Brood X is coming

Washington is preparing for an invasion. Several weeks from now billions and billions of insects will ascend upon the city from their hiding places under the ground to be begin two weeks or so of frenzied sex followed by egg-laying and dying. I know what your thinking – there goes Tabarrok again with his apocalyptic visions of doom and gloom.

The invaders, however, are not the biblical locusts of old but cicadas and they are going to be sex-starved because they only do this every 17 years. Why 17? No one knows for sure but 17 is prime so to meet the cicadas every time they appear a predator must lock-on to the exact frequency (while if they appeared say every 12 years then predators appearing every 2,3,4,6, or 12 years would be sure to meet them). There is another variant of periodical cicada that appears every 13 years, supporting the prime theory.

The cicadas are loud and the WashPost notes that the 1970 appearance of brood X inspired Bob Dylan to pen these lines:

And the locusts sang, well, it give me a chill,

Yeah, the locusts sang such a sweet melody.

And the locusts sang with a high whinin’ trill,

Yeah, the locusts sang and they was singing for me . . .

Addendum: Thanks to Marc Poitras for correcting me on one point. The cicadas can get plenty to eat underground so they really are coming out for the sex. Makes sense to me.

Phrase of the day

“The non-governmental sector.” At yesterday’s UNESCO meetings, I heard it at least fifteen times.

Yes I know the term has a (supposedly) legitimate use, but you will never hear it from my lips. How about a sentence like this?:

…non-governmental organizations have made and are increasingly making important contributions to both population and development activities at all levels. In many areas of population and development activities, non-governmental groups are already rightly recognized for their comparative advantage in relation to government agencies.

It’s nice to know that we are good for something!

The bottom line: Tomorrow I fly home.

Tragedy and market prices

Before [the recent incident] truck drivers [in Fallujah] were charging a $150 surcharge per delivery. In the last 24 hours it’s risen to $500,” said a British site manager. He said Iraqi construction workers at the site, shipped in from Baghdad, had threatened to put down their tools if they did not receive an immediate rise of more than 20 percent.

That is from today’s Financial Times, “US Army Promises Punishment and Pacification,” here is the link, though the numbers are less specific in the on-line version.

Private Militaries

Believe it or not, the private British firm, Global Risk International, “a more bespoke approach to the security industry,” operates the 6th largest military force in Iraq. Overall there are some 15,000 private military contractors in Iraq. In addition to more mundane tasks like feeding the troops they protect convoys and train the Iraqi police, paramilitary and army. The four Americans brutally killed earlier this week were employees of Blackwater Security Consulting who also serve as bodyguards for Paul Bremer.

In the United States, private military firms (PMFs) are similarly pervasive. Over the past 10 years the US has spent more than 300 billion on private forces including a contract for the operation of the computer and communications systems at NORAD’s Cheyenne Mountain base, where the U.S. nuclear response is coordinated. Brookings’s Peter Singer notes:

PMFs now provide the logistics for every major U.S. military deployment, and have even taken over the Reserve Officer Training Corps (“ROTC”) programs at over two hundred U.S. universities; that is, private company employees now train the U.S. military leaders of tomorrow.

I have drawn from Peter Singer’s book Corporate Warriors: The Rise of the Privatized Military Industry as well as several of his papers at the Brookings Institution. If you are in need of a small island nation, here is list of private military firms.

The end of TV as we know it?

America’s 350 public TV stations have made a stunning proposal. They would like to give their analog broadcast licenses back to the government by 2006. While viewers would continue watching public TV via digital broadcasts, cable or satellite, public stations would save $36 million a year on electricity.

But our government says no:

The FCC requires TV licensees to simulcast both analog and digital signals at least through 2006, but transition booby-traps inserted in the 1997 Budget Act will stretch the process years beyond. They require that before analog signals are turned off in a market, 85 percent of local households have to be equipped with digital off-air reception capability. Arcane details make this mission impossible; even if every home received local broadcasts over cable, the 85 percent threshold would not be met under any likely scenario.

