The unenlightened economy
SNAKING AROUND the outer wall of the courthouse in Mbaiki, Central African Republic, is a long line of citizens, all in human form and waiting to face judgment. It’s easy to imagine them as the usual mix of drunks, reckless drivers, and check-bouncers in the dock of a small American town. But here most are witches, and they are facing criminal punishment for hexing their enemies or assuming the shape of animals.
By some estimates, about 40 percent of the cases in the Central African court system are witchcraft prosecutions.
…most lawyers I consulted there favored keeping the law intact, although they admitted that it fits uneasily in a modern legal system. “The problem is that in a witchcraft case, there is usually no evidence,” said Bartolomé Goroth, a lawyer in Bangui…
More here. Add this to the evidence for Joel Mokyr's thesis.
Hat tip: The Browser.
Raghuram Rajan on health care in India
Hospitals in the United States could learn more from each other, as well as from hospitals elsewhere, including India, where costs have been brought down by bringing mass-production techniques perfected in manufacturing to health care. Indian hospitals have found that error rate are reduced when their doctors specialize and perform many procedures of a similar kind. The time for operations is also cut down, with no loss of safety. A focus on eliminating unnecessary frills and on utilizing expensive resources like doctor time most effectively also helps even though good surgeons in India earn about as much as surgeons in the United States, the cost of operations is often an order of magnitude lower. Regulations that force hospitals in the United States to be "full-service" hospitals rather than permitting specialization tend to drive up costs. Greater competition between hospitals could also bring down costs; an easy way of encouraging cross-border competition is to authorize Medicare and Medicaid reimbursements for procedures performed by authorized hospitals in other countries, like Mexico and Thailand.
That is from Rajan's Fault Lines: How Hidden Fractures Still Threaten the World Economy. Most of this book is on the financial crisis — and not health care — and it is one of the two or three best books on that topic.
Ramban, a 12th century Jewish Biblical Commentator
Doni Bloomfield sends me this passage:
Set aside a sum of money that you will give away if you allow yourself to be angered. Be sure that the amount you designate is sufficient to force you to think twice before you lose your temper… (Ramban: A letter for the Ages translated by Avrohom Chaim Feuer Reishit Chochmah, Shaar Ha'anavah Chapter 3)
The link to the source is here.
Top Kill
We hope some time today. Live video feed from 5000 feet below.
Assorted links
1. The evolution of income distribution in Canada.
2. How can we tell if financial reform is working?
3. Vending machines in everything.
4. Correction on Leibniz, see also Jacob T. Levy, a great post but I can only wonder what he was at this point expecting, the show hasn't made sense from episode one.
5. Will fiscal austerity sweep Europe (and does anyone now hold the view that these countries need more government spending)?
Bond markets in everything
British high-end chocolate maker and retailer Hotel Chocolat, which currently operates over 40 stores in the UK, the Middle East and the US, wants to expand even further. But rather than turning to banks or big investors for money, they're inviting customer to buy bonds. Bonds that will pay chocolate returns.
Two values of Chocolate Bond will be issued: both with the return paid in monthly Tasting Boxes. Holders of a GBP 2,000 Chocolate Bond will receive six free tasting boxes a year worth GBP 107.70 per year, and those holding a GBP 4,000 bond will receive thirteen boxes, worth GBP 233.35 per year. Which comes down to a 5.38% return. After an initial term of three years, and on every anniversary thereafter, bond holders can redeem their bond for a full return of their investment. If they decide to continue to hold the bond, the monthly boxes will keep on coming.
The link is here and hat tip goes to Eric John Barker.
Serendipity in Istanbul
I am walking along the main shopping street, seeing many Turks but actually thinking it would be nice to read more on Edwin Chadwick, when I stumble across a bookstore with a largish section of Augustus M. Kelley reprints, no Chadwick but they do have the everyone-should-now-reread-it Herbert Feis, Europe the World's Banker, 1870-1914, and I stumble upon the section on Greece and the International Finance Commission of 1898.
A bit of Googling yields the following (JSTOR):
The I.F.C. was set up in 1898 as a result of Greece's disastrous defeat in the 1897 Greco-Turkish War. The powers involved in its creation were Great Britain, France, Germany, Austria, and Italy. The purpose of the commission was to control the collection and employment of the revenues assigned to…[various foreign loans, mostly to the aforementioned powers]…on which the country had defaulted in 1893, as a result of the slump in the currants trade.
