David Brooks on Tolstoy
Tolstoy devoted himself to activism and spiritual improvement – and paid the mental price. After all, most historical leaders write pallid memoirs not because they are hiding the truth but because they’ve been engaged in an activity that makes it impossible for them to see it clearly. Activism is admirable, necessary and self-undermining – the more passionate, the more self-blinding.
Here is more. By the way, here is the Pope on padded pipes.
Assorted links
2. More from Henry on the political economy of Ireland, here and here.
3. Krugman should write a book on this (though it is simply wrong — and unnecessary — to claim that articles showing the potency of monetary policy were ever pushed out of the major journals. Somehow he cannot write correctly when the topic of real business cycle theory comes up.)
4. This is wrong (Obama, not Matt), an example of a dysfunctional management style (commenting on everything), and not an admission I would make as a relatively new but now gridlocked President, all in one.
5. America's two literary cultures?
der andere Schuh
NYTimes: Despite Germany’s economic growth, its banks are among Europe’s weakest. Moody’s, the ratings agency, ranks the average health of German banks below those of most other Western European countries as well as nations like Brazil, Jordan and Mexico.
In its annual financial stability report, the Bundesbank warned that German banks had increased their dependence on short-term financing, a profitable but risky practice…
Enlightened blogspam, part II
Kat sends me this link on CAPTCHA arbitrage.
Stephen Smith points our attention to some examples of quite good economics in blogspam. My example was here, and that comment attracted a lot of attention from subsequent spammers (some of that has since been erased). For instance Tiffany1837Jewelry (web site sadly now defunct) reported:
When Google crawls this page, it basically ignores the URL and any links in the the comment text. In order for the spammer to benefit, they have to persuade human readers to follow the link, so contributing meaningful content is perhaps the only way.
Not too shabby.
Savefuel noted:
a spam formed from the fusion of human and machine intelligence….maybe this is part of the evolution of spam. Not sure I am proud to part of that parentage.
The young Stephen Smith, by the way, is the author of the excellent, intelligent, and well-reasoned weblog marketurbanism.com. He tells me that he is looking for a job in journalism and/or think tank-related activities.
The war of politics and finance
There is talk of upping the euro bailout fund:
European Central Bank council member Axel Weber said governments can increase the size of the European Union-led bailout fund if necessary to restore confidence in the euro.
“Seven hundred and fifty billion should be enough to assure the markets,” Weber said at the German embassy in Paris late yesterday. “If not, it will have to be increased.”
The Spanish approach the same issues with another tone:
Spain has warned financial traders betting against its debt that they will lose money, in a defiant challenge to the markets which are driving Madrid’s cost of borrowing sharply higher.
José Luis RodrÃguez Zapatero, Spanish prime minister, on Friday ruled out any rescue package for the country even as the premiums demanded by investors to hold Spanish sovereign debt over that of Germany’s rose to euro-era highs.
You can find more detail at ElPais.com; most significantly it is a much bigger headline in the FT than in the Spanish paper.
In a nutshell, we’re watching the most pitched, highest-stakes, most determined battle between politics and finance which has been staged. I am expecting finance to win. It’s not just about PIGS and the future of the eurozone, it’s settling a very general question about the relative power of politics and finance. Either way, it is an event of momentous importance.
Department of Secondary Consequences
It is true that Irish mortgages are “recourse” – that is, you can’t just turn in the keys and walk away from a property as you can in many parts of the United States. On the other hand, Irish residents can leave the country – moving to Britain or the United States is a well-established tradition for many families. And how can an Irish lender enforce debts when someone has emigrated?
That's from Simon Johnson, interesting throughout.
Large-scale battles erupt in Rio
If American TV is too boring, you can watch here on Globo; some moments are quite dramatic.
For the pointer I thank Eduardo Pegurier.
Concerns about Spain
More federalistic than you might think, indeed more like the EU than you might think:
Another concern is that the central government’s cost-cutting zeal might not be matched by regional and local authorities, which accounted for 57 percent of public spending last year.
