*A Convergence of Civilizations*
That’s the new book by Youssef Courbage and Emmanuel Todd and the subtitle is The Transformation of Muslim Societies Around the World. I read it as offering three major messages: a) there is no unique pattern for Muslim demographic evolution, b) there is more civilizational convergence than divergence, and c) the demographic data we observe explain a good deal about various Muslim countries. Here are some specific points:
1. In 1998-1999 about 55 percent of married women in Burkina Faso lived in polygamous relationships. In the Muslim parts of Nigeria, rates of polygamy can run forty to fifty percent, as opposed to about thirty percent in the Christian parts of Nigeria.
2. Demographically, Iran is very much a Western country with a 2.08 fertility rate, and the authors strongly hint that Iran has a reasonable chance of modernizing as Turkey has; the authors also worry that Turkey has not made a complete demographic transition and thus is vulnerable to backsliding. In general the authors seem to believe that the modernizing properties of Shiism are underrated.
3. Less than five percent of Uzbek or Tajik women are unmarried at age thirty. In Morocco it is 41 percent unmarried at age thirty, in Tunisia it is 54 percent, 50 percent in Lebanon, and a staggering 58 percent unmarried at age thirty in Algeria.
4. Palestinian birth rates are not as high as they are often made out to be: “If one takes Israel and the occupied territories together, one can grasp the absurdity of the demographic confrontations: The high fertility rate of Israeli Arabs is an internal threat to the Jewish state, whereas the high fertility rate of the Jewish settlers threatens Palestinian predominance in the West Bank.” (p.67)
5. In Shiite Azerbaijan, there are almost twice as many abortions per woman as live births, 3.2 to 1.7.
6. Among the Muslims of Europe, the Kosovars are arguably the least religious but also the most demographically conservative.
7. The Muslim Malays seem to have combined high birth rates with relatively high status for women.
Speculative throughout, as they say, but always interesting. Here is one short but accurate review. For the original pointer to the book I thank Chris F. Masse. Chris also points us to the DSK prediction market.
Vance isn’t sure if this article is a parody or not
Emotions are running high in the Northbrae area of Berkeley, and the friendly spirit of the neighborhood is at stake, according to a number of small merchants who are afraid they will not survive in the wake of what is being perceived as aggressive marketing strategies at Monterey Market.
Several small businesses say the owners of Monterey Market have begun to deliberately stock items that they specialize in — including certain cheeses, wine and flowers — and they are selling them at predatory prices, which threatens the local merchants’ livelihoods.
A group of Northbrae neighbors has distributed a hand-out in support of the small local merchants in which it criticizes Monterey’s approach. ”We are making a moral and ethical appeal,” said Tom Meyer, speaking for the group. Signatories on the hand-out include Monterey Fish, Gioa Pizzeria, Hopkins Launderette, and Storey Framing. (See the hand-out here.)
…Meyer said that recently the group had been approached by a representative of Monterey Market to set up a meeting. “That discussion will determine where we go from here,” he said.
Asked what he expected from the Market, Meyer said: “They should talk to their fellow merchants about how they could all flourish.”
The story — if that’s what it is and I believe it is — is here. The caption on the photo reads: “Shirley Ng, owner of Country Cheese Coffee Market, says Monterey Market is under-cutting her prices.”
Kasparov on meta-rationality, the longer article is on Bobby Fischer
Many strong chess players go on to successful careers as currency and stock traders, so I suppose there is considerable crossover in the pattern-matching and intuitive calculation skills required. But the aptitude for playing chess is nothing more than that. My argument has always been that what you learn from using the skills you have—analyzing your strengths and weaknesses—is far more important. If you can program yourself to learn from your experiences by assiduously reviewing what worked and what did not, and why, success in chess can be very valuable indeed. In this way, the game has taught me a great deal about my own decision-making processes that is applicable in other areas, but that effort has little to do with natural gifts.
Read the whole thing. A related point is that chess players cannot make many excuses when they lose. “The sun got in my eyes” doesn’t cut it.
China facts of the day
Did you know that the president of China is a scientist? President Hu Jintao was trained as a hydraulic engineer. Likewise his Premier, Wen Jiabao, is a geomechanical engineer. In fact, 8 out of China’s top 9 government officials are scientists.
Here is more, noting once again that a link does not constitute an endorsement. Hat tip goes to Science Comedian.
Words of wisdom
Basically when you ask questions where the left-wing answer is also the one supported by economics, suddenly left-wing people have a better understanding of economics. But when you ask the other set of questions, it comes out the other way. Basically, there’s a lot of confirmation bias out there. This is why I think people who teach economics ought to think harder about their choice of examples when teaching.
That is Matt Yglesias (check out the interesting graph), referring to this paper by Daniel Klein and Zeljka Buturovic.
