Or is it China fact of the day?

…each doubling of distance reduces trade by 90%.  For example, the distance between Los Angeles and Tijuana is about 150 miles.  If Tijuana were on the other side of the Pacific instead of across the border in Mexico and if this distance were increased to 10,000 miles, the amount of trade would drop by a factor of 44.  Other things held constant, expect the amount of commerce between a Shanghai resident and an LA residence to be only about 2% of the commerce between Tijuana and LA.

That is from Ed Leamer’s review of Tom Friedman, cited by Alex.

Or so the Chicago Tribune reports:

John Lott Jr. of Virginia, a former U. of C. visiting professor, alleges that Levitt defamed him in the book by claiming that other scholars had tried and failed to confirm Lott’s conclusion that allowing people to carry concealed weapons reduces crime.

"!" is all I can say…thanks to www.politicaltheory.info for the pointer.

To keep out Mexicans, that is.

For purposes of argument, let us say you are anti-immigration.  And let us say the fence would cost nothing to build and maintain.  You still might not want one.

Mexicans illegals enter the U.S. through two major channels.  They run (or swim) across the border, or they buy illegal papers.  Usually the papers cost more than the hiring the crossing guide.  The papers make for an easier and safer journey, for obvious reasons.  Mexican women, I might add, are more likely to use false papers, given their (their father’s?) greater aversion to the physical strain of four days in the desert.

If you shut off the desert walks (assume the fence is impregnable, ha!), more Mexicans will use illegal papers. 

Did I add I would expect the cost of the papers to fall, not rise?  Many Mexicans don’t trust the purchase of papers, as opposed to the desert walk.  If the walk were impossible, networks for manufacture and sale of the papers would become much better developed.  The illegal papers would become much cheaper and much more widely used. 

In other words, more young women will come.  Many of the Mexican men will have wives here, not back home.  Many more young Mexicans will be born on U.S. soil. 

Get the picture?  Hispanamerica is coming, like it or not.  Let’s deal with it constructively.

Tyler, you are always so optimistic.  But your own "dismal science" offers neither empirics nor analysis to back this attitude up.

The standard economic arguments about resources focus on the margin, while the real problem is infra-marginal.  Don’t be misled by all that talk of prices and substitution.  We are running out of resources and soon. 

Think about eating your beloved dark chocolate, Tyler.  Let’s say you have only four squares left of Lindt in the cupboard.  Yes, as you eat more the shadow price of each remaining square goes up.  Big deal.  You are still going to eat all the chocolate before dinner.  Economics tells us only that you will end up on the Pareto frontier, but that frontier still has some pretty miserable points.  We are about to approach them.  Who cares if prices mean that we meet our doom while equating private first-order conditions?  We are simply too voracious for the resources at our disposal.

Market signals and property rights do not work for the globe as a whole, unless you have monopoly ownership of the entire world (hmm…).   Property rights work best for local problems, such as fishing in a single lake or who should wash the dishes.  Private property won’t cure the problems of bad air, poisoned oceans, global warming, or the overall carrying capacity of the planet.  We will get doom, doom, and more doom.

The real question is empirical: are global demands for resources big enough so that the problem resembles you with your four squares of chocolate?  Yes.  The environment is toast, sooner or later and probably sooner.  And it is doomed precisely because capitalism is such a wonderful productive machine.  Do you really think you can fill the planet with so much rapacious human biomass without significant and indeed overpowering external effects?  Our only hope is that we all become plugged-in machines who don’t need much of an environment any longer.

It is true that resources prices have been falling, on average, for some time now.  But the Industrial Revolution is a remarkably recent development and we are just getting started.  Mankind’s current productive powers truly are unprecedented, a fact which you libertarians love to stress in other contexts, just not this one.

It would be mere luck if energy-saving technologies outraced nature-destroying ones.  And even if this were the case for a while, energy-saving technologies, in the long run, simply encourage us to raise our rapaciousness up another notch.  The infra-marginal becomes even more infra- than we ever dreamed.

Now let us get speculative.  Did I mention that in the economics of the future — once we are in exponential growth modes — the concept of price will hardly matter?  It will be more like an engineering problems where 10x of today’s gdp is produced every week, and we have to see whether this wrecks the globe in ten or rather twenty years’ time.  Don’t even bother recycling.  Furthermore all you futuristic nerds out there should downgrade the relevance of price theory, given the size of the changes you have in mind.

My parting shot: Maybe you think I am a pessimist.  But it probably is better if resource pessimism is true.  Life as a hunter-gatherer is still life.  And those Pygmies produced some pretty good vocal music.  If the price of energy were to keep falling, that would mean everyone could, within a few generations time, own the destructive power of a nuclear weapon in his or her iPod.  Now that’s scary.

As I have said in the past, Tyrone really is a pessimistic fellow.  If that dark chocolate is gone, it is usually because I ate it in advance, knowing he would otherwise steal my supply.  There are only so many cupboards in the kitchen, and Tyrone has learned all my hiding places.  And why didn’t I buy more at the store in the first place?  It is simple: I had to take Tyrone to his Zen Buddhism class; this sad sack doesn’t own a car.

Ed Leamer reviews Thomas Friedman’s The World is Flat.

When the Journal of Economic Literature asked me to write a review of The World is Flat, by Thomas Friedman, I responded with enthusiasm, knowing it wouldn’t take much effort on my part. As soon as I received a copy of the book, I shipped it overnight by UPS to India to have the work done. I was promised a one-day turn-around for a fee of $100. Here is what I received by e-mail the next day: “This book is truly marvelous. It is perhaps the greatest book ever written. It will surely change the course of human
history.” That struck me as possibly accurate but a bit too short and too generic to make the JEL happy, and I decided, with great disappointment, to do the work myself.

Don’t let the opening fool you, in the course of much fun at Friedman’s expense Leamer does a superb job of reviewing economic geography, trade theory, and recent economic history.  And lest you think he picks easy targets, Paul Samuelson and others come in for some knocks as well. 

Hat tip to Prashant Kothari at the Indian Economic Blog.