Man on Wire
This movie is both a first-rate documentary and riveting social science. It is excellent on how Frenchmen differ from Americans, how young men differ from old, what is art, why some people follow others, how we are led to folly by small steps, whether human behavior can be explained by signaling theory, and the motivations and roots of terrorism, among many other issues. Here is one good review.
Regulation and Distrust
Brought to you by Aghion, Algan, Cahuc and Shleifer, this is one of the best papers so far this year. It’s so good I’ll give you a longer than usual quotation from the opening pages:
In a cross-section of countries, government regulation is strongly negatively correlated with social capital. We document, and try to explain, this highly significant empirical correlation. The correlation works for a range of measures of social capital, from trust in others to trust in corporations and political institutions, as well as for a range of measures of regulation, from product markets, to labor markets, to judicial procedures.
We present a simple model explaining this correlation. The model turns on the idea that investment in social capital makes people both more productive and more civic (e.g., Coleman 1990). Compared to people who have invested in social capital, those who have not are both less productive and impose a negative externality on others when they produce (e.g., pollute). The community (whether through voting or through some other political mechanism) regulates production when the expected negative externalities are large. But regulation itself must be implemented by government officials, who are corrupt if they have not invested in social capital. As a consequence, when production is restricted through regulation, investment in social capital may not pay off. In this model, when people expect to live in a civil community, they expect low levels of regulation, and so invest in social capital. Their beliefs are justified, as lack of investment leads to incivility, high regulation, high corruption, and low production. The model has two Pareto ranked equilibria.
…The model predicts, most immediately, that distrust influences not just regulation itself, but the demand for regulation…distrust fuels support for government control over the economy. What is perhaps most interesting about this finding, and also consistent with the model’s predictions, is that distrust generates demand for regulation even when people realize that the government is corrupt and ineffective; they prefer state control to unbridled production by uncivil firms.
…We take evidence on the demand for regulation as supportive of causality running from distrust to regulation. To test the reverse causality, we look at the experiment of transition from socialism, which we interpret as a radical reduction in government regulation in low trust societies. Our model predicts that such a reduction should lead to 1) a reduction in output, 2) an increase in corruption, 3) an increase in demand for government control at a given level of trust, and 4) a reduction of trust in the short run.
Markets in everything
To Mr. Brown, 24, who works at Esquire magazine in New York, the
colorful strips are an important accessory, and he’s careful to
coordinate them with his Kris Van Assche sweater or his Balenciaga bag.
He generally wears one on his left hand or arm and balances it out with
two or three on his right leg.He doesn’t put them on his face because, he said, “I don’t want people thinking, ‘What happened?’ “
Some call it creepy.
What’s the opposite of antitrust policy?
Georgia is a transit country. Through our territory went the Great Silk
Road. And we have confirmed our transit potential more than once.
Through our territory go the BTC, the Baku-Tbilisi- Erzurum, and the
Baku-Supsa pipelines. Not only liquid goods transit through Georgia,
but also dry goods by railroad. However, apart from the existing oil
and gas pipelines, there is a potential for new ones. But they will
only be considered if the oil producing companies themselves become
interested in them. With today’s price for crude oil, the
attractiveness and profitability of the BTC and the Baku-Supsa are
obvious. Therefore, with the growing production of hydrocarbons in
Central Asia, and in the Caspian region, new oil pipelines will
undoubtedly be profitable. Therefore I would like to emphasize that all
of the proposed projects are viable and have prospects.
And the transit of fossil fuels through Georgia endangers the profit of which country? You have three guesses. If you don’t know the word "Transneft" you will soon. Here is more. See also Marshall Goldman’s new book Petrostate on the Georgia-Russia relationship and the economic factors involved. In my view today’s series of events is very, very bad news. Not only are the events bad, but it is a bad signal of type about the new (is it new?) Russian government.
The Pledge of Allegiance
Barack Obama was heckled by a crazy bystander for not beginning a speech with the pledge of allegiance. He handled the event gracefully (video here along with cogent commentary by Matt Welch.) As I’ve written before, I think the pledge is creepy.
