Markets in Everything: Torturer
At left is an ad that ran in the Guardian newspaper. “The government of a Middle Eastern state is recruiting a senior torturer to work in a well-equipped prison. Our ideal candidate would be prepared to inflict extreme pain and suffering… Candidates will be expected to inspire a small but enthusiastic team.” No, I don’t [...] Read more...
Marginal Revolution, May 21, 5:01pm
*Birdseye: The Adventures of a Curious Man*
That is the new and oddly underreported book by Mark Kurlansky, about Clarence Birdseye and the early history of frozen food. I found it consistently good and enjoyable, here is one excerpt: Birdseye asked himself many questions about food and survival in the subarctic. Why, he wondered, did people in Labrador eat lean food in [...] Read more...
Marginal Revolution, May 21, 1:51pm
Capital flight in the Eurozone
In a fascinating research note*, Matt King of Citigroup calculates the outflows of capital from various euro zone nations, in particular Italy and Spain. He concludes that Italy saw 160 billion euros exit in 2011, while Spain lost 100 billion euros, in a mixture of bank withdrawals and sales of government and corporate bonds. He [...] Read more...
Marginal Revolution, May 21, 10:50am
The Father of Microcredit
You’ve heard how microcredit was born. In a nation long shackled by British rule and wracked by famine, a brilliant man was seized with a desire to strike a blow against the poverty all about him. Defying common sense and the skepticism of his colleagues, he began lending tiny sums out of his own pocket to poor people, [...] Read more...
Marginal Revolution, May 21, 7:04am
Assorted links
1. Marc Gunther’s blog on food, sustainability, economics, and related matters. It is analytical, not just the usual rhetoric on these topics. 2. Does Hayek’s welfare state lead to serfdom? And how to unfold a rhino (short video). 3. Summary of the No-sterity debate. 4. Have we been underestimating the extent of the growth of [...] Read more...
Marginal Revolution, May 21, 6:28am
It would be premature to use the words “free fall”
Nonetheless those are the words which come to mind, to me, in my safe Fairfax home, far from China and European bank jogs: Chinese consumers of thermal coal and iron ore are asking traders to defer cargos and – in some cases – defaulting on their contracts, in the clearest sign yet of the impact [...] Read more...
Marginal Revolution, May 21, 6:11am
The reshoring of U.S. (and Mexican) manufacturing
Some 65 per cent of the senior executives questioned by Accenture said they had moved their manufacturing operations in the past 24 months, with two-fifths saying the facilities had been relocated to the US. China was the second destination for relocated factories, with 28 per cent, followed by Mexico with 21 per cent. Here is [...] Read more...
Marginal Revolution, May 20, 4:37pm
Amazon vs. expert reviews of a book
…experts and consumers agreed in aggregate about the quality of a book. Amazon reviewers were more likely to give a favourable review to a debut author, which the Harvard academics said suggested that “one drawback of expert reviews is that they may be slower to learn about new and unknown books”. Professional critics were more [...] Read more...
Marginal Revolution, May 20, 3:15pm
More from Edward Conard, on proprietary trading
Rather than demanding an end to default-prone subprime lending funded with hair-triggered short-term debt, bank critics have, ironically, demanded an end to proprietary trading, which they view as unnecessarily risky, but which was inconsequential to the cause of the Crisis. In a world where banks underwrite and trade risk, what constitutes proprietary trading? When a [...] Read more...
Marginal Revolution, May 20, 6:21am
Ezra and Tom Coburn on Sweden
EK: To go back to Krugman, if he were sitting here, he’d say in this crisis there’s been no evidence anywhere that cutting deficits leads to growth. We’ve not seen it in the euro zone or the UK. And he’d say the Reinhart/Rogoff story is a correlation story. It doesn’t prove that high debt always [...] Read more...
Marginal Revolution, May 20, 6:09am
Update on the Millennium Villages controversy
G., a loyal MR reader, writes to me: I imagine you may find this interesting… The blog post: http://blogs.worldbank.org/impactevaluations/the-millennium-villages-project-impacts-on-child-mortality The retraction on the MVP website: http://www.millenniumvillages.org/field-notes/millennium-villages-project-corrects-lancet-paper The retraction in the Lancet: http://press.thelancet.com/MVP.pdf …from the Lancet editors…http://download.thelancet.com/flatcontentassets/pdfs/S0140673612607879.pdf Related: http://www.economist.com/node/21555571 http://www.economist.com/blogs/newsbook/2012/05/jeffrey-sachs-and-millennium-villages?fsrc=gn_ep http://blog.givewell.org/2012/05/18/millennium-villages-project/ Read more...
