The Dialectic at Work?
Justin Yifu Lin, apparently soon to be named the World Bank’s chief economist, has one of the strangest CVs you could imagine. Lin was born in Taiwan but in 1979 while serving in the Taiwanese army he defected to China by swimming from the island of Kinmen in Taiwan to Xiamen in China. Embarrassed by the defection of a rising star, the Taiwanese army listed him as missing. Lin left behind a wife and children who (it seems) didn’t know what had happened to him.
Lin rose quickly in China receiving a Master’s degree in Marxist political economy from Peking University in 1982 and in 1986 a PhD in economics from the University of Chicago
(!). According to the Taipei Times, Lin’s wife learned that Lin was alive while he was in the United States and they were reunited in the U.S. where she also earned a graduate degree before both returned to China. Lin has since become a well-published economist.
I see movie.
Addendum: Tyler also covers this further below.
How are libertarians different from social democrats?
Returning to last week, Ezra Klein (the real one) wrote:
Tyler Cowen is a libertarian economist with a wildly different set of
assumptions about human behavior, the policy process, and political
change [than I, Ezra, have].
I was surprised to read this. Let’s imagine that we asked a very smart person, but one who disagreed politically with both Ezra and me, to pinpoint how Ezra and I differ. I believe that person would see the two of us as having very different blind spots, in both moral and positive terms, but not holding fundamentally different assumptions about human behavior. If Ezra and I chatted about which are the most insightful movies, whether the Washington Wizards should trade Gilbert Arenas, or the best way to get magazine contributors to deliver their essays on time, I don’t know how much we would agree. (I almost always agree with Matt Yglesias about TV shows and movies, it turns out, although I don’t love The Wire as he does.) But I’d be surprised if we disagreed any more than I would with the average libertarian, or than he would with the average social democrat.
Of course there is a lesson here, namely that our political views don’t stem from our positive views about human nature as much as we might like to think.
Are African wages too high?
One thing that has always struck me in the African countries I have
worked is that the real wages (i.e. wages adjusted for the cost of
living) of African formal sector workers seem to be incredibly high, at
least compared to that of workers in China or India. Given that firms
in China and India seem to be more productive than their African
counterparts, it creates a double disadvantage for African workers, and
raises the question of why the situation continues. Why don’t
manufacturing wages fall in Africa, stimulating more jobs for more
people at wages still higher than those available in agriculture or
informal business?Why, when I run a survey in rural Uganda, do
youth with the same education and experience expect a wage three to
four times higher than the youth I worked with in India? I don’t
begrudge anyone anywhere a living wage. It’s the relative differential
that puzzles me, and that could be keeping Africa from doing business
globally.There are probably lots of plausible reasons. Perhaps
we ought to consider (and get data on) the informal sector in Africa,
which could be larger and have more moderate wages than the formal
sector ones. It may be that all my notions and data about African wages
are erroneous.Another possibility, however, is that the largest
employers of skilled workers in most African countries are
international NGOs and the local government. They are competing, in
many cases, for the same pool of skilled and semi-skilled workers as
the manufacturers and service sector firms. Neither the government or
NGOs, moreover, seem to set wages according to the local market or
local conditions, and it requires little imagination to wonder whether
they set their wages higher than the market would normally do.
That’s from Chris Blattman, a political science professor at Yale; here is Chris’s consistently interesting blog.
Justin Lin
He has been named the new chief economist at the World Bank. Wikipedia claims he left his wife and family behind in Taiwan to defect to mainland China. He even swam across some ocean to do so. It seems to be true.
Why would I not pick this man? But at least one smart person who knows Lin is very happy. Here are some of Lin’s articles, including a well-cited piece for Cato Journal. Here is his CV. He must be very adept at dealing with bureaucracy.
Plus ça change, plus c’est la même chose
A French court has ruled in favor of the French Bookseller’s Union that Amazon’s free shipping policy violates a law forbidding booksellers from offering discounts of
more than 5 percent off the list price.
Amazon was told to start charging for shipping within ten days or pay a
daily fine. It must also pay €100,000 to the French Booksellers’ Union.
Amazon CEO Jeff Bezos, however, is refusing to charge for shipping and is taking the case to the French public. Way to go Jeff! My advice? Tell the state, laissez nous faire!
Hat tip to A Chequer-Board of Nights and Days.
Is 2008 like 1971?
