Results for “water” 1034 found
I ignore Wikipedia at my peril
Wiki Travel offers details and observations not found in mainstream guidebooks. Five hours after the experience, I read the following:
You should, if you are indiscriminately gobbling chaat sold by a man with a cart along Ridge Rd, be aware that the chaat might not have been prepared with bottled water.
Will every election be a tight one?
The well-known median voter theorem suggests that the two major party candidates should adopt arbitrarily close positions. The left- and right-wing parties each move just short of the center to pick up swing voters. It also suggests that elections should be extremely close. The former prediction is clearly falsified (there are real differences between Bush and Kerry), but the latter was not the last time around. Endogenous voter participation, of course, can account for both results. Elections will be very competitive but without policy convergence. If a candidate moves too close to the center, his base decides to stay at home.
Of course few past elections have been very very close, Goldwater and McGovern being two cases in point. Parties may have strategic reasons to run suicide candidates, or primaries may not reflect a rational decision-making process. Candidates also may misjudge which strategy maximizes the number of expected electoral college votes.
But will candidates and parties make these mistakes in the future? Don’t parties care about electability more than ever before? Doesn’t information technology (not to mention betting markets) give us an unparalleled measure of voter opinion? Shouldn’t we take the postulate of hyper-competitive political markets seriously?
The pessimist might suggest we are entering a future where most Presidential elections are arbitrarily close. In other words, the courts would choose the President every time, to the detriment of democratic legitimacy. Over time we might assign this task to an elected governmental body more decisive than the Electoral College, such as the Senate.
Alternatively, voters might have reasons to rebel against a tendency for very close elections. Some voters simply want someone to win (lose) by a clear margin. Other voters like to say they supported the victor. Perhaps Bush is campaigning in some Kerry states (e.g., New Jersey) simply to appear as a likely winner and thus capture these votes.
An article in the Hindu Times suggested that all the American undecideds will break one way or the other before the election, giving us a landslide for one candidate. If that is the case, some portion of the vote is inherently winner-take-all. Political choices will remain “lumpy” in certain regards and our future will remain (quasi-) democratic. This likely means that each candidate will be playing a gambling strategy across alternative non-median policy positions. Political competition can look as perfect as can be on the supply side, but the demand side can force politicians to take strategic chances. The median voter will still go home at night fed up. Not to mention the non-median voter, such as yours truly.
Markets in everything, Indian style
At the Imperial Hotel in Delhi the attendant in the men’s room turns on the water for you, puts the soap on your hands, and dries your hands (including the crevices between your fingers) with a towel when you are done, all in the hope of a tip. Another man watches him, presumably to see how well he is doing, or perhaps if two customers were to come along at the same moment.
India impressions
Don’t expect a vacation in the ordinary sense of the term, as the main sight is India itself. None of the listed sights are the true highlights.
What was better than I had expected:
1. The overall friendliness, sparkle and wit of the Indians I have spoken to.
2. The quality of the food; I have a few times heard the erroneous claim that Indian food is better outside of India. Don’t believe it.
3. I recall an old saying that in matters of religion, every Indian is a millionaire. This becomes evident on one’s first day in the country.
4. Sitting in parks, people-watching, and seeing the human drama in the small things.
5. Availability of Western consumer goods, including Coca-Cola. It’s been a while since India has been stringently protectionist.
6. The prices of Indian classical music CDs, and yes I mean the legitimate issues; I now have a stock of Pandit Kumar.
7. It is easier to get a straight answer here than I had been led to believe.
My biggest problems:
1. Air quality in central Delhi. It is hard to walk for more than an hour. And more generally Delhi is not a city with anything to walk to, it is one cab ride after the other.
2. There is no street which is truly atttractive. At least I haven’t found one yet. That being said, I am no longer sure I want to find one. Even the “nice” parts of Delhi can be more run down than the not-so-nice parts of, say, Mexico City.
3. Being tempted by street food, so far I have yet to succumb, I fear what will happen when I do.
Assorted humorous moments: Seeing a large cadre of baffled Japanese tourists with newly-acquired red dots on their foreheads. Hearing my Taj Mahal guide speak of Billy Graham and Oral Roberts in glowing terms. Being considered a marvel because I know what a “mango lassi” is. Almost meeting an unfortunate end on a motorized tricycle rickshaw; the driver played a strategy of precommitment while entering a busy motorway.
