Tyler Cowen's Blog, page 15

China (Korea) fact of the day

Producer prices deflated for a 37th consecutive month in March, falling 4.6 per cent, versus a 4.8 per cent fall in February.

That is the longest period of factory gate deflation in China on record.

“The current bout of goods deflation in China and South Korea is the longest in postwar East Asia outside of Japan in the 1990s,” said Rodney Jones, Beijing-based principal of Wigram Capital.

Producer prices in South Korea have also fallen for 39 consecutive months.

The producer price index, often regarded as a leading indicator for consumer prices, has been mired in deflation thanks to sliding domestic demand and chronic overcapacity in many sectors.

That is from McGee and Anderlini at the FT.

By the way, here is the FT citing Deutsche Bank:

Bubble watchers point out median earnings multiples for Chinese technology stocks are twice US peer valuations at their dot.com peak. More worrying perhaps is a health-goods-from-deer-antlers producer on 70 times, the seamless underwear manufacturer on 90 times or those school uniform and ketchup makers on 330 times!

Last week there were 1.67 million new brokerage accounts.

Simplistic arguments which are nonetheless essentially true

Walmart critics embrace two moral standards: in the first, morality requires payment of high wages to 1.2 million people. In the second, morality can be achieved without employing anyone at all–that is, by paying zero wages. Most of us have chosen to live by the second standard, and from our lofty moral position we can criticize Walmart for not meeting the first standard. How convenient!

There is more here, from Ryan Decker, via Ben Southwood.

The effect of reusable shopping bags

Karkarmar: It was clear that shoppers who brought their own bags were more likely to replace nonorganic versions of goods like milk with organic versions. So one green action led to another. But those same people were also more likely to buy foods like ice cream, chips, candy bars, and cookies. They weren’t replacing other items with junk food, as they did with organic food. They were just adding it to their carts.

The full story is here, via Peter Metrinko.

Friday assorted links

1. “Why isn’t Chongqing more famous?  There is no reason for it to be famous, really.”

2. A blog on what we can learn from TV anachronisms.

3. The Old Boys’ Club.

4. Beware the comments (scroll down a bit to find it, but actually the whole link is interesting).

5. The jumping dad culture that is Japan.  And none of it as good as Bryan Caplan.

6. New Cato monetary blog with George Selgin.

Jobs young people are willing to consider for the future

Mayor of a city or town – 9.3% are willing to consider

Member of Congress – 8.8%

President – 6.4%

That is from Jennifer L. Lawless and Richard L. Fox, Running From Office: Why Young Americans Are Turned Off to Politics, a fascinating and also readable book.

The Experimental Turn in Economics: A History of Experimental Economics

The author is Andrej Svorenčík and he has produced the definitive account of the history of experimental economics.  The SSRN paper is here, but it is more accurate to think of this as a monograph at 248 pp. of text.  I hope a major publisher is interested, but do note it starts off a bit slow.  Once it gets going it never lets up and I learned a great deal from it.  Here is just one excerpt:

When Austin C. Hoggatt died on April 29, 2009, at the age of seventy-nine the experimental economics community lost a low profile yet very influential figure.  Hoggatt was the first to build a computerized laboratory for controlled experimentation in economics or, more broadly, in the social, behavioral, and decision science — the Management Science Laboratory at the Center for Research in Management Science at UC Berkeley in 1964.

If you think you might be interested you will be.  The paper/monograph is strong on recognizing the need for an integrated approach to experiments, involving software, support staff, programmers, and researchers, and tracing how all this came together, or in some cases did not.  You really get the inside story from Svorenčík.

Tyler’s Conversation with Jeff Sachs

It’s a great conversation. Sachs really opened up when discussing how his pediatrician wife influenced his approach to economics. The anger he still feels from the US treatment of Russia during its reform period is evident. He is startling forthright, calling out Acemoglu and Robinson and Krugman for mistakes and errors.

The youtube link is here. The audio edition is here and this is the ITunes link. Finally, here is the elegantly presented transcript on Medium, also with lots of links and additional material.

Sachs’ work on many fronts has influenced both Tyler and I, most notably in the geography section of our MRU development course.

Does education in economics make politicians corrupt?

Maybe so, I haven’t yet had a chance to look at the paper, so I can’t lay out for you how the measurements work, or how many data points they have, but the abstract sounds interesting, albeit in a possibly speculative way:

The present article analyzes the differences between economists and non-economists with respect to observed corruption behavior used as a proxy for selfishness. For this purpose, I analyzed real world data of relating to the 109th–111th US Congress between 2005 and 2009, including 695 representatives and senators. I show that those who hold a degree in economics are significantly more prone to corruption than ‘non-economists’. These findings hence support the widespread, but controversial hypothesis in the ‘economist vs. non-economist literature’ that economists lack what Frey and Meier (2004) call ‘social behavior’. Moreover, by using real world data, these findings overcome the lack of external validity, which impact on the (low cost) experiments and surveys to date.

That is from René Ruske in Kyklos.  Hat tip goes to Kevin Lewis.

Can any of you find an ungated version?

Sentences to ponder, words of wisdom

The ageing societies of the rich world want rapid income growth and low inflation and a decent return on safe investments and limited redistribution and low levels of immigration. Well you can’t have all of that. And what they have decided is that what they’re prepared to sacrifice is the rapid income growth.

That is from Ryan Avent.

Thursday assorted links

1. Data on how chess has evolved since 1850.

2. There is no great real rabbit stagnation (really not, check out the link).

3. Various reviews of Apple Watch.

4. What has influenced Ben Southwood?

5. Bangkok’s lavish malls consume as much power as entire provinces.

6. Matthew Klein at the FT on one hundred percent reserve banking for Iceland, or is it?