China fact of the day: Striking for longer hours
Taiwanese factories in Dongguan [a city between Hong Kong and Guangzhou and a major centre of manufacturing] are facing a problem. According to a news report in the United Daily in Taiwan, over a thousand workers at a factory, which produces goods for big brand names such as Nike, demonstrated for two days and damaged equipment and factory cars. 500 armed police arrived and quashed the riot. Several leaders were arrested.
The main cause for the riot was the limitation [sic] on working hours at the factory. The shorter hours have been requested by US companies so as to avoid criticism from various groups on long working hours. However, the mainly migrant workforce want to work longer hours so they can earn more [emphasis added]. Consensus had been reached by the US companies, the Taiwanese-invested factory and local government that the maximum working hours per week should be set at 60 hours [which is still a breach of Chinese Labour Law, but less than other manufacturing plants]. However, this reduction in hours was unsatisfactory for the workers and the resulting riot was serious [emphasis added].
Here is the link, and thanks to Jeffrey Tucker at The Mises Blog for the pointer. And here is my previous post on social unrest in China.
Dear Economist: Are Cities Environmentally Sound?
The Financial Times suddenly has seen fit to offer Tim Harford’s weekly economics column in the U.S. Saturday edition. Here is last week’s sample:
Dear Economist: I am worried about the damage we wreak on our planet, and I want to do my bit to reduce my personal environmental impact. I was thinking of moving to the country and living a more self-sufficient life. But is there a better way? Jocelyn Hathaway, London
Dear Jocelyn,
You should ask yourself, rather, if there is a worse way. London may not appear to be the model of sustainble development, but it is an organic commune compared with what would happen if the other 7m inhabitants selfishly decided to move to the country.
Tightly packed, rich cities such as London are easily the most environmentally friendly way to enjoy modern life. Wealthy people squeeze into cozy apartments…Denser cities mean more efficient transport. Only 10 percent of commutes into central London take place in cars.
Manhattan, the densest and richest city of all, was recently described in The New Yorker magazine as "a utopian environmentalist community" and it is vastly more energy-efficient, per person, than any of the 50 American states.
My advice is to forget all this self-centred nonsense about moving to the country. Instead, you should put double-glazing in your flat, travel to work by bike and relax in the smug knowledge that you are living in one of the greenest cities on the planet.
Of course a full assessment must also include the dependence of cities on the surrounding countryside, and vice versa. Cities both spur and reflect economic growth, which puts pressure on aggregate resources. Nonetheless this answer remains a useful corrective to urban whinging. The real question is when the FT will put Harford’s column on-line to non-subscribers…
Mansfield on Economists
Here is Harvard’s Harvey Mansfield on economists (in relation to the Summers affair).
Summers is an economist, and there is almost no such thing as a suave
economist. The great Joseph Schumpeter, a Harvard economist of long ago, claimed
to be the world’s greatest lover as well as the world’s greatest economist (it
is said), but he was a singular marvel. The reason why economists are blunt is
that words of honey seem to them mere diversion from reason and self-interest,
which are the only sure guides in life.
Whither social security privatization?
Only one in three Americans approve of
President Bush’s handling of Social Security, his lowest rating on the
issue since he took office. A USA TODAY/CNN/Gallup Poll conducted
Friday-Sunday found that 35% approved of Bush’s Social Security record,
56% disapproved and 9% had no opinion. That was down from three weeks
ago, when 43% approved. In March 2001, just after he took office, 49%
approved. (Related: Poll results)
Here is the story. Yes poll results are tricky but this suggests we will not get a large reform plan. I expect a face-saving measure with a tax increase on the FICA maximum, and a nominal nod to "private" accounts in the form of forced saving. As they say, be careful what you wish for…
Are economists better at games?