Animals seen on trip from Delhi to Agra: Bears, monkeys, water buffalos, camels, swan-like birds, and cows too numerous to count.
Saddest moment: Seeing ultrasound clinics in rural areas.
I’ll write another post of this ilk once I have more experiences to relate. I am here speaking for Parth Shah’s Centre for Civil Society. They are an excellent group devoted to bringing market-oriented ideas to India.
Sometimes correlation does too imply causation
Correlation, as we all know so well, does not imply causation. But sometimes it comes damn close.
For example: Parents of daughters are more likely to divorce than parents of sons. When I wrote and then rewrote about this odd fact in Slate, I got hundreds of emails from readers protesting that daughters might not cause divorce. Maybe some third factor causes both divorce and daughters.
There’s even a clear candidate for that factor: Stress. It’s well established that in many species, stressed populations produce unusually many female offspring. If the same is true in humans, then perhaps both daughters and divorce are the products of exogenous stress.
The problem with that theory is that it’s arithmetically implausible. To explain even a small correlation between daughters and divorce, you’d have to make pretty extreme assumptions about the effects of stress.
For example: Suppose half of all parents are stressed, stressed parents have 55% girls and a 50% divorce rate, and unstressed parents have 45% girls and a 25% divorce rate. Those are much stronger effects (especially on the boy/girl ratio) than anyone could actually believe. Nevertheless, even with these strong assumptions, we get a 36.25% divorce rate among parents of girls and a 38.75% divorce rate among parents of boys—not a very big difference. So the stress theory just doesn’t hold water.
The general point is that before you attribute a correlation to some mysterious (or non-mysterious) third factor, it’s worth pulling out an envelope, flipping it over, and jotting down some numbers. If your numbers have to be ridiculous to get the result you want, you probably need a different theory.
The Dead and the Draft
California farmers are sold water at cheap rates and they use it wastefully and with abandon. Now apply the same idea to the draft. Let it sink in. Shocking isn’t it? Don Boudreaux explains further.
Manna from China
If cheap goods from China are bad for the United States then surely zero-priced Manna from Heaven must have been terrible for the Israelites. Cecil Bohanon and T. Norman Van Cott, two of my former colleagues at Ball State University, know better.
Manna wasn’t a “sky is falling” catastrophe for the Israelites. Quite the contrary, wealth was being showered on them. Lower-cost production alternatives always expand consumption alternatives. Regardless of whether these alternatives trace to manna-like acts of God, new production technologies, foreigners willing to sell their products to us at less-than-prevailing prices, or even immigrants willing to work at less-than-prevailing wages, the result is the same. Consumption alternatives for the natives expand…..
Fortunately for the Israelites, Moses didn’t order them to shun manna in order to preserve good jobs in food production. Manna meant those good jobs weren’t so good after all. Indeed, manna meant that jobs connected with finding water and protecting sheep became the better jobs. The result was that the Israelites reached the Promised Land a stronger nation.
Haitian update
Can it get worse? With Haiti the answer is always yes. This is from The Independent:
It now looks certain that more than 2,000 Haitians lost their lives in the flooding that followed Tropical Storm Jeanne last weekend. A similar number drowned in floods in May…simply a light rainstorm that swept away their shanty homes.
That is just the beginning. At least a quarter of a million Haitians face two more coming storms. They have no food and many are still living on rooftops. Human and animal corpses are drifting down the dirty river, which currently provides the only source of drinking water. Starving dogs have been seen tearing off the limbs of human corpses. The morgues are not working and there is risk of a large-scale epidemic. And social cooperation has broken down. The Washington Post reports:
Hungry, thirsty and increasingly desperate residents attacked each other in a panic Thursday to get scarce food and water as workers struggled to bury hundreds of corpses five days after the city was struck by Tropical Storm Jeanne.
To make matters worse, radical deforestation, caused by ill-defined property rights, may make Haiti a virtual desert by the end of the decade. In the 1950s, 25 percent of the country was forest, now it is 2 percent. Floods of this kind will only get worse.
Outside of wartime, Haiti represents new depths in how bad things can get. The current standard of living is well below that of most hunter-gatherer societies. We don’t spend much time studying economies with negative real rates of return; I am sorry to report that developing such a theory is becoming increasing relevant.