Cato’s Gene Healy says it well:
From its inception, in 1892, the Pledge has been a slavish
ritual of devotion to the state, wholly inappropriate for a free
people. It was written by Francis Bellamy, a Christian Socialist pushed
out of his post as a Baptist minister for delivering pulpit-pounding
sermons on such topics as "Jesus the Socialist." Bellamy was devoted to
the ideas of his more-famous cousin Edward Bellamy, author of the 1888
utopian novel Looking Backward. Looking Backward describes the future
United States as a regimented worker’s paradise where everyone has
equal incomes, and men are drafted into the country’s "industrial army"
at the age of 21, serving in the jobs assigned them by the
state…Bellamy’s book inspired a movement of "Nationalist Clubs,"
whose members campaigned for a government takeover of the economy. A
few years before he wrote the Pledge of Allegiance, Francis Bellamy
became a founding member of Boston’s first Nationalist Club….
Bellamy’s ritual for honoring the flag was right in step with those other National Socialists. Here’s a picture illustrating the recommended salute (which later was to became politically incorrect).
The salute may be gone but the message remains.
Google Street View is not popular in Japan
According to the morals of urban area residents in Japan, the assumption that “it is scenery [viewable] from public roads and therefore it must be public” is in fact incorrect. Quite the contrary, [these morals state that] “people walking along public roads must avert their glance from the living spaces right before their eyes."
…With this culture [of privacy], if you were to walk along a residential street in an urban area of Tokyo, every 10 meters surveying all 360 degrees of your surroundings, there’s no question that you would be reported to the police within 30 minutes. Even just filming the scenery from the street with camera in hand, there’s no question that if you tried to shoot the area not covered by Street View, you would be asked, after initial questioning, to come to either the Ikegami Police Station or the Den-en-Chofu Police Station.
Here is the full story, interesting throughout. Keep also in mind that Japanese urban residents are more likely to urinate in public or use a love hotel than are, I think, most Americans.
I thank Riemannzeta for the pointer.
Celebrity and politics
Many of the supposed "heroes" of the past were liars, frauds, and butchers to varying degrees. The association of fame with entertainers, for all its flaws, departs from earlier concepts of heroic brutality and martial virtue. Most of today’s famous people have had to persuade consumers to offer their allegiance and their dollars. Nowadays fame is attained through a high-stakes game of pursuit and seduction, rather than a heroic contest or a show of force in battle. The shift in fame to entertainers is a modern extension of the Enlightenment doux commerce thesis that the wealth of the market civilizes morals and manners and supports an ethic of bourgeois virtue.
…Modern politics emphasizes images, rumor, negative campaigning, and a circus-like, mass media atmosphere. Leaders lose their stature and become another set of celebrities. We talk about them and use them for entertainment. Yet contrary to the views of many critics, these developments are by no means wholly negative.
Commercial society has brought the taming of fame to politics…
That is from my 2000 book What Price Fame?
Trade is good: settle your lawsuit
Note to victims of accidents, medical malpractice, broken contracts and the like: When you sue, make a deal.
That
is the clear lesson of a soon-to-be-released study of civil lawsuits
that has found that most of the plaintiffs who decided to pass up a
settlement offer and went to trial ended up getting less money than if
they had taken that offer.…Defendants made the wrong decision by proceeding to trial far less
often, in 24 percent of cases, according to the study; plaintiffs were
wrong in 61 percent of cases. In just 15 percent of cases, both sides
were right to go to trial – meaning that the defendant paid less than
the plaintiff had wanted but the plaintiff got more than the defendant
had offered.
Here is the story. The good news is that 80 to 92 percent of cases do in fact settle. The bad news is that, over time, poor decisions to go to trial have become more rather than less frequent.
Why are some countries free and others not?
I am to speak on this topic in Buenos Aires (details here) and I was considering the following threads:
1. The Catholic capitalism of the Italian Renaissance and to what extent does it refute Max Weber?
2. Facundo and Martin Fierro, or where Domingo Sarmiento and Steve Sailer go wrong.
3. Why didn’t either the gauchos or the conquest of Siberia lead to the Turner thesis?
4. Why the old buildings in Oamaru, New Zealand remind me of Chile and what that means for the current Latin economic pecking order.
