Results for “age of em” 17234 found
*The New Lombard Street*
The subtitle is How the Fed Became the Dealer of Last Resort (home page here) and the author is Perry Mehrling. The entire book is good but the paydirt comes in the last two chapters, where we are treated to a persuasive and original account of what the crash- and post-crash Fed is all about.
Mehrling tells us that the Fed is now committed to supplying liquidity in money markets through its role as a dealer, on both sides of its balance sheet, and that is a critical shift in the nature of central banking. He discusses (pp.126-127) how the collateral behind the shadow banking system relied on CDS markets for its pricing. In Mehrling's account, insurance companies (including AIG) were indirectly serving as dealers of last resort, believing that they held invulnerable positions but nonetheless exposed. Investment banks, on their side, thought they held matched books but the higher and lower CDO tranches turned out to be less similar than they had been expecting, based on historical price risk. None of these expectations survived contact with the reality of the crash.
Now it's the central bank which sells AAA protection because eventually, in Mehrling's view, this activity cannot forever remain a private function (for a start, which insurer is itself safer than AAA?). A good and indeed central question to ask anyone who is proposing a financial system is to ask who will sell AAA insurance.
To quote Perry, the new Fed principle seems to be: "insure freely but at a high premium."
Mehrling also suggests that looking at the Fed's balance sheet, or its transactions, is misleading. The key question is what kind of liquidity dealing option the Fed is promising to the market.
I continue to ponder Mehrling's main claims, but in any case this is an important book about the new Fed.
*The Big Ditch*
The authors are Noel Maurer and Carlos Yu and the subtitle of this excellent book is How American Took, Built, Ran, and Ultimately Gave Away the Panama Canal. In the old days they might have called this book The Panama Canal. Excerpt:
In 1920, when the Panama Canal first opened to commercial traffic, real freight rates between Britain (Liverpool) and the West Coast of the United States (Portland, Oregon) dropped 27 percent. In 1921, the canal's first year of operation, real shipping costs dropped another 35 percent…by 1922, shipping costs had fallen 31 percent below their prewar average.
Within a few years, oil prices in California and Texas had converged. The authors estimate a social rate of return of nine percent for the first two decades of the canal's existence and they do include the costs of defending it.
In my view, whether as tourists, economists, or historians, people do not spend enough time thinking about the Panama Canal. Here is the book's home page.
Device Lag at the FDA
A new survey of the FDAs impact on medical technology innovation reports that the FDA is slow, inefficient and costly. The survey is from the Medical Device Manufacturers Association so take it with a grain of salt (but see below). What is most telling, however, is how manufacturers rate the FDA compared to its European counterpart(s).
Overall Experience: 75 percent of respondents rated their regulatory experience in the EU excellent or very good. Only 16 percent gave the same ratings to the FDA…
Respondents also cite specific concerns with the FDA process (not just a general complaint of slowness which could be efficient) such as:
…44 percent of participants indicated that part-way through the regulatory process they experienced untimely changes in key personnel, including the lead reviewer and/or branch chief responsible for the product’s evaluation.
As a result:
On average, the products represented in the survey were available to patients in the U.S. a full two years after they were available to patients in Europe (range = 3 to 70 months later).
In some cases, respondents said they initiated their regulatory processes within and outside the U.S. at the same time, but received clearance/approval in the U.S. much later. In anticipation of long, expensive FDA reviews, others said they decided to seek or obtain European approval first in an effort to generate sales overseas that could help fund their U.S. regulatory efforts.
The survey has a good discussion of potential biases. To those not familiar with the industry it might seem obvious that the MDMA would want to bash the FDA but my experience is that companies in the business don't like to complain. Indeed, the survey notes:
A number of companies indicated that they would not respond due to fear of retribution from the FDA (despite assurances we would maintain their confidentiality).
See FDAReview for more on the FDA. Hat tip: Mike Mandel.
