The economics of Shakespeare
Commercial wealth, urbanization, and early globalization helped make the works of Shakespeare possible. Shakespeare himself was an effective and commercially minded businessman. Here is the full story, courtesy of Friedrich at www.2blowhards.com. Read the whole thing.
Can the U.S. government manipulate the real exchange rate for the dollar?
Exchange rates today respond in large part to capital flows–not to the utterances of central bankers and finance ministers. And the vast structural forces affecting those flows–the comparative economic strength of the United States vs. the Eurozone, the insatiable desire by U.S. businesses and consumers for imports–are far beyond the reach of this, or any, administration.
The argument goes through a variety of detailed cases, click here for the full account.
You lie more over the phone
Relative to email, that is. Why? Email leaves a permanent record and you are afraid of getting caught in your lies.
Jeff Hancock of Cornell University in Ithaca, New York, asked 30 students to keep a communications diary for a week. In it they noted the number of conversations or email exchanges they had lasting more than 10 minutes, and confessed to how many lies they told.
Hancock then worked out the number of lies per conversation for each medium. He found that lies made up 14 per cent of emails, 21 per cent of instant messages, 27 per cent of face-to-face interactions and a whopping 37 per cent of phone calls.
That’s a lot of lying. Here is the full story.
North Korea on the Web
Check out the website of the Democratic People’s Republic of Korea. From the opening image of electrification to the leader worship and slogans (“The Great Leader Kim Il Sung Will Be Always With Us!”) the website looks and feels like an ironic museum piece. The fact that it is not, is an eerie if useful reminder of things too often taken for granted.
Thanks to Curtis Melvin for the link.
Rewards for Justice
The State Department’s Rewards for Justice program has been quite successful. At the twenty five million dollar level we captured one ourselves (Saddam) but paid a reward for the capture of Al Qaeda leader Khalid Sheikh Mohammed. Qusay and Uday Hussein were located due to a reward as was Ramzi Yousef and the terrorists responsible for the destruction of Pan Am 103. Know where a terrorist is located? The Rewards for Justice homepage is available in Arabic, Hindi, Pashtu, and Swahili among other languages.
No baby, you really ARE beautiful…
Carry a lie detector in your pocket:
The Love Detector is based on layered voice analysis, a system that was developed for security work by Nemesysco, an Israeli company, and adapted for personal use by V Worldwide, the international distributor.
The Love Detector relies on a simplified form of the technology, said Richard Parton, chief executive of V Worldwide. The security version applies 8,000 algorithms to 129 parameters of a speaking voice, assessing, among other things, levels of emotion, embarrassment and concentration as well as whether what is said reflects certainty, uncertainty or outright lies.
When this reporter tried it informally, both in person and over the phone, the results were arguably accurate; the software detected the split in my attention as I took notes, though it misinterpreted my skepticism about the product as condescension.
Buy one here.
Some versions of the new product will put James Bond to shame:
Later this year V plans to introduce a simplified version built into sunglasses, with light-emitting diodes to signal emotional intensity and truth or falsehood.
Here is one article about the product. Here is the whole story. The article notes that many people will use the product to assess their own emotions, not just the person they are trying to court.
Stuck with that gift certificate?
Swap it in for a gift certificate from a different store. Tens of thousands of people have used certificateswap.com, a central clearinghouse for such exchanges.
Here is the full story.
There is, of course, a bid-ask spread for such swaps. So a $25.00 certificate from The Gap brings you $23.00 of value at the clearinghouse. For Walden Books you can the lesser sum of $22.00. The discount on Sears certificates is especially noticeable, you get only $40 in value for a $50 certificate. Who needs another lawnmower anyway? Here is a fuller list of prices. My perusal suggests that Niketown has the biggest percentage discount, Bath & Body Works has the smallest, I suppose everyone needs soap.
Thanks to Daniel Akst for the pointer.
Don’t miss the gorilla
Picture yourself watching a one-minute video of two teams of three players each. One team wears white shirts and the other black shirts, and the members move around one another in a small room tossing two basketballs. Your task is to count the number of passes made by the white team – not easy given the weaving movement of the players. Unexpectedly, after 35 seconds a gorilla enteres the room, walks directly through the farrago of bodies, thumps his chest and, nine seconds later, exits. Would you see the gorilla?
Fifty percent of all observers do not see the gorilla.
This is called inattentional blindness, the link offers some further examples and tests. The bottom line: if you are concentrating on one static task, you often fail to notice dynamic movement. This is one reason why you should not drive and talk on your cell phone at the same time.
The quotation is from the March issue of Scientific American. Here is the the original research. Here are some additional studies, also look here. Here is a page of video exercises, although now you know what and who to look for.
The bottom line for economics? Neither investors nor voters need be rational in procedural terms. Searching more does not guarantee a better outcome. An “obvious” bubble can catch large numbers of investors unaware. And we, as voters, can fixate on some aspects of candidates and miss entirely their most important qualities.
British national patrimony
Thirty years ago the British government drew up a list of 35 privately-owned paintings, on British territory, that should be kept in Britain for reasons of national heritage. The pictures were deemed “of such outstanding quality that they should not under any circumstances be allowed to leave the country.” Many were hanging in country homes, and many have since been acquired by British public sector museums. The British government will help institutions bid more heavily for such pictures, to keep them in the country.
N.B.: Not a single British work is on the list.
Here is the full story.
