Tyler Cowen's Blog, page 343
June 23, 2013
China story of the day
Hundreds of police eventually cordoned off the school and the local government conceded that “exam supervision had been too strict and some students did not take it well”.
Here is more.
The Tabarrok Curve in the WSJ
Matt Ridley covers patents and the Tabarrok Curve in the WSJ:
The economist Arthur Laffer is reputed to have drawn his famous curve—showing that beyond a certain point higher taxes generate lower revenue—on a paper napkin at a dinner with Dick Cheney and Donald Rumsfeld in the Washington Hotel in 1974.
Another economist, Alex Tabarrok of George Mason University, last year drew a similar curve on a virtual napkin to argue that, beyond a certain point, greater protection for intellectual property causes less innovation. He thinks that U.S. patent law is well beyond that optimal point.
Last week the Supreme Court came out against the patenting of genes, on the grounds that they are discoveries, not inventions, though it did allow that edited copies of the DNA of a breast cancer gene should be seen as invented diagnostic tools. Dr. Tabarrok thinks that decision and other recent rulings are nudging patent law back in the right direction after a protectionist drift in the 1980s and ’90s.
Jude Wanniski and the Wall Street Journal made the Laffer curve famous so I have high hopes!
June 22, 2013
Emerging markets, hitting a wall
That is the title of my new New York Times column. Here is an excerpt:
The disconcerting truth is that the great “age of industrialization” may be behind us, a possibility that has been outlined most forcefully by the economist Dani Rodrik, who is leaving Harvard for Princeton next month. And evidence for this view is coming from at least four directions:
THE RISE OF AUTOMATION First, machines can perform more and more functions in manufacturing, and sometimes even in services. That makes it harder to compete via low wages.
Say you run a company in a developed nation and have been automating many of its processes. Because your total bill for employee wages would be low, why not choose the proximity and familiarity of investing in labor in or near your home country? This change would help the jobs picture in the United States and probably countries like Mexico, but could hurt many other lower-wage nations.
GLOBAL SUPPLY SOURCES Supply chains are now scattered across many countries. Think of the old development model as a nation, such as South Korea, trying to build a nearly complete domestic supply chain for its automobile and other industries. The newer model is more distributed, as reflected by the iPhone, with the bounty from the investment spread across many locations, including the Philippines, Taiwan and mainland China. As for cars, Thailand has courted automobile factories with success, but the parts usually come from outside the country and the benefits for the Thai economy are limited.
Richard Baldwin, professor of international economics at the Graduate Institute in Geneva, refers to the internationalization of the supply chain as “globalization’s second unbundling.” He sees the new world as one of “development enclaves,” in which parts of countries will stand out as advanced or wealthy, without fundamentally transforming the entire economy.
I end with the following:
In any case, we should be prepared for the possibility that, while Seoul now looks a fair amount like Los Angeles, perhaps La Paz, Accra and Dhaka will never look much like Seoul.
China fact of the day
The state-owned Shanghai Daily reported today that divorces now surpass marriages in China, with Shanghai reporting a 13.6 per cent rise in marital dissolutions last year, the biggest jump in recent years.
Here is more.
Probably not good news markets in everything
For US$249 a company in the United States is promising to send curious and competitive players of computer games an unusual headset. The device, the company claims, will convert electronic gamers into electronic-gamers. At the touch of a button, the headset will send a surge of electricity through their prefrontal cortex. It promises to increase brain plasticity and make synapses fire faster, to help gamers repel more space invaders and raid more tombs. And, according to the publicity shots on the website, it comes in a choice of red or black.
The company is accepting orders, but says that it will not ship its first headsets to customers until next month. Some are unwilling to wait. Videos on the Internet already show people who have cobbled together their own version with a 9-volt battery and some electrical wire. If you are not fussy about the colour scheme, other online firms already promise to supply the components and instructions you need to make your own. Or you could rummage around in the garage.
Here is more, with further interesting points, via Michelle Dawson.
