Outsourcing and dining?
White House Council on Economic Advisers chief Gregory Mankiw was scalded last week for saying that sending jobs overseas was a good thing for the economy. So on Tuesday, he tried to, as they say on the Hill, revise and extend his remarks at a luncheon with economists. The restaurant? Chinatown Garden on H Street NW.
The Bombay Club was booked?
Here is the link. I propose that all opponents of outsourcing be forced to eat American food for one month straight.
The price of eternal vigilance
I am just back from Philadelphia where for the first time I visited Independence Hall, birthplace of the Declaration of Independence and the Constitution. I was shocked by how small and modest is the main room in which it all occurred – there is barely space enough for thirteen simple desks set side-by-side. The constitutional convention could have fit in my living room!
Independence Hall is remarkable but I could not enjoy it fully because I was disconcerted by the circumstances of my arrival. I flew into Philadelphia and of course was scanned, wanded, and de-shoed before boarding the plane – this I was prepared for – but it was depressing to walk from the Liberty Bell to Independence Hall and be subjected again and again to gates, armed guards, scanning, searching and surveillance. What is next? Will we be asked to show ID before entering the birthplace of liberty? The experience was upsetting.
It seems to me that the price of eternal vigilance is liberty.
The Ricardo effect in Haiti
The civil war in Haiti is intensifying, to the detriment of virtually everyone. Many American observers do not understand how poor Haiti is, how few good institutions it has, and how much it is currently hovering on the brink of a true disaster. The new blog HaitiPundit.com offers regular updates.
One of the most memorable accounts I read of Haiti concerned the time when a ferry sank off the coast, leading to hundreds of deaths (this has happened more than once, I might add). Oddly enough, a large number of employees were on hand to help bring in the bodies. Normally when a boat comes to shore it stops at a dock. Haiti could not afford the dock, so a large number of people are hired to wade out into the water and carry the passengers back to shore on their shoulders.
No, flying around the island isn’t safe either, nor is driving. Here is a short explanation (scroll down a bit) of the Ricardo Effect, which notes that capital is substituted for labor at higher wage rates.
We feed your need
Yes we do RSS. What is RSS? It’s a format for stripping a blog of its non-text items and dividing each entry into useful chunks such as a headline and body text. A news “aggregator” automatically and periodically checks the RSS “feed” of all of your favorite blogs and when it finds new material it downloads the headlines and the first few sentences of each entry. Since only a limited amount of text is downloaded, the process is quick. If you read a lot of blogs, aggregators have two advantages. You won’t waste time checking a site only to find that is has no new material and skimming headlines allows you to more efficiently pass over what is of little interest to you – when you find something that does interest, you can click on that item and more information appears.
Reading blogs through an aggregator can sometimes be annoying as items don’t always format correctly, especially when you want to view non-text items or follow a link from a blog to another site. But aggregators are quickly becoming the delivery method of choice for blog junkies. Wired reports:
Maniacally wired netizens who read a hundred blogs a day and just as many news sources are turning to a new breed of software, called newsreaders or aggregators, to help them manage information overload.
My estimate is that if you regularly read more than 5 blogs a day then you should try an aggregator. On the other hand, once you have found MR why would you go elsewhere?
There are lots of aggregators available. I quite like FeedDemon. Newsgator integrates with Microsoft Outlook. See the Wired link for some other choices. I have not done a side to side comparison so let us know what you like and what works well with MR. If a site has one, FeedDemon will automatically search for and find its RSS feed. If your aggregator doesn’t find our feed the link is on the left hand side of this page above the Google search, the one that says Syndicate this site (XML).
The real threat to the music industry?
I am a bit late getting MR up today because last night I took Yana to her first rock concert. We saw Fountains of Wayne, a nerdy New Jersey pop group that has numerous excellent hooks.
After they played “Stacey’s Mom,” their best known song, the band leader stopped and made an announcement. “The real problem in the music industry isn’t illegal downloads. It’s all of you who use your cell phones to broadcast the concert to your friends at home who aren’t paying for tickets.”
He made as if he was joking, but the crowd took him quite seriously.
The Millennium Challenge Account progresses
Some facts:
1. The U.S. is engaged in a major restructuring of its foreign aid programs, bypassing the multilateral institutions. For better or worse, this is one of the most innovative ideas of the Bush administration.
2. The Millennium Challenge Account represents a yearly foreign aid increase of about nine percent. By 2008 this could amount to a total of $5 billion a year.
