The pointer is from Chris Masse
Very small countries
Here is James Surowiecki on the economic problems of Iceland. Google tells me that Iceland has about 316,252 people. Fairfax County is over three times more populous but it hardly receives any out-of-state attention. Of course Fairfax County has neither its own language nor its own culture (apart from a lunch tradition, that is) but for economic questions that should not matter much.
One question is whether we should be trading asset claims to the future creditworthiness of very small units. Let’s say there were tradeable shares in the future prospects of assistant professors. A low share price wouldn’t do much for your mid-contract review and maybe not for your mortgage prospects either. It seems that noise traders can wreak more havoc on small units, if only because volatility relative to retained earnings may be larger. Maybe the real problem is when the small units cannot self-insure; imagine the public uproar if the Icelandic government were caught selling itself short.
Why we shouldn’t boycott the Olympics in any way
A wheelchair-bound Chinese torch bearer has rocketed to national fame after fending off protesters in Paris, becoming a symbol of China’s defiance of global demonstrations backing Tibet.
Jin Jing, a 27 year-old amputee and Paralympic fencer has been called the "angel in a wheelchair" and is being celebrated by television chat shows, newspapers and online musical videos after fiercely defending the Olympic torch during the Paris leg of the troubled international relay.
Protesters denouncing Chinese policy in Tibet threw themselves at Jin. Most were wrestled away by police but at least one reached her wheelchair and tried to wrench the torch away. Jin clung tenaciously to what has become a controversial icon of the Beijing Olympic Games until her attacker was pulled off. Her look of fierce determination as she shielded the torch, captured in snapshots of the scene, has now spread throughout China, inflaming simmering public anger at the protests. "I thought we had lost in France, but seeing the young disabled torch bearer Jin Jing’s radiant smile of conviction, I know in France we did not lose, we won!" said one of tens of thousands of Internet postings about the incident.
Here is the story. Here are further ramifications and don’t worry they’ll be happy to give up their coal factories too.
Readsplat
The Economist has a new travel blog, the new Fuchsia Dunlop book is only "good," the first issue of Reason magazine under new editor Matt Welch is out (so far I like it; it’s less cultural, less left-wing and more current affairsy than before), finally I am into Wilco, Vishnu’s Crowded Temple is an interesting account of the blend between Indian politics and religion, Arthur Brooks’s Gross National Happiness argues that the traditional conservative recipe makes people happy, Ramon Llull is a much underrated medieval thinker, here’s a blog on giving away your rebate, and here’s Ryan Holiday on how to master what you read; his technique is the opposite of mine which is simply to read and move on. And here is why congestion pricing died in New York.
The $10 billion Saudi university
A picture is here and yes they claim the finished version will have both male and female students and Western faculty. A question we’ve been asking over lunch lately is the following: how much would it really cost to set up a first-rate university — and not just a technical school — in Asia? Let’s say an Asian businessman were willing to put up $10 billion in endowment: how good would the school be? I see three major problems:
1. Many Asian governments cannot precommit to respecting academic free speech; nor for that matter can the Saudis.
2. An excellent university must be part of an intellectual network near other excellent universities. Arguably with the internet this effect is weakening over time. Still, if they tripled my salary I wouldn’t move to Saudi Arabia or for that matter Japan and that is for reasons related to network effects.
3. Such universities could not precommit to the governance systems (please don’t laugh) that have been so effective in bringing American schools to dominate the world rankings. In fact the more money that one person or government gave, the greater the commitment problem might be. By these governance systems I mean faculty control of appointments, with academic-based monitoring by the Dean and Provost, independent boards, and Presidents willing and able to raise enough money to maintain financial independence for the future. That’s a pretty tall order but you’ll find all those qualities in the successful American colleges and universities. Long-run financial independence also requires a more general culture of philanthropy which is found only in the United States.
Technical schools aside, I do not expect American colleges and universities to lose their leadership role in the immediate future. And if they do, the real competitors will prove to be Europe, the UK, and Canada, not Asia.
The world isn’t flat, installment #736
Wolf Totem, by Jiang Rong, is the most widely read book in China since Chairman Mao’s Little Red Book. In the United States it’s been out since March 27 and still it has only one Amazon review and a negative one at that. So far I find it compelling and I am enjoying its panpsychic vulgarities. It’s also a good guide to how the Chinese think about their foreign policy.
Questions that are rarely asked
Markets in everything
How much is a Twitter account with nearly 1,500 followers worth? Rocketboom founder Andrew Baron wants to find out, and launches a publicity stunt
that will spark a debate about trust and privacy: He’s selling his Twitter account
, including the followers.
Here is the full story, and thanks to Chewxy for the pointer. And here is how to custom-order jeans on Second Life.
