Los Angeles fact of the day
Not since the Beach Boys were in peach fuzz and crew cuts has it been so safe to live and play in the City of Angels. Believe it: you are more likely to be murdered in Columbus, Ohio, or Tulsa, Okla., than in the nation’s second most populous city.
Even Omaha, Nebraska now has a higher murder rate. Here is more.
Counterintuitive stories
This one is from Canada:
Muslim group moves to ban burka
"Considering the fact that women are in fact forbidden from wearing burkas in the grand mosque in Mecca, Islam's holiest site, it hardly makes sense that the practice should be permitted in Canada, she said."
The proposed ban comes on the heels of reports that Sheikh Mohamed Tantawi, dean of Egypt's al-Azhar university and the country's highest Muslim authority, is poised to issue a fatwa, or religious edict, against the garments.
Sentences to ponder
The insurance commissioners in 11 states are elected. Under the Supreme Court’s Citizens United decision, insurers will now be able to finance the election campaigns of those who will be their regulators. Among other powers these state insurance regulators have authority over rates and policy forms.
That's a letter to The New York Times.
Addendum: See the comment by Michael Yuri.
Markets in everything the culture that is Japan
Authentic Japan Airline outfits sell for as much as £11,000 on the black market.
The explanation for the high price is here. If you read the final sentence of the article you will see that this is perhaps one of the few prices that rises with deflation.
For the pointer I thank Ryan Briggs.
Assorted links
1. Incentives still matter on the supply side.
3. Bruce Bartlett criticizes spending caps.
4. Why is there no Jewish Narnia?
5. Will Yao Ming's baby be American and is that a betrayal?
6. Why did economic models fail to predict the medal count in this year's Olympics?
7. Some rules for graduate students; I mostly agree.
Paul Krugman on Chile
He writes (and check out the graph):
Actually, as you can see from the chart above, what happened was this: Chile had a huge economic crisis in the early 70s, which was, yes, partly due to Allende and the accompanying turmoil. Then the country experienced a recovery driven in large part by massive capital inflows, which mostly consisted of making up the lost ground. Then there was a huge crisis again in the early 1980s – part of the broader Latin debt crisis, but Chile was hit much worse than other major players. It wasn’t until the late 1980s, by which time the hard-line free-market policies had been considerably softened, that Chile finally moved definitively ahead of where it had been in the early 70s.
Krugman views this analysis as taking away some credit from Milton Friedman and the Chicago School. Given his recent writings on the Euro, it is odd what he doesn't mention, namely that the Chilean catastrophe of 1982-3 stemmed in large part from a Chilean overvaluation of the currency, rooted in a peg to the rising U.S. dollar. Milton Friedman, of course, recommended floating exchange rates.
It's also incorrect to argue that the boom starting in the late 1980s stemmed from the considerable softening of hard-line free-market policies. More accurately, Chile increased its international credibility by becoming democratic, while showing that elections would likely leave the core economic reforms intact.
You would do better to read my post on the economic legacy of Pinochet. There are significant qualifications to the story of Chile as "free market miracle," but they're not the ones Krugman makes.
The Philosophical Cow
Suppose that you are a cow philosopher contemplating the welfare of cows. In the world today there are about 1.3 billion of your compatriots. It would be a fine thing for cows if all cows were well treated and if none were slaughtered for food. Nevertheless, being a clever cow, you understand that it's the demand for beef that brings cows to life. How do you regard such a trade off?
If each cow brought to life adds even some small bit of cow utility to the grand total of co
w welfare must not beef eaters be lauded, at least if they are hungry enough? Or is the pro beef-eater argument simply repugnant?
Should a cow behind a haystack of ignorance choose the world with the highest expectation of utility? In which case, a world of many cows each destined for slaughter could well be preferable to one with many fewer but happier cows.
Or is it wrong to compare the zero of non-existence with existence? Should a cow philosopher focus on making cows happy or on making happy cows? If the former, would one (or two) supremely happy cows not be best?
I think these questions are important both for thinking about cows and animal rights and for human beings. Tyler has thought a lot about these issues (e.g. here, here and elsewhere). Some people, however, think that cow philosophy is just a bunch of bull.
Diane Ravitch turns on school choice and testing
Her new book is The Death and Life of the Great American School System: How Testing and Choice are Undermining Education. Her bottom line is this:
The more uneasy I grew with the agenda of choice and accountability, the more I realized that I am too "conservative" to embrace an agenda whose end result is entirely speculative and uncertain. The effort to upend American public education and replace it with something market-based began to feel too radical for me. I concluded that I could not countenance any reforms that might have the effect — intended or unintended — of undermining public education.
Ravitch of course was once the number one advocate of these very ideas; read this excellent article on her intellectual evolution.
Overall it is a serious book worth reading and it has some good arguments to establish the view — as I interpret it — that both vouchers and school accountability are overrated ideas by their proponents. (Short of turning the world upside down, some school districts will only get so good; conversely many public schools around the world are excellent.) But are they bad ideas outright? Ravitch doesn't do much to contest the quantitative evidence in their favor. There are many studies on vouchers, some surveyed here. Charter schools also seem like a good idea.
