I, Dirt

Potting mixes often contain sphagnum peat moss from bogs in Canada
or Ireland. Bark fines might come from a sawmill in the Deep South.
Coconut "coir," a peat moss substitute, gets shipped all the way from
Asia.

A common ingredient in potting mixes is perlite, which makes the
soils airier while also retaining moisture. In its final form, small
white pellets, it appears to be something synthesized in a factory. In
fact, it comes from a volcanic sand mined on the Greek island of Milos.
Shipped to the United States, the ore is heated to 1,400 degrees
Fahrenheit, at which point it pops into kernels.

The always-interesting Joel Achenbach writing in the Washington Post.

Real business cycle theory is not dead

Stephanie Schmitt-Grohe and Martin Uribe report (ungated here):

In this paper, we perform a structural Bayesian estimation of the
contribution of anticipated shocks to business cycles in the postwar
United States. Our theoretical framework is a real-business-cycle model
augmented with four real rigidities: investment adjustment costs,
variable capacity utilization, habit formation in consumption, and
habit formation in leisure. Business cycles are assumed to be driven by
permanent and stationary neutral productivity shocks, permanent
investment-specific shocks, and government spending shocks. Each of
these shocks is buffeted by four types of structural innovations:
unanticipated innovations and innovations anticipated one, two, and
three quarters in advance. We find that anticipated shocks account for
more than two thirds of predicted aggregate fluctuations. This result
is robust to estimating a variant of the model featuring a parametric
wealth elasticity of labor supply.

Jerry-rigged, yes.  But the principle of Occam’s Razor isn’t as strong as many people think.  If the mechanisms governing real world outcomes actually are that complicated, and if the simpler theories have failed, than jerry-rigging it is.  And, as Christina Romer has pointed out, deflationary money shocks are still bad for output and employment, which means the theory has at least an extra branch.

The power of competition, or should there by library fines?

From the UK:

"Libraries are facing competition from television, magazines, the
internet, e-books, yet they have this archaic and mad idea of charging
people money for being slightly late," said library consultant Frances
Hendrix – a loud voice in the debate which has been taking place on an
online forum for librarians. "It’s all so negative, unprofessional and
unbusinesslike; like any business, libraries need not to alienate their
customers." Liz Dubber, director of programmes at reading charity The
Reading Agency, agreed. "My personal view [is that] they’re past their
sell-by date because they do sustain a very old-fashioned image of
libraries which is out of sync with today’s modern library environment
and the image libraries are trying to project – tolerant, responsive,
flexible, stimulating," she said.

Some critics have described the fines as "alienating."  But are there alternatives?:

One librarian suggested adopting the ancient practice of some
monasteries, in which monks who offended in the handling of books were
publicly cursed. Another pointed to Soviet Russia, where they said that
offenders’ names were published in newspapers to shame them into
returning their books. In New Zealand town Palmerston North next week,
library users returning late books are being challenged to beat
librarians on Guitar Hero to have their fines waived.

In any case this economist will suggest higher fines for very new and popular books and also commonly used reference manuals, combined with lower fines for everything else.

Tipping is hard

And should I also say that writing software is sometimes easy?  Stephen Dubner lists some of the new iPhone applications:

iTip, from palaware
iTip, from Uncouth Software
BigTipper, from PureBlend Software
TipCalc, from BAMsoft
Tiptap, from Made with Bananas
Tipulator, from tap tap tap
Tip Calc, from Charles Ying
Tip, from Carlos Perez
CheckPlease, from Catamount Software
Tips, from Kudit.com
mTip, from Pascal Mermoz
TipBuddy, from Justin Jeffress
Gratuity, from TapeShow
QuickTip, from Spare Change Software
Tippety Split, from Manta Ray Software

U.S. fact of the day


High school cheerleading accounted for 65.1 percent of all catastrophic
sports injuries among high school females over the past 25 years.

Here is the link, with a photo.  Loyal MR readers will know that I am a strong and genuine non-paternalist.  But if you are a paternalist, and you are looking for one place to start, well…it’s not just the injuries that should point your attention in this direction.  We have to raise tax revenue from somewhere, right?  Currently we are subsidizing cheerleading and, along the lines of Robert Frank’s column, that makes no more sense than subsidizing fuel

Obama insecurity

Obama has many good qualities but this does not prevent the circulation of massive amounts of "Obama insecurity," as evidenced by some of the comments on a recent post.  (It’s not about disagreeing; note how the tone changes.)  For some people no comment on Obama, other than the purely laudatory, is anything other than a hackish right-wing attempt to forge an alliance of lies with Karl Rove and his ilk.  But an election need not be framed as a war where all remarks must be strategically proper and in line with the objective of electing a preferred candidate; a blog is a discourse first and foremost.

The mood on Obama reminds me of the response of some MR commentators to Eric Lyon on Radiohead.

I cannot imagine how devastated and hopeless the Democratic left would feel if Obama loses.  That response would be a big mistake but in part it explains "Obama insecurity."  The left is uneasy that so many of their hopes are pinned on this man and as Paul Krugman points out he is somewhat unknown.  There is a secondary fear that Obama is in fact committed to the notion of America as a center-right country or at least is unwilling to challenge that idea. 

"Obama insecurity" hurts his electoral chances and hurts the intellectual future of the left as a corrective force in American politics.  There’s not a convincing or credible path toward painting his enemies as immoral, even if that is what you believe.  Some campaign lies are painting Obama as weak, inexperienced, and non-American or even anti-American.  Responding with a dose of "Obama insecurity" only plays into the hands of those who would turn this into a race of emotions and innuendo. 