Marginal Revolution, May 19, 4:23pm
Assorted links
1. Edible stop signs in food. 2. Will smartphones alter psychology? 3. Ask Cowen Anything (on food), and Jerry Weinberger reviews An Economist Gets Lunch. 4. How do science fiction futures change over time? 5. Why is American mobility declining? 6. Saez and Diamond on taxes. Read more...
Marginal Revolution, May 19, 1:15pm
Incentives matter
Divorce lawyers and wedding planners have been gearing up for the Facebook IPO, waiting for the influx of wealth in Silicon Valley to stir up drama in romantic relationships, for better and for worse. “When Google went public, there was a wave of divorces. When Cisco went public there was a wave of divorces,” says [...] Read more...
Marginal Revolution, May 19, 10:27am
Why did the U.S. financial sector grow so large?
Edward Conard, author of Unintended Consequences: Why Everything You’ve Been Told About the Economy is Wrong, offers a hypothesis. He suggests the underlying cause is the (relatively recent) prevalence of risk-averse foreign capital: With an abundance of risk-averse offshore capital, the constraint to increase investment and risk taking has been the capacity of risk underwriters, [...] Read more...
Marginal Revolution, May 19, 6:15am
Jared Diamond reviews *Why Nations Fail*
There is much in the review, excerpt: In their narrow focus on inclusive institutions, however, the authors ignore or dismiss other factors. I mentioned earlier the effects of an area’s being landlocked or of environmental damage, factors that they don’t discuss. Even within the focus on institutions, the concentration specifically on inclusive institutions causes the [...] Read more...
Marginal Revolution, May 18, 2:26pm
What I’ve been reading
1. Héctor Abad, Oblivion: A Memoir. A charming and intense memoir of a boy and his relationship to his father. It seems to be true, but it can be read profitably as either non-fiction or the equivalent of fiction. Recommended. Abad is still an underrated author in the United States. 2. Steve Coll, Private Empire: [...] Read more...
Marginal Revolution, May 18, 11:43am
What is the potential for German fiscal stimulus?
This idea has been overpromoted for a long time: Even if Germany manages to increase domestic demand, there is no guarantee that the additional spending will find its way into the peripheral euro-zone economies. A simple macroeconomic simulation suggests that a permanent increase in German government consumption equivalent to one percentage point of GDP would [...] Read more...
Marginal Revolution, May 18, 9:48am
*China Airborne*
That is the new book by James Fallows. On the surface it is a book about aviation in China, but it is also one of the best books on China (ever), one of the best books on industrial organization in years, and an excellent treatment of economic growth. It is also readable and fun. Highly [...] Read more...
Marginal Revolution, May 18, 5:58am
Assorted links
1. Is Sweden or England the paragon of “austerity”? Scott Sumner comments. 2. Has Australia been avoiding economic stagnation? 3. Criticisms of Aishwarya Rai. 4. Giant turtle dined on crocodiles. 5. 4-D, edible movies. 6. Via Chris F. Masse, Peter Thiel in New Zealand. Read more...
Marginal Revolution, May 18, 5:52am
Can Timeouts Change the Outcome of Basketball Games?
From Serguei Saavedra, Satyam Mukherjee, James P. Bagrow. Here is the paper, here is the abstract: In basketball, timeouts are believed to reverse the momentum of a game. However, here we show timeouts have no significant effect on the final outcomes of games. Moreover, we find that the timeout factor only appears to reinforce the [...] Read more...
Marginal Revolution, May 17, 2:47pm
Agricultural yields and the returns to schooling
Agricultural yields, which reflect real returns and are not contaminated by “signaling,” are another independent way to measure the returns from schooling. Starting with Ted Schultz, this is a significant theme in development economics, and now from John Parman we have a new paper on schooling and agriculture in early 20th century America: Formal schooling [...] Read more...
Marginal Revolution, May 17, 12:27pm
Solomon’s Knot and Gray Markets
Solomon’s Knot: How Law Can End the Poverty of Nations has received less attention than some of other recent big books on development but I found it to be rich in institutional detail, wisdom and practical advice. The authors, Robert Cooter and Hans-Bernd Schafer, are law professors and as befits their expertise they spend less [...] Read more...
Marginal Revolution, May 17, 7:24am
Scaling the Great Wall
Here is my essay from Washingtonian magazine, adapted from An Economist Gets Lunch, about what it is like to shop at a Chinese supermarket for a month. Here is one bit about search theory: Then there’s getting your cart down the aisle. The main aisles fit two carts side by side, barely. It’s hard to [...] Read more...
Marginal Revolution, May 17, 4:37am
The Rotten Kid theorem?