3. For this year to come, perhaps no more than fifteen nations will win awards. All but five countries in Latin America are ineligible for the awards, largely because they are now too wealthy
4. Countries such as Senegal and Ghana, which are poor but respect (some) basic civil liberties, are leading contenders for funds.
5. We are told that grants will be handed out in accordance with a variety of indices, many of them non-governmental, such as the corruption index of Transparency International, the rule of law index of the World Bank Institute, and the Heritage Foundation index on trade policy and freedom.
6. The U.S. will not try to dictate how the money is spent, but rather leave this decision in the hands of the receiving government. This, plus the use of the indices, represents the real innovation of the policy. In essence we are giving bonuses to countries with good policies.
Here is a recent New York Times story on the policy initiative. Here is a previous MR post on the topic.
What’s the bottom line? One scenario is that the Bush people are serious about sticking to the chosen indices. In that case we are funding the marginal, otherwise-not-worth-doing Senegalese project. Third world countries typically need stronger states (as opposed to bigger states per se), it is an open question how much outright cash gifts will further this end, without further mechanisms for accountability. Another scenario involves a deepening of our fiscal crisis, and the use of the fund to prop up current efforts in Iraq and Afghanistan, or perhaps anti-AIDS efforts. In this case we have created another bureaucratic instrument to finance aid efforts that are already in place.
Stay tuned…
The rise of barter clubs
Here is an update on the current surge in barter clubs:
“I live my life on barter,” says [Dale] the spunky, 5-foot-3-inch consummate deal-maker, who is part of a growing network of people working and playing in a largely cashless universe.
Dale, 57, runs Barter Advantage, one of hundreds of exchanges around the country that have emerged in recent years that take the age-old concept of barter – neighbors swapping chickens for a hog, for instance -to new, sophisticated, IRS-approved heights.
Instead of simple swapping, the exchanges offer what’s called round-robin trading, allowing members to barter their products and services for credits that they can later spend on whatever they want – from travel to office supplies to dental work – as long as it’s offered within the network.
Here is a previous post on the benefits and limits of barter clubs. Here is a previous post on the enhanced liquidity of gift certificates.
Thanks to Paul Jeanne for the pointer.
Addendum: Here’s a way to barter your books and music, thanks for Daniel Akst for the tip.
What ten books should an undergraduate read?
Here is what university presidents think:
1. The Bible
2. The Odyssey
3. The Republic
4. Democracy in America
5. The Iliad
6. Hamlet
7. (tie) Wealth of Nations, The Koran, The Prince
10. (tie) Federalist Papers, Don Quixote, On Liberty, Invisible Man, King Lear, War and Peace, Moby Dick, The Lexus and the Olive Tree
I admire Tom Friedman’s writings but he is in some pretty exalted company.
I would nix The Koran, which few non-Muslims get much out of, nix The Prince, which few non-Straussians understand, and downgrade Invisible Man and Lexus, both of which are too trendy. Smith is a worthy representative of economics but I would like to see some science on the list, not a classic but rather a book that undergraduates can understand. When it comes to the category of “most cited authors” (see the link, which offers other interesting measures as well), Stephen Hawking makes an appearance at eighth, just behind Dostoyevsky, Dickens, and Aristotle.
The greatest irony?: Two university presidents cited What Color is Your Parachute?
Thanks to www.politicaltheory.info for the pointer.
Measuring Adam Smith’s sympathy
The ability to appreciate other people’s agony is achieved by the same parts of the brain that we use to experience pain for ourselves.
In other words, Adam Smith, a crazed bachelor writing in remote Scotland, and with no real means of making empirical measurements, nailed it. Some people’s introspection is better than others, here is Smith on sympathy. Read the full story about the recent work in neuroscience, here is another account. Here is a page for the researcher, Tania Singer.
Can’t these guys take a joke???
Remember this story?
A 23-year-old student with no knowledge of economics bluffed his way into a trip to China to teach a prestigious course on the subject at Beijing University.
Matthew Richardson, in his fourth year at Oxford University, only gave up after nine hours of lectures, when he ran out of material from pages ripped out of an A-level text book.
It now seems the economist imposter is getting in trouble. His teachers, his dean, and his hosts are upset, BBC uses the word “furious” to describe the Chinese. How much less angry would they be, had they caught the guy up front? Even the interpreter was no more than suspicious. His college might discipline him for being absent during term (huh?), in this age of corporate scandals perhaps they should award him an MBA instead.
