Assorted links
1. Black widow males prefer well-fed mates.
2. In which areas has consumer spending gone up since the recession?
3. Pregnancy envy and the death tax (pdf, strange but interesting essay by Dalton Conley).
4. Does P = NP (or not) matter for market efficiency? (video talk and linked paper)
5. Kenneth Rogoff on what to do.
6. An epistemic defense of the blogosphere (gated).
Bus Deregulation in Germany
In order to protect the railroads, inter-city bus service has been basically illegal in Germany since the 1930s.
NYTimes: “It’s an anachronism,” said Roderick Donker van Heel, general manager of Deutsche Touring, which offers bus service from Frankfurt and other cities to foreign destinations, but is usually not even allowed to drop off passengers within Germany.
The anti-bus law is also a reminder that, despite steady changes over the last decade, barriers to free enterprise remain in Europe. Germany and other countries still shield certain professions and industries from new competitors with thickets of regulation.
“Deutsche Bahn can do whatever it wants,” Mr. Donker van Heel said, referring to the state-owned railroad. “The airlines can do what they want.” But when a bus company wants to offer intercity service, “the answer is no. And we’re in the year 2010.”
A court-case and now a new law, however, mean that buses are to be allowed.
The U.S. also protected its railroads for some forty years by regulating airlines and trucking. There are some efficiency reasons why one might want to protect a network industry, although a straightforward subsidy is preferable to regulation of competitors, but the capture theory seems to fits the facts better, especially for railroads.
We still subsidize railroads in the U.S. and talk about subsidizing high-speed railroads even more, meanwhile bus travel is expanding and modernizing. Randal O’Toole covers some issues:
Intercity buses carry at least 50 percent more passenger miles than Amtrak in Amtrak’s showcase Northeast Corridor. They do so with almost no subsidies and at fares that are about a third of Amtrak’s regular train fares and little more than 10 percent of Amtrak’s high-speed Acela fares. Intercity buses are safe and environmentally friendly, suffering almost 80 percent fewer fatalities per billion passenger miles than Amtrak and using 60 percent less energy per passenger mile than Amtrak.
Today, in fact, I am blogging from a bus. I appreciate the on-board wireless and the fact that on entering the bus I was neither searched, groped nor scanned.
Hat tip: Greg Roscetti.
Which intellectuals have influence?
Ben Casnocha suggested to me that I have harsh standards. I don’t mean “influencing lots of other minds,” I mean changing the world. Here are a few intellectuals who have had real influence:
1. Jane Jacobs: City planners heed her strictures in many different locales, sometimes too much.
2. Rachel Carson, and numerous environmentalists: Obvious.
3. Milton Friedman: He inspired market-oriented reformers around the world, eased the way to floating exchange rates, helped legitimize early derivatives, and focused attention on monetary policy and away from fiscal policy, among other achievements.
What about today?
1. Peter Singer: Many fewer people eat meat and he has given the animal rights movement greater intellectual credibility.
2. Muhammad Yunnus: He popularized micro-credit and spread the notion to many countries, even though he is by no means its inventor.
3. Richard Posner: Many more judges use economic concepts when issuing judgments or writing up opinions.
Most of the people in this category have spent a big chunk of their lives pushing a single, fairly specific issue or method. You could add Bernanke (a special case, but still a yes), Charles Murray on poverty, and Germaine Greer. Art Laffer maybe. Friedman is a throwback to the time when generalists could be quite influential.
Who hasn’t had much influence over events? I would cite Jared Diamond, Richard Dawkins, Slavoj Žižek, Christopher Hitchens, Paul Krugman, Tony Judt, Noam Chomsky, Francis Fukuyama, Charles Taylor, Steven Pinker, Naomi Klein, and Niall Ferguson, among many others including virtually all economists.
Perhaps these individuals will have long-run influence on people’s broader views, and thus on longer-run events, but I wonder. Not everything feeds into a long and powerful stream, and every now and then there is a reset. We do not know, but we do know that some very focused individuals have had real influence.
I would put Esther Duflo, Jeffrey Sachs, Paul Romer, and Jacob Hacker (public option) in the “still have a good chance to have a big influence” category.
There is also the “futile crusaders” category, for instance Thomas Friedman for pushing for a centrist movement for green energy and Larry Lessig for IP reform and campaign finance reform, although of course subsequent events could upgrade them. We may well end up with green energy and IP reform but more likely as the result of technologies and market prices, rather than from successful intellectual battles.