According to Adecco, nearly a third of parents are helping their kids find work, and nearly one in ten are taking them to job interviews. …Three percent of recent college grads say their parents have actually sat in with them during interviews, and one percent claim Mom or Dad wrote their thank you notes afterwards. [...] Read more...
Marginal Revolution, May 17, 3:51am
Four underrated European masterworks
1. The Ravenna mosaics, most of all at St. Vitale. 2. Monreale, the Norman church outside of Palermo, Sicily. 3. Matthias Grünewald’s Isenheim altar, in Colmar, France. 4. Tiepolo’s paintings in the Residenz, in Wurzburg. I much prefer any of those to the Mona Lisa, and to my prejudiced taste they are all among the [...] Read more...
Marginal Revolution, May 16, 2:52pm
Assorted links
1. Romanian uh-oh. 2. The beloved FT Alphaville launches a Tumblr. 3. The new Brian Doherty book on Ron Paul. 4. James Crabtree worries about India and India facing stagflation. This whole matter is already looking worse. 5. The bank jog, a deadly picture. 6. How much will global aging slow economic growth? Read more...
Marginal Revolution, May 16, 12:25pm
Words of wisdom, from men of wisdom
From Arnold Kling: Mauldin’s claim is that we are in what he calls the “endgame,” meaning that the Keynesian option of increasing government borrowing is no longer available to European countries. The only willing lenders are banks, which in turn need to be propped up, and ultimately they can only be propped up by printing [...] Read more...
Marginal Revolution, May 16, 10:47am
Dollars, dollars, everywhere, and not a dollar to drink?
Is the shortage [sic] of dollars in China the real global financial ticking time bomb? This post, from Isabella at FT Alphaville, is essential reading. The world will not be safe again until FT Alphaville is neutered into irrelevance, unfortunately that won’t be anytime soon. Read more...
Marginal Revolution, May 16, 10:08am
As I have been saying
“The euro will leave Greece before Greece leaves the euro.” On Monday, bank deposit withdrawals from Greece were about 700 million euros. Read more...
Marginal Revolution, May 16, 9:38am
How emigrants try to run their fiscal policies
In survey data collected as part of the study, Washington, D.C.–based migrants from El Salvador report that they would like recipient households to save 21.2 percent of remittance receipts, while recipient households prefer to save only 2.6 percent of receipts. This is one reason why emigrant workers do not send more back home all at [...] Read more...
Marginal Revolution, May 16, 4:49am
I know, I know, M2 isn’t exactly the right indicator
Still, I find this interesting: M2 money supply growth rates are plunging in Greece (down -16.8% y/y through February), Spain (down -4.7%), and Portugal (-3.8% through January). It is up only 1.3% through February in Italy. Germany’s M2 is up 7.5% y/y through February. Some of that growth is coming from Greece, Portugal, and Spain, [...] Read more...
Marginal Revolution, May 16, 1:48am
Assorted links
1. Heath Gordon reviews An Economist Gets Lunch. 2. The daily Tate Watkins Haiti round-up, and will there be a gold boom in Haiti? 3. Narrative Science. 4. The economics of same sex marriage. 5. A radical idea: limit gadgets to one photograph per day. And dogs yawn when people yawn. Read more...
Marginal Revolution, May 15, 2:09pm
The Rent is Too Damn High
From London: On 30 April, the housing minister, Grant Shapps, announced that the government was creating a nationwide “beds in sheds” taskforce, to identify the thousands of sheds and outbuildings being illegally rented out, often to illegal migrants. He said it was “a scandal that these back-garden slums exist to exploit people, many of whom [...] Read more...
Marginal Revolution, May 15, 11:46am
The Myth of Chinese Meritocracy
No doubt you have heard how the leadership of China is meritocratic and composed of technocrats with PhDs. Minxin Pei suggests that there is less than meets the eye. …Contrary to the prevailing perception in the West (especially among business leaders), the current Chinese government is riddled with clever apparatchiks like Bo who have acquired [...] Read more...
Marginal Revolution, May 15, 11:27am
How much structural unemployment was there during the Great Depression?
A few times recently Paul Krugman has raised the issue of structural unemployment in the Great Depression, so I thought I would offer a look at what has been written on the topic. Here is Richard J. Jensen, from a survey article: Economists agree that Keynesian stimuli would not have helped structural or hard-core unemployment, [...] Read more...
Marginal Revolution, May 15, 12:58am
What is austerity?
Or should that read what is “austerity”? The May 11 IHT has a headline “German line on austerity appears to soften,” and the article is about monetary policy and inflation targeting (I don’t see it on line). While monetary policy has ramifications for fiscal policy and output, I would not refer to tight money as [...] Read more...