And why is the government wrong?

Allowing the TV band to be tied up for another decade ignores the enormous social value of spectrum. Wireless networks could productively use the frequencies to expand and improve cellular service, with added airspace dramatically decreasing costs. Entrepreneurs lust for access to the rich VHF and UHF frequencies to unleash mobile Internet-based applications offering consumers a cornucopia of fresh choices for voice, data, video and applications yet to be dreamed.

Read the full analysis by Tom Hazlett. And write your congressman to get rid of TV as we know it.

Life in the United States in 1904

Average life expectancy was 47.

Only 14 percent of homes had a bathtub.

Only 8 percent of the homes had a telephone.

There were 8,000 cars and just 144 miles of paved roads.

Alabama, Mississippi, Iowa, and Tennessee were each more heavily populated than California. With a mere 1.4 million residents, California was only the 21st most populous state in the Union.

More than 95% of all births took place at home.

90% of all physicians had no college education.

Most women only washed their hair once a month and used borax or egg yolks for shampoo.

The five leading causes of death were: 1. Pneumonia & influenza 2. Tuberculosis 3. Diarrhea 4. Heart disease 5. Stroke

And worst of all,

The population of Las Vegas, Nevada was 30.

Here is the link, thanks to www.geekpress.com for the pointer. And read Michael at 2blowhards.com for some further commentary, excellent as always.

Crude extrapolation: debt to gdp ratios

What happens if we extrapolate current trends to 2050? What will debt to gdp ratios look like around the world? A few estimates:

1. For 25 major OECD economies, the ratio will rise to 47 percent by 2010 and 139 percent by 2050. Most of these countries would risk eventual downgrading to junk status.

2. In 2050 Japan would have the highest debt to gdp ratio, namely 718 percent. The Czech and Poland would have the next most serious problems.

3. Among the current Eurozone countries, Germany would fare the worst with a ratio of 307 percent. The ratio in the US would be 158 percent.

4. For purposes of contrast, Great Britain, right before WWII, a fiscally pressed time, had a debt to gdp ratio of 188 percent.

5. The countries with the smallest future ratios include Luxembourg, the UK, Sweden, Spain, Ireland, and Australia. Those countries have more favorable demographics and smaller burdens from their pension systems. Those ratios lie in the range of 40 to 60 percent.

6. The fiscal impact of aging far outweighs the costs of German unification.

OK, this is crude extrapolation. But keep in mind that social security benefits are often fixed by law or politically hard to alter. Growth rates might improve, but on the other hand longevity could increase.

The estimates are from Standard and Poor’s, reported in The Financial Times of 1 April 2004, “Sovereign Ratings Under Threat.” Sorry I have no permanlink from this antiquated Parisian computer terminal but it is subscription only anyway.

Addendum: Alex suggests I could have titled the post “r>g,” don’t worry if you don’t get the joke.

Econ Journal Watch

The inaugural issue of Econ Journal Watch has just been published (I am an advisor and have a paper in the first issue). EJW publishes comments on articles appearing in economics journals. Other journals also publish comments but they are rare and generally restricted to pointing out logical or mathematical flaws in a chain of deductions. EJW, in contrast, seeks to take on the unrealistic assumptions, omission of relevant facts, and phony claims of relevance that pervade many economics articles.

EJW also has a number of recurring features such as “Do Economists Reach a Conclusion?.” Papers in this section test Truman’s quip about needing a one-handed economist. In the first issue, Rick Geddes looks at the postal monopoly and Mark Thornton at drug prohibition. When attention is focused on those economists who have actually studied the issue and reached a policy conclusion both authors find a surprising consensus in favor of reform.

Lots of other interesting material. I’ve put this one in our permanent list of resources (left hand side bar).

Gmail?