Minimum Wage Effects in the Longer Run
The minimum wage reduces employment, especially among low-skilled workers for whom the minimum wage is most binding. That remains the consensus view but note that holding the consensus view does not preclude thinking that the decrease in employment is small relative to the increase in the wages of those who remain employed. If the employment effect is small, however, it is also important to understand why it is small – the policy implications of monopsony, which I think implausible, are quite different from the implications of the the idea that other aspects of the labor-contract adjust in response to enforced changes in wages (i.e. the converse of the hot water argument). See also Tyler on this.
When I discuss minimum wages in class I tell my students that one of the best ways to get a high-paying job is to get a low-paying job and work your way up. The minimum wage can put the least employable out of work and have permanent negative effects when training and work skills not acquired in youth are difficult to accumulate later on. I think the theory makes sense but until recently it had not been extensively investigated.
David Neumark and Olena Nizalova look at the how exposure to the minimum wage in the past impacts workers today. They find that teenagers who grow up in states with a minimum wage that is significantly and consistently higher than the federal minimum have lower earnings and work less a decade or more later when those workers are in their late twenties. The negative effects are larger for blacks, for whom the minimum wage tends to be more binding.
To generate variation, Neumark and Nizalova use data on minimum wages by state relative to the Federal minimum. The data is more aggregated than I would like and the variation by state only picks up in the late 1980s so there is less data than meets the eye. In theory, there is nothing special about the minimum wage as the driving factor that pushes people out of the work force, unemployment brought about by bad economic conditions should have similar effects. Thus, I wish that they had discussed the literature on hysteresis and unemployment. Welfare could also pull people out of the work force. I’m not fully convinced that they adequately control for economic conditions although they do use some clever techniques to try to address some of these issues. Nevertheless, my priors are supported so this must be a good paper! More seriously, Neumark and Nizalova are to be credited with opening the question of the long run effects of the minimum wage.
The bottom line? If you don’t work at McDonald’s when you are a teenager, don’t expect to manage a McDonald’s when you are middle-aged.
Addendum: Thanks to John Thacker and others who pointed out that one of my sentences, now fixed, was difficult to parse if you hadn’t read the paper – which sort of defeats the purpose of the blog, doesn’t it?
New items in my Mexican village
As many of my readers know, I visit a small Mexican village, San Agustin Oapan, one or twice every year. This pueblo in Guerrero has about 1500 people, most of whom farm corn and paint for a living. You’ll hear more when my book on the place comes out next year, from University of Michigan Press. In the meantime, here are the new items I have noticed in the village this year:
1. Apples
2. Green beans
3. A much improved road. A four hour trip now takes less than an hour and a half, at least if the rains permit. This makes an especially big difference if you have to take your kid to the doctor.
4. Stoves. They were once a rarity, now they are commonplace. It takes the fun out of watching people cook for you, but hey that is progress.
5. Small shops with wrapped items from the larger city of Iguala. Shampoo and band-aids, for instance, are now easy to find.
6. The number of “retail” (and I use that word cautiously) watermelon sellers has gone from one to at least three.
7. The number of pigs has doubled over the last five years, though not always to the benefit of the town streets.
As far as I can tell, most of this does not show up in the growth statistics for Mexico. No one (except for yours truly) comes to the place to count anything. Most of the transactions occur in black or grey markets. And even if the data were recorded, using market prices to measure underestimates the benefits from a sudden introduction of new commodities (in essence the price is falling from infinity to a market level, and the first consumers at the new price might value the item at more than a small amount above the observed price).
It is commonly the case that consumption statistics, when we have them, measure changes in income better than do income statistics.
Globalization does not make everyone better off, but its beneficial effects are commonly underestimated, and undermeasured by available statistics.
Economic foundations of law
If tenants benefit from a law that says apartments must have hot water then surely a law that says tenants must have hot water and a dishwasher benefits them even more, right? What about a law that says tenants must have hot water, a dishwasher and cable tv? By now the students have cottoned on to the idea that the rent will increase. Once you realize that the law causes the rent to increase it’s no longer obvious if tenants benefit or if landlords are harmed.