Good sentences

The marriage between sport and broadcasters, though long and
successful, has been changing in a number of ways. First, the
fragmentation of audiences among hundreds of channels has given the
most popular sports enormous bargaining power. As the number of
channels has multiplied, large audiences have become much harder to
find, but sport has retained its ability to supply them.

Here is more.  Here are related articles on globalization and sports.

Why does India win so few Olympic medals?

A loyal MR reader writes to me:

Here’s an interesting fact: despite a
population of more than 1 billion, India has won a grand total of 18 Olympic medals (mostly in field hockey):

http://en.wikipedia.org/wiki/India_at_the_Olympics

there are many obvious hypotheses, all of which may be partially
right, yet one would think these apply to zillions of other countries that
nevertheless have non-trivial Olympic presences.

So what is it?

My guess would be lack of government subsidies, combined with the possibility that non-democratic, authoritarian governments feel greater need to prove themselves on the international stage and to their people at home.  The subsidies matter for the infrastructure as much as for the athletes.  Throw in low social mobility, nutrition problems, and the relative lack of TV to inspire the young ‘uns and you’ve got my answer.  Bad roads don’t help any either.  Does this query have any other takers?

Here are some different yahoo attempts at an answer.  Here is a Guardian article.  Anirudh Krishna and Eric Haglund have a whole paper on the topic of social mobility.

Chile impressions

Santiago now feels like a huge city rather than a collection of neighborhoods.  The old center of town (Plaza de Armas) has become a bit of a dump but the outskirts are booming.  Parts of the city are even hip and trendy, a shock to anyone who knows the older Chile.  The variety of faces reminds me, oddly, of Oslo.  The "Dissidents Cemetery" in Valparaiso is full of Scottish and German names.  The seafood remains superb, most of all the clams and mussels and ceviche and shrimp and conch and abalone.  And the other stuff too.  Some restaurants, rather than giving you a lemon for your fish, offer you a small glass of lemon juice and a squeezer.  There are many more immigrants from the northern Andes than before and many more tourists from Brazil.

I was stunned by this, which is even more impressive when you are standing by it.  Some of the surrounding apartment blocks have a nice modern Art Deco style.  There remain deep pockets of poverty but overall the nation is pulling away from the other Latin American countries.  The Chileans basically need more of the same, rather than having to solve some deep structural problem.  Usually drivers stay in their lanes.  People don’t always dress that well.  It was a page 3 story in El Mercurio, with photo, that "Oprah won a million votes for Obama."

It is a common claim that Catholicism is bad for growth but in fact Chile is arguably the most seriously Catholic of the South American countries.

Tomorrow we head off to a remote place which I dare not reveal; I am surprising Yana and Natasha and perhaps you too.

Nationalism versus Peace

Paul Krugman has good column today on the threat of nationalism to globalization.

Shortly
before World War I another British author, Norman Angell, published a
famous book titled “The Great Illusion,” in which he argued that war
had become obsolete, that in the modern industrial era even military
victors lose far more than they gain. He was right – but wars kept
happening anyway….

…the belief that economic rationality always prevents war is an
equally great illusion. And today’s high degree of global economic
interdependence, which can be sustained only if all major governments
act sensibly, is more fragile than we imagine.

Designing Monopoly

In Alabama it is illegal to recommend shades of paint without a license.  In Nevada it is illegal to move any large piece of furniture for purposes of design without a license.  In fact, hundreds of people have been prosecuted in Alabama and Nevada for practicing "interior design" without a license.  Getting a license is no easy task, typically requiring at least 4 years of education and 2 years of apprenticeship. Why do we need licenses laws for interior designers?  According to the American Society of Interior Designers (ASID) because,

Every decision an interior designer makes in one way or another affects the health, safety, and welfare of the public.

This hardly passes the laugh test.  Moreover as Carpenter and Ross point out in an excellent article in Regulation from which I have drawn:

In more than 30 years of advocating for regulation, the ASID and its ilk have yet to identify a single documented incident resulting in harm to anyone from the unlicensed practice of interior design…These laws simply have nothing to do with protecting the public.

Most states do not have license laws for interior designers but the unceasing lobbying efforts of the ASID have expanded such licenses.  Fortunately, unlicensed interior designers are fighting back!  I love that unlicensed designers in New Hampshire have formed a anti-license league, Live Free and DesignTuttle Lives!

John McCain’s proposed tax hike

Jason Furman and Austan Goolsbee write:

As even Sen. McCain’s advisers have acknowledged, his health-care plan
would impose a $3.6 trillion tax increase over 10 years on workers.
Sen. McCain’s plan will count the health care you get from your
employer as if it were taxable cash income. Even after accounting for
Sen. McCain’s proposed health-care tax credits, this plan would
eventually leave tens of millions of middle-class families paying
higher taxes. In addition, as the Congressional Budget Office has
shown, this kind of plan would push people into higher tax brackets and
increase the taxes people pay as their compensation rises, raising
marginal tax rates by even more than if we let the entire Bush tax-cut
plan expire tomorrow.

The piece is interesting throughout, for instance:

Overall, Sen. Obama’s middle-class tax cuts are larger than his partial
rollbacks for families earning over $250,000, making the proposal as a
whole a net tax cut and reducing revenues to less than 18.2% of GDP —
the level of taxes that prevailed under President Reagan.

I would look more closely at the implied structure of fiscal commitments over time and what each candidate is likely to actually do (as opposed to promise) when it comes to Medicare and other health care issues.