Google will be launching a new no-charge (“free” as the rest of the world likes to call it) email service, Gmail, with one gigabyte of storage, 100 times the amount offered by rivals Yahoo and Hotmail. The catch? There will be small ads included. One gigabyte? Think of how many offers for mispelled intimate products or urgent assistance for foreign oil ministers that will hold. There is one other catch. The news was announced yesterday, March 31st with an April 1 date on the news release. Many are suggesting that it’s merely a hoax. At MarginalRevolution, we only report. You decide. Here’s the Google page announcing the beta version. Looks pretty convincing, but it would, wouldn’t it?

How Now, Dow

The Dow Jones Industrial average will be dropping AT&T, Kodak and International Paper. Welcome Pfizer, Verizon and AIG, an insurance group. Verizon was once part of AT&T which is something like Ken Griffey, Sr. being benched in favor of his son, Junior. Reuters reports that it has happened before:

Both Verizon and SBC Communications Inc., added in 1999, were among the seven companies carved out of AT&T in an antitrust ruling in 1984. Mr. Prestbo said this is the third instance in which descendants have taken the place of broken-apart parent companies to represent their respective industries in The Dow. ExxonMobil Corp. is a combination of two descendants of Standard Oil Co. (New Jersey), broken up in 1911. Boeing Co. and United Technologies Inc. trace their lineage to United Aircraft Corp., which was split in 1934.

The Dow Jones average started in 1896 with 12 stocks. Only General Electric is still around in its original name from those halcyon days, a tribute to GE (though it has dropped out and come back as this nice historical summary from the Motley Fool points out) and the dynamic nature of the American economy.

Evolutionary theories I don’t believe

In their paper titled “Love’s Labour Lost,” recently submitted to a medical journal, anthropologist Edward Hagen, biologist Paul Watson and psychiatrist Andy Thomson suggest that full-blown major depression disorder may be a complex social adaptation originating in the human evolutionary past and designed to help otherwise powerless individuals influence their social groups, focus on problem-solving and obtain help from those with whom one is in conflict.

“Depression evolved to compel assistance from reluctant social partners,” they theorize. “Depression signals need and compels social assistance by preventing the sufferer from providing benefits to others.”

They cite the severe cost of depression not only to the individual but to the whole social network.

“The toll depression takes on both its victims and society may be precisely what it was, in human evolutionary history, designed to do.”

This thinking – that depression is an important signal and part of a complex dynamic among people that provokes change – leads these researchers to argue that drug therapy alone for depression may not be the best solution even it relieves symptoms.

It may be that non-chronic major depressive disorder (MDD) is like fever – a signal that something has gone awry and needs to be healed.

Here is the full story. Here is a link to the relevant research. Here is the specific piece in question. Here is a related piece, called “Depression as Bargaining”. For a good time try using that description on your girlfriend.

Why I am skeptical: I can see why emotional sensitivity to bad events has survival value. Emotions bring general benefits, plus the sensitivity keeps you away from bad events to some degree. It is harder for me to see a great importance for the negative reaction itself, ex post, once bad events have happened.

Japan’s trade with China

I don’t trust the figures, but did you know that China’s per capita income has been estimated at $890 a year, circa 2002, well under that of Guatemala ($1670) or Morocco ($1180)? Guest blogger Russ Roberts cites a slightly higher and more recent figure of about $1000.

That being said, how might you expect growing trade between China and Japan to affect the Japanese economy? The wage differential for semi-skilled labor is about a factor of twenty. Russ also cites worries that trade with China will weaken or impoverish the United States.

Here are a few simple facts:

1. In 2003 Japan’s trade with China, including Hong Kong, rose by nearly a third to $162 billion.

2. Exports to China leaped 40 percent in this same year.

3. A few years ago accepted wisdom was that trade with China would destroy Japan’s manufacturing base. Now observers say that “Even Japan’s “old economy” industries, such as steel, pulp, chemicals, shipbuilding and construction equipment, have been handed a new lease of life.” (Financial Times, March 30, “Crossing the Divide” ($)).

4. Trade with China is widely viewed as bailing out Japan, which was otherwise stuck in more than a decade of virtually zero growth. Japan buys cheap Chinese inputs, and supplies the Chinese manufacturing boom.

