Tyler Cowen's Blog, page 375
April 21, 2013
Two excellent books
Lawrence Wright, Going Clear: Scientology, Hollywood, and the Prison of Belief.
Fredrik Logevall, Embers of War: The Fall of an Empire and the Making of America’s Vietnam, recently a Pulitzer Prize winner for non-fiction.
The first of these is good enough to fall into the “worth reading even if you don’t think you want to read a book about this topic” category.
Apprenticeships need more respect
Ed Luce in the FT reports on increased interest in the German model of apprenticeships:
Germany channels roughly half of all high-school students into the vocational education stream from the age of 16….More than 40 per cent of Germans become apprentices. Only 0.3 per cent of the US labour force does so.
Luce, however, thinks that “In the US that would be seen as too divisive, even un-American.” In the United States we obsess about getting a college degree so much that anything else looks like second best. But what is so special about college? As I said in Tuning in to the Dropping Out:
The U.S. has paved a single road to knowledge, the road through the classroom. “Sit down, stay quiet, and absorb. Do this for 12 to 16 years,” we tell the students, “and all will be well.” Most of them, however, crash before they reach the end of the road–some drop out of high school and then more drop out of college. Who can blame them? Sit-down learning is not for everyone, perhaps not even for most people. There are many roads to knowledge.
German apprenticeship students are well-educated, highly skilled and employable and they are in no way second-class relative to college graduates. Going to college is neither necessary nor sufficient to be well educated. Moreover, as Luce goes on to note, even for those who do complete a college degree, all is well no longer.
Fifteen per cent of taxi drivers in the US have a degree, up from 1 per cent in 1970. Likewise, 25 per cent of sales clerks are graduates, against 5 per cent in 1970. An astonishing 5 per cent of janitors now have a bachelor’s degree.
Why did Cuba become healthier during the economic meltdown of the 1990s?
One should interpret anything about Cuba, or coming out of Cuban data, with extreme caution. Nonetheless I thought this was interesting enough to pass along:
The economic meltdown should logically have been a public health disaster. But a new study conducted jointly by university researchers in Spain, Cuba, and the U.S. and published in the latest issue of BMJ says that the health of Cubans actually improved dramatically during the years of austerity. These surprising findings are based on nationwide statistics from the Cuban Ministry of Public Health, together with surveys conducted with about 6,000 participants in the city of Cienfuegos, on the southern coast of Cuba, between 1991 and 2011. The data showed that, during the period of the economic crisis, deaths from cardiovascular disease and adult-onset type 2 diabetes fell by a third and a half, respectively. Strokes declined more modestly, and overall mortality rates went down.
This “abrupt downward trend” in illness does not appear to be because of Cuba’s barefoot doctors and vaunted public health system, which is rated amongst the best in Latin America. The researchers say that it has more to do with simple weight loss. Cubans, who were walking and bicycling more after their public transportation system collapsed, and eating less (energy intake plunged from about 3,000 calories per day to anywhere between 1,400 and 2,400, and protein consumption dropped by 40 percent). They lost an average of 12 pounds.
It wasn’t only the amount of food that Cubans ate that changed, but also what they ate. They became virtual vegans overnight, as meat and dairy products all but vanished from the marketplace. People were forced to depend on what they could grow, catch, and pick for themselves– including lots of high-fiber fresh produce, and fruits, added to the increasingly hard-to-come-by staples of beans, corn, and rice. Moreover, with petroleum and petroleum-based agro-chemicals unavailable, Cuba “went green,” becoming the first nation to successfully experiment on a large scale with low-input sustainable agriculture techniques. Farmers returned to the machetes and oxen-drawn plows of their ancestors, and hundreds of urban community gardens (the latest rage in America’s cities) flourished.
And this:
During the special period, expensive habits like smoking and most likely also alcohol consumption were reduced, albeit briefly. This enforced fitness regime lasted only until the Cuban economy began to recover in the second half of the 1990s. At that point, physical activity levels began to fall off, and calorie intake surged. Eventually people in Cuba were eating even more than they had before the crash. The researchers report that “by 2011, the Cuban population has regained enough weight to almost triple the obesity rates of 1995.”
That is by Richard Schiffman, the full article is here, and for the pointer I thank Jim Oliver.
