people are moving up various ladders quickly.
Perhaps we have lost the ability and the political economy to support inflation when needed.
True, false, or uncertain?
From Susan Sontag:
On Intelligence
I don’t care about someone being intelligent; any situation between people, when they are really human with each other, produces “intelligence.”
There is also this bit:
Why I Write
There is no one right way to experience what I’ve written.
I write — and talk — in order to find out what I think.
But that doesn’t mean “I” “really” “think” that. It only means that is my-thought-when-writing (or when- talking). If I’d written another day, or in another conversation, “I” might have “thought” differently.
Here is more.
Assorted links
1. Blog on Tajik anecdotes and photos.
2. Acemoglu and Robinson on why Haiti is so poor.
3. Economics and evolutionary biology reading list, and Singapore whiskey.
4. How one man beat the casinos?
5. Is the King’s Gambit finally busted by computers? Fantastic story, recommended.
Young vs. old
Three of the top five symptoms searched for on Yahoo Mobile in January were early pregnancy, herpes and H.I.V. None of these symptoms showed up among the top searches on desktop computers, which are more likely to be used by older people.
The most popular symptom searches on PCs included gastroenteritis, heart attacks, gout and shingles, Yahoo said, adding that the encyclopedic medical symptoms checker on WebMD was the most popular site of its kind among PC users. On WebMD, the top symptoms searched for in January were muscle strain, gastroenteritis and irritable bowel syndrome.
…“I do health searches all the time,” said Brittany Lashley, 20, who is majoring in Chinese at the University of Maryland at College Park. She surfs the Web on her iPod Touch for food and drinks that she hopes will increase her energy level and help her stay awake and sharp for late-night studying.
The article is interesting throughout.
Bloomberg Business Week
I am learning that many people still do not know how good it has become. Every issue has a remarkable amount of substance. I am in the blogosphere and on Twitter quite frequently, and yet still a large number of the stories are news to me; that is hard to pull off these days. Many people had grown disenchanted with the old Business Week, but odds are you should be reading the new incarnation. It would make my list of the five essential periodicals/magazines. Let’s hope it continues, just don’t ask me what is their business plan. Make Bloomberg a more focal name to spur and maintain demand for the terminals?