xkcd on Efficient Markets

Not to mention that there is an easy $1,000,000 lying on the sidewalk for the true practitioner of the paranormal, supernatural, or occult.
Hat tip: Brad DeLong.
Words of wisdom
The best advice about how to conduct yourself at work is to know yourself, and get new information–from outside your own experience–about what is possible in the world. And that is what fiction, and plays, and poetry, and this blog, are about.
More here. I thank Alex and Garett for having done a short (very short) jaunt to El Salvador with me; more on that soon.
Rip-off
The iTunes version of 4'33" offers all three movements, a snip at $1.99. Strangely, they only add up to 4'31". You might have thought a duration of four minutes and thirty-three seconds the minimum prerequisite for a recording of 4'33": apparently not.
That is by Wesley Stace, from his review "Hush Now: The silent of music and the music of noise," TLS 15 October 2010.
The Industrial Organization of the Miami Heat
A new study by Northwestern's Adam Galinsky looked at 11 NBA seasons and found that on average, teams that pay one star a lot and the rest not as much, win more games. "The study shows how pay is tied up with status," Galinsky says. Exhibit A: Kobe. He makes nearly 25 mil a year, roughly equal to all the subs combined. That payscale ensures his teammates know their roles, and that leads to better team play. In Miami, LeBron, Chris Bosh and D-Wade all earn about the same.
That is from the new ESPN magazine, not yet on-line. Here is one related bit:
“Status is such an important regulating force on people’s behavior, hierarchy solves so many problems of conflict and coordination in groups,” says Adam Galinsky, a psychologist at Northwestern University’s Kellogg School of Management who did the research on social hierarchies on basketball teams. “In order to perform effectively, you often need to have some pattern of deference.”
Here is Galinsky's home page, and here, though I cannot find the NBA paper on-line.
When I look at the Miami Heat, I think of Bengt Holmstrom, and his models of why the input suppliers in a firm require strong external constraint. When I look at the Miami Heat, I think of Hart and Moore 1990 — their chef, skipper, and tycoon example – which suggests a successful small enterprise should not have three separate veto points.
Overall, I put greater stock in Holmstrom, Hart, and Moore (and Bryant) than I do in James, Bosh, and Wade.
Assorted links
1. Taiwanese bride marries herself.
2. Victor Menaldo has a blog; he is the researcher behind the myth of the resource curse and "rainfall and democracy."
4. Who is the most important avant-garde filmmaker? After Warhol, Jonas Mekas, Stan Brekhage, Kenneth Anger, and Maya Deren top the NYT citation list.
Life inside the PPF
The plane came down despite no apparent mechanical problems during an internal flight in the Democratic Republic of Congo.
It has now emerged that the crash was caused by the concealed reptile escaping and causing a stampede in the cabin, throwing the aircraft off-balance
A lone survivor apparently relayed the bizarre tale to investigators.
The crocodile survived the crash, only to be dispatched with a blow from a machete.
The goal had been arbitrage, namely to sell the crocodile in the destination locale. The full story is here and for the pointer I thank A.L. and also R.
Assorted links
*Why the West Rules — For Now*, the new book by Ian Morris
Most of the book is intelligent, well-sourced, easy to read, and non-dogmatic. It is a "big book" on the scale of Jared Diamond or Paul Kennedy and the author is obviously highly intelligent. There is a good use of archaeology and mostly the author supports geographical theories of the rise of the West and other civilizations. It considers energy use, urbanization, and war-making explicitly, all pluses in my view. Eventually you realize it is going nowhere and has only a weak theoretical framework. The first two-thirds are still better to read than most books. It raised my opinion of the importance of coal in the Industrial Revolution. The final chapter collapses into the lamest of conventional wisdoms.
The WSJ gave it a big review which somehow I cannot find on-line. Here are other reviews.
Parentheticals to ponder
Geoffrey Johnson, who gave a speech that attempted to debunk any ideas that a machine could have emotions or self-consciousness and could, therefore, be said to think in a human way (Johnson was a pioneer of the frontal lobotomy).