"In poker, world champion of poker, Chris "Jesus" Ferguson, has his PhD in Computer Scientist from UCLA and his father teaches game theory there. He and his father have co-authored an article on Borel and von Neumann’s models of poker, and from what I’ve been able to gather, Ferguson’s style of play draws heavily from game theory. He and his father also show why the very best poker players in the world play a very aggressive game (actualy, Borel and Nash showed it, but Ferguson and his dad helped translate it for me) where optimal playing is actually to bluff *a lot* (more than you might think), even though every single book out there that teaches you how to play Texas Holdem recommends a conservative "tight aggressive" strategy. Game theory suggests to raise (in limit poker) with your absolute dead worst hands a lot more than people usually feel comfortable doing – but this is exactly the behavior of the greatest, like Doyle Branson, Gus Hansen, and TJ Coultier. So, I can buy that economics and game theory more generally should make one the better player. But, it’s also interesting to note that the world’s best poker theorists (David Sklansky) is criticized for not being able to pull it off in real play. It’s not enough to actually know the opimal move; it takes a certain level of openness to variance to be truly great at poker. So I suspect it’s a mix of heart and head, and game theory can only take you to the water, but not help you drink."
Can we make objects invisible?
The idea of a cloak of invisibility
that hides objects from view has long been confined to the more
improbable reaches of science fiction. But electronic engineers have
now come up with a way to make one.Andrea
Alù and Nader Engheta of the University of Pennsylvania in Philadelphia
say that a ‘plasmonic cover’ could render objects "nearly invisible to
an observer". Their idea remains just a proposal at this stage, but it
doesn’t obviously violate any laws of physics…The key to the concept is to reduce
light scattering. We see objects because light bounces off them; if
this scattering of light could be prevented (and if the objects didn’t
absorb any light) they would become invisible. Alù and Engheta’s
plasmonic screen suppresses scattering by resonating in tune with the
illuminating light.
Read more here.
Aids, Condoms and Africa
Regarding my post, The African Cliff, a number of readers wrote to me about the Catholic Church’s anti-condom teachings (and apparently in some cases mis/disinformation campaigns).
I have three reasons for thinking that Catholic teaching on condoms, whatever you might think of the substantive issue, is not a major factor in the African Aids crisis. First, Catholics in the US don’t seem to find it difficult to ignore the Church’s teachings when these are costly. Second, many African countries with high Aids rates have few Catholics. (Compare the countries in yesterday’s graph with this map of Catholic membership in Africa.) Third, couples who do not use condoms but follow Catholic teaching in regards to monogamous marriage are unlikely to contribute much to the Aids problem. It seems inconsistent, moreover, to assume that religion is strong enough to prevent men from using condoms but not strong enough to stop them from sleeping with multiple partners. Does the man having sex with a prostitute feel less guilty because he isn’t wearing a condom? (Admittedly, I don’t know enough about venial versus mortal sins to be sure about the latter.)
We hope that Marginal Revolution can be enjoyed by the whole family so I am somewhat reluctant to discuss a second hypothesis brought to my attention by Steve Sailor. Nevertheless intellectual honesty compels me to mention dry sex.
Epidemiologists are also finding that multiple concurrent sex partners are an important transmission route. Halperin and Epstein writing in the Lancet (subs. required) note:
Of increasing interest to epidemiologists is the observation that
in Africa men and women often have more than one–typically two or
perhaps three–concurrent partnerships that can overlap for months or
years. This pattern differs from that of the serial monogamy more common in
the west, or the one-off casual and commercial sexual encounters that
occur everywhere.
Morris and Kretzschmar
used mathematical modeling to compare the spread of HIV in two
populations, one in which serial monogamy was the norm and one in which
long-term concurrency was common. Although the total number of sexual
relationships was similar in both populations, HIV transmission was
much more rapid with long-term concurrency–and the resulting epidemic
was ten times greater.
It is important to understand that multiple concurrent partners does not mean more partners in a lifetime. What differs in parts of sub-Saharan Africa is the pattern and timing of sexual relations not the number of lifetime partners. (See also Sailor for a tendentious but interesting take on the why the pattern might be different in parts of Africa.)
The African Cliff
Even though I know about AIDS in Africa this figure shocked me.