We can work out what happens with sone numbers. Let’s suppose that after much bargaining the tenant and landlord have agreed upon the rent and the amenities – each party to the contract is profit maximizing, doing as well as they can given market conditions and the interests of the other. Now suppose that tenants value the hot water benefit at $100 and that it costs the landlord $150 to provide the hot water. At these prices the tenant does not buy the hot water. The law is passed; by how much does the rent increase? By at least $100 but no more than $150. The landlord knows for certain that he can increase the rent by $100 because this will make the tenant just as well off as he was before, which by assumption was an equilibrium price. Similarly, if the landlord could profitably raise the rent by more than his cost he would have done so already – the fact that he did not indicates that an increase of more than $150 would not be profitable
Thus the rent rises somewhere between $100 and $150, the precise amount to be determined by bargaining power. Suppose that the rent increases by $120. Then the tenant gets a benefit worth $100 at a price of $120 and is worse off by $20 and the landlord gets a benefit of $120 at a cost of $150 and so is worse off by $30. The law makes both the landlord and tenant worse off!
The lesson here is that a contract is multi-dimensional so if the government changes one dimension of a contract the other dimensions will adjust towards offsetting that change.
Bonus points: a) Suppose the tenant values the hot water at $150 and it cost the landlord $100. Does the regulation benefit the tenant and landlord now?. If so, what is odd about this example? b) Explain why the loss to the tenant and the loss to the landlord must add up to $50. How does this further illustrate the principle?
Going for the gold
This sort of nonsense gives property rights a bad name.
Strict regulations published by Athens 2004 last week dictate that spectators may be refused admission to events if they are carrying food or drinks made by companies that did not see fit to sponsor the games.
Sweltering sports fans who seek refuge from the soaring temperatures with a soft drink other than one made by Coca-Cola will be told to leave the banned refreshment at the gates or be shut out. High on the list of blacklisted beverages is Pepsi, but even the wrong bottle of water could land spectators in trouble.
Thanks to Boing, Boing, Blog for the link.
How did Scotland grow so quickly?
Scotland had been an economic backwater at the time of the 1707 union with England. By 1770 at least the Scottish cities were among the most developed and intellectually advanced parts of Europe. How could this happen?
Arthur Herman supplies at least one piece of the puzzle:
…the fact that Scotland was very much the junior partner in this union also turned out to be an advantage. The new Parliament largely ignored Scotland; outbursts such as the malt riots and the threat of Jacobitism apart, the government in London paid little attention to what was happening north of the border. Scots ended up with the best of both worlds: peace and order from a strong administrative state, but freedom to develop and innovate without undue interference from those who controlled it. Over the next century, Scots would learn to rely on their own resources and ingenuity far more than their southern neighbors would…
A strong government that leaves well enough alone: this was the dual, seemingly contradictory, nature of the British state as it became part of life in post-union Scotland. Scots became used to these dualities, and learned to accept them as basic reality, just as the Union itself involved a fundamental duality: “a ship of state with a double-bottomed hull,” as Jonathan Swift put it. They also learned to think in a new way as a result of the Union: in terms of the long term.
Many economic development problems today stem from a similar conundrum. Ideally we would like a state that is both strong and not too large. Most parts of the world are unable to institute this duality; of course Hong Kong was a notable exception. I am not in general an imperialist, but the most successful instances of imperialism are likely to be highly successful indeed.
The Freedom of a Confucian
The great free-market economists and libertarian philosophers of China were not Taoists, but Confucians, according to Auburn University philosopher Roderick Long. I often say that I never doubted the value of history of thought until someone tried to convince me of it, but Long’s “Rituals of Freedom: Austro-Libertarian Themes in Early Confucianism” Journal of Libertarian Studies 17(3) is an amazingly interesting and learned paper. It is true, Long admits, that the Taoists have a few grand libertarian passages. The favorite from Lao-tzu has to be:
The greater the number of laws and restrictions,
the poorer the people who inhabit the land.
The sharper the weapons of battle and war,
the greater the troubles besetting the land.
The greater the cunning with which people are ruled,
the stranger the things which occur in the land.
The harder the rules and regulations,
the greater the number of those who will steal.
The sage therefore does not contrive,
in order to bring about reform,
but teaches the people peace of mind,
in order that they might enjoy their lives.Tao Te Ching Section 57
Unfortunately, Long points out, a much stronger theme in Taoist is primitivist hostility to modern civilization. Listen to Lao-tzu describe the Taoist utopia:
Lessen the population. Make sure that even though there are labor saving
tools, they are never used. Make sure that the people look upon death as a
weighty matter and never move to distant places. Even though they have
ships and carts, they will have no use for them. … Make sure that the
people return to the use of the knotted cord [in lieu of writing]. … Then
even though neighboring states are within sight of each other, [and] can
hear the sounds of each other’s dogs and chickens … people will grow old
and die without ever having visited one another.