That is from Jane Smiley's new and worthwhile The Man Who Invented the Computer, The Biography of John Atanasoff, Digital Pioneer. My favorite part of the book was the discussion of Konrad Zuse, who deserves his own popular biography.
What does a utilitarian approach to animal rights suggest?
The most dangerous form of malaria originated in gorillas…
And AIDS seems to have come from chimpanzees.
Add up the numbers and figure out the utilitarian-preferred policy.
That is one reason why I believe a pure utilitarian approach to animal (or human animal) welfare does not work, namely that it leads to morally horrible consequences. This is one topic I wished I had brought up with Peter Singer.
A rainfall theory of democracy
From Stephen Haber and Victor Menaldo:
Why have some countries remained obstinately authoritarian despite repeated waves of democratization while others have exhibited uninterrupted democracy? This paper explores the emergence and persistence of authoritarianism and democracy. We argue that settled agriculture requires moderate levels of precipitation, and that settled agriculture eventually gave birth to the fundamental institutions that under-gird today’s stable democracies. Although all of the world’s societies were initially tribal, the bonds of tribalism weakened in places where the surpluses associated with settled agriculture gave rise to trade, social differentiation, and taxation. In turn, the economies of scale required to efficiently administer trade and taxes meant that feudalism was eventually replaced by the modern territorial state, which favored the initial emergence of representative institutions in Western Europe. Subsequently, when these initial territorial states set out to conquer regions populated by tribal peoples, the institutions that could emerge in those conquered areas again reflected nature’s constraints. An instrumental variables approach demonstrates that while low levels of rainfall cause persistent autocracy and high levels of rainfall strongly favor it as well, moderate rainfall supports stable democracy. This econometric strategy also shows that rainfall works through the institutions of the modern territorial state borne from settled agriculture, institutions that are proxied for by low levels of contemporary tribalism.
For the pointer I thank www.bookforum.com.
Stanley Fischer update
Formerly a famous macroeconomist at MIT, he now runs the central bank of Israel and he just won a Euromoney award for best central banker of the year.
Jacob Frenkel argues that Fischer's shekel-selling policies are unsustainable. Here is another account. Israel foreign currency reserves now exceed $66.3 billion, in part because of Fischer's decision to buy up so many dollars and keep down the value of the shekel.
Here, Fischer complains that the Israeli economy is dominated by a few families and excessively concentrated wealth. He wants the government to remedy this situation, although it is hard to tell which policy he is proposing.
The Wisdom of Garett Jones
Satellite dishes amid the tin-roofed shacks of El Salvador. So much for Maslow's hierarchy.
I laughed and told Garett he should twitter this.
Arbitrage
I make a living buying and selling used books. I browse the racks of thrift stores and library book sales using an electronic bar-code scanner. I push the button, a red laser hops about, and an LCD screen lights up with the resale values. It feels like being God in his own tiny recreational casino; my judgments are sure and simple, and I always win because I have foreknowledge of all bad bets. The software I use tells me the going price, on Amazon Marketplace, of the title I just scanned, along with the all-important sales rank, so I know the book's prospects immediately. I turn a profit every time.
Sometimes the guy spends eighty hours a week in used book stores, and if you are an author think of this as your competition. For the pointer I thank Andy Howard and the full story is here.
Along related lines, Adam Ozimek thinks that "Brain Mounted Computers are a Dominant Strategy Equilibrium."
Barter markets in everything, bring your own restaurant
On a recent evening, an abandoned gas station with a curb blocked by cement barriers is the meeting point for a group of people who appear to be pulling chairs and tables from the trunks of their cars. It's almost dark. Some boxes are set on the sidewalk; linens and dishes and food are pulled out and what moments ago was an eyesore has been transformed into a popular place to eat. It's called BYOR. That stands for "bring your own restaurant." It's not quite an established venue, but the food is very good.
It's free to those who share. And the ambiance is unexpected as the outdoor location keeps changing. People learn where BYOR is going to be via Facebook. In the mild weather it's "open" every other weekend. No reservations required: just an appetite and some extra chairs if you have them.
What should you infer about Holyoke, the locale of this practice? The full story is here and I thank Anastasia for the pointer.
And from China, here is a vending machine for live crabs.