The dumbing down of Borders

You leave the country for a few weeks and you come back to ruin.  I’ve visited two Borders stores since my return and both have done away with their new books tables.  In one case the table is still there but has about one-quarter as many books on it if that.  The very best-selling books now get four to six piles on the table — or more — rather than leaving space for a greater number of titles with one stack a piece.  The front of the store offers many more paperback books and many more bestsellers that have been doing well for months.  Many bookshelves are gone altogether and replaced with non-book, non-CD, non-DVD items, such as expensive writing journals and gift cards.  It’s much more like a Barnes and Noble.

In sum, the front of a Borders store no longer produces much information about the new titles on the market and it is no longer a good place for the well-informed to browse.  I’ve yet to compare what’s stocked on the shelves but I am not hopeful about the trend.  It’s hard to believe that the front of the store is the only site of ruin.

On the brighter side, maybe Borders Magic Shelf will prove of use.  But check it out here — so far it doesn’t compare to browsing a well-stocked new books table nor for that matter Amazon

This Global Show Must Go On

Here is my NYT column on globalization, excerpt:

Despite all these gains, the prevailing intellectual tendency these
days is to apologize for free trade. A common claim is that trade
liberalization should proceed only if it is accompanied by new policies
to retrain displaced workers or otherwise ameliorate the consequences
of economic volatility.

Yes, the benefits of a good safety net
are well established, but globalization is not the primary source of
trouble for most American workers. Health care problems, bad schools
for our children or, in recent times, bad banking practices have all
produced greater disruptions – and these have been fundamentally
domestic failings.

What’s really happening is that many people,
whether in the United States or abroad, are unduly suspicious about
economic relations with foreigners. These complaints stem from basic
human nature – namely, our tendency to divide people into “in groups”
and “out groups” and to elevate one and to demonize the other.
Americans fear that foreigners will rise at their expense or “control”
some aspects of the economy.

One approach is to appease these
sentiments by backing away from trade just a bit, or by managing it, so
as to limit the backlash. Giving up momentum, however, isn’t
necessarily the right way forward. If we are too apologetic about
globalization, we can feed core irrationalities, instead of taming
them. The risk is that we will frame trade as a fundamental source of
suffering and losses, which would make voters more nervous, not less.

Do read the whole thing.  A few further points of note:

1. Virtually all of the "second best worrying" about trade could be applied also — in fact more so — to technical progress.  Or to trade across the fifty states.  Yet when it comes to foreigners, the worries acquire a more dangerous credibility.  That is the real second best problem, not any theorem you might derive about trade and externalities.

2. I don’t see the evidence that marginal strengthenings of the safety net will diminish anti-foreign statements.  Yet this has become an article of faith among the globalization "middle roaders."  A crude look at the cross-sectional evidence does not indicate a clear pattern.  France and Germany have a strong safety net but they are skeptical about economic globalization; Sweden and the Netherlands are more sympathetic.  Switzerland, with a weaker safety net, is pro-globalization for the most part.  Like Will Wilkinson and unlike Bryan Caplan, I am for a safety net but often a bigger safety net makes people even more fearful of loss and change.  Note it is the Bismarckian welfare state, the world’s most advanced at the time, which turned to The Dark Side during the 1930s.  I’m hardly suggesting causality here but it didn’t halt the process either.

3. Yes I know about Denmark but job retraining programs in the U.S. hardly have a stellar record.

4. When it comes to improving the quality of economic adjustment, the overwhelming priority should be to delink health insurance from having a job.  I doubt if that will decrease skepticism about foreigners, however.

5. Most of the world’s wealthy economies are, if only because they are smaller and less diversified in terms of resources, more open than is the United States.  They do just fine and by no means do they all spend more on social welfare than does the United States.

6. Cite Samuelson and Stolper all you want, here is yet another paper showing that outsourcing has not been placing significant downward pressure on American wages.

7. China is now the world’s leading supplier of photovoltaic cells. 

But it is really the first point that is the key.

Addendum: Brad DeLong comments extensively.

The carbon footprint of food

Ezra reports:

…two Carnegie Mellon researchers recently broke down
the carbon footprint of foods, and their findings were a bit
surprising. 83 percent of emissions came from the growth and production
of the food itself. Only 11 percent came from transportation, and even
then, only 4 percent came from the transportation between grower and
seller (which is the part that eating local helps cut).

In other words, when it comes to food the greenest things you can do, if that is your standard, is to eat less meat and have fewer kids.

Why oh why can’t we have a better press corp?

A May 31 Metro article about the Scripps National Spelling Bee misspelled last year’s winning word. The correct spelling is serrefine.

The paper, The Washington Post, had chosen the obviously incorrect "serrifine."  Here is my source.

Addendum: Whoops!  I have corrected my spelling error.  At least I wrote the mistaken spelling of the newspaper correctly rather than vice versa, force of habit took over I suppose.

“What’s Wrong With You?”