Marginal Revolution, May 14, 1:41pm
Assorted links
1. An old but still interesting Bertola and Drazen paper on fiscal policy (pdf): “We propose and solve an optimizing model which explains counterintuitive effects of fiscal policy in terms of expectations. If government spending follows an upward-trending stochastic process which the public believes may fall sharply when it reaches specific “target points,” then optimizing [...] Read more...
Marginal Revolution, May 14, 12:47pm
Greece fact of the day (but how many bullets did they fire?)
More than half of all police officers in Greece voted for pro-Nazi party Chrysi Avgi’ (Golden Dawn) in the elections of May 6. This is the disconcerting result of an analysis carried out by the authoritative newspaper To Vima (TheTribune) in several constituencies in Athens, where 5,000 police officers in service in the Greek capital [...] Read more...
Marginal Revolution, May 14, 10:29am
Genoeconomics
An interesting piece from the Boston Globe on “genoeconomics”: Though the name wasn’t coined until 2007, genoeconomics flickered briefly into existence once before. In 1976, the late University of Pennsylvania economist Paul Taubman published the results of a study in which he followed the financial lives of identical twins, and found there were curious similarities in [...] Read more...
Marginal Revolution, May 14, 7:31am
Markets in Everything: Fashion Like
These hangers in a São Paulo store show in real-time the number of “likes” an outfit has received on the Facebook page of Brazilian fashion retailer C&A. I shudder to think how many likes my typical outfit would receive. The internet of things is approaching rapidly. Read more...
Marginal Revolution, May 14, 6:05am
Genoeconomics
Here is one paragraph of an interesting-but-treads-quite-lightly story about what is possibly a new field of economics: To talk to the genoeconomists about their vision for the field is to listen to people acutely reluctant to overpromise, or to come off as naive. Much of their forthcoming paper in the Annual Review of Economics, in [...] Read more...
Marginal Revolution, May 14, 1:31am
Assorted links
1. Via Chris F. Masse, how large is the Chinese art market really? 2. The economics of HBO, and conditioning on a collider. 3. Good analysis of Spanish debt restructuring; “Should there be some form of Spanish sovereign bond restructuring, the amounts required to recapitalize the banks would be astronomical.” 4. Is the multi-year, multi-volume [...] Read more...
Marginal Revolution, May 13, 5:04pm
Sentences to ponder
Given the complete “credit isolation” of Greece’s banks and the private sector from the rest of the Eurozone, the ECB is powerless to improve liquidity conditions in that nation. That is from Sober Look. Read more...
Marginal Revolution, May 13, 1:52pm
Markets in everything
And while I knew that retired baseball players sell their autographs for $15 a pop, I had no idea that Pete Rose, who was banished from baseball for life for betting, has a Web site that, Sandel writes, “sells memorabilia related to his banishment. For $299, plus shipping and handling, you can buy a baseball [...] Read more...
Marginal Revolution, May 13, 12:50pm
One future path in development economics
Johannes Haushofer writes to me: The Busara Center for Behavioral Economics is a state-of-the-art facility for experimental studies in behavioral economics and other social sciences, located in Nairobi, Kenya, and hosted by Innovations for Poverty Action, Kenya (IPA-K). Busara is open to be used by researchers and students from universities and institutions around the world. [...] Read more...
Marginal Revolution, May 13, 3:29am
The culture that is Germany
According to Germany’s Der Spiegel, German police shot only 85 bullets in all of 2011…As Boing Boing translates, most of those shots weren’t even aimed [at] people: “49 warning shots, 36 shots on suspects. 15 persons were injured, 6 were killed.” In some cases the United States police manage to best that number while firing at [...] Read more...
Marginal Revolution, May 13, 1:49am
Assorted links
1. Via Robert Martinzes, interview with Kevin Shields, on labor market hysteresis and other matters. Excerpt: I’ve got my own studio, just down the road from here. And in the ten years I’ve had it, I’ve only used it in three of them. The other seven years it’s been empty. I feel quite sad about [...] Read more...
Marginal Revolution, May 12, 5:13pm
Facts about JP Morgan
The banking unit of JPMorgan Chase alone made $12.4 billion last year. The holding company has over $2.26 trillion in assets and is the largest U.S. bank and 8th largest in the world. The holding company made $29.9 billion in operating income and just over $20 billion in net income for 2011. So, this initial [...] Read more...
Marginal Revolution, May 12, 2:34pm
Not as easy as you might think (leaving the eurozone)
Controls on the movement of capital could be a nightmare for banks with loans in Greece, potentially making it illegal for companies to repay debt in euros. Here is more, but that is the key point. One option is that the Greek government would prevent importers of food and fuel from paying in euros, but [...] Read more...
Marginal Revolution, May 12, 5:47am