This is funny, via Ezra Klein (who is also funny), but of course it misses the point. One big difference is that we use energy much more efficiently than we used to. Expensive oil needn’t crush us. The second big difference is that the Federal Reserve is far more competent today than in the 1970s. That is true even if you are not a Ben Bernanke fan. The third big difference is that a negative shock or financial collapse from China could crush us today, but not in 1971. Whoops, forget that third difference.
Department of “Whatever”
Suffering the gloom, inevitable as breath, we must further accept
this fact that the world hates: We are forever incomplete, fragments of
some ungraspable whole. Our unfinished natures – we are never pure
actualities but always vague potentials – make life a constant
struggle, a bout with the persistent unknown. But this extension into
the abyss is also our salvation. To be only a fragment is always to
strive for something beyond ourselves, something transcendent. That
striving is always an act of freedom, of choosing one road instead of
another. Though this labor is arduous – it requires constant attention
to our mysterious and shifting interiors – it is also ecstatic, an
almost infinite sounding of the exquisite riddles of Being.To be against happiness is to embrace ecstasy. Incompleteness is a
call to life. Fragmentation is freedom. The exhilaration of never
knowing anything fully is that you can perpetually imagine sublimities
beyond reason. On the margins of the known is the agile edge of
existence. This is the rapture, burning slow, of finishing a book that
can never be completed, a flawed and conflicted text, vexed as twilight.Eric G. Wilson is a professor of English at Wake Forest University. This essay is adapted from his book Against Happiness: In Praise of Melancholy, being published this month by Farrar, Straus and Giroux.
Here is the link.
Cloverfield
I thought this was a remarkable cinematic event. But you need to know that the characters are supposed to be vacuous and annoying, and that the opening scene is supposed to be obnoxious and superficial. The heroism is supposed to be thin. (The whiney NYT review I read is, in retrospect, an embarrassment.) And that the movie is supposed to make you feel physically nauseated. You are in fact witnessing a disaster. Most of all this is a movie about how the young’uns have no tools for moral discourse and that all they can do is utter banalities and take endless pictures of each other and record their lives for no apparent purpose. I can’t recall any other movie that so completely devastates its intended demographic. The integration of sound blips and flashing lights is brilliant. The homage to the tanks attacking Godzilla is loving. I didn’t even know how good this movie was until after the halfway point. Bravo.
Markets in everything: buy put options on your gadgets
You pay a small fee up front when you buy a new gadget. In return,
you get the right to sell it back to them for a pre-determined price at
a set time. With an 80GB iPod, for example, you pay $9 up front to be
able to resell it for $50 in a year, $40 in two years and $20 in three
years.They’re currently taking contracts on iPods, name-brand laptops and
desktop PCs, GPS units, flat-screen TVs and more. All in all, the
return on investment seems sub-eBay, but if you’re really into
long-term planning, the sureness might be worth the penalty.
Here is the full story, and thanks to Eric Kimbrough for the pointer.
Hackers Extort Cities?
Criminals have been able to hack into computer systems via the Internet and cut power to several cities, a U.S. Central Intelligence Agency analyst said this week….
"We
have information, from multiple regions outside the United States, of
cyber intrusions into utilities, followed by extortion demands," he
said in a statement posted to the Web on Friday by the conference’s organizers, the SANS Institute.
"In at least one case, the disruption caused a power outage affecting
multiple cities. We do not know who executed these attacks or why, but
all involved intrusions through the Internet."
I am highly suspicious – why has no one heard of this before? – but every year I do feel more and more like I’m living in a Neal Stephenson novel.
The Logic of Life, by Tim Harford
Our book forum starts this coming Wednesday, make sure you’ve read at least chapter one by then. You can buy the book here.
Results I do not believe
…an analysis of strike outs (failing to hit the ball three times in a
row) in American baseball from 1913 to 2006 showed that players whose
first or last names began with K suffered significantly more strikeouts
than other players. Why? Because in baseball scoring, K is used to
denote a strikeout – "For players with this initial, the explicitly
negative performance outcome may feel implicitly less aversive," the
researchers said.Next, an analysis of 15 years of MBA students’
grades at a large American University showed that students with the
initials C or D achieved significantly lower grades than students whose
initials were unrelated to grade scores, and students with the initials
A or B.Was this due to the students’ self-preference for their
initials or was it the examiners showing the bias? To test this, Nelson
and Simmons, asked hundreds of other undergrads to report their liking
for the different letters of the alphabet. A subsequent analysis of
their exam scores again showed that students with the initials C or D
performed less well, but only if they had previously shown a preference
for these letters. This shows that affection for one’s own initials
really is playing a role in the patterns being observed here.Another
study showed how far-reaching these effects can be. An analysis of
392,458 lawyers who studied at 170 law schools showed that as the
quality of law schools declined, so too did the proportion of lawyers
with the initials A or B who had attended.