Don’t get sick anywhere but at home:

…doctors in Tanzania complete less than a quarter of the essential checklist for patients with classic symptoms of malaria, a disease that kills 63,000-96,000 Tanzanians each year.  The public-sector doctor in India asks one (and only one) question in the average interaction: "What’s wrong with you?".  In Paraguay, the amount of time a doctor spends with a patient has nothing to do with the severity of the patient’s illness…these isolated facts represent common patterns…three years of medical school in Tanzania result in only a 1 percentage point increase in the probability of a correct diagnosis…One concern with measuring doctor effort through direct observation is that the doctor may work harder in the presence of the research team.

That is from "The Quality of Medical Advice in Low-Income Countries," by Jishnu Das, Jeffrey Hammer, and Kenneth Leonard, in the Spring 2008 issue of the Journal of Economic Perspectives.  The editor is now Andrei Shleifer and this issue is one of the best in a long time.

Time travel back to 1000 A.D.: Survival tips

Londenio, a loyal MR reader, asks:

I wanted to ask for
survival tips in case I am unexpectedly transported to a random
location in Europe (say for instance current France/Benelux/Germany) in
the year 1000 AD (plus or minus 200 years). I assume that such
transportation would leave me with what I am wearing, what I know, and
nothing else. Any advice would help.

I hope you have an expensive gold wedding band but otherwise start off by keeping your mouth shut.  Find someone who will take care of you for a few days or weeks and then look for employment in the local church.  Your marginal product is quite low, even once you have learned the local language.  You might think that knowing economics, or perhaps quantum mechanics, will do you some good but in reality people won’t even think your jokes are funny.  Even if you can prove Euler’s Theorem from memory no one will understand your notation.  I hope you have a strong back and an up to date smallpox vaccination.

Readers, do you have any other tips?  Is there any way that Londenio can leverage his knowledge of modernity (he is, by the way, a marketing professor) into socially valuable outputs?  Would prattling on about sanitation and communicable diseases do him any good?

The incentives for violence in hockey

Here is my source.  Here is the paper.  Here is the abstract:

The level of violence in the National Hockey League (NHL) reached its highest point in 1987 and has reduced somewhat since then, although to levels much larger than before the first team expansions in 1967. Using publicly available information from several databases 1996–2007, the incentives for violence in North American ice hockey are analyzed. We examine the role of penalty minutes and more specifically, fighting, during the regular season in determining wages for professional hockey players and team-level success indicators. There are substantial returns paid not only to goal scoring skills but also to fighting ability, helping teams move higher in the playoffs and showing up as positive wage premia for otherwise observed low-skill wing players. These estimated per-fight premia, depending on fight success ($10,000 to $18,000), are even higher than those for an additional point made. By introducing a “fight fine” of twice the maximum potential gain ($36,000) and adding this amount to salaries paid for the team salary cap (fines would be 6.7% of the team salary cap or the average wage of 2 players), then all involved would have either little or no incentives to allow fighting to continue.

In other words, there are substantial incentives for violence in hockey.

NotSneaky on remittances

Will Wilkinson has the scoop.  NotSneaky writes:

Bottom line is that most of the so called “gains from remittances” are
straight up gains from IMMIGRATION. Or in other words, they are gains
from the fact that some person from a poor household in a poor county
has managed to make their way to a rich country and now has a richer
income. Strictly speaking the gain from remittances is just the gain
from INTER-HOUSEHOLD reallocation of income between the migrant and
those who stay behind, not the overall increase in household income due
to migration.

This is oh so tricky and of course we must refer back to the 1920s debates on the "transfer problem," involving Keynes, Ohlin, and others, so ably surveyed by Jacob Viner’s Studies in the Theory of International Trade.

Let’s say a Mexican in Texas sends pesos in his pocket back home.  His family benefits and he gets the warm glow but for the nation as a whole that’s just inflation and a redistribution of wealth.  How about if he sends dollars back home?  Well, he converts through pesos, the real Mexican exchange rate appreciates, and Mexican exporters are penalized, to some extent offsetting the family gains.

How different are the two cases?  Ha!  That would make a nice exam question. 

Does it matter if the receiving family plans to spend the money on imports or does that not matter?  Does it matter if the big hotels in Cancun — tourism is Mexico’s largest export sector — are foreign-owned?  The clock is ticking…

Ultimately NotSneaky has the correct intuition that the gains are to be found in the immigration itself, not the subsequent transfer.  Beware double counting.  Here is my previous post on remittances but please note the comments on this post are for remittance talk, not a general discussion of immigration.

What I’ve Been Reading

1. Henning Mankel, Depths.  I loved this story.  Have I mentioned that Mankell is one of my favorite contemporary writers?

2. Nick Lane, Power, Sex, Suicide: Mitochondria and the Meaning of Life.  One of the best popular science books I’ve read in the last few years.  Among other matters he explains why curing aging isn’t so easy, why eukaryotes seem to have evolved only once, and why it often should be "The Selfish Cell" and not always "The Selfish Gene."  His book Oxygen is excellent as well.