Traditional dress from the Gulf States, and its origins
This is from the latest book by Christopher M. Davidson, After the Sheikhs:
Another prominent mechanism for guarding and preserving the social base of national elites in the Gulf monarchies has been the adoption of a “national dress” code. There are significant variations across the region, with men and women in Oman, Saudi Arabia, and Kuwait wearing several different styles of garments, and with the younger generations in all six Gulf monarchies increasingly wearing western clothes during their leisure time. For the most part the older generations in all these countries, and most citizens — young and old — in the wealthiest of the Gulf monarchies tend to wear a fairly strict uniform of white thobes or dishdashas (men) or black abayas (women). Such quotidian sartorial choices allow the observer to differentiate instantly between a citizen and an expatriate, which helps the former to access the aforementioned privileges associated with citizenship and the concomitant elevated social status they bring. In those monarchies such as Qatar or the UAE where the material rewards of citizenship are the greatest and where the expatriate component of the total resident population is the highest, adherence to the dress code is most prevalent. As one recent study put it, “it is no mere fashion that leads all Qatar national men to wear their traditional thoh at all times…the emir and his government have perpetuated these neo-traditional myths of authenticity, allowing the creation of a citizen autocracy.” Certainly it is very important to note that this dress code is primarily a product of the oil era and the rentier state: although sometimes referred to as “traditional dress” or even “Islamic dress” by foreigners, the current national dress code in these Gulf monarchies has few roots in tradition or religion, with early pre-oil photographs from the region demonstrating that the indigenous populations once wore a variety of colours and styles.
As for the book as a whole, I don’t think the author makes a convincing case for his extremely pessimistic forecasts, but still it is an interesting read.
June 21, 2013
Academic economics is more winner-take-all than you might think
John P. Conley and Ali Sina Onder write (pdf):
We study the research productivity of new graduates of top Ph.D. programs in economics. We find that class rank is as important as departmental rank as predictors of future research productivity. For instance the best graduate from UIUC or Toronto in a given year will have roughly the same number of American Economic Review (AER) equivalent publications at year six after graduation as the number three graduate from Berkeley, U. Penn, or Yale. We also find that research productivity of top graduates drops off very quickly with class rank at all departments. For example, even at Harvard, the median graduate has only 0.04 AER papers at year six…
The indicating post is from Angus, thanks also to Stan T. for a pointer.
No One is Innocent
I broke the law yesterday and again today and I will probably break the law tomorrow. Don’t mistake me, I have done nothing wrong. I don’t even know what laws I have broken. Nevertheless, I am reasonably confident that I have broken some laws, rules, or regulations recently because its hard for anyone to live today without breaking the law. Doubt me? Have you ever thrown out some junk mail that came to your house but was addressed to someone else? That’s a violation of federal law punishable by up to 5 years in prison.
Harvey Silverglate argues that a typical American commits three felonies a day. I think that number is too high but it is easy to violate the law without intent or knowledge. Most crimes used to be based on the common law and ancient understandings of wrong (murder, assault, theft and so on) but today there are thousands of federal criminal laws that bear no relation to common law or common understanding. The WSJ illustrates:
Last September (2011), retired race-car champion Bobby Unser told a congressional hearing about his 1996 misdemeanor conviction for accidentally driving a snowmobile onto protected federal land, violating the Wilderness Act, while lost in a snowstorm. Though the judge gave him only a $75 fine, the 77-year-old racing legend got a criminal record.
Mr. Unser says he was charged after he went to authorities for help finding his abandoned snowmobile. “The criminal doesn’t usually call the police for help,” he says.
Or how about this:
In 2009, Mr. Anderson loaned his son some tools to dig for arrowheads near a favorite campground of theirs. Unfortunately, they were on federal land….
There is no evidence the Andersons intended to break the law, or even knew the law existed, according to court records and interviews. But the law, the Archaeological Resources Protection Act of 1979, doesn’t require criminal intent and makes it a felony punishable by up to two years in prison to attempt to take artifacts off federal land without a permit.
The Anderson’s didn’t even find any arrowheads but the attempt to find was punishable by imprisonment. Under statutes such as the Lacey Act one can even face criminal prosecution for violating the laws of another country. Ignorance of another country’s laws is no excuse.
If someone tracked you for a year are you confident that they would find no evidence of a crime? Remember, under the common law, mens rea, criminal intent, was a standard requirement for criminal prosecution but today that is typically no longer the case especially under federal criminal law .
Faced with the evidence of an non-intentional crime, most prosecutors, of course, would use their discretion and not threaten imprisonment. Evidence and discretion, however, are precisely the point. Today, no one is innocent and thus our freedom is maintained only by the high cost of evidence and the prosecutor’s discretion.
One of the responses to the revelations about the mass spying on Americans by the NSA and other agencies is “I have nothing to hide. What me worry?” I tweeted in response “If you have nothing to hide, you live a boring life.” More fundamentally, the NSA spying machine has reduced the cost of evidence so that today our freedom–or our independence–is to a large extent at the discretion of those in control of the panopticon.
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