The full story is here.
Assorted links
1. The modified Out of Africa model, with an intermission.
2. New York Times Notable Book List.
3. Irish banks passed July 2010 stress tests; foreclosed homes in Spain to triple next year.
4. "Defending the undefendable": the Mafia.
5. Claims by Taleb.
6. How do interest rates (not) regulate lending in Austro-China.
7. Ireland's abandoned horses.
The Browser had especially good links today.
*Marketplace of the Gods*
The author is Larry Witham and the subtitle is How Economics Explains Religion. It's a good book, and my favorite passage was this:
[Larry] Iannaccone was born in Buffalo into a family of Italian immigrants. Earlier in the century, the family had broken from Catholicism to join a dissenting branch of the Jehovah's Witnesses, which itself had splintered off from the early Adventists. It was rich American church history, and young Iannaccone had a front-row seat on the sectarian religious experience for eighteen years of his life. Still, his father had a Columbia University Ph.D. in education. He was a "wandering academic," who went to jail as a conscientious objector, set up summer church camps, and taught at several universities. The family ended up at the University of California, Santa Barbara, and Laurence went off to Stanford to study mathematics. Then in 1977 he headed for Chicago, considering pure mathematics but not exactly enthused. Looking for alternatives, he had an interview with James Coleman, the noted sociologist. Coleman said that sociology was in utter disarray: "You should think in terms of economics," he advised. "Rational-choice economics."
How to encourage innovation?
Here is a new research paper:
We explore the relationship between attractiveness and risk taking in chess. We use a large international panel dataset on chess competitions which includes a control for the players’ skill in chess. This data is combined with results from a survey on an online labor market where participants were asked to rate the photos of 626 expert chess players according to attractiveness. Our results suggest that male chess players choose significantly riskier strategies when playing against an attractive female opponent, even though this does not improve their performance. Women’s strategies are not affected by the attractiveness of the opponent.
For the pointer I thank Bruce Bartlett.
Jordan markets in everything
At Sami Abu Hossein's cramped bookstore, the hundred or so book titles listed on a wall aren't bestsellers. They're banned.
And the cheery Abu Hossein can you get you any of them, sometimes in the few minutes it takes to sit down and drink a cup of thick-brewed Turkish coffee.
"There are three no-nos," the owner of Al Taliya Books explains with a big smile. "Sex, politics and religion. Unfortunately, that's all anyone ever wants to read about."
Hat tip goes to Steve Silberman.
Assorted links
Does the UK have the best health care institutions in the world?
Not in the present day time slice sense ("did he write "best," didn't he mean "worst"?"), but think of it over time. There is a big lock-in effect. The United States, for instance, cannot easily switch into another way of organizing its health care system. Obamacare is built upon current institutions and, for better or worse, does more to lock them in than to modify them.
Let's say you think an optimal mix is government-run clinics for the poor and reliance on the market for wealthier individuals, with people in the middle using some mix of the two. The government clinics enact redistribution at relatively low cost and this means you don't have to overly regulate the private market. People can take their chances with the market, or fall back on the cheaper but possibly inferior government service. Think of it as a public option at the level of provision rather than insurance.
Now that is not exactly the current regime in the United Kingdom. For one thing, the public sector is too large and the private alternatives are both too small and not free enough. But could you not imagine their institutions evolving into some version of this, mostly through growth of a less-regulated market sector?
Can you imagine the same evolution for the American system?
Addendum: Ezra discusses how the American system might evolve. And Austin Frakt comments.
Headlines to ponder
German business confidence soars
Those are two of the countries which have done the most to commit to subsequent decreases in government spending. It would be wrong, wrong, wrong to causally attribute their growth to those spending decreases. Still, fairly firm expectations of spending decreases don't exactly seem to be driving them under, and we do know that AD stimulation is all about credible expectations, not just the current flow of spending…