One reason why Japan allows deflation
• Why do Japanese investors keep buying their own public sector debt, which is racing to 250% of GDP by 2015, twice the level that got Greece in trouble? Part of the explanation is what we call financial repression, where thegovernment puts pressure on domestic institutional investors, frequently through regulations. But much of the explanation is likely deflation, which creates acceptable real return to bonds, that are not taxed. The eventual JGB crisis must await 2015 or later, when demographics drive the country into an external balance that requires foreign borrowing, something that will not be possible at current yields.
The post offers good points on other topics too. Here is more on Japan’s future funding issues.
Assorted links
Technology and human rights
President Obama will issue an executive order Monday that will allow U.S. officials for the first time to impose sanctions against foreign nationals found to have used new technologies, from cellphone tracking to Internet monitoring, to help carry out grave human rights abuses…Although the order is designed to target companies and individuals assisting the governments of Iran and Syria, they said, future executive orders could name others aiding other countries through technology in crackdowns on dissent.
Here is more, and I thank a loyal MR reader for the pointer.
Podcast with Russ Roberts
About An Economist Gets Lunch, you will find it here.
Does Not Compute
Steven Salzberg from Forbes is right about this:
Wow, no one saw this coming. The University of Florida announced this past week that it was dropping its computer science department, which will allow it to save about $1.7 million. The school is eliminating all funding for teaching assistants in computer science, cutting the graduate and research programs entirely, and moving the tattered remnants into other departments.
Let’s get this straight: in the midst of a technology revolution, with a shortage of engineers and computer scientists, UF decides to cut computer science completely?
Salzberg, however, is critical of Florida Governor Rick Scott for cutting university funding overall (Scott famously decried anthropology degrees in favor of STEM). Salzberg also finds it “unintentionally ironic” that in announcing a new polytechnic just two day ago Gov. Scott said:
“At a time when the number of graduates of Florida’s universities in the STEM [science, technology, engineering, and mathematics] fields is not projected to meet workforce needs, the establishment of Florida Polytechnic University will help us move the needle in the right direction.”
Rather than ironic I see this as illustrating how university incentives are not always aligned with those of the Governor or with the social interest. As Governor, Scott can more easily direct new funds towards STEM than tell entrenched university bureaucracies how to reallocate funds among existing programs. In particular Scott wants to promote STEM and computer science graduates for the externalities they produce but universities don’t get paid for producing externalities they get paid based on student enrollment. Thus, this is not surprising:
…Meanwhile, the athletic budget for the current year is $99 million, an increase of more than $2 million from last year. The increase alone would more than offset the savings supposedly gained by cutting computer science.
Two gloomy views on consumer tech
Via @ModeledBehavior, one is by Alexis Madrigal and from Atlantic Monthly, excerpt:
On the mobile side, we’re working with almost the exact same toolset that we had on the 2007 iPhone, i.e. audio inputs, audio outputs, a camera, a GPS, an accelerometer, Bluetooth, and a touchscreen. That’s the palette that everyone has been working with — and I hate to say it, but we’re at the end of the line. The screen’s gotten better, but when’s the last time you saw an iPhone app do something that made you go, “Whoa! I didn’t know that was possible!?”
Those are high (and somewhat impatient) standards. How about this line?:
…I think we’re into the mobile social fin de siècle.
What about making Siri better, or real on-line education through an iPad? Nonetheless the article makes many excellent points, for instance about the increasing obsession with filling out niches, or this point:
I return to Jeff Hammerbacher’s awesome line about developers these days: “The best minds of my generation are thinking about how to make people click ads.”
Via Noah Smith, here is Ashlee Vance from Bloomberg, and here is his subtitle:
Tech bubbles happen, but we usually gain from the innovation left behind. This one—driven by social networking—could leave us empty-handed
And this bit:
“My fear is that Silicon Valley has become more like Hollywood,” says Glenn Kelman, chief executive officer of online real estate brokerage Redfin, who has been a software executive for 20 years. “An entertainment-oriented, hit-driven business that doesn’t fundamentally increase American competitiveness.”
In relative terms, those two make me look like a tech optimist, not just about the more distant future (which has always been the case), but about the present as well.
The African cake that cries when you eat it
Assorted links
1. Will cellphones be able to see through walls, and other barriers too? Via Chris F. Masse.
2. Update on the elite Grayling humanities school.
3. The Guardian on An Economist Gets Lunch, by Oliver Burkeman, “This column will change your life,” and a lengthy review from Kyle Smith at The New York Post; “Cowen’s special sauce is rationality, which is why this may be the first food book I have ever made it through.”
5. The violence of Montreal snow removal, and replicating three years’ worth of articles in psychology journals, and one economist’s guide to politics in China.
Scott Sumner, public choice, and Karl Polanyi all meet up
Through Interfluidity, where else? Here is one bit:
Consider NGDP targeting. Under this policy rule, Treasury securities would become risk assets, whose real return would be geared to the health of the economy. (NGDP path targeting implies that shortfalls in real growth must be matched by increases in inflation.) Treasuries become low-beta index funds, diversified claims on the real production. Nominal yields would be more stable, but the real value of a future payment becomes as uncertain and volatile as the business cycle.
