Here is a piece of spam email that I received recently.
The new revised edition of the Canadian Subsidy Directory 2004 is now available. The new edition is the most complete and affordable reference for anyone looking for financial support. It is deemed to be the perfect tool for new or existing businesses, individual ventures, foundations and associations….
The Canadian Subsidy Directory is the most comprehensive tool to start up a business, improve existent activities, set up a business plan, or obtain assistance from experts in fields such as: Industry, transport, agriculture, communications, municipal infrastructure, education, import-export, labor, construction and renovation, the service sector, hi-tech industries, research and development, joint ventures, arts, cinema, theatre, music and recording industry, the self employed, contests, and new talents.
Sadly, I have no doubt that this all true. (I am also sure a similar product exists for the U.S.)
Once, Mrs Joan Robinson, my radical teacher at Cambridge University, and Professor Gus Ranis of Yale University, a ‘neo-liberal’ economist, were observed agreeing with each other that Korea had been a great success.
The paradox was resolved when it turned out that Mrs Robinson was talking about North Korea and Professor Ranis about South Korea!
That is taken from an interview with Jagdish Bhagwati, who I might add is another plausible contender for an economics Nobel Prize.
Thanks to www.politicaltheory.info for the link.
The DVD format is taking over the classical music world, especially opera:
Sales regularly hit 5,000 units, the standard break-even figure for classical CDs, and go as high as 40,000 worldwide, says Klaus Heymann, the Hong Kong-based head of Naxos International. Also, the hard-core classical community doesn’t have to wait around for the video companies to finish issuing meaningless Luciano Pavarotti galas before going on to the real stuff.
Major classical labels initially hesitated to jump into DVD, so smaller, specialized concerns took the medium directly into niche marketing. Upfront “authoring costs” (translating video to the small disc) were as low as $2,000 a few years ago, says Gilbert, and are now half that.
Once a nightmare of regional formats, DVDs are increasingly universal (look for the “0” in the code box), though savvy consumers still need a specially doctored player to read all codes on discs available on European Web sites. Disc prices, which range from $10 to $35, are still unstandardized. The Deutsche Oper’s Die Meistersinger is $39, but the Australian Opera’s better cast sells for as little as $25.
Whatever the reason, even the most expensive DVD operas cost less than sound-only, full-price CD sets (emphasis added).
Here is the full story.
A philosopher has levied another attack on economics:
…a lot of the credibility of economics depends precisely on its claim to be a science, in the precise sense of generating successful predictions. (Predictive power may be neither a necessary nor sufficient condition for science, but economists generally view it as what makes their discipline “scientific.”) Indeed, many economists and lawyer/economists have emphasized the putatively “scientific” character of economic theory. Friedman’s classic paper on “The Methodology of Positive Economics” is predicated on the idea that economics is “a positive science [whose] generalizations about economic phenomena. . .can be used to predict the consequences of changes in circumstances.”
All of these scientistic sentiments about economics co-exist, of course, with a very different picture of the discipline as essentially a pseudo-science. It is better, perhaps, than astrology, but not much more predictively successful than common-sense psychology. It parlays a set of implausible and utterly unrealistic assumptions into tidy, mathematically-expressible theories that have little or no connection to reality. A recent article in The New Yorker captures this sentiment well. “[A] good deal of modern economic theory,” says the author, “even the kind that wins Nobel Prizes, simply doesn’t matter much.” (“The Decline of Economics,” Dec. 2, 1996, p. 50)
The attack goes on at length.
The simplest defense of economics (or philosophy, I might add) is biographical rather than methodological. Just spend some time talking to a person who knows little economics (philosophy) and you will be impressed at how much understanding the discipline brings.
Economics in particular does two things. First, it provides “existence theorems” as to what can possibly happen, and how. This may not sound very ambitious, but in fact many of the mechanisms (e.g., time consistency or principal-agent problems) are rich in their implications and applications. Second, economics gives you a good idea of the conditions under which various results can come about.
Milton Friedman overemphasized prediction as a justification for economic science. That being said, plenty of propositions are abandoned because would-be proponents cannot cite convincing evidence on their behalf. How many people today still wish to target monetary aggregates?
I might add that Leiter is the first person ever to attack me for being a Popperian falsificationist. Oddly he mentions my name and then characterizes my views by quoting someone else; by that time he is off and running and never looks back.