Addendum: Loyal reader Josh Turnage has produced a video plea to the FDA on behalf of his mother to leave Avastin approved for breast cancer.
Assorted links
1. As I've been saying, derivatives clearinghouse regulation isn't working. And that was supposed to be one of the best, least controversial, and most non-partisan parts of Dodd-Frank.
2. Arnold Kling, China, labor markets, Hayek, Hilferding. Uh-oh.
3. Are people backing away from the school choice movement?
4. Can you tell if someone is Mormon by looking at him?
5. What (some white) progressives don't understand about Obama.
Apichatpong Weerasethakul
I find it increasingly hard to resist the notion that he is the most enduring director of our time. I've now seen Syndromes and a Century (the best place to start), Blissfully Yours, and Tropical Malady and wish to rewatch them all. Uncle Boonmee Who Can Recall His Past Lives (not yet on DVD) won the Golden Palm at Cannes this year. Themes of his movies include dreams, medicine and its authority relationships, sex and eroticism, homosexuality, the nature of cinema itself, memory, sudden fractures of reality, surrealism, and the modernization of Thailand. [Insert Dancing About Architecture cliche here.] You could frame most of the shots from these movies and turn them into stunning photographs. The plot structure is stronger than it appears at first. These movies also have notable (though quiet) soundscapes, as you would find in a Tarkovsky film.
If you expect to disagree, try then the excellent Ong Bak.
For the original pointer to Apichatpong Weerasethakul, I thank Andrew Hazlett. Here is an MP3 on pronouncing his name properly.
Advice for planning a wedding
A friend, and a prospective consumer of Hot Pot, inquires for tips on planning a wedding. I will offer a few:
1. Non-contractibility is a bigger problem than you think. You can agree on the number of people, and the amount you will spend on flowers, but ex post many questions will pop up at the margin. One of the two persons will care more about the right answer than the other. One party will be more willing to work on the wedding than the other. Contract in advance for a method of disagreement resolution, not just on the details of the wedding. Get ready for the fact that one person cares less about the wedding than the other and realize this is not the same as caring less about the marriage.
2. Refuse to accept the intransitivity of indifference: "If we invite Uncle Fester, we surely can't turn down Auntie Mame," etc. Just say no and (in vain) expect our federal government to do the same.
3. The purchases are a classic Hansonian "showing that you care" problem and the capitalist suppliers are not on your side. Early, up front, do something to show that you don't care. Buy a cheap paper cup. Relish the feeling. Accept it. Celebrate it. Then let the other person see you still care. Break in the idea of showing that you don't care.
4. Googling to "advice for planning a wedding" is a nightmare of P > MC commercial promotions, not just in the ads but also in the main search results. Rely more on the reader advice, in the comments section, from a very good economics blog.
What am I forgetting?
Assorted links
2. Pavement (pdf, and not the band).
3. New purple octopus. And sneezing snub-nosed monkey.
4. Dave Weigel on Randy Barnett.
5. Update on the Wolfers-Price NBA referee bias paper.
6. Controversial RCTs for social welfare programs.
7. Law and the Multiverse, a blog about superheroes.
“Why work?”
Here's a claim, with concrete numbers, that:
"a one-parent family of three making $14,500 a year (minimum wage) has more disposable income than a family making $60,000 a year."
That's after various government benefits and taxes, but the calculation seems incorrect to me. For instance, should the Medicaid and CHIP benefits of the poorer household actually be valued — to the user — at $16,500 a year? (Is that number coming from some kind of cost basis? If so, is it adjusted for the age of the Medicaid recipients to rule out nursing home expenditures?) Is the $60,000 per year family receiving employer-supplied health insurance? The assumption seems to be that they do not.
Still, even if you make adjustments this is a scary comparison. I'd like to see a more exact calculation of the implicit marginal tax rates of the poor, as they climb from say 15k a year through the 60k range. Does anyone know of such a table?
For the pointer I thank CC.
Addendum: Andrew Gelman comments.
