Results for “age of em” 16718 found
Sin: The Price is Not Right
Here is an excellent New York Times story on payments to firms that destroy HFC-23, a by product from the creation of air conditioning coolant. The gas is 11,700 times worse for climate change than C02 so the UN set a price for destroying the gas 11,700 times higher than for eliminating C02. N.B. In a real market prices are based on supply and demand not just demand! Hi jinx ensue:
…since 2005 the 19 plants receiving the waste gas payments have profited handsomely from an unlikely business: churning out more harmful coolant gas so they can be paid to destroy its waste byproduct. The high output keeps the prices of the coolant gas irresistibly low, discouraging air-conditioning companies from switching to less-damaging alternative gases.
…The production of coolants was so driven by the lure of carbon credits for waste gas that in the first few years more than half of the plants operated only until they had produced the maximum amount of gas eligible for the carbon credit subsidy, then shut down until the next year, United Nations reports said. The plants also used inefficient manufacturing processes to generate as much waste gas as possible…
The invisible hand is subtle and difficult to duplicate with manufactured markets. The UN is trying to stop the payment program but, as usual, the rents attracted rent seekers who are now using their profits to lobby to keep the system in place.
In other offset news, Ted Frank’s chicken offset will let you eat at Chick-fil-A and still keep your liberal conscience clean.
H/t: Carl Danner.
The Young Lady’s Illustrated Primer
Nearly here:
SITTING down with the Inquire system is, at first, a lot like trying to cosy up to an intimidatingly dense biology textbook. Sure, its presentation on the iPad is slick, but that can’t hide the fact that you are in for a tough old read.
That is until you highlight the first bit of particularly impenetrable text. Suddenly a list of questions pops up in the right-hand margin. Touch one and you are whisked away to a Wikipedia-like page full of information specific to the concept you are stuck on. Terms like “chloroplast” and “plasma membrane” are succinctly defined, and the page explains how each concept fits into the wider field of biology.
Want to know more? Type in your own question and artificially intelligent software will construct a new page to answer your query.
The aim of Inquire is to provide students with the world’s first intelligent textbook, says its creator David Gunning of Seattle-based Vulcan. At first glance, the system just looks like an electronic version of Campbell Biology, the tome that forms the bedrock of biology classes for first-year university and advanced high school students in the US. But behind the scenes is a machine-readable concept map of the 5000 or so ideas covered in the book, along with information on how they are all related.
Claims about gold
From a new paper by Claude B. Erb and Campbell R. Harvey:
Gold objects have existed for thousands of years but gold has only been an actively traded object since 1975. Gold has often been described as an inflation hedge. If gold is an inflation hedge then on average its real return should be zero. Yet over 1, 5, 10, 15 and 20 year investment horizons the variation in the nominal and real returns of gold has not been driven by realized inflation. The real price of gold is currently high compared to history. In the past, when the real price of gold was above average, subsequent real gold returns have been below average. As a result investors in gold face a daunting dilemma: 1) seek inflation protection by paying a high real gold price that almost guarantees a decline in future purchasing power or 2) avoid gold and run the risk of a decline in future purchasing power if inflation surges. Given this situation is it time to explore “this time is different” rationalizations? We show that new mined supply is surprisingly unresponsive to prices. In addition, authoritative estimates suggest that about three quarters of the achievable world supply of gold has already been mined. On the demand side, we focus on the official gold holdings of many countries. If prominent emerging markets increase their gold holdings to average per capita or per GDP holdings of developed countries, the real price of gold may rise even further from today’s elevated levels.
Caveat emptor! Here is a photo gallery about gold.
A Spontaneous Order Firm
Valve’s Chief Economist tries to explain the Valve Model:
A corporation that tries to function as a type of ‘spontaneous order’ (i.e. without an internal system of command/hierarchy) seems like a contradiction in terms. Smith’s and Hayek’s spontaneous orders turn on price signals. As Coase et al explained in the previous section, the whole point about a corporation is that its internal organisation cannot turn on price signals (for if it could, it would not exist as a corporation but would, instead, contract out all the goods and services internally produced). So, if Valve’s own spontaneous order does not turn on price signals, what does it turn on?