An additional mistake of philosophers is to believe that economics rests on the idea of “instrumental rationality,” I have written on this elsewhere.
The ever-effervescent Jane Galt has some smart remarks on “smart growth.” Like Jane, I believe that the world’s future lies in sprawl, not in concentrated central cities. Even Paris (can you imagine a nicer, more livable city?) has been losing population over the last fifty years.
Here is one good bit:
Smart growth is great if you are an upscale professional, preferably without children, who can score a relatively large apartment fairly close to work. It’s a lot less fun for the majority trying to cram your family into four or five rooms. Smart growth is great if you are savvy enough to manipulate an urban school system into keeping your children away from the poor kids; it is not so nice for the majority who must make do. Smart growth is great if you can afford to have everything you buy delivered, or are in excellent physical condition with a physically undemanding job; it is not so great if you have to come home from your shift at the nursing home to lug groceries a quarter-mile down the street, and then up three flights of stairs. Smart growth is great if you can afford to eat in the plethora of restaurants; it is not so enjoyable if you have to scrape up an extra 20% for the ingredients in tuna casserole. Smart growth is great if you have a nanny to take the kids to the park during the day; it is not so terrific if you have to choose between wasting several precious hours standing around the playground, or letting your kids languish inside. Smart growth is great if you can afford taxis when you need them; it is not so good if you are forced to take three busses to get somewhere you really need to be. Smart growth is great if your family members are all affluent enough to take care of themselves; it is not so fulfilling when you have to shove your ailing mother into the kids room when her resources fail.
Smart growth, in other words, is wonderful for those with the werewithal to smooth over its little rough spots. But ask the priced out secretaries commuting 2 hours a day from Yonkers how “liveable” New York is.
Also read the attached New York Times article, a brilliant defense of the automobile by James Tierney. Now if we could only get Jane to move to the suburbs…
Long-time readers will recall my discussion of Vouchers for Private Schooling in Colombia by Angrist, Bettinger, Bloom, King and Kremer in the Dec. 2002 AER. The paper is especially important because it uses data from a randomized experiment.
Angrist et al. estimate that attending private school increased the probability of finishing eighth grade by 13-15 percentage points or 25 percent. Test scores increased by .29 standard deviations which is equivalent to about an extra year’s worth of schooling which has been estimated to increase yearly wages by 10 percent. Other markers such as teen cohabitation also improved.
Angrist, Bettiner and Kremer are back with a follow-up study that looks at high-school graduation rates and test scores on college-entrance exams.
The results of our follow-up study point to lasting benefits for voucher winners, with substantially higher high school graduation rates and, after adjusting for selection bias, higher test scores among those who took the ICFES exam [a college entrance test, Alex]….The size and persistence of the impact suggests PACES was a cost-effective intervention … there is substantial economic return to high school graduation in Colombia.
If cheap goods from China are bad for the United States then surely zero-priced Manna from Heaven must have been terrible for the Israelites. Cecil Bohanon and T. Norman Van Cott, two of my former colleagues at Ball State University, know better.
Manna wasn’t a “sky is falling” catastrophe for the Israelites. Quite the contrary, wealth was being showered on them. Lower-cost production alternatives always expand consumption alternatives. Regardless of whether these alternatives trace to manna-like acts of God, new production technologies, foreigners willing to sell their products to us at less-than-prevailing prices, or even immigrants willing to work at less-than-prevailing wages, the result is the same. Consumption alternatives for the natives expand…..
Fortunately for the Israelites, Moses didn’t order them to shun manna in order to preserve good jobs in food production. Manna meant those good jobs weren’t so good after all. Indeed, manna meant that jobs connected with finding water and protecting sheep became the better jobs. The result was that the Israelites reached the Promised Land a stronger nation.
A few days ago Alex applied his usual wisdom to prediction markets, a perennial topic here at MR. A key question, handled by Alex and Daniel Davies, is how effectively prediction markets convert scattered information into a useful signal.
I am a fan of prediction markets, but I do have a few concerns. However they revolve around the variances of the forecasts rather than the means.
Many thanks to Michael, our guest blogger from last week. You can keep up with his thoughts at Mahalanobis. Stay tuned for future guests!
The actual headline is no less absurd: “Economic Growth from Hurricanes Could Outweigh Costs”. The story is here, courtesy of USA Today.
The body of the story is worse:
Although natural disasters spread destruction and economic pain to a wide variety of businesses, for some, it can mean a burst in activity and revenue.