The Greeks ended up raising the money through state monopolies on their customs ports, kerosene, salt, matches, playing cards, emery and cigarette paper, plus taxes on tobacco and stamp duties.
At $40, I pass on the book and I will see the story reenacted in any case.
New evidence on the multiplier
Here is an interview with Joshua Coval, of Harvard Business School, about his current research. I would urge caution on interpreting these results, but this is what the data toss back out at us:
Q: One of your findings was that the chairs of powerful congressional committees truly bring home the bacon to their states in the forms of earmark spending. Can you give a sense of how large this effect is?
A: Sure. The average state experiences a 40 to 50 percent increase in earmark spending if its senator becomes chair of one of the top-three committees. In the House, the average is around 20 percent. For broader measures of spending, such as discretionary state-level federal transfers, the increase from being represented by a powerful senator is around 10 percent.
Q: Perhaps the most intriguing finding, at least for me, was the degree and consistency to which federal spending at the state level seemed to be connected with a decrease in corporate spending and employment. Did you suspect this was the case when you started the study?
A: We began by examining how the average firm in a chairman's state was impacted by his ascension. The idea was that this would provide a lower bound on the benefits from being politically connected. It was an enormous surprise, at least to us, to learn that the average firm in the chairman's state did not benefit at all from the increase in spending. Indeed, the firms significantly cut physical and R&D spending, reduce employment, and experience lower sales.
The results show up throughout the past 40 years, in large and small states, in large and small firms, and are most pronounced in geographically concentrated firms and within the industries that are the target of the spending.
For the pointer I thank Alex Prado.
Addendum: Megan McArdle comments on the difficulty of interpretation.
The political slants of the news diets of media figures
Jesse Shapiro and Matt Gentzow start off their short note as follows:
We use data from comScore,Mediamark Research & Intelligence (MRI), and The AtlanticWire “Media Diet” to study the news diets of media figures such as David Brooks and Tyler Cowen.
This is what they find:
Tyler Cowen’s news diet is relatively liberal: 45.7 percent of users of the average news outlet he visits are conservative.
This means that Cowen’s news diet is more conservative than 11 percent of all Internet users, and 8 percent of all media figures interviewed by the Atlantic Wire.
David Brooks’ news diet is relatively conservative: 60.4 percent of users of the average news outlet he visits are conservative. This means that Brooks’ news diet is more conservative than 74 percent of all Internet users and 72 percent of all media figures interviewed by the Atlantic Wire.
pp.3-4 in the paper offer the measurements for other media figures, including Jeff Goldberg, Felix Salmon, Marc Ambinder, and David Frum.
What do you think? Do the more conservative commentators have a more conservative media diet? Which factors determine the political slant of the media diet of a public intellectual? Does it matter, for instance, where you were born? I'll predict that conservatives who grew up in the Northeast are more likely to spend a lot of time with The New York Times than conservatives from the South.
Here is a previous MR post on this line of research by the authors.
Assorted links
Kentucky fact of the day
The last Public Policy Polling survey in Kentucky found that more Republicans think Rand Paul (R) is too liberal (17%) than think he is too conservative (12%).
That is from Jerry Brito.
The 1964 Civil Rights Act in the 21st Century
Rand Paul's remarks about the 1964 Civil Rights Act brought forth lots of talk about libertarians and lunch counters but almost no discussion of how the Civil Rights Act actually works in the twenty-first century. Yesterday provided a nice reminder.
I won't comment on Lewis v. City of Chicago directly because it was decided on technical matters (the Supreme Court ruled that black firefighters in Chicago did not miss a deadline to argue that a test disproportionately hurt their chances of employment). The underlying facts, however, are of interest not because they are especially unusual but because they are common. From Fire Law:
The case, Lewis v. Chicago, involved alleged discrimination against African American applicants for the Chicago Fire Department who took a test in 1995.
The department set a passing score of 64 on the exam. Applicants who scored at least 64 but below 89 were informed that they passed the test, but would probably not be hired given the number of candidates who scored 89 or above. [26,000 applied and there were only a few hundred jobs, AT] Applicants scoring 89 and above were classified as “well qualified”.