Financial Compensation for Organ Donors is Working
Only one country in the world has eliminated the shortage of transplant kidneys. Only one country in the world has legalized financial payments to kidney donors. That country is Iran.
In an important report, transplant surgeon nephrologist Benjamin Hippen argues that the Iranian system has saved thousands of lives and it should be used if not as model then to inform America’s efforts to eliminate its deadly shortage.
In the Iranian system organs are not bought and sold at the bazaar. Instead a non-profit, volunteer-run Dialysis and Transplant Patients Association (DATPA) mediates between recipients and donors. Recipients who cannot be assigned a kidney from a deceased donor and who cannot find a related living donor may apply to the DATPA. The DATPA identifies a possible donor from a pool of people who have applied to the DATPA to be donors. Donors are medically evaluated by transplant physicians, who have no connection to the DATPA, in just the same way as are non-financially compensated donors.
The government pays donors $1,200 plus limited health insurance coverage. In addition, charitable organizations also provide renumeration to impoverished donors. Thus demonstrating that Iran has something to teach the world about charity as well as about markets. Will wonders never cease? Recipients may also contribute to donor remuneration.
Hippen reports that the system works well, although better follow-up of donors would be an improvement. He concludes with a call to legalize financial compensation in the United States.
The economics of the male pill
Might there soon be a pill for men? Standard theories of tax incidence (borrowing from the Coase theorem) say that if so, it shouldn’t much affect the quantity of intercourse. Either the gains from trade are there or they are not. The initial burden of taking the pill might change the distribution of those gains across the sexes, but at the end of the night the final result should still be the same.
Only not!
If you are a man who can credibly signal he is taking such a pill, it is like paying the woman for that final result you so desired. The woman no longer has to perform the costly pill-taking action herself. And indeed the typical equilibrium is in fact that the man does the paying. But with the male pill you are paying her in a way that will flatter her, not insult her. Nice, eh?
The funny thing is, I don’t expect the male pill to be popular at all. The key question is to figure out which assumption of the basic model is not satisfied.
One possibility is that women will infer that a man taking the pill is essentially paying other women for sex and she values him less highly.
Another possibility has to do with credibility combined with lags. If it’s focal for the woman to be taking the pill, the woman is in any case taking her pill in advance. The male pill would have impact, at the margin, only on women who weren’t really planning on having sex at all. And what kind of man spends his energy targeting such women? Yes, some men indeed do target such women, but then we’re back to the male pill not really being so popular.
A third possibility is that women in any case want the man to use a condom, if only to prevent STDs. If the man is on the pill, it is harder to make that request without insulting him and thus a woman doesn’t want her new paramour to be on the male pill.
Addendum: Megan McArdle adds a fourth explanation.
Bittergate
You’ve probably already read or heard the remarks but here goes:
"It’s not surprising that they get bitter, they cling to guns or
religion or antipathy to people who aren’t like them or anti-immigrant
sentiment or anti-trade sentiment."
There you have it: some truth, some correct implicit moralizing, elitist scorn and condescension, some false implicit time series (guns and religion do not closely track economic decline), and some totally unpopular cosmopolitan sympathies. The "they" is the clincher, a hypostatizing and vaguely offensive generalization, yet one which we are all prepared to make in different contexts.
By the way, here is John Lott meets Barack Obama, worth reading for the scene of the encounter.
I think increasingly that Obama is very much a rationalist, in both the good and the bad senses of that term.
If I think about what makes me bitter, it is highway and roadway construction and bad airports and the attendant delays. You can decide for yourself what that makes me cling to.
Assorted links
1. Using TiVo fast forwards to predict American Idol winners.
2. An optimistic view of the mortgage market.
3. John Rawls on the superiority of baseball; recall I once described him as the least Hansonian thinker ever.
4. The legacy of Milton Friedman; Brad DeLong comments.
5. Does foreign occupation really cause suicide bombing?
“Guns don’t kill people, trading guns does”
Well, that is a joke of sorts. But here is Jim Kessler’s piece on deepening gun ownership. He writes:
There are 280 million firearms in private hands in America, and last
year there were about 300,000 gun crimes. That means that at least
279,700,000 guns did nothing wrong. We also know that in 89 percent of
crimes, the person using the gun was not the person who originally
bought it. In 34 percent of crimes, the firearm was bought in one state
and used in a crime in another. And in 32 percent of crimes, the
firearm was less than three years old.This indicates that the root of America’s gun crime problem is not
the number of guns in the hands of Americans, but an extensive web of
gun trafficking operations that funnel firearms to criminals.
…The first step is to make gun trafficking a federal crime, not a
term of art…Trafficking should be redefined as selling multiple guns out of a
home, car, street, or park that have two or more of the following
characteristics: obliterated serial numbers, are stolen, are new in the
box, or are sold to underage buyers or people with felony records. This
would still allow individuals to privately sell firearms to people they
know or trust, and it would put the onus on sellers to demand a
background check for those they don’t.