Ross Douthat defines conservatism

…A commitment to the defense of the particular habits, mores and
institutions of the United States against those socioeconomic trends
that threaten to undermine them, and those political movements
(generally on the left, but sometimes on the right) that seek to change
them radically in the pursuit of particular ideological goals.

Here is the post, which is interesting throughout.  I should not speak for Ross but having read his blog for a while I believe he would prefer a modified definition to allow some of those habits and mores to be judged.  Ross circa 1958 for instance need not defend segregation.  But it is hard to invoke a standard of judgment without moving away from conservatism in the philosophical sense and becoming a rationalist.

Insofar as I am conservative (debatable) I would rewrite the definition:

A realization that we will do best by building on the strengths of the particular habits, mores and
institutions of the United States (and other successful nations) rather than trying to reshape the nation radically in the pursuit of particular ideological goals.

You can then pick a rationalist standard of judgment (e.g., utilitarianism, virtue ethics, Rawls, whatever) while keeping this vision intact.  Conservatism is then an empirical claim about the resilience and power of national and cultural strengths.  There is no "pro status quo" trap lurking in the background here and no reason why you can’t be both a conservative and a rationalist at the same time.

Markets in Everything: Pay to Stay

A small number of California jails have begun to offer pay to stay programs.  These programs allow inmates in for minor crimes to "upgrade" to a private or public jail with better facilities.  Evidently the fees are profitable to the jails.  Take a look at how Santa Ana county advertises it’s hotel jail.

The Santa Ana Jail is pleased to host a full range of alternatives to
traditional incarceration.  Our offerings include weekends in jail,
non-linear jail sentences, and a variety of work release options.  Our
philosophy is designed to allow our clients (!, AT) to serve their obligations
to the court in a manner that respects them as human beings and permits
them to continue to provide for themselves and their families….

  • Programs that include 2-day or 3-day weekends with minimal impact on
    the client’s professional life.  Work on Saturday and Sunday?  No
    problem…
  • Programs that permit jail sentences to be served in multiple parts.
    Perfect for clients that live out of the area or clients with frequent
    business travel.
  • Programs that permit the client to leave jail for work everyday.  We
    have helped everyone from 9 to 5 business people to oil-rig workers, so
    no work schedule is out of the question.

The Santa Ana Jail is the
most modern and comfortable facility in the region.  Our housing areas
are a world away from cement and steel bars….

Most clients can be approved immediately, over the phone.  We can also provide same-day acceptance letters for the court.

I have mixed feelings about these programs.  On the one hand, someone has to pay for the jails and who better than the inmates?  And note that to make an inmate-pays program effective you have to give them an incentive to pay.

But on the other hand the profit-maximizing strategy for a monopolist with different quality levels of service is pretty scary in this context.  A profit maximizer will reduce the quality level of the lowest class service – perhaps even spending money (!) to make the quality level lower – in order to push people to pay for the higher quality.  (For more on the theory, see Hal Varian’s elegant explanation.)

On the other hand (I know, I know, three hands) California’s prison system is already so overcrowded, violent and dysfunctional that one federal judge referred to medical care in the CA system as "outright depravity," thus we may already be close to the lowest quality level.  See this classic MR post for an expert’s take on the incentives of private and public prisons.

More on pay-to-stay at a Michigan Law Review Symposium.  Hat tip to Timothy Taylor at the Journal of Economic Perspectives.

Should Harvard continue to accumulate an endowment?

Matt writes:

A university that rich [Harvard] ought to either embark on some kind of ambitious
expansion program and start educating substantially more students, or
else decide that it would unduly alter the character of the place to
expand that much and just close up the development department and enjoy
the luxury of being able to focus single-mindedly on the university’s
core teaching and research functions.

Taking this as personal advice, I agree: don’t donate your money to Harvard.  But as a matter of public policy I would not disturb the current arrangement.  First, a donation to Harvard is an act of conspicuous consumption by the rich, a bit like buying the watch that doesn’t tell time.  In other words, the donors benefit, either through a warm glow or perhaps they receive networking opportunities.  Like Bob Frank, you might think we need a new consumption tax on the rich (not my view) but even if so we shouldn’t single out Harvard as a starting target.

Second, the Harvard endowment earns a high rate of return, relative to the cost of raising the funds.  Let’s say the fund nets 10 percent a year.  There is some trickle down and furthermore even if you wish to confiscate those resources it is always better to do so later rather than sooner.  The wise guy point here is to suggest that everyone give all their money to Harvard and arrange for some ex post compensating transfer.  (I’ve heard by the way that Yale faculty sometimes demand that Yale money managers take care of their personal portfolios.)  Obviously that’s not realistic but the point remains that ten percent is a very good return on investment.  Let’s say Harvard earned forty percent a year: should this make us more or less likely to leave the current arrangement in place?