*The Great Stagnation* (Retrogression)
June 9 it is coming out in a physical edition, hard cover. Amazon pre-order is here. Barnes&Noble pre-order is here. The text is exactly the same as the eBook edition, although I made a minor addition to one footnote. If you’ve read Borges’s Pierre Menard, you’ll know why I regard the electronic edition as “the real book” and this volume as a kind of postmodern satire. Still, many people demanded a physical edition, sometimes for classroom use, and so now there is one.
“Google plays the yield curve”
Here is Greg Mankiw’s very interesting post, but with an open comments section:
I was fascinated a story in today’s Wall Street Journal. Apparently, Google is sitting on $37 billion in cash, but nonetheless decided to sell $3 billion worth of bonds. Why? To take advantage of low interest rates.
It is like reverse maturity transformation. The banking system borrows short and lends long. Google is borrowing long and lending short. (Or maybe I should call it reverse quantitative easing, as Google is also doing exactly the opposite of what the Fed has been doing.)
Does this make sense for Google? I have no idea, and I am ready to concede that those guys are a lot smarter (and financially successful) than I am. But there is reason to be skeptical.
The chart above shows the spread between the ten-year Treasury bond and the three-month Treasury bill. The yield spread is now high by historical standards. The empirical literature on the expectations theory of the term structure (in which I have sometimes played) suggests that this is a good time to borrow short and lend long–the opposite of what Google is doing.
Maybe this time is different, and past empirical regularities will not hold going forward. But ponder this question: If you had a friend with a paid-up house, would you suggest that he now take out a long-term mortgage in order to deposit the proceeds in a money-market fund? If not, does it make sense for Google to be doing much the same thing?
The usual explanation for this kind of apparently strange financial behavior is that shareholders wish to force the managers into accepting the scrutiny of outside capital markets; see Easterbrook 1984. That seems less plausible in the case of Google, where concentrated delegated monitoring by major shareholders remains strong. An alternative explanation is that Google has a very high option value for the cash, which more or less implies they see a lot of acquisition and investment opportunities in their not so distant future. A lot.
Assorted links
1. One way of measuring structural shifts.
2. The culture that is German, they sold condoms in the Bundestag (in German), though now no more.
3. Debt ceiling games throughout the ages.
4. Coverage from Guinea (in French); the maid is described as a nice person. And “His most recent book, Left in Dark Times: A Stand Against the New Barbarism, discusses political and cultural affairs as an ongoing battle against the inhumane.” The Germans give the most detail.
5. The inefficiency of urban sorting?
6. Lengthy 2005 interview with Milton Friedman at 93 (Charlie Rose). Fascinating.
The offshore bias in U.S. manufacturing
In the newest Journal of Economic Perspectives, Susan Houseman, Christopher Kurz, Paul Lengermann and Benjamin Mandel report:
In this paper, we show that the substitution of imported for domestically produced goods and services—often known as offshoring—can lead to overestimates of U.S. productivity growth and value added. We explore how the measurement of productivity and value added in manufacturing has been affected by the dramatic rise in imports of manufactured goods, which more than doubled from 1997 to 2007. We argue that, analogous to the widely discussed problem of outlet substitution bias in the literature on the Consumer Price Index, the price declines associated with the shift to low-cost foreign suppliers are generally not captured in existing price indexes. Just as the CPI fails to capture fully the lower prices for consumers due to the entry and expansion of big-box retailers like Wal-Mart, import price indexes and the intermediate input price indexes based on them do not capture the price drops associated with a shift to new low-cost suppliers in China and other developing countries. As a result, the real growth of imported inputs has been understated. And if input growth is understated, it follows that the growth in multifactor productivity and real value added in the manufacturing sector have been overstated. We estimate that average annual multifactor productivity growth in manufacturing was overstated by 0.1 to 0.2 percentage points and real value added growth by 0.2 to 0.5 percentage points from 1997 to 2007. Moreover, this bias may have accounted for a fifth to a half of the growth in real value added in manufacturing output excluding the computer and electronics industry.
In other words, Michael Mandel was right. An ungated version is here. In terms of income distribution, think of these rents as going to those individuals and institutions which are good at managing international supply chains. That’s a relatively small number of people. A lot of the offshoring is enabled by an innovation — the internet — which really does boost productivity but not in a way which much helps the median U.S. wage.
New World Bank blog on project impact evaluations
Assorted links
A few thoughts on the debt ceiling
This topic is so laden with “us vs. them” thinking that I am loathe to approach it. Still, here are a few thoughts:
1. There is plenty in the federal budget which can be cut and should be cut, starting with farm subsidies but extending considerably further.
2. In blackmailing President Obama (and arguably the Senate too), the House Republicans are cowards. They want him to take the heat for the spending cuts.
