My Christmas present

by  Tyler Cowen in

It’s the best book of the year and not just because it was my Christmas present.  It’s The Phaidon Atlas of 21st Century World Architecture (good photo excerpts at the link).  The book is 812 pp. and also several times larger than a normal book so it is like getting a 2000 pp. book or more.  (That’s why it costs $122!)  It is very heavy to carry around and it comes in its own plastic case.

The book offers photos and information about the splendid works of architecture that have opened since the beginning of the millennium.  It’s amazing how much there is (1037 structures, according to one review) and also you can compare one locale to another; why for instance has Medellin been so active in building innovative structures?

Unintentionally, the book is a paean to the now-passed global real estate bubble.  It is an amazing feeling to turn the pages and see how much effort and creativity mankind has put into building.  Homes were considered profitable investments and state and local governments had plenty of funds for public buildings.  Today, many projects are on-line as half-baked cakes but, overall, the next eight years won’t be anything like these.

Highly recommended.

Does paying for grades work?

by  Tyler Cowen in

C. Kirabo Jackson has a new study and his conclusion is a qualified yes:

…the incentives produce meaningful increases in participation in the AP program and improvements in other critical education outcomes. Establishment of APIP results in a 30 percent increase in the number of students scoring above 1100 on the SAT or above 24 on the ACT, and an 8 percent increase in the number of students at a high school who enroll in a college or university in Texas. My evidence suggests that these outcomes are likely the result of stronger encouragement from teachers and guidance counselors to enroll in AP courses, better information provided to students, and changes in teacher and peer norms. The program is not associated with improved high school graduation rates or increases in the number of students taking college entrance exams, suggesting that the APIP improves the outcomes of high-achieving students rather than those students who may not have graduated from high school or even applied to college. Nonetheless, APIP may be an exceptionally good investment. The average per-student cost of the program, between
$100 and $300, is very small relative to reasonable estimates of the lifetime benefits of attending and succeeding in college.

Here is a recent article on the topic.  My intuition is that this works best for unmotivated students, where there is no intrinsic motivation to undermine.

Brad DeLong on fiscal policy

by  Tyler Cowen in

Brad thinks I am too pessimistic about the prospects for a fiscal-led recovery:

But surely we believe that if the U.S. government were to follow the
Countrywide plan–to send its representatives out onto the streets to
have them walk up to people and say: "Here’s $500,000. You can have it
if you go buy a house"–then that would drive a recovery, right? I mean
it drove a recovery in 2003-2006, didn’t it?

Even the Austrians believe that spending–in their case, driven by
credit-expansion created by the malefactors of fractional-reserve
banking–works. So why can’t the government do what fractional-reserve
bankers can?

Here is the link.

The Guardian Trust Company of Detroit — the good ol’ days

by  Tyler Cowen in

It was, however, the run on the Guardian Trust Company of Detroit, a bank controlled by Edsel Ford, scion of the Ford motor family, that transformed the new crisis into a national one.  The Guardian Trust had done well during the 1920s financing consumer purchases of Ford cars.  When auto sales dried up in the early 1930s, the bank found itself in serious trouble and had been forced to borrow from the RFC.  In early 1933, the RFC balked at providing more money unless the sponsors, who were, after all, the second richest family in the country after the Rockefellers, put in more capital.  Patriarch Henry Ford, now in his seventies and increasingly autocratic and unreasonable, refused to bail out his son.  He had a long-standing antipathy to bankers and could not quite grasp why banks should be allowed to use the money he deposited for making risky loans  — "It’s just as if I put my car in a garage and when I came to get it, I found somebody else had borrowed it and run it into a tree," was the way he saw it.  Faced with a statewide run on its banking system, on February 14, the governor of Michigan issued a proclamation closing all 500 banks in the state for eight days.  The residents of Michigan woke up on Saint Valentine’s Day to find that all that they could draw upon was the cash in their pockets.

That is from pp.442-3 of Liaquat Ahamed’s Lords of Finance: The Bankers Who Broke the World, a truly timely book.

As for the GTC, here is their Detroit Art Deco building, still standing.  Here is the lobby ceiling.  The splendid building is a National Historic Landmark.

Merry Christmas, here is your gift

by  Tyler Cowen in

The Fed’s decision was a welcome holiday present for GMAC’s major
investors, GM and Cerberus Capital Management, which bought a 51
percent stake in GMAC in 2006…The Fed board granted GMAC’s application on an emergency basis,
eliminating the normal process of comment and review in favor of
immediate action.

GMAC is now a bank, even though they haven’t reached requested levels of capitalization.  Here are more details.  Elizabeth Duke voted against. 

I believe that moving more assets under government guarantees is exactly the opposite of what we should be doing.

Addendum: More comment from Felix.

Updates

by  Tyler Cowen in

Martin Feldstein argues that military spending should be part of the stimulus
package

Jacob Hacker argues that health care reform should be part of the stimulus
package

Zoo and Aquariums Look for Slice of Stimulus Pie

Keep in mind that no matter what your view of health care reform, the goal of our next round of health care policy changes should not be to spend as much money on labor costs as quickly as possible.

This is an object lesson — in progress — of how bad decisions end up getting made. 

There will be no slice of stimulus pie for me this Christmas, though perhaps we will manage tamales de elote.

The Twelve Days of Christmas

by  Tyler Cowen in

…shopping online raises the price for the gifts by nearly $9,500.

Overall the "nine ladies dancing" cost no more than last year, but the "eight maids a-milking" are governed by the increase in the federal minimum wage.  Here is much more information about the gifts and what they cost.  Perhaps for environmental reasons, the inflationary pressure in the index comes from the swans:

Swans, which vary widely in price because of their scarcity, have
caused big swings in the index. The gift package this year would shoot
up to $21,080.10 if the swans were included because the going price for
the seven is $5,600. That is a 33 percent increase, or $1,400, for the
swans compared with the price last year.

Bagehot: Beware the busy banker

by  Tyler Cowen in

As Walter Bagehot, the great nineteenth-century editor of the Economist who reveled in the quaint paradoxes of English life, described them, members of the Court [TC: they governed the Bank of England] were generally "quiet serious men…(who) have a good deal of leisure."  Indeed, he felt it an ominous sign for a private banker to be fully employed.  "If such a man is very busy, it is a sign of something wrong.  Either he is working at detail, which subordinates would do better and which he had better leave alone or he is engaged in too many speculations…and so may be ruined."

That is from Liaquat Ahamed’s Lords of Finance: The Bankers Who Broke the World, which I am still enjoying.  Here is my previous post on the book.

The latest from Harvard

by  Tyler Cowen in

Harvard University’s admission that it lost $8 billion from its $36 billion
endowment fund, as staggering as it sounds, may grossly underestimate the true magnitude of the
loss between from July 1 through Oct. 31 2008.  According to a source close the Harvard
Management Corporation (HMC), which runs the fund for Harvard, the  loss is closer to $18
billion if the losses on the fund’s illiquid investment are realistically appraised.

That’s Edward Jay Epstein, via Megan McArdle.  As Megan points out, no one should be surprised by this and in fact I would be surprised if that were the full extent of the damage.

Markets in everything China fact of the day

by  Tyler Cowen in

The cult-like fascination with the game has even spawned a World of Warcraft-themed restaurant in China, complete with dishes inspired by the game.

The article has other interesting features, mostly on the value of WoW experience in the job market.  Here is one bit:

…employers specifically instruct him not to send them World of Warcraft
players. He said there is a belief that WoW players cannot give 100%
because their focus is elsewhere, their sleeping patterns are often not
great, etc.

Good, humorous uses of "etc." are not easy to come by.