Here is more. When I think of the letter K, I think of Ted Kluszewski, Harmon Killebrew, and brawny Poles who swing for the fences. Maybe that’s lame, but I don’t see that names with "S" strike out more often, or that names with "H" hit more home runs. Maybe "K" has special power, just ask Franz Kafka. The A and B stuff puzzles me too, but it also doesn’t seem consistent with other parameters on the power of suggestion. I also would expect the C and D names to do better than average, given all the names lower in the alphabet, at least if there is going to be an effect at all. Are people whose names start with the letter "B" more likely to be bloggers?
I’m not contesting the raw tabulations but my gut feeling is that the letters in your name correlate with physique or education or IQ in some other way. One paper is here, I don’t see a lot of controls.
Addendum: Andrew Belman seems puzzled too. Alex has a related post, he doesn’t feel totally puzzled.
Tax rebates don’t always work
Matt Shapiro and Joel Slemrod report:
Many households received income tax rebates in 2001 of $300 or $600. These rebates represented advance payments of the tax cut from the new 10 percent tax bracket. Based on a survey of a representative sample of households, this paper finds that only 22 percent of households receiving the rebate would spent it. Instead, they would either save it or use it to pay off debt. This very low rate of spending represents a striking break with past behavior, which would have suggested a much higher rate of spending. The low spending rate implies that the tax rebate provided a very limited stimulus to aggregate demand.
The pointer is from Angus. Purely coincidentally, a moment later I read the following:
…both the White House and Congressional Democrats are leaning heavily
toward a combination similar to the one the administration turned to in
2001 as a recession-fighting tool. It would include a one-time tax
rebate for individuals and an immediate expansion in the deductions
that businesses take for investment in equipment. If Congress acts
quickly, checks could be in the hands of American taxpayers as early as
spring.
Hmm….By the way, here is the Elmendorf and Furman paper on fiscal stimulus.
Addendum: Don’t forget Alex’s post on this. Mark Thoma and Bruce Bartlett are here, and as you might expect Greg Mankiw asks the correct pointed question.
In defense of (some) neuroeconomics
Andrew Samwick at Vox Baby reports on the neuroeconomics sessions at the AEAs. He is justifiably impressed with the work of David Laibson. Laibson has pioneered the theory and implications of hyperbolic discounting.
But a clever economist can always come up with a rational (time-consistent) model to explain what appears to be irrational hyperbolic discounting. Laibson, however, uses fMRI scans to show that different parts of the brain are activated when making decisions at different time-scales. As Andrew notes, the isolation of the different decisions to different parts of the brain gives Laibson’s argument significant credibility against more standard neo-classical explanations for the same phenomena.
How would tighter regulation affect mortgage origination?
Here’s one paper suggesting that regulation doesn’t necessarily solve current problems:
We find that most aspects of mortgage broker licensing systems, such as mandatory professional education, do not have a significant and consistent statistical association with market outcomes. However, one component — the requirement in many states that mortgage brokers maintain a surety bond or minimum net worth — does have a significant and fairly consistent statistical relationship with both labor and consumer market outcomes. In particular, we find that tighter bonding/net worth requirements are associated with fewer brokers, fewer subprime mortgages, higher foreclosure rates, and a greater percentage of high-interest-rate mortgages. Although we do not provide a full causal interpretation of these results, we take seriously the possibility that restrictive bonding requirements for mortgage brokers have unintended negative consequences for many consumers. On balance, our results also seem to support theories of occupational licensing that stress the importance of pure entry and exit barriers over those that focus more on the human capital effects of licensing.
Get that? Tighter regulation does mean fewer subprime mortgages, but also higher foreclosure rates and higher interest rates on the mortgages. This paper is hardly the final word, if only because broker licensing is not the only possible means of regulation. But in the meantime caution is in order; don’t be attracted to the idea of tighter regulation simply because you feel we haven’t had good enough regulation so far. Regulators are famous for fighting the last war, not preventing the crisis to come.
So far I’m not finding an ungated copy of this paper.