Read the whole thing. In American politics, old people usually get their way. In Western Europe, those governments have been obsessed with protecting insider interests for decades and they are not suddenly swept up with an enthusiasm for free market economics. The problem isn’t “the Austerians”; do you really think that Pete Boettke is in charge?
The African Growth Miracle?
I had not previously read this 2009 paper by Alwyn Young (pdf):
Measures of real consumption based upon the ownership of durable goods, the quality of housing, the health and mortality of children, the education of youth and the allocation of female time in the household indicate that sub-Saharan living standards have, for the past two decades, been growing in excess of 3 percent per annum, i.e. more than three times the rate indicated in international data sets.
National income statistics, which in this context are untrustworthy, indicate a growth rate of only about one percent. Contra Young, here is a much less positive perspective, excerpt:
Yet this is nothing like the required economic advancement built around an actual or dominant “middle-class” milieu as commonly and quite wrongly suggested.
Africa’s burgeoning demography will challenge this future. Subsistence economies remain its anchors, and the alleged “demographic dividend”, that some blithely portray as a “driver”, will mostly transform into one of rising unemployment and growing informalisation.
Those who observe the lack of significant gains in African agricultural productivity often prefer the negative interpretation. Too many of the observed progress seems to come from mining wealth. In a recent short essay, Michael Lipton sums it up:
1. Stop kidding ourselves. (a) Faster GDP growth in Africa since 2000 is mainly a mining boom, with dubious benefits. Staples yields (and labour productivity) have not reversed the dismal trends that Peter Timmer diagnosed two decades ago: big, credible rises are seen in only a few African countries (e.g. Rwanda, Ghana). The populous ones (Ethiopia, Nigeria, maybe Kenya, above all DR Congo) tell a sad tale.
That we don’t know who is right is perhaps the most interesting fact of all.
Assorted links
Veronique de Rugy on *An Economist Gets Lunch*
On the (superior) French parental approach to children and food:
Growing up, my parents would mostly ignore my wishes when it came to food — or anything else for that matter. I wasn’t forced to eat blue cheese at every meal, but I had to try it once in a while, like I had to try every new food they put on the table. My mom fixed one meal for the whole family and if you didn’t like it, well, tough luck because that’s what was on the menu that night. As a result, my sister and I ate very diverse meals (most of them without particular enjoyment). This practice may not guarantee that children will grow into adults who can eat anything but it certainly makes it easier for parents (Having tried both ways with my children, I can confirm that point too!).
And in summary:
Finally, I can imagine that this book will annoy a serious portion of the “foodie” community as, in the end, I read it as an awesome statement about the democratization of great food, not to mention a serious exercise in debunking the idea that high-quality food is reserved for a rare elite willing to invest lots of money in eating.
There is more here.
Tabarrok on the Alyona Show (“Debtors’ Prisons”)
I believe it was Brad DeLong who once said that people who can look into the camera and emote as if they are talking to a person will one day rule the world. It’s a very unnatural thing but ironically it makes you look much more natural on television (when you look at the person it looks as if you are not looking the viewer in the eye and worst of all is the shifty-eyed switch between looking at the camera and the person or their image which makes you look untrustworthy). I am getting the knack but still have other tics to work on.
Interview below, here is my original post.
*The Occupy Handbook*
I have an essay in that book co-authored with Veronique de Rugy. Other contributors include Paul Krugman, Robin Wells, Michael Lewis, David Graeber, Peter Diamond, Emmanuel Saez, Ariel Dorfman, Barbara Ehrenreich, Jeff Sachs, and Nouriel Roubini, among others.
Our essay is an…outlier…in the volume. Here is one bit:
Wall Street has contributed to some very real problems, but the core issues for poor Americans are often health care, education, and the cost of renting an apartment of buying a house. The best way to improve living standards and increase options for future success is to move toward greater competition and accountability in each of those areas, areas that usually have little to do with the financial sector per se.
Our goal is to propose an alternative vision for what OWS should focus on. You can buy the book here.
How to get stuff done
This is a good discussion, I agree with most of it, for most people. Here is one bit:
The hardest part is often just starting. I’ve found that it’s especially hard for me to start when a task is difficult or complex. The more importance and weight a certain activity has in my life or business, the more I seem to put off starting.
However, if I can just get moving on it, even for a few minutes, it tends to get easier.
Because I know this about myself, rather than setting the intention to finish something, I resolve myself to start. The more often I start, the easier things get finished. Overcoming that first bit of inertia is the biggest challenge (just like getting started on a run, or the first push of getting a car moving).
Once things are moving, momentum is on your side.
That is from Jonathan Mead, hat tip goes to Anya Kamenetz. You also can enter “time management” into the MR search function, and then scroll down a bit.