The answer is: on time and team allocations. Each employee chooses (a) her partners (or team with which she wants to work) and (b) how much time she wants to devote to various competing projects. In making this decision, each Valve employee takes into account not only the attractiveness of projects and teams competing for their time but, also, the decisions of others. The reason is that, especially when insufficiently informed about projects and teams (e.g. when an employee has recently joined Valve), an employee can gather much useful information about projects and teams simple by observing how popular different projects and teams are (a) with others in general, (b) with others whose interests/talents are closer to their own.
Just like in a marketplace, everything in Valve is in flux. People move about (making use of their desk’s wheels), new teams are formed, new projects are concocted. All this information is observable by the naked eye (one notices an empty spot where David’s desk used to be, and then finds out that David moved to the 4th floor to work with Tom, Dick and Harriet), on the company’s intranet, in cross-team meetings where teams inform each other on what they are working on). People learn constantly, both by observing and by doing, the value to them of different projects and teams. These subjective values keep changing, as the time and team formation signals that are emitted by everyone else are updated.
The idea here is that, through this ever-evolving process, people’s capacities, talents and ideas are given the best chance possible to develop and produce synergies that promote the Common Good. It is as if an invisible hand guides Valve’s individual members to decisions that both unleash each person’s potential and serve the company’s collective interest (which does not necessarily coincide with profit maximisation).
It’s an interesting post, much longer than I have quoted here, although no evidence is given that the time allocation system works anything like an invisible hand–a few good games do not a social revolution make.
Coase’s islands of conscious decision are also often misunderstood. The islands are not cut off from the market sea but are permeated by the sea. Everything that goes on within the firm does so in light of the shadow prices projected from outside. Absent those prices the firm fails into socialist miscalculation.
Still, there is something to be said for how modern technology can coordinate mass action. The phenomena is perhaps most evident in the way that distributed computing coordinates the actions of thousands of computers to solve various problems, each day and each hour drawing on a different set of computers. Coordinating people in this way allows them to quickly participate in joint actions, such as a flash mob. (See also anonymous). Indeed, silicon Valley writ large is not that different from internal Valve, people end and form new firms all the time.
Capitalism allows within itself many alternative social arrangements, to think, however, that one particular such arrangement is the one that must govern the whole is badly to miss the point.
Twenty questions?
Or forty questions, as the case may be. One of my favorite methods of giving a talk is to have the audience write out questions in advance, and then during the talk I have to try to answer them (without peeking at them beforehand). The goal is not only to address the queries, but also to weave the answers together into the form of a broader talk with underlying themes.
I did this recently, and I thought the best question was something like this:
“If you were designing a ten question True-False test to fool the American public and induce the greatest number of wrong answers, which questions should go on the test? Which question would people get wrong the most often? How many questions of the ten would the American public get right on average?”
I also was asked which of my habitual errors I would most want to change, looking forward in life.
I was asked about Jeremy Lin, and whether he or LeBron James did more to maximize global wealth. I suggested that Lin did more to maximize utility, as his fame in Asia did not much detract from the fame of any other NBA player, but that LeBron did more to maximize wealth, in part through endorsement income.
Another good question was “How far do you think real interest rates will fall into negative territory?”, or something like that.
300 Million Without Electricity In India After Restoration Of Power Grid
According to estimates, roughly one-third of a billion Indian citizens were left without power Wednesday after workers successfully repaired the nation’s electrical grid and brought all of its systems back online. “Since restoring our infrastructure to 100 percent capacity following Monday and Tuesday’s blackouts, vast swaths of India are now completely without access to electricity,” said the country’s power minister, Veerappa Moily, who confirmed that three out of every four residents lacked access to such basic amenities as lighting, food refrigeration, and the use of simple appliances now that the country’s grid had fully recovered. “We are currently not monitoring the situation, as everything appears to be functioning normally again in India.” Government officials also stated that the widespread power outage had in no way compromised their ability to provide adequate sanitation to 31 percent of India’s citizens.
The Onion hits on a hard truth.
An event study of ACA winners and losers
I have not had the chance to read through this paper, by Jonathan Hartley, but thought I should pass along the abstract and link:
Abstract:
The Patient Protection and Affordable Care Act of 2010 marked a substantial shift in US healthcare policy. We create an event study observing the returns of healthcare stocks in the S&P 500 when on June 28, 2012 the US Supreme Court very unexpectedly ruled that the individual mandate, a provision requiring that Americans maintain a certain level of health insurance or face a monetary penalty, was not unconstitutional. The paper finds that as a result of the upheaval, over two days following the ruling the cumulative average abnormal return of managed care stocks was -6.7% (equal to -$6.9 bn in market capitalization), while the same metric was -1.2% (-$1.5 bn) for biotechnology companies, 3.2% ($0.4 bn) for hospital firms, 1.9% ($1.6 bn) for healthcare service firms, and 0.5% ($4.8 bn) for pharmaceutical companies. Healthcare equipment, distribution, and technology sub-industry stocks had relatively flat cumulative abnormal returns over the period.