What I don’t understand is why the discussion of solutions focuses so heavily on AIDS drugs when condoms are cheaper and more effective in preventing spread of the disease. And why isn’t condom use in Africa skyrocketing? (A notable exception is Uganda where AIDS rates have begun to level off due to condom use– see graph). Condoms are cheap – even if not to every African they can be easily subsidized by donor groups or governments but there is still a large condom-gap in Africa.
Note that in theory condom use could increase transmission of AIDS if it increases sex. Evidence from the US and elsewhere indicates this is unlikely in practice. Moreoever, it doesn’t explain why more condoms are not being used.
Figure from the Economic Report of the President (2005) via Ben Muse.
Markets in everything
[some University of Michigan students] are getting $100 cash payments for keeping their dorm rooms presentable and opening their doors so prospective students and their parents can take a look during campus visits…
Participants must let tour groups see their room in the middle of the day, and have to be out of bed and dressed [imagine that!], said Randi Johnson, the university’s housing outreach coordinator. Display of anything illegal, offensive or banned is forbidden.
Here is the story, and thanks to Michael Rizzo for the pointer.
Does citrus smell make you buy?
Under certain conditions, a citrus smell seemed to magically open the
pocketbooks of shoppers and increase their desire to spend, according
to Jean-Charles Chebat of the HEC Montreal graduate school of business,
Richard Michon of Ryerson University in Toronto and L.W. Turley of
Western Kentucky University. Their findings appear in the latest issue
of the Journal of Business Research.But retailers with a nose for sales should not order industrial-size
vaporizers and fill them with orange scent just yet. The researchers
cautioned that the citrus smell provoked additional spending only if
stores were moderately busy. If they were too crowded or too empty, the
power of citrus disappeared. "Crowds have their own smells," Chebat
said in an e-mail. "Citrus can counterbalance the effects of such
smells to a certain extent. However, it has its limitations. As for the
least crowded environments, citrus may be too arousing."
Here is the full story. Here is another summary, which includes a discussion of using scents to encourage gambling. Here is a link to the paper and related works.
Do gay men read maps like women?
Gay men employ the same strategies for navigating as women – using landmarks to find their way around – a new study suggests.
But
they also use the strategies typically used by straight men, such as
using compass directions and distances. In contrast, gay women read
maps just like straight women, reveals the study of 80 heterosexual and
homosexual men and women.
Here is the full story.
Copyrighting Storms
Writing in the Financial Times, James Boyle makes an interesting comparison between how Europe and the U.S. treat government produced data, everything from "ordnance survey maps and weather data, to state-produced texts,
traffic studies and scientific information."
On
one side of the Atlantic, state produced data flows are frequently
viewed as potential revenue sources. They are copyrighted or protected
by database rights. The departments which produce the data often
attempt to make a profit from user-fees, or at least recover their
entire operating costs….The other side of the Atlantic practices a benign form of
information socialism. By law, any text produced by the central
government is free from copyright and passes immediately into the
public domain.
Surprisingly, it’s the US which practices the "benign form of socialism."
Take weather data. The United States makes complete weather data
available to anyone at the cost of reproduction. If the superb
government websites and data feeds aren’t enough, for the price of a
box of blank DVD’s you can have the entire history of weather records
across the continental US. European countries, by contrast, typically
claim government copyright over weather data and often require the
payment of substantial fees. Which approach is better? If I had to
suggest one article on this subject it would be the magisterial study
by Peter Weiss called “Borders in Cyberspace,” published by the
National Academies of Science. Weiss suggests that the US approach
generates far more social wealth. True, the information is initially
provided for free, but a thriving private weather industry has sprung
up which takes the publicly funded data as its raw material and then
adds value to it. The US weather risk management industry, for example,
is ten times bigger than the European one, employing more people,
producing more valuable products, generating more social wealth.
