Tyler Cowen's Blog, page 394

Assorted links

1. The political culture that is Meghalaya.

2. An unexpected budget surplus in Texas.

3. Richard Thaler’s health care prescriptions.

4. Does it make sense for colleges to recruit chess players?

5. Thomas Reese on the papal election.

6. On Austro-Iberian business cycle theory.

7. The rebuilding of Shanghai.

Very good sentences about Bulgaria, the EU, and the DDR

 For years people complained about the absence of labour mobility in the EU. Now we have it, the flaw in the institutional infrastructure is obvious.

Young people are moving from the weak economies on the periphery to the comparatively stronger ones in the core, or out of an ever older EU altogether. This has the simple consequence that the deficit issues in the core are reduced, while those on the periphery only get worse as health and pension systems become ever less affordable.

That is from the excellent Edward Hugh, here is more.  Among other points, Hugh stresses just how much the “East German answer” involved extreme levels of labor mobility.  There is also an illuminating analysis of the problems facing Bulgaria:

According to the 2011 census, Bulgaria has lost no less than 582,000 people over the last ten years. In a country of 7.3 million inhabitants this is a big deal. Further, it has lost a total of 1.5 million of its population since 1985, a record in depopulation not just for the EU, but also by global standards. The country, which had a population of almost nine million in 1985, now has almost the same number of inhabitants as in 1945 after World war II. And, of course, the decline continues.

Kimchee wars

The popularity of kimch’i in Japan greatly stimulated the South kimch’i processing industry.  Ironically, it was Japanese attempts to capitalize on manufacturing kimch’i that inflamed Korean claims to its ‘ownership’.  This dispute, commonly known as the ‘Kimch’i‘ War…began in 1996 when Japan proposed designating kimuchi (the Japanese pronunciation of kimch’i) an official Atlantic Olympic food.  By then Japanese-Korean trade relations were already under stress due to the fact that Japan had already been involved in exporting the Japanese instant version of kimch’i, which lacked the distinctive flavor from the fermentation process.  In response, South Korea filed a case with the Codex Alimentarius Commission (CAC), pat of the United Nations Food and Agriculture Organization, arguing that there was a need to establish an international kimch’i standard.

That is from Cuisine, Colonialism and Cold War: Food in Twentieth Century Korea, by Katarzyna J. Cwiertka.  This is an excellent book on Korean-Japanese relations, the early history of Korean industrialization, and the rise of industrial food, as well as the evolution of Korean food in recent times, all rolled into a scant 237 pp.  A good author can do wonders…

Questions about the minimum wage

This is by kebko, from the MR comments section:

Is there any other issue where any economists insist that price floors benefit the lowest added-value suppliers?

Not that I know of, although feel free to correct that impression in the comments of this post.  This is one reason, by the way, why I do not find the monopsony explanations of minimum wage benefits convincing.   Monopsony should not be particularly strong across labor, if anything the contrary (more employers hire labor than say aluminum).

If labor does differ from other factors of production, one feature is that labor can “decide to work harder.”  So perhaps a minimum wage pushes people into tougher jobs.  As I’ve argued in the past, this may be bad for them but good for their families.

David Henderson offers some remarks about the minimum wage and monopsony.

Why you should care about the budget deficit

…very few people in Washington actually care about the federal government’s budget deficit.

That is why you should care about the budget deficit.

The quotation by the way is from Evan Soltas, though I am not sure he endorses my conclusion.

This is not true of Evan’s piece, but often when I read someone write “no one cares about the budget deficit” I mentally sub in: “I don’t care about the budget deficit, but I don’t have a responsible argument for that view, so I will instead write that others also have very high discount rates.”

Assorted links

1. Ripple, or Bills of Exchange 2.0?  And new Bitcoin paper (pdf).

2. The decline of Jewish delis.

3. We buy White Albums (recommended).

4. Is the FAA engaged in political posturing?

5. What it is like to wear Google Glass (piece starts slow, picks up and improves)

CAFE Standards are Extremely Inefficient

In Modern Principles, Tyler and I explain that a command and control regulation is a less flexible and thus more expensive way of reducing energy consumption than is a tax. How much more expensive? A recent analysis estimates that the new fuel economy standards are 6 to 14 times more expensive than an equal consumption-reducing gas tax. Valerie Karplus, one of the authors of the new analysis, writes in the NYTimes:

I and other scientists at the Massachusetts Institute of Technology estimate that the new standards will cost the economy on the whole — for the same reduction in gas use — at least six times more than a federal gas tax of roughly 45 cents per dollar of gasoline. That is because a gas tax provides immediate, direct incentives for drivers to reduce gasoline use, while the efficiency standards must squeeze the reduction out of new vehicles only. The new standards also encourage more driving, not less.

The full paper is here and a free summary is here.

Acrobatic Quadrocopters

Imagine balancing a pole on one finger then throwing it into the air and catching it with another finger. Then watch this.

Machines have been stronger than us for a long time but now they are becoming more flexible, agile and graceful than us as well, not to mention smarter. More here on the math.

Hat tip: Umair Haque.

Is bipolar disorder more common in highly intelligent people?

Here is a new piece by Gale CR, Batty GD, McIntosh AM, Porteous DJ, Deary IJ, and Rasmussen F.:

Abstract

Anecdotal and biographical reports have long suggested that bipolar disorder is more common in people with exceptional cognitive or creative ability. Epidemiological evidence for such a link