My take: On one hand, the cosmopolitan British perspective is to be applauded. But why oh why does the British government feel it is a superior artistic investor? Taxpayers never see this money again and most of them never go see the pictures. Don’t cite museum visitorship statistics to me, most people never see the pictures or would know if they are gone. And with the Louvre just a few hours across the Chunnel, it is really necessary to stop a Poussin from going to the United States? Odd that a national patrimony policy should grant its biggest subsidy to foreign tourists and to the reputations of foreign artists.
Winner’s curse revisited
1. Cable giant Comcast offered $54 billion to buy Disney.
2. Comcast shares fell eight percent yesterday.
Need I say more? Furthermore the evidence suggests that Comcast later may be dismantled or itself become a takeover target.
Libertarians for tax increases?
We now have two parties in Congress, the tax and spenders and the no-tax and spenders. What’s a libertarian to do? Julian Sanchez, associate editor of Reason, reminds us that,
A tax cut financed by deficits is ultimately no more responsible than a spending program financed the same way.
What about the starve the beast argument? Well, the beast isn’t starving. Furthermore, as Sanchez writes,
The logic behind this “starve leviathan” theory is not totally mad, though it bears a creepy resemblance to the Marxist revolutionary slogan that things “have to get worse before they get better.”… And just as plausible as the “starve leviathan” hypothesis is the theory that combining spending growth with tax cuts hides the true cost of burgeoning programs, creating a political culture in which there’s no will to restrain appropriations.
Like Sanchez, I today would take a deal combining tax increases with serious cuts in entitlement spending.
Addendum: Alan Greenspan agrees. See Brad DeLong’s comments.
Bankruptcy for the Etymologist
In fifteenth century Venice, Jewish money lenders set out bancos or benches of business. “When a money lender was found to be cheating he was publicly disgraced and put out of business by having his bench broken, banco ruptus.”
From Swetz’s Capitalism and Arithmetic.
Stock market facts
1. The earliest known example of an organized market for equities dates from Rome, second century B.C.
2. Nathan Mayer Rothschild arranged his own personal transportation to the Battle of Waterloo, which he viewed from a distance. He bribed a ship to hurry him back to London, where he traded on his information of a British victory.
3. In 1913, 52.3 percent of all traded securities in London were non-British in origin. Great Britain exported seven percent of its gdp in the form of foreign investment, a figure which no developed nation has equalled since.
4. In 1929 less than two percent of all American households were buying stocks on margin. At the peak of the boom the average P/E ratio for NYSE-listed stocks was 16 to 1, which is not especially high by subsequent standards.
5. In 1958-9 dividend yields on stocks fell below bond rates in the U.S. and U.K., for the first time. They have stayed below ever since. At the time this was a source of shock and worry, the Modigliani-Miller theorem was not yet widely understood.
The above facts are from B. Mark Smith’s engaging The Equity Culture: The Story of the Global Stock Market.
Addendum: Michael Ward writes:
I recently came across a passage that identifies an even earlier example than second century BC Rome. Archeologists have uncovered evidence of what amounts to a stock market operating almost 2600 years ago. The following passage is set in a discussion of life among the subject peoples of Cyrus the Great, 559-530 BC, but also refers to archeological findings from the late Chaldean period and early Achaemenid period, roughly 650-500 BC. The passage reads:
“One more feature of contemporary economic life is strangely modern. In earlier times the high temple officials obtained as perquisites of their offices the right to certain of the sacrifices on certain days. These prebends were now bought and sold on the open market, not only for a given day, but for a small fraction of a day. The temple had become a huge corporation, shares of which could be transferred on what almost corresponded to our modern stock exchange.”
[A.T. Olmstead, History of the Persian Empire (Chicago: The University of Chicago Press, 1948), p. 85]
Second Addendum: The Rothschild fact is wrong, thanks to Jay McCarthy for the right answer.
N. Gregory Mankiw vs. John Kerry
Free-trader Daniel Drezner offers full coverage of Mankiw’s pro-outsourcing testimony before Congress. Brad DeLong defends Mankiw, free trade and outsourcing. John Kerry attacks Mankiw’s words and his campaign. He also dismisses a voter-calling service that had been routing its phone calls through Canada.
My idea: Unless a candidate supports free trade, his party can only drive supporters to the polls with American-made cars.
Update: The Kerry family fortune operates 57 factories in foreign countries.
The new Michelin winners
The Michelin dining guide will upgrade three restaurants, all in France, to three-star status. One three-star restaurant will be demoted to two stars. The Michelin three-star designation is the highest a restaurant can obtain, right now there are only twenty-seven three-star restaurants in the world.
Perhaps it is no accident that only three stars are used for the world’s most rigorous restaurant system (Gault-Milleau, in contrast, has a scale up to twenty). The smaller the number of stars, the harder it is to inflate the standard. If the scale has one hundred steps, no one can really tell if a “73” restaurant is pushed up to a “75” rating by mistake. Ratings inflation can slip in over time. But everyone knows if a restaurant is elevated to three-star status by mistake.
Michelin precommits to quality rankings and takes great care to preserve its name as a restaurant “gold standard.” It is commonly believed that the number of three-star restaurants in France is capped, in fact it has remained close to twenty-one since the mid-1930s. Furthermore it is harder to get back a third star once you have lost it, than to win it in the first place, see the first link for more information.
French cooking may be suffering under excess taxes and labor market regulation, but French food criticism is alive and well, in this case under corporate auspices and subsidy. The Red Guide does not make money on its own terms, but rather serves to advertise the parent company and burnish its image. It is a classic instance of the private production of public goods.
So the next time that Roger Ebert gives a movie either a “thumbs up” or a “thumbs down,” this is a signal that he is offering a truly important evaluation.