April 19, 2013
We interrupt your regularly scheduled programming…
Given the ongoing events in Boston and Cambridge, it is hard to know what else to post. My first intuitive thought, by the way, is to think hired agents are involved, but of course this is speculative (note this update). I also would think this raises the chance of the fertilizer explosion being a terrorist attack. Just last night some of us were talking and discussing the question “what is your most surprising prediction?” No one predicted these new developments. There is a good chance these events doom immigration reform, by the way.
Gourmet cupcakes are crashing
It’s about time, and it’s not just Bitcoin:
After trading at more than $13 a share in mid-2011, Crumbs has sunk to $1.70. It dropped 34% last Friday, in the wake of Crumbs saying that sales for the full year would be down by 22% from earlier projections, and the stock slipped further this week.
Crumbs in part blamed store closures from Hurricane Sandy, but others say the chain is suffering from a larger problem: gourmet-cupcake burnout.
“The novelty has worn off,” says Kevin Burke, managing partner of Trinity Capital LLC, a Los Angeles investment banking firm that often works in the restaurant industry.
The cupcake high water mark seems to have been June of 2011. Here is more, and I thank several MR readers for the pointer.
From the comments
On your 2010 R&R post: Your point about 90% being neither sacred nor stable shows how badly many people misinterpreted the paper.
You also said we don’t know how much higher than 90% we can go. I’m not sure exactly what you meant, but I’ve suggested that the threshold we should be most concerned about is the point beyond which you can be sure you’ll never get back to safe debt levels, because you’ll be faced with the Catch-22 of both austerity and “not-austerity” pushing debt higher for different reasons. This threshold is much lower than the point at which large countries will actually experience a fiscal crisis and probably lower than most people think. A reasonable estimate is only 150% debt-to-GDP, based on the observation that there are no historical episodes of countries recovering from 150%+ that are at all relevant to the U.S. or U.K. today (yes, I used the R&R data among other sources to test this).
The risk that the U.S. sails through such a threshold is becoming very real at current debt levels.
If you (or anyone) are interested, my paper reviewing all historical episodes of debt >150% of GDP (from the R&R database) was posted last month on Seeking Alpha and on http://www.cyniconomics.com and it’s called “Answering the Single Most Important Question in Today’s Economy.” And if the U. Mass. trio are interested, I’ll even offer my calculations.
On sleep, in my email, from Asher Meir
I don’t think we economists have quite gotten to the bottom of sleep. To the extent we think of it at all, I think we are inclined to think of it as an input in a kind of Gary Becker way. More sleep = less time for production and consumption, but too little sleep harms the productivity of both production and consumption. Solve for the optimum (in which you will be slightly over-tired all the time).
In this model the objective function is to maximize the present value of all future WAKING consumption. Adopting this approach, studies showing that more sleep = longer life are not very persuasive, because the effect would have to be huge before more total hours would translate into more waking hours, particularly since the old-age hours are highly discounted. (Of course some people believe the decades-away future may bear huge positive shocks – new therapies, new kinds of experiences, etc.- and this would offset the discount.)
I don’t find this model very convincing. Many people don’t view time spent sleeping as time wasted. Is enjoying a good nap merely a synonym for enjoying subsequent consumption more intensively, or do we perhaps actually enjoy a good nap? (My 17 year old son is adamant that he enjoys sleeping and sometimes it seems to be his favorite activity.)
And he follows up with this:
…My conjecture is that these wake drugs will mostly change the intertemporal substitutability of sleep. It will be easy to “borrow” wakefulness the night before an exam, during an extended battle, etc. But the total amount of lifetime sleep will be little affected. Qui vivra, verra.
Could also be related to the frequency and pleasantness of dreams. I have frequent and sometimes quite interesting dreams so giving up on sleep would be more of a sacrifice for me than for someone who has few dreams or frightening ones.
April 18, 2013
Sentences to ponder
Irish homeowners applying for debt writedowns will have to give up satellite television, foreign holidays and private school educations for their children under a strict new insolvency law introduced to tackle the country’s debt crisis.
On Thursday Ireland’s Insolvency Service set out monthly spending limits for people seeking debt deals from their creditors, highlighting the impact austerity is having on Irish spending habits. A single person will be allowed just €247.04 a month for food, €57.31 for heating and €125.97 for “social inclusion and participation”, an expenses category that includes tickets for sporting events and the cinema.
…In most cases, people seeking debt deals will also have to give up private health insurance and their cars, although they will be able to keep their vehicles if they do not have access to public transportion.
From the FT, here is more. The Irish Times has an ungated version.
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