Do those results make you more or less favorable toward ACA?
“Back to the Future of Green Powered Economies”
From Juan Moreno Cruz and M. Scott Taylor:
The purpose of this paper is to introduce the concept of power density [Watts/m²] into economics. By introducing an explicit spatial structure into a simple general equilibrium model we are able to show how the power density of available energy resources determines the extent of energy exploitation, the density of urban agglomerations, and the peak level of income per capita. Using a simple Malthusian model to sort population across geographic space we demonstrate how the density of available energy supplies creates density in energy demands by agglomerating economic activity. We label this result the density-creates-density hypothesis and evaluate it using data from pre and post fossil-fuel England from 1086 to 1801.
Many of you have been asking for more coverage of this topic, so here is a starter. Ungated copies are here.
Investment vs. the Warfare-Welfare State
In Launching the Innovation Renaissance and my Atlantic article The Innovation Nation vs. the Warfare-Welfare State I showed that the Warfare-Welfare state has crowded out federal investment in research in development.
In a short report titled Collision Course: Why Democrats Must Back Entitlement Reform, Jessica Perez, Gabe Horwitz, and David Kendall cut the data in a slightly different way but come to the same conclusion:
Entitlements are squeezing out public investments. In 1962, spending on investments was two and a half times that of entitlements. But today, as a result of this Great Inversion, entitlement spending is three times that of investments. And this trend will only accelerate in time as the Baby Boomers retire and their benefits grow faster than inflation and wages.
…The fact that entitlement spending is crushing investments is bad news for U.S. growth.
Hat tip: Arnold Kling.
Assorted links
1. From Washington Monthly: monetary policy, gargoyles, and the emotions. I say focus ruthlessly on substance and do your best to explore and present the limits and drawbacks of your own ideas and recommendations. Years down the road — or sooner — one will end up wiser and better informed. The reasoning in this article is an excuse to dismiss moderating or inconvenient ideas, or ideas which de-moralize a topic somewhat.
2. Wage stagnation isn’t due to a compositional shift.
3. Old Germans who die and leave their estates to Israel.
Very good quotations
“It’s not as if 50 people woke up one morning and said, ‘Today, instead of getting a real job, I’m going to go steal cardboard.’
And here is a bit on why cardboard theft has evolved into an organized business:
The city’s impound managers might want to phone China. That country, along with other developing nations like India, is driving the market by paying top dollar for used cardboard. The foreign recyclers then blend it down to remold into new products, such as containers for exports eventually shipped back to the United States.
Again, though the business may sound humdrum, it can be extremely profitable. In 2010, China’s richest woman was “cardboard queen” Zhang Yin, whose $5.6 billion recycling empire made her wealthier than Oprah.
The article is here, and for the pointer I thank Daniel Lippman.
The economics of Olympic success
Here is my new Grantland piece with Kevin Grier. Excerpt:
Predictions
1. Medal totals will become more diversified over time. The market share of the “top 10” countries will continue to fall (it was 81 percent in 1988) as economic and population growth slows in the rich world. The developing world has greater room for rapid economic growth, and most parts of the developing world also have higher population growth. The Olympic playing field will get more and more level.
2. Japan will continue to fade, mostly because of aging and population shrinkage.
3. Italy will follow Japan for similar demographic reasons, as well as because the Eurozone crisis will continue to cut into budgets, training and otherwise.
4. Since Rio is host to the next Olympics, Brazil should do better than expected due to the “pre-host” bump.
5. Many African nations will rise. Currently about half of the approximately 1 billion people in Africa have a cell phone, and the middle class is growing. The chance that an African star will be spotted and trained at the appropriate age is much higher than before. Africa also continues to grow in population, and that means lots of young people. Most of us still think of African nations as very poor, but infant mortality has been falling and per-capita income rising across Africa for the better part of a decade now.
6. China will level off and then decline as a medal powerhouse. In less than 15 years, the typical person living in China is likely to be older on average than the typical person living in the United States, in part due to the country’s one-child policy. As of 2009 the number of over-60s was 167 million, about an eighth of the population, but by 2050 it is expected to reach 480 million people older than 60, with the number of young Chinese falling. The country will become old before it is truly wealthy.