For that reason, economists tallying the numbers expect the hurricanes will be neutral in their effect on the U.S. economy, or may even give it a slight boost, particularly because of an expected reconstruction boom in the already red-hot construction industry.
Or how about this?
Cochrane estimates that in Florida, the state hit hardest by the storms, 20,000 jobs will be created that otherwise would not have been. Two-thirds of those jobs will be in construction. The rest will be in areas including utilities, retailing, insurance and business services. Another 2,500 jobs will likely be added in Mobile, Ala., according to Economy.com.
Economic consulting firm Global Insight estimates the hurricanes at most will shave two-tenths of a percentage point off gross domestic product, the broadest gauge of U.S. economic activity, in the third or fourth quarters. That will be offset by reconstruction activity.
I would not have dared this as satire. Nor is it presented as a sophisticated critique of national income accounting, which in fact does treat such expenditures as productive. Will it next be suggested that excess productivity is our main economic problem?
That is all for tonight folks, I am headed out to the crying bar.
Will the diversity of the blogosphere ever cease?
This morning alone I have learned of three new blogs. The first is on Sabernomics, or econometrics as applied to baseball.
Finally, Johan Norberg, libertarian crusader for global capitalism, posts on his views and efforts on behalf of liberty.
1) Ed Prescott – A powerhouse economic theorist. He has seminal insights into the role of “real” (i.e., non-monetary) forces in business cycles and whether returns on stocks (7% average) and bonds (a little over 1% on average) reflect the relative risk of these instruments. I am also a fan of his work on monopolies –often government monopolies — as barriers to innovation. His latest work suggests that Americans work more than Europeans because our marginal tax rates are lower.
2) Eugene Fama – His work on empirical finance tested whether the market rewards risk-taking and which variables might predict “excess returns.”
3) Gordon Tullock – My colleague, read my previous remarks.
4) Oliver Williamson – Asset specificity is his key idea. You invest in relationships with business partners and much of the value is specific to that relationship. Then things start going wrong…
5) Paul Krugman – Krugman winning the prize today would mean something very different than Krugman winning the prize five years ago. The chance of this happening is either much greater or much less than I think, I am simply not sure which.
6) Robert Barro – He has shown longer “legs” than his critics seemed to think he would. A powerhouse of macroeconomics and growth. It is less well known that he also did early versions of political business cycle theory and sticky price macroeconomics. I do not believe, however, that the Swedes will choose this year to reward someone who has to some (relative) extent defended Bush economic policies. (If you are wondering, Hans Blix is a heavy favorite to win the Peace Prize.) Barro is a very effective economic popularizer, in addition to his scholarly work.
7) Edmund Phelps – His work on labor markets laid the basis for the next thirty years of macroeconomics. He is not leading the betting market, but many observers consider him to be “due.”
Who is missing? Thomas Schelling is the most notable living theorist of spontaneous order and a key father of applied game theory. Like Phelps, he is “due.” Most of the people on the “New Candidates” list don’t have much of a chance, and here is a list of expired candidates.
A cotton candy-like cloud of simple sugar drifts in the unspeakably cold center of the Milky Way about 26,000 light years away, offering a remote, yet tantalizing, hint of how the building blocks of life may have reached Earth billions of years ago.
This frigid cloud is composed of molecular glycolaldehyde, a sugar that, when it reacts with other sugars or carbon molecules, can form a more complex sugar called ribose, the starting point for DNA and RNA, which carry the genetic code for all living things.
The simple sugar molecule glycolaldehyde was found in this dust and gas cloud, Sagittarius B2. The colors indicate radio emissions of different strengths.
Astronomers have known about sugar in space for some time, but new research reported last week in the Astrophysical Journal Letters showed that gaseous sugar could exist at extremely low temperatures, as are found in regions on the fringes of the solar system where comets are born.
Why not use blogs to become a virtual DJ? The latest blogging trend is to offer MP3 files to your readers, combined with commentary and useful links. The tracks tend to be obscure rather than from mainstream pop, which everybody knows about anyway. Copyright status is often black or grey but so far the marketing has proven useful and these blogs have not been a legal target.
Could this be the future of marketing in the music industry? Here is an article on the phenomenon.
Here is one example of such a music blog.
The bottom line: Why don’t econ bloggers post their classroom and public lectures? Or short answers to public questions of the day? Hmm…