The majority of “well-qualified” applicants were white. Only 11 percent were black…
The trial court sided with the black applicants, and ordered the city to hire 132 randomly selected African American applicants who scored above 64. The court also ordered the city to divide backpay owed among the rest of the black applicants.
White, Asian and Hispanic applicants who also scored above 64 but below the 89 standard were not offered employment or backpay.
Perhaps you are wondering about the tests? You would be hard pressed to find any obvious racial bias. I haven't found the Chicago test online but you can find similar tests from New York (also the subject of lawsuits) here. Here is a sample questions from New York.
Nowadays the Chicago fire department simply gives everyone an easy test and then they hire randomly.
How rich are we?
Arnold Kling makes some good points:
…after a crash it is very tempting for people to believe that the previous prosperity was false. However, there is a good economic case for presuming that it is a recession that is an aberration, not prosperity. For example, a graph of long-term GDP growth shows a steady upward trend, to which we return even after severe recessions.
We still have the capacity to produce the output we produced in 2006. Therefore, to a first approximation, we should still be able to consume what we consumed in 2006.
I have a few responses:
1. The problem is not in reattaining the 2006 level per se, but rather that people in 2006 expected an entire future path of growth which now appears further away. They made plans based on these expectations and we are not yet in a position to make comparably luxurious plans. Ireland is an extreme example of this point and do note that their capital stock has not been destroyed.
2. As I've written elsewhere, I remain an optimist about the future path of utility, though perhaps not gdp. Many of today's innovations improve people's lives directly, without necessarily generating much revenue or employment.
3. This problem also resembles the equity premium issue. Each crisis there is some probability that "this time is different" and upward growth will not resume or at least not for a long time. Until that expectation is cleared away (if indeed it is cleared away), the real living standard is genuinely lower, most of all in expected value terms.
4. I'm still an optimist about the much longer run, whether for utility or gdp. In fact the greater the current labor market troubles, the greater the long-run "human capital dividend" from reallocating resources. Sooner or later, we'll have another burst of important innovation, comparable to that of 1870-1940. We just don't have it now.
My favorite things Turkey
1. Novelist: Orhan Pamuk. My favorite books by Pamuk are the ones rooted most firmly in Istanbul and Turkey, namely The Museum of Innocence and Istanbul and also Snow. Those are some of my very favorite books, period.
2. Non-fiction book, set in: There is Runciman and Kinross and Stephen Kinzer. Is the Osman book good?
3. Movie, set in: From Russia With Love and Topkapi come to mind; my knowledge of Turkish cinema is weak.
4. Opera, set in: The Abduction from the Seraglio, maybe the Beecham recording, or Krips, plus I like the overture of the Harnoncourt version, much more Turkish-sounding than the others. And I don't have to tell you my favorite Rondo.
Uh-oh, suddenly there is too much Orientalism in this post. Reverse course!
5. Favorite recording showing the unities behind Turkish and classical music: Istanbul, Dimitrie Cantemir, by Jordi Savall. Quite the revelation and it makes you wonder how well we understand the true story of classical music.
6. Singer: Tarkan comes to mind and he is well represented on YouTube. There is an entire strand of Turkish popular song, in the direction of Sezen Aksu, YouTube here. But overall my pick is Edip Akbayram, imagine a Turkish version of Tropicalia.
7. Economist: Dani Rodrik, Daron Acemoglu, Timur Kuran, and Faruk Gul are the best-known Turkish economists I can think of. I believe Nouriel Roubini was born in Turkey but I don't think he counts as Turkish.
8. Music mogul: Ahmet Ertegun, founder of Atlantic Records.
9. Classical pianist: I still have mixed feelings about Fazil Say, who is very subjective with the score. Idil Biret has some good recordings of romantic music and piano transcriptions.
10. Cynic: Diogenes, who in a few ways was an early version of Robin Hanson, though I am not suggesting Robin is a cynic in the lower case sense.
The bottom line: Textiles and the decorative arts weigh in as strong additional positives, but I wish there were more Turkish writers I liked.
Plunked on my doorstep
The Company of Strangers: A Natural History of Economic Life, by Paul Seabright, revised edition. But I must run, and cannot report on how the new edition differs. Here is the book's home page.