New arguments against polygamy
Prof. Grossbard said there are fewer women available to men in societies that permit polygamy – even for monogamous men, because they are drawing from the same pool of women.
Since that scarcity could increase what she describes as the women’s “bargaining power,” men in such societies have an incentive to ensure they retain control over who the women marry.
To that end, Prof. Grossbard said, polygamy is associated with teenage brides, arranged and forced marriages, payments to brides’ fathers, little emphasis on “romantic” love and poor access to education or the work force – all designed to restrict the ability of women to choose who they marry.
There is further discussion here. I am not a fan of polygamy, but I find this argument strange (though not strictly impossible; men can behave preemptively and incur a large fixed cost to prevent a subsequent erosion of their control). Surely Grossbard would not argue that all institutions which improve the bargaining power of women lead to…less bargaining power for women. So why is polygamy so special in this regard?
For the pointer I thank John Chilton. On polygamy, I once wrote:
Polygamy ends when children cease to be a net economic asset. As society progresses and urbanizes, there are cheaper ways of having sex with multiple women, if that is one's goal.
Here are previous MR posts on polygamy.
What I’ve been reading
1. Supermac: The Life of Harold Macmillan, by D.R. Thorpe. I'm not one of these people who enjoys reading a lot of long tracts about British politicians, but this is one of the best non-fiction books of the year. It's full of good information, offers useful context for British economic and political debates, has plenty of original research, and is as suspenseful as a very good novel. Most of all, it brings its world and character to life. Highly recommended.
2. J.P. Singh, Globalized Arts: The Entertainment Economy and Cultural Identity. The definitive book for updating coverage on its topic, including the best and most comprehensive history of the UNESCO Convention on Cultural Diversity.
3. James K. Glassman, Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence. p.11: "Reduce the proportion of stocks in your portfolio."
4. Alan Taylor, The Civil War of 1812: American Citizens, British Subjects, Irish Loyalists, and Indian Allies. "The civil war had four overlapping dimensions. In the first, Loyalists and Americans battled for control of Upper Canada. Second, the bitter partisanship within the United States threatened to become a civil war, as many Federalists served the British as spies and smugglers, while their leaders in New England flirted with secession. Third, Irish republicans waged a civil war within the British empire, renewing in Canada their rebellion, which the British had suppressed in Ireland in 1798. Invading Canada, Irish-American soldiers faced British regiments primarily recruited in Ireland, for thousands of Irishmen had fled from poverty by enlisting in the royal forces. Fourth, the war embroiled and divided native peoples…In the North American civil war of 1812, Americans fought Americans, Irish battled Irish, and Indians attacked one another. They struggled to extend, or to contain, the republicanism spawned by the American Revolution." Some of this book has too much detail for my interests, but overall it is good.
5. Thomas Bartlett, Ireland: A History. I liked the cover so much that I also enjoyed the book more. I also liked the weight of this book a great deal; it was just right. In any case a fine one-volume introduction.
How rich was Ireland really?
Not as rich as they thought. I've been reading Fintan O'Toole's excellent Enough is Enough: How to Build a New Republic. Mostly it is an expose of Ireland's crony capitalism and bad political institutions. On economic issues, chapter five offers up the following:
1. During the boom years, property accounted for 72 percent of all assets.
2. For infrastructure, Ireland ranked 26 out of 28 OECD countries.
3. Ireland had a higher share of slow fixed internet connections than in any other comparable country.
4. In terms of R&D or patents, Ireland was well below the OECD average in per capita terms.
5. In the OECD "human and income poverty" rankings, Ireland was 23 out of 25 countries, sandwiched between the United States and Mexico.
6. The country's health care and educational systems are considered subpar.
The author asks: "Did anyone seriously believe the Irish were sixty percent richer than the Germans?" Income is not wealth.
Unfortunately, the second half of the book collapses into polemics and generalities, but some of the earlier discussions are useful, important, and not available in most other sources. Here is a review of the book.