Another study estimates that Europe invests €9.5bn in weather data and
gets approximately €68bn back in economic value – in everything from
more efficient farming and construction decisions, to better holiday
planning – a 7-fold multiplier. The United States, by contrast invests
twice as much – €19bn – but gets back a return of €750bn, a 39-fold
multiplier. Other studies suggest similar patterns in areas ranging
from geo-spatial data to traffic patterns and agriculture. “Free”
information flow is better at priming the pump of economic activity.
Link addded. Thanks to Paul van Hoek for the pointer.
Weather Incentives Work?
The Russians will soon find out.
Moscow Mayor Juri Luschkov said: "Weather forecasters in our city and
the surrounding area will be held responsible for financial losses that
the city incurs through their incorrect prognoses."….He did not elaborate on how much the fines would be or if the cash
would be taken from the weathermen, or the companies they worked for.The
fines come after the head of the Romanian National Meteorology Agency,
Ion Poiana, was fired after he predicted warm weather fronts on days
when temperatures plunged to a record minus 36 degrees centigrade.
Thanks to Carl Close for the pointer.
Brad is wrong, so is Brad
Brad DeLong quotes Brad Plummer:
[I]t really doesn’t make a difference whether you pay 40 percent of your income for private health care, or 40 percent of your income in taxes that then go to government-administered health care. I mean, yes, in one sense it makes a difference: If you think the free market is a better way of delivering health care, you’ll endorse option 1; otherwise, you’ll endorse option 2. But in the end, you’re still paying 40 percent of your income….it’s disingenuous to say, "Oh no! America’s doomed! We’re going to have
to raise taxes massively in the future in order to afford things we’d
be spending a good chunk of our income on anyway!"
Brad DeLong writes "Brad is absolutely right. (I like the way
that sentence sounds: I wish *I* heard it more often from others.)"
Sorry Brad (and Brad), I’d like to oblige but there is a big difference between spending 40 percent of your own income on health and having 40 percent of your income taken in taxes and spent on health even if we assume that the spending is on exactly the same thing. The 40 percent of your income spent on health is a benefit of work, a reason to work harder, but the 40 percent taken in taxes is a cost of work that creates a dead weight loss. Moreover, at 40 percent plus the dead weight loss is going to be big.
To make the problem with Brad P.’s thought experiment clear suppose that we documented exactly how everyone spent their yearly income. Now we tax everyone 100 percent and provide them with exactly what they were buying before. Nothing changes, right? Wrong. At 100 percent tax there is no longer any incentive to work – thus no one works and nothing is provided. Everything changes.
Why are land taxes special?
Recently Bryan Caplan and I were chatting about Georgism. Henry George is well-known for his insistence on taxing land. But why land? What makes land special rather than labor or capital?
As I understand the doctrine, there is no special case for taxing improvements on land. Instead government should tax the "barebones" or "in situ" value on land. Say that land currently sells for $100,000 an acre, but would sell for $50,000 unimproved. We should levy the tax only on the $50,000. Supposedly we are then taxing an inelastic factor and creating only minimal distortions. Did not Adam Smith offer a similar recommendation? What better way to fund government?
Fair enough, but then why not tax the in situ values of labor as well? The "barebones" value of labor is of course leisure. That is what labor is worth when no extra effort is added to the picture. Therefore an optimal tax system should try to tax leisure. This may prove difficult, but why should it be harder than taxing the barebones value of land? Note that sometimes we are content to tax complements to leisure, such as large camper vans.
What if we taxed complements to the in situ value of land? These would be the factors — like labor and capital — that add value to barebones land. So I take the Georgist view to imply two claims. First, it is easier or better to tax barebones land than barebones labor. Second, taxing a factor directly is much better than taxing complements of that factor. Since I am not convinced either of these are true, I hold no particular attachment to the idea of a single tax on land.
I also share Benjamin Tucker’s concern as to how the in situ value of land should be defined. Some of the problems are conceptual rather than empirical. Land values are interdependent. When assessing the in situ value of my land, what assumptions should be made about the values of surrounding lands or the actions of other people? When the steamship is invented, should all taxes on American land have risen?
I might add that Bryan has different objections, which he may someday reveal to us all.