None of this seems quite right to me. It seems to confuse "how things are done now" with "how things could be done if people needed substitutes." For instance if this proposal were adopted, criminals might acquire guns at a young age and simply never give them up. (Think of the idea as raising the liquidity premium on owning a gun.) Or criminals might buy more guns from each other. I can see that it makes sense to shut off some avenues of gun flow, such as gun sale shows with no buyer verification. But once the stock of guns is high, I don’t think trying to control the flow is likely to prove an effective means of gun control. Forcing the seller to verify the quality of the buyer is one form of a tax, and yes it will raise the price, but it is in turn hard to verify how well the seller performed this responsibility. It seems less efficient than a simple and direct excise tax, for instance.
Addendum: Alternatively, you might pose a tax incidence question: how does taxing the stock of guns differ from taxing the flow of trade? Both will raise price but taxing the flow limits "the velocity" of guns. Taxing the flow should hurt "whim killers" but it won’t so much discourage regular killers. The former get all the publicity but are they really the bigger problem?
Simple sense about discount rates
Geoffrey Heal writes:
Sterner and Persson…talk about the effect of changes in relative prices rather than consumption of produced and environmental goods, but the point is the same. If we consume both produced goods and the services of the environment…then we can expect that with climate change environmental services will become scarce relative to produced goods and therefore their price will rise relative to that of produced goods. Consequently, the present value of an increment of environmental services may be rising over time, and the consumption discount rate on environmental services may thus be negative…This could be the case even with a positive pure rate of time preference…
Here is the paper. Here is an ungated version. In the interests of fairness to both sides of this debate, I should note that while I believe the costs of climate change are higher than most people think, I also believe that the costs of fixing the problem are higher than people think.
Heads in the Sand
That’s by Matt Yglesias (son of Rafael Yglesias) and the subtitle is How the Republicans Screw Up Foreign Policy and Foreign Policy Screws Up the Democrats. Anyone who reads books on foreign policy should buy this book. Most of all it is a critique of recent practice and a defense of liberal internationalism. He calls for negotiating with Iran, not digging in deeper in Iraq, and more generally accepting multilateral frameworks for the use of American military power. I agree with the policy recommendations though I would package them differently. I view liberal internationalism as a kind of noble lie which will in any case be superseded by American exceptionalism, most of all because of differing European and American experiences in WWII and differing degrees of religiosity. Rightly or wrongly, Americans are more likely to see menaces abroad and of course America is the only country that can even try to do much about them. Of course we’ve shown we’re not up to the job, noting that Afghanistan (a just war, I might add, and do note it commanded international support for a while but that turned out not to matter) is probably going even worse than Iraq by standards of long-run viability. If our interventions are counterproductive then constraints on those interventions are beneficial and in that regard we can embrace internationalism for practical reasons.
But I can’t have a high opinion of internationalism per se, perhaps because I’ve spent too much time actually working in multilateral institutions. The incentive is to negotiate at the margin, and eke out a somewhat better deal for one’s nation and carry victories to diplomatic superiors back home, rather than to actually solve the international problem in cooperative fashion. If there is any good solution to be had, the large number of negotiating parties usually requires America to play von Stackelberg leader (remember Yugoslavia?), noting that our ability to do this has broken down for reasons that go beyond the failures of Bush. The EU now precommits to a greater role in global decisions and many more countries are wealthy and have global interests. Media spin means that no one wants to take too many sacrifices. I think once a Democrat assumes the Presidency it will become clear just how much the old order has broken down, probably forever. European diplomats were cynical in the first place and don’t forget that the Security Council still has two members whose influence is more or less pure poison. I can’t imagine what liberal internationalism means, for instance, when it comes to allocating the thawing bits of the Arctic and the associated oil wealth. What will happen if/when the Russians simply try to grab more than international conventions allow them?
Note, by the way, that Saddam and Chirac really were gift-giving friends; that’s not just a right-wing fantasy. At some level American voters understand much of this, albeit in excessively provincial terms, and they simply won’t, in the electoral sense, allow the Democrats to inhabit the old space of internationalism.
In game-theoretic terms I would say the key question is what is the "threat point" America adopts when it offers to join international coalitions. Whatever Matt’s answer might be (his book is not written in that sort of lingo) that is now the key question, noting that whatever threat point you specify you have to be willing to live with. One paradox is that the more internationalist your default threat point is, the less effective a country actually will be in leading an international coalition.
In short, I’m all for talk of liberal internationalism as long as we don’t take it too seriously on its own terms. My prediction is that, doctrinally, Matt will eventually end up somewhere else, even though his practical advice is very sound and very well articulated and doesn’t much need to be changed. I hereby sentence him to one full month spent working at the United Nations.