Thanks again to Ken Hirsch for the original pointer and the follow-up.
Q&A with Matthew Rabin
Matt is a MacArthur fellow and one of America’s brightest economists. He is best known for exploring the idea that human choices are not fully rational. I also like his argument that if you exercise too much moral suasion against a person, rather than heeding your opinion the person will simply stop listening. Read an interview with Matt here. At the bottom of the interview you will find links to his working papers. Thanks to www.2blowhards.com for the pointer.
Movie update
Ender’s Game, one of my favorite science fiction novels, will be a movie. The story of the book appears sophomoric at first, but it has some genuinely new intellectual and moral twists (which I won’t give away). Here is a web site about the book, which offers varying levels of detail and helps you avoid spoilers. Thanks to www.geekpress.com for the pointer to the film news.
The next artistic explosion?
According to the Entertainment Software Association, 50 percent of Americans over the age of six play computer games, and the industry had $11.4 billion in sales in 2003, more than the film industry. Last year, 63 percent of U.S. parents said they planned to buy a video game.
So will computer games be the breeding grounds for our next artistic renaissance? I’ve yet to see the evidence. Many people are negative on the aesthetic prospects:
Some in the industry, however, are not so sure that games will ever mature. They fear games could be a dead end like comic books – valuable as a social phenomenon, but outside a select few titles like Art Spiegelman’s “Maus,” not worth a great deal of individual study. “I seldom play computer games, because it’s such a depressing experience,” said Chris Crawford, a game designer who is building a program to create interactive stories. “I end up shaking my head in dismay at how stuck the designers are in a rut.”
Here is the full story, including a discussion of how academics are hoping to raise aesthetic standards in the area. Get this:
The field has its own research group (the Digital Games Research Association) and peer-reviewed online critical journal, Game Studies, where one writer, discussing the horror and splatter-fest PlayStation game “Silent Hill,” wrote that it “favors syntagmatic causality over descriptive explication. Its distinct chain of puzzle solving and conditional progression enable it to instigate and maintain pace and tension, and so fuel its unnerving visions of death and possession.”
Imagine if Motown or be-bop jazz had been studied in these terms, in their heydays. If that is our best hope, I am skeptical too.
The best case scenario is that game designers are breeding aesthetic wonders in their highly commercial and competitive environment, and outsiders such as myself simply don’t know it yet. The worst case scenario is that computer games unbundle “fun” and “the aesthetic,” and sell us the former at the expense of the latter. Mozart gives us both beauty and entertainment, but in a world with very low fixed costs, perhaps these two qualities will be sold separately from now on. Perhaps computer games, and books such as The Da Vinci Code, can damage the arts by hindering entertainment from cross-subsidizing beauty.
I’ll bet on the best case scenario, since I think enough people prefer indivisible cultural goods that bundle many different qualities, including aesthetic quality. But I’m still waiting to see the payoff.
Addendum: Here is a review of an < href="http://www.gameforms.com/features/misc/bang/">art exhibit of video games, thanks to Hei Lun Chan for the pointer.
Medicaid and the High Price of Pharmaceuticals
The price that Medicaid pays for pharmaceuticals is based upon the price in the private market. When Medicaid prescriptions are only a small portion of the total market this works reasonably well at avoiding the twin problems of monopsony (Medicaid pushing prices so low that R&D incentives are curtailed, as has happened in the vaccine market) and monopoly (pharmaceutical firms jacking prices up above fair market value).
But in some areas, Medicaid accounts for a large fraction of the market. The Medicaid share for HIV drugs, for example, is more than 50% and in antipsychotics the Medicaid share is more than 75%! (I have cribbed from this paper by Mark Duggan.) In this situation it makes sense for pharmaceutical companies to raise prices – they lose customers in the private market but this is more than made up for by the increase in prices that they can charge to Medicaid. As a result, average prices for HIV and antipsychotic drugs are higher than for any other drug categories.
The Medicaid pricing formula can create a vicious spiral. Medicaid pricing causes prices to rise which pushes more people into Medicaid thereby shrinking the private market and increasing the incentive to raise prices yet further. To add insult to injury, high pharmaceutical prices are then said to demonstrate why we need more government involvement.
How to impersonate an economist
Read this story of a Mr. Matthew Richardson in China. And if you think your child will be above average, do not give him or her a very common name. Thanks to Ken Hirsch for the pointer.