In contrast, Long finds much of value in the Confucians:
The early Confucians, by contrast, may not be as radical in
their anti-statism as the Taoists, but in my estimation they make up for this flaw by firmly
yoking their anti-statism to the cause of civilization, commerce, and the Great Society;
their overall program thus looks a lot more like contemporary libertarianism than the
Taoist program does. One Confucian text, while noting approvingly Laozi’s hostility to
despotism, sharply criticizes Laozi for wanting to “drag the present age back to the
conditions of primitive times and to stop up the eyes and ears of the people”; the best
ruler instead “accepts the nature of the people,” which is to long for “beautiful sounds
and forms,” “ease and comfort.”
The highlight of Long’s article is his discussion of the Sima Qian (c. 145-85 B.C.). Almost two thousand years before Adam Smith, Qian opined that “Wealth and currency should be allowed to flow as freely as water!” and had arguments to defend his position. And who said that Chinese intellectuals had no appreciation for the merchant class? Few Western thinkers match Sima’s appreciation of entrepreneurship:
These, then, are examples of outstanding and unusually wealthy men.
None of them enjoyed any titles or fiefs, gifts, or salaries from the
government, nor did they play tricks with the law or commit any crimes to
acquire their fortunes. They simply guessed what course conditions were
going to take and acted accordingly, kept a sharp eye out for the
opportunities of the times, and so were able to capture a fat profit. …
There was a special aptness in the way they adapted to the times …. All of
these men got where they did because of their devotion and singleness of
purpose. … [T]here is no fixed road to wealth, and money has no
permanent master. It finds its way to the man of ability like the spokes of
a wheel converging upon the hub, and from the hands of the worthless it
falls like shattered tiles. … Rich men such as these deserve to be called the
“untitled nobility” …
Murray Rothbard praised Sima in his history of economic thought, but Long notes that he neglected to mention that he was a Confucian!
It is hard to read this piece and not stand in awe of Long’s command of the Chinese literature. This is a body of thought comparable to Western philosophy in its intricacy and depth. Even if you couldn’t care less about Chinese proto-libertarians, this article exemplifies the true meaning of scholarship. And so the Sage says: check it out!
Diamonds are Forever…Not
How long can the diamond cartel last? I remember, as a kid, watching Milton Friedman tell us that the New York Stock Exchange was the only longstanding market monopoly he could think of. The NYSE has lost much clout, but why isn’t the diamond sector more competitive? Diamonds are found in many countries but the De Beers cartel has been dominant for much of the twentieth century.
But things are now changing:
…this stable, established and monopolistic system is now falling apart…other big miners got hold of their own supplies of diamonds, far away from southern Africa and from De Beers’s control. In Canada, Australia and Russia rival mining firms have found huge deposits of lucrative stones: BHP Billiton, Rio Tinto and Alrosa have been chipping away at De Beers’s dominance for two decades.
De Beers once controlled (though did not mine directly) some 80% of the world supply of rough stones. As recently as 1998 it accounted for nearly two-thirds of supply. Today production from its own mines gives it a mere 45% share. Only a contract to sell Russian stones lifts its overall market share to around 55%.
An Israeli named Lev Leviev has been instrumental in breaking down the old system:
Mr Leviev recently moved into diamond retailing. He claims that he is the only tycoon with interests in every stage of production from “mine to mistress” (a canard in the industry holds that men buy more diamonds for their mistresses than for their wives). But his real power lies in the cutting and polishing businesses. He has factories in Armenia, Ukraine, India, Israel and elsewhere. These give him power to challenge De Beers’s central clearing house and seek instead to channel stones directly, and at a lower price, to his own polishers.
The price of diamonds, however, has yet to fall. My more fundamental question is why these supply-side developments have taken so long.
Perhaps synthetic diamonds will put the market under for good. Few people if any can tell the difference. The diamond industry is spending large amounts to tout “the real thing.” But will a generation used to reproduction and “multiples” buy this line? And will men manage to move to a lower-cost signaling equilibrium in the marriage (and mistress) market?
The bottom line: File this one under “Markets Economists Do Not Understand.” But if there was one commodity I would not want to be holding today, it is diamonds. Someday students will wonder why they ever called it the “diamond-water paradox.”