5. What does the pre-war Japanese growth miracle tell us about the postwar Japanese growth miracle?
6. "Betting on refrigerated transport" as a theme in Argentine history.
Or maybe I’ll do something else altogether.
They tell me that dress for the event is "elegant casual." Yikes! This, of course, leads to classic cycling in the sense outlined by William Riker. Since I cannot be elegant (certainly not by B.A. standards), I cannot be casual either.
The talk should eventually show up in print, although possibly only in Spanish in Argentina. I’ll get you a link if there ever is one.
Assorted links
1. West Side Story: the truth
2. Discover your gender, using the web
3. Backyard nukes? A scary joke, or is it?
4. Quantum mechanics gets even weirder
5. Business cycles: the current frontier
Pure signaling
Yesterday developer Armin Heinrich posted an iPhone app to the App Store called I Am Rich. The program displays a red gem, has no function but to display your wealth to others through ownership, and costs $1000. It has since been removed from the App Store, although no one knows whether Apple or Heinrich pulled it.
Here is more.
Feldstein on Fiscal Policy
Martin Feldstein, a proponent of the recent fiscal stimulus, said it didn’t work.
Here are the facts. Tax rebates of $78 billion arrived in the second
quarter of the year. The government’s recent GDP figures show that the
level of consumer outlays only rose by an extra $12 billion, or 15% of
the lost revenue. The rest went into savings, including the paydown of
debt….Although press stories emphasizing that the rebates induced additional
consumer spending were technically correct, they missed the important
point that the spending rise was very small in comparison to the size
of the tax rebates.
It’s a peculiar op-ed, however, as he then goes on to say:
The small rise in spending in response to these tax rebates is similar
to what previous studies of one-time tax cuts found. It also
corresponds to what both basic economic theory and common experience
imply. Although someone who receives a permanent annual salary increase
of $1,000 typically would increase his annual spending by an almost
equally large amount, a $1,000 rise in wealth caused by a share price
increase or a tax rebate would raise spending only gradually over a
number of years.
Right. But a short-term tax cut is exactly what Feldstein called for in an earlier op-ed.
The poor effects of the Bush tax rebate as fiscal stimulus, however, let Feldstein now attack the Obama plan for a $1000 tax rebate. Nothing wrong with that – McCain has nothing better however – but what Feldstein doesn’t say is that if you follow the logic of his two op-eds (and this is not something I would necessarily buy into) the conclusion should actually be that fiscal stimulus would work better if it ran through government spending.
Santiago bleg
For part of next week I will be in Santiago, Chile. I haven’t been there for nineteen years. What should I do?
Addendum: Seth Roberts sends me this interesting link on travel.
The most obnoxious blogger in the world
I read many blogs but there is only one — of the two or three hundred I have sampled — which I find truly obnoxious. I find the content obnoxious and I find the style obnoxious and I find the blogger obnoxious. By the way, I don’t think it is a blog which has ever said anything negative about me, at least not that I’m aware of. And it’s not a blog on the blogroll or a blog I have, as far as I can remember, linked to.
I never read it regularly in the first place, but I don’t think I can stand to read this blog any more ever again. Even so, I try to spin theories of how one blog and one blog only can have achieved such a special place in my mind. It’s not a blog that covers special or unique topics, relative to the other blogs I read and link to. Is the world not a continuum?
If you are a blogger you can know that the chance I find you obnoxious is very slim indeed. But not zero.
Or maybe you all think that I just don’t read enough blogs.
Are lead papers in a journal of higher quality?
Maybe not, maybe you just think they are:
Leading papers in a journal’s issue attract, on average, more citations than those that follow. It is, however, difficult to assess whether they are of better quality (as is often suggested), or whether this happens just because they appear first in an issue. We make use of a natural experiment that was carried out by a journal in which papers are randomly ordered in some issues, while this order is not random in others. We show that leading papers in randomly ordered issues also attract more citations, which casts some doubt on whether, in general, leading papers are of higher quality.
Here is the full paper, courtesy of Pluralist Economics Review.