3. In considering the blackmail to be blackmail, the Obama administration has its share of cowards. “You are forcing us to propose something we believe in” is not that serious a negative charge, even if the motives of the forcers are ignoble. That said, the Obama administration is probably not going to propose something it believes in, which makes them ignoble too.
4. “Blackmail” is also known as “checks and balances” and it does not, normatively speaking, require an electoral mandate. That said, arguably the House Republicans do have an electoral mandate for the idea of “doing something about the crummy budget,” but do not have a mandate for particular cuts which might be prompted. Which of these is the “fact of the matter” is a moot point.
5. In my view the consequences of “funny debt ceiling outcomes” could be very, very bad. Various crude causal theories, or underspecified bargaining theory axioms, will be used to apportion this blame to one side or the other. The naive causal perspective would seem to apportion most of the blame for the chance of catastrophe to the Republicans.
6. By refusing to raise income tax rates on the non-wealthy, or to propose some comparably unpopular reforms, the Obama administration is somewhat undoing the normative relevance of the naive causal perspective here. The Obama administration is also stonewalling on (required) further fiscal reforms to Medicare, to better use the issue against the Republicans.
7. Do we take market prices seriously? Since Treasury rates are still low, low, low, arguably we can infer that the market does not think the Republican stance is so catastrophic. Paul Krugman does not take a consistent position on the relevance of low rates. They are allowed to indicate that the U.S. government should spend more, but not allowed to indicate that we should diminish the blame to be leveled at Republicans. One cannot have it both ways.
Addendum: Megan McArdle comments.
Hemp for Victory
During World War II hemp made a brief comeback as an American crop due to shortages of rope-making stock from other countries. Hemp for Victory is a 1942 US Department of Agriculture film that encourages farmers to grow hemp. It opens with a discussion of the ancient history of hemp (canvas derives from cannabis) and then moves into how it is being farmed in Kentucky and other US states to help in the war effort.
The film has an interesting history. For decades the USDA and the Library of Congress denied that such a thing had ever been made but in 1976 Rastafarians delivered a copy to a reporter in Florida.
http://www.youtube.com/watch?v=W0xHCkOnn-A
Facts about health care coverage
Among workers who provide hands-on care to nursing home residents, one in four has no health insurance. Among those who provide care to people living at home, one in three is uninsured.
But here is the clincher:
The new health care law is supposed to fix the problem by guaranteeing access to affordable coverage for all. But many nursing homes and home care agencies, alarmed at the cost of providing health insurance to hundreds of thousands of health care workers, have started a lobbying effort seeking some kind of exemption or special treatment.
This is not a good sign for the future of the mandate. The full story is here.
Three (unrelated?) points about stagnation
I’ve been wondering about a few questions.
Internalizing externalities is a common theme in economics,and it’s also called capturing the value you create. Don’t economists believe this happens — and happens increasingly — all the time? Karl Smith writes (and you can find his caveat here):
TFP growth depends on the returns to innovation not being captured by the innovator. Otherwise it becomes a return to the factor of production rather than total factor productivity.
Does TFP tend to fall once it has been high for a while? Is falling TFP, following a technological breakthrough, a sign of the market’s ability to capture value and internalize externalities? And is this another reason why we might prefer imperfectly defined intellectual property rights?
The second question concerns the Industrial Revolution. There is a large cottage industry about the origins of “the rise of the West,” and so on. I am not disputing the particular causal claims made in this literature. Still, I wonder what is being explained. Arguably the potency of the technological platform of “powerful machines plus fossil fuels” was not well understood in advance. Ex post, that it led to the “rise of the modern world” was somewhat of a technological accident. In this sense, studies of the origins of the Industrial Revolution, analytically speaking, are explaining “the Industrial Revolution” (to some extent). But the “sense-reference distinction” matters here. These studies are not so much explaining “the rise of the modern world,” which is more of a technological accident than we might wish to think.
Third, there remains the issue of unmeasured gains in real wages. Let’s try a simple thought experiment. Say I’ve been at George Mason twenty years (much less since 1973) and my real wage had never gone up (not the case). But my Dean were to say to me: “Tyler, U.S. health care has some new procedures, when you’re 73 you’ll have stents, and now can surf the internet and watch reruns of Battlestar Galactica. We’ve treated you very well!” Such a claim would not pass the laugh test and few people would accept it as applied to their own employment relation. Yet many of those same people make this same argument in the aggregate. I still think that if measured real wages for a group (or individual) have not gone up very much, over a long period of time, something is wrong. Wrong with the Dean, wrong with me, whatever, but something is wrong. Who would have predicted in 1972 that measured male median wages were going to stagnate and even possibly fall? You should be shocked by this result and indeed I am.