Is American public education such a huge success these days that it should be immune from significant restructuring? I don't think so. One of the best arguments for our current system is simply that — because it is lax — it doesn't waste too much time for the really smart kids who want to be doing other things. That's an important factor but hardly a ringing endorsement for the system as a whole.
Questions that are rarely asked
On my electric stove, there are two big coils and two little coils. The big coils, not surprisingly, heat up food much better. Why can't I have four big coils? There seems to be room for them. Is that asking too much? Do the little coils have some special use I am not aware of?
Assorted links
Predictions about Yemen
Most experts predict Sana'a, the fastest-growing capital in the world at 7% a year, will run out of economically viable water supplies by 2017. That is the same year the World Bank says Yemen will cease earning income from its oil, which currently accounts for three-quarters of the state's revenues.
Here is the full article. The Yemeni government, by the way, is still subsidizing water usage.
Speculative thoughts on shadow banking and the fiscal deficit
I've been thinking about my last Gary Gorton post and the use of Treasury securities as collateral for the shadow banking system. You will read many arguments that we should restrict the shadow banking system and limit its leverage and it is easy to see where these views come from. At the same time we observe that the U.S. federal government is on an unsustainable fiscal path, and yet able to sell its debt securities at very high prices.
Might there be a connection here? What is the actual trade-off? If leverage and shadow banking were much smaller, and we had safe, itty-bitty Canadian-style banks, how much would the demand for Treasury securities go down?
Just asking. If China stopped manipulating its currency, how much would the demand for Treasury securities go down? How much harder would it be to finance deficits?
Why are these issues rarely discussed in terms of trade-offs? I'd like to see a deeper study of the factors — possibly temporary or "artificial" — holding up the demand for Treasury securities.
This is Chile, not Haiti
"There is a certain lawlessness in this country that the government enabled," he said in Spanish. "They don't protect people and people don't respect them and criminal elements get out of control. People also have a high sense of entitlement. They expected the government to have water and power and things under control."
There is much more at the link or try this tweet: "The situation in Concepción is deteriorating. Citizens have taken up arms to defend themselves and their stores. 8 PM to 12 PM Army curfew." By no means is it just a bunch of people trying to feed themselves: "…many residents in the most damaged areas have not only taken food from supermarkets, but also robbed banks, set fires and engaged in other forms of lawlessness."
Haiti, on the other hand, remains fairly orderly and there have been reports that police corruption has gone down significantly.
One implication here is that I fundamentally distrust the use of "social trust" or "social capital" indicators in cross-country growth regressions. Repeat three times after me: context-dependence, context-dependence, context-dependence. The lessons for social science run deep.
My deeper worry is that this event will change Chile and set it back more than the damage alone would indicate. It will alter their self-image and national unity could decline. An alternative story is that Chile will become more progressive, as there will be greater common knowledge of income divisions and it will be harder to pretend everything is just fine.
Maybe it is a sign of social health to have some looting after an earthquake. In this part of blogland we do not dismiss the counterintuitive conclusion out of hand. For instance perhaps Haiti is so orderly because a) looters would be killed on the spot, and b) the entire fate of the nation is at stake and thus every small event is taken very seriously. Neither factor is exactly good news.
Message for *The Atlantic*
Give us your blogs back. We're right about this one, just trust us. We love you AM, but as it stands now, you've destroyed them. There's more here and here.
Addendum: Ezra offers his analysis. And some fixes are forthcoming.
African poverty is falling
Xavier Sala-i-Martin and Maxim Pinkovskiy report:
The conventional wisdom that Africa is not reducing poverty is wrong. Using the methodology of Pinkovskiy and Sala-i-Martin (2009), we estimate income distributions, poverty rates, and inequality and welfare indices for African countries for the period 1970-2006. We show that: (1) African poverty is falling and is falling rapidly; (2) if present trends continue, the poverty Millennium Development Goal of halving the proportion of people with incomes less than one dollar a day will be achieved on time; (3) the growth spurt that began in 1995 decreased African income inequality instead of increasing it; (4) African poverty reduction is remarkably general: it cannot be explained by a large country, or even by a single set of countries possessing some beneficial geographical or historical characteristic. All classes of countries, including those with disadvantageous geography and history, experience reductions in poverty. In particular, poverty fell for both landlocked as well as coastal countries; for mineral-rich as well as mineral-poor countries; for countries with favorable or with unfavorable agriculture; for countries regardless of colonial origin; and for countries with below- or above-median slave exports per capita during the African slave trade.
Not only has poverty fallen in Africa as a whole, but this decline has been remarkably general across types of countries that the literature suggests should have different growth performances. In particular, poverty fell for both landlocked as well as coastal countries; for mineral rich as well as mineral poor countries; for countries with favorable or with unfavorable agriculture; for countries regardless of colonial origin; and for countries with below or above median slave exports per capita during the African slave trade. Hence, the substantial decline in poverty is not driven by any particular country or set of countries.