7. Bob Costas will make you cry.
Beijing notes
It is a gargantuan, imperial city, and while there is always a walking path the point of walking is not always clear. “The Middle Kingdom does Dubai.” There is no need to tell me about all the parts of the city which do not look like Dubai, I have seen many of them, and furthermore Dubai has such parts as well.
An iPad, plus Baidu access to Chinese characters, makes it easy to ask questions of strangers. Hardly anyone speaks even minimal English. It is less harried than I had expected. The sky rarely appears, at least in late July. The contemporary art district, 798, is worth more than one visit. I am not interested in seeing the Great Wall. My hotel, rather than having a “Medical Devices” conference, has a meeting on “Australian Property Holdings.”
The main problems here are the air pollution, and that no one, including taxi drivers, seems to know how to get anywhere. The rate of change is high and many people are from the provinces, so there is a real information gap.
The main upsides stem from what scale enables. Even if you have been to many places, Beijing will manage to astonish you.
Most of all, I am struck by how Taiwan is more Chinese than is China.
Non-Markets in Some Things: Olympic Tickets and Dickish Tweeting
TVNZ: London’s Metropolitan police said they had arrested 16 people since Friday for illegal reselling of Olympics tickets, as Games organisers said they were investigating why scores of seats were empty at some events yesterday.
Tim Worstall offers wise comment, should the cause and effect not be clear.
Cory Doctorow has other news:
Police in Weymouth, Dorset, England came to the home of a 17-year-old boy and arrested him, because he had retweeted an unpleasant sentiment to an Olympic athlete. The offending tweet? “You let your dad down i hope you know that.” (This was a pretty dickish thing to tweet, as the athlete in question had previously dedicated his performance to his recently deceased father). The charge is “malicious communication.” The law in question is the Communications Act 2003, Section 127(1)(a) (“a message that is grossly offensive or of an indecent, obscene or menacing character”). It’s great to see that the spirit of the Olympics is alive and well: athleticism and international cooperation means that people are only allowed to say nice things or they go to jail. Just about the only thing worse than being a dick on Twitter? Being a loony authoritarian cop who arrests people for being a dick on Twitter. (via /.)
Hat tip: Carl Danner.
Have the French shown that water privatization is dead?
Some time ago, @ModeledBehavior has requested comment on this article. Excerpt:
Across the nation cash-strapped municipalities are considering the sale of their public-utility systems. These moves are intended to raise cash and rid the municipalities of expensive liabilities such as debt service and pension obligations. But officials considering this approach might do well to look to France and other nations that are rapidly moving in the opposite direction with a “remunicipalization” of their utility systems. In 2010, Paris, in the best known case of remunicipalization, ended contracts with the world’s two biggest water service companies, Suez and Veolia, bringing an end to their 100-year private duopoly. The reversal of a century-old practice in Paris was an acceleration of an international movement away from private control.
So what’s up? I see it this way. For advanced water systems, there is no cost advantage to having a privatized system. It is a regulated monopoly and over time it acquires skill in manipulating the political process, most of all its regulators. Why expect lower costs and prices? A wide variety of studies of this topic, including studies by “market-oriented” economists, find no cost advantage for the private sector in this setting.
For very poor countries, very often water privatization would in principle be a good idea, since the public sector is not supplying much piped water at all. Monopoly is better than carrying a bucket on your head, and you still can carry the bucket if you wish. Yet privatization also won’t get very far in many of these cases. One reason is that there is no way to make people — many of whom are non-registered and lacking in assets — pay their water bills, and not enough legal infrastructure to prevent them from cutting into the pipes or otherwise going rogue. You shouldn’t “blame” privatization here, but still it may not be a useful option.
Finally, there is a sweet spot in the middle, often for reforming or middle-income countries. In those cases water privatization can mobilize private capital rapidly and expand water coverage. It often brings higher quality water, higher quality connections, lower rates of unaccounted-for-water, and higher prices. Not all cities desire that trade-off, but it is there for the taking. Some of these privatizations are done fairly well, others are done very poorly, such as in Cochabamba, where the “privatization” gave the company property rights over previously privately held, decentralized water sources of the poor, such as collected rain.
As long as there are countries in this middle income range, water privatization is not dead nor should it be.