Overall it is very hard to have much influence.
Why are bank stocks falling so rapidly?
Bank of America, the nation’s largest bank by assets, plunged 20 percent and Citigroup slid 16 percent, leading the KBW Bank Index (BKX) down 11 percent. It was the worst showing for the 24-company benchmark since April 20, 2009, when Bank of America told investors it was putting aside more money to cover a growing pool of uncollectible loans.
There is more here, and you can think of that price change as showing much higher tail risk. LinkedIn fell twenty percent (revenues are connected to recruiting), and Asian markets continue to fall. Treasury securities are stockpiled there, plus the general patina of American power and influence probably benefits Asia more than any other region. That’s the tragedy of this downgrade — the negative shock to American power and influence effect, not any enhanced probability of default. The CDS prices support that interpretation, but don’t neglect the broader geopolitical ramifications. Marketing and signaling really matter, and this remains a very definite step away from the idea of having another American Century. Contrary to Atrios, whether we like it or not, a lot of people — mostly not idiots — really do care what S&P thinks. I would have to put his quotation down as the least prophetic sentence of the year. Further equity price declines seem on the way.
The status of scientists
When asked to name a scientist, Americans are stumped. In one recent survey, the top choice, at 47 percent, was Einstein, who has been dead since 1955, and the next, at 23 percent, was “I don’t know.” In another survey, only 4 percent of respondents could name a living scientist.
Here is more.
Very good sentences
…in the wake of the weekend’s downgrade, we need them to govern as though that final victory might never quite arrive.
That is from Ross Douthat, here is more.
Assorted links
1. Can a woman lobby a guy she has already rejected?
2. The Baltimore Poe house might be closing.
3. What should Obama have done in 2009?
4. Are the Chinese liberals in decline? (link now fixed)
5. Scott Adams: “A lack of creativity always looks like some other problem. If no one invents the next great thing, it will seem as if the problem
is tax rates or government red tape or whatever we’re blaming this week.”
How to increase your reader downloads
From David McKenzie, at the World Bank, there is much more here. He also finds, as I had suspected, that a very small percentage of readers click through a link to read the abstract, maybe one or two percent.
The pithy essence
…as long as you have bad debt that is priced at par, you have an active crisis. To the extent that the ECB is trying to keep the price of weak-country debt close to par, it is not offering a credible solution. Uncertainty will prevail in the markets.
From Arnold Kling. You will note, of course, that this differs from Krugman’s multiple equilibria model.
The tipping point
Suppose that of the N member-states, F (e.g. 3, as is the case at the moment of writing) have ‘fallen’ out of the money markets and into the EFSF’s bosom. The EFSF must then finance their debts entirely until the Crisis ends. To do so it must seek loan guarantees from the N-F still solvent member-states. It is extremely easy to show that the contribution (as a portion of their GDP) of the N-F solvent member-states to the ‘fallen’ member-states, let’s call it αF (where the subscript indicates the number of ‘fallen’ states that must be supported) equals some newfangled debt-to-GDP ratio: The numerator is the total debt of the ‘fallen’ and the denominator is the total GDP of the still solvent member-states. (See here for a brief proof.) The reason I choose to call αF a toxic ratio is that, with every member-state that ‘falls’, this ratio rises even if GDP and debts remain the same. Moreover, every new casualty boosts the toxic ratio αF and guarantees that yet another member-state will join the rank of the ‘fallen’. And as if this were not enough, nothing can stop this process while everything else remains the same. Including the potential size of the EFSF.
Here is more. Thus enter the ECB and its bond-buying. Do Italy and Spain now count as belonging to “the fallen”? Or have they just returned from “the fallen”? Or maybe a bit of both?
The ECB bond-buying plan
“The ECB is once again intervening as the last line of defense,” said Jacques Cailloux, chief European economist at Royal Bank of Scotland in London. “The intervention will put a halt to the bond market crash that some member states faced. However, the ECB is now in for the long haul and will potentially have to buy up to half of the Italian and Spanish traded debt, the biggest risk-pulling effort ever engineered in Europe.”
Here is the article. This analysis by Paul Krugman probably won’t be beaten, and more here.