5. It is estimated that only about 20 percent of Japanese and Chinese products compete in the same markets. For the most part the two countries produce complementary goods.

The information is from the Financial Times article cited, here is a related link with some roughly comparable statistics.

My take: Won’t any facts convince individuals of the merits of free trade? Surely if any set-up would lead to falling wages in Japan, trade with China should do the trick. In reality it has been a godsend to the Japanese economy. That being said, the Japanese should expect more volatility. In the long run I am bullish on China, but I expect a bubble to burst within the next five years. Has any country made the climb into modernity without a collapse along the way?

Build a house in 24 hours

Randall Parker cites the following link:

Degussa AG, one of the world’s largest manufacturers and suppliers of construction materials, will collaborate in the development of a USC computer-controlled system designed to automatically “print out” full-size houses in hours.

Funded by a grant from the National Science Foundation, Behrokh Khoshnevis of the USC Viterbi School of Engineering’s Information Sciences Institute has been developing his automated house-building process, called “Contour Crafting,” for more than a year.

Khoshnevis believes his system will be able to construct a full-size, 2,000- square-foot house with utilities embedded in 24 hours. He now has a working machine that can build full-scale walls and is hoping to actually construct his first house in early 2005.

Contour Crafting uses crane- or gantry-mounted nozzles, from which building material – concrete, in the prototype now operating in his laboratory – comes out at a constant rate.

Moveable trowels surrounding the nozzle mold the concrete into the desired shape, as the nozzle moves over the work.

Parker adds:

Robots and other automated equipment have increased factory automation so much that factories are a dwinding source of all jobs. The next big target for automation has been and continues to be office work. Office automation is being addressed with the development of huge amounts of software and information systems.

What never seem to get as much attention is how to automate all the other places where people work aside from the office and the factory. Construction automation is an obvious big target. One approach is to do prefabrication of walls and other building pieces in highly automated factories. Then the prefabricated parts can be shipped to the construction site. But automated methods to doing construction at a site have advantages because they avoid the difficulty of shipping large walls, floors, and ceilings to a site. Also, automated site construction techniques allow more flexibility in site design.

My take: In economics language, this is called “g>r”, which refers to the growth rate of an economy exceeding its rate of interest. If we’re going to make it through our forthcoming fiscal crises, it will be through innovations such as these.

Labor Standards and Bicycle Helmets

Robert Samuelson writes in today’s Washington Post (registration required) that China, though in many ways an abominable economic landscape is a lot like the US 100 years ago. He argues that while growth is a messy thing, there is hope for the future in China, and recent progress is encouraging. He notes (citing the World Bank as his source):

†¢ From 1978 to 2002, the average annual per-person income rose from $190 to $960. It’s probably now above $1,000. (The U.S. figure: about $36,000.)

†¢ Life expectancy increased from 61.7 years in 1970 to 71 in 2002.

†¢ Adult illiteracy fell from 37 percent in 1978 to less than 17 percent in 1999.

†¢ Infant mortality dropped from 41 per 1,000 live births in 1978 to 30 in 1999 (the U.S. rate: about seven).

As the election heats up, we’re going to hear a lot about labor and environmental standards and how we need to level the playing field in trade. China remains a very poor country. It cannot afford the luxury of our standards of today any more than America could have afforded them 100 years ago when the average work week was 67 hours (down to 34 today) and the work place was a much more dangerous place.

One way to see this is to think about bicycle helmets. Where are more bicycle helmets worn–Chicago or Shanghai? Manhattan or Mexico City? More are worn in Chicago and New York. Don’t people in China and Mexico know that it’s dangerous to ride a bike in traffic without a helmet? I suspect they do. It’s just too expensive. Poor people are better off foregoing the helmet, keeping their kids in school a little longer and doing the best they can to avoid being hit by a car. Making the Chinese have factories as safe and clean as ours is like forcing them to wear bicycle helmets. It’s a bad deal for them even though there are benefits.