Assorted links
1. More culturally untranslateable expressions, some of them obscene.
2. Blog symposium on behavioral law and economics, with many notables.
4. Ireland markets in everything, boxer shorts edition.
5. Should men or women staff Saudi lingerie stores?
6. Do scientific effects shrink over time?
7. The Taiwanese explain Ireland (video).
8. Why are there so few great women chefs? (Or are there?)
9. The wisdom of Garett Jones, on the status of science.
How to Make Friends Without Influencing People
Bryan Caplan had a great post last week combining statistics, biology, and parenting to lead to the conclusion that weird people should have more kids. First, the statistics. If there is a zero correlation between parental and child traits then your child is as likely to be as similar to you as is a stranger. If the correlation between parent and child traits is greater than zero then you are more likely to be like your child than a stranger but only if you yourself are not normal. Here is Bryan:
Take a look:
Parent-Child Correlation
r= 0
r=.5
You
Stranger
Child
Stranger
Child
Percentile/
Expected
Percentile
50th
50th
50th
50th
50th
95th
50th
50th
50th
80th
99.99th
50th
50th
50th
95th
Notice that regardless of the value of r, normal people can expect to be like their kids. But that's not saying much, because normal people can expect to be like any random person they meet! The story's very different for weirdos. By definition, weirdos never have much in common with random strangers. With a zero parent-child correlation, weirdos will feel equally alienated from their children. As the parent-child correlation rises, however, weirdos' incompatibility with strangers stays the same, but their expected compatibility with their children gets stronger and stronger.
Now let's look at these facts like a mad economist. There are two ways to surround yourself with people like you. One is to meet them; the other is to make them. If you're average, meeting people like yourself is easy; people like you are everywhere. If you're weird, though, meeting people like yourself is hard; people like you are few and far between. But fortunately, as the parent-child correlation rises, weirdos' odds of making people like themselves get better and better.
…The lesson: As your weirdness increases, so does your incentive to have kids. If you like football and American Idol, you're never really alone. You don't need to build a Xanadu for yourself. But if you're a lonely misfit, oddball, freak, or weirdo, then find a like-minded spouse and make new life together. Let the normals laugh at you. You'll have each other.
Rebounds per game, or rebounds per minute? (not a post about basketball)
When someone wins the Cy Young award with a 13-12 record, you reconsider the reliability of particular statistics and also the meaning of the award. In economics we are taught, correctly, that Ronald Coase is a world-class economist, despite his relatively small number of publications. Virtually each piece is a gem.
In the NBA, which is a better or more important stat? Rebounds per game, rebounds per minute, or how about "total rebound percentage"? Should not some measure of rebounding rate win out here?
Nonetheless, I still look first to total rebounds, whether in a game, in a year, or even in a career. How much time you are on the court is endogenous. If you are a superb rebounder but cannot play more than ten minutes a game — because of injury, uncooperativeness, or other missing skills — you will have a low number of total rebounds and that will reflect your broader deficits.
Greg Oden has a high rebound rate but he hardly plays, due to recurring injury. No one calls him the Ronald Coase of rebounding.
Similarly, Yao Ming has high success rates, but cannot stay on the court for very long, due to his bad feet. His team has plenty of talent but has not won much and it probably needs to be dismantled at this point.
In other words, it is often "brute total" statistics which are underrated (think about evaluating a potential spouse). And brute total statistics are most important when you must cooperate with others in complementary fashion and maintain their productivity as well as your own. They are least important when, like Wittgenstein, Coase, or Sraffa, you occasionally issue a missive of brilliance and then retreat for years. Coase did make his Chicago colleagues much more productive, but that effect would be weaker today in this age of specialization and co-authorship.
Both experimental economics and field experiments involve a lot of researcher cooperation and both are fields on the rise. Does this mean that total output statistics will/should become more important for assessing economists?
Circa 2010, should we be looking more for economists who are more like Nolan Ryan and less like Ronald Coase?
Addendum: Angus comments.