Arguably it’s now a question of who stares down whom. If you do not doubt German resolve, bet on the ECB and lend money to Italy fairly cheaply. If you fear that Italy suffers from its own version of the great stagnation, and doesn’t have good enough political institutions to make decent reforms (and now the hammer of the private capital markets is partially removed), maybe the ECB will cry uncle at some point and give up. Knowing that, confidence will not return and the speculators will continue to pounce. We’ll see soon enough what the markets think.
As I am posting this, Dow futures are off about 250 points, although that bad news could be traced to numerous causes.
Speculative attack games can be hard to predict for the marginal cases (personally I am skeptical), but the general uncertainty resulting from the U.S. debt fight, and the resultant “flight to safety” isn’t helping matters. It’s another way in which our fiscal nonsense brings some very real costs, and quickly. Have you seen that France might suffer a downgrade from AAA? In the abstract, that makes sense. Why should they be safer than the US? Again, our stupidity makes the European mess harder to resolve by shifting the focal equilibrium from a good outcome to a bad, scary outcome.
Not ready for the rain, in northern Chile
The past weekend’s precipitation blocked highways, forced the cancellation of a top Chilean football match and damaged the homes of 1,800 people, said Vicente Nunez, chief of the Interior Ministry’s national emergency office.
A similarly wet stretch in early July dumped four years’ worth of rain in one day on coastal Antofogasta. That was just a quarter of an inch (more than 6.3 millimeters) but it was still enough to cause collapsed or leaking roofs in homes and businesses that usually have no reason to protect themselves against even minimal precipitation.
…Average annual rainfall in the northern city of Arica is so low that it would take 50 years to accumulate an inch. This July, the city was swamped twice by what would be considered mild showers almost anywhere else on the planet. So far this year, Arica has had 0.13 inch (3.4 millimeters) of rain, more than six times its yearly average during 30 years of record keeping.
Here is more, interesting throughout. Of course it reminds me of David Friedman’s famous piece.
Assorted links
1. Future behavior is seen as more intentional than past behavior.
2. In what field are blind mathematicians most likely to work?
3. Lessons for gift-giving: give cash and honor requests.
4. The silent bank run in Greece, continued, some amazing stories.
5. Via Chris F. Masse, the world’s safest asset class (and it is French, some explanation here).
6. Chileans throw fruit and small stones at the rescued miners.
7. Excellent Ezekiel Emanuel piece on cancer drugs and price controls.
The Coming Education Revolution
From Metafilter:
Stanford’s ‘Introduction to Artificial Intelligence’ course will be offered free to anyone online this fall. The course will be taught by SebastianThrun (Stanford) and PeterNorvig (Google, Director of Research), who expect to deal with the historically large course size using tools like Google Moderator.
There will two 75 min lectures per week, weekly graded homework assignments and quizzes, and the course is expected to require roughly 10 hours per week. Over 10,000 students have already signed up.
In 2003, I argued that professors were becoming obsolete, giving a 10 to 20 year time for a big move to online education. Later, I pointed out that the market was moving towards superstar teachers, who teach hundreds at a time or even thousands online. Today, we have the Khan Academy, a huge increase in online education, electronic textbooks and peer grading systems and highly successful superstar teachers with Michael Sandel and his popular course Justice, serving as example number one.
One of the last remaining items holding back online education is a credible system to credential and compare student achievement across universities. Arnold Kling has that covered with a new business model.
For superstars and strong researchers, life in the ivory tower remains good. But for most teachers the cushy life is gone; tenure is just a dream for a majority of university teachers, salaries are low and teaching requirements have risen.
As in other fields what we are seeing is an increase in teaching inequality, at the top are high-salary superstars surrounded by apprentices who work long hours at low pay for a lottery ticket that for most will not payoff and at the bottom are lots of mid-skill adjuncts who do the drudge work of teaching remedial English and math.
Addendum: Tim Worstall points to the UK’s University of London as a model for the future.
State-contingent markets in at least a few things
MF Global Holdings Ltd. (MF) took the cult of the Wall Street chief executive officer to a new level with its sale of bonds that pay a higher rate if Chairman and CEO Jon Corzine quits to take a job from the U.S. president.
The futures broker sold $325 million of five-year unsecured notes, the company said today in a statement. The notes will pay an extra percentage point of interest if Corzine is named to a federal post and confirmed by the Senate before July 2013, New York-based MF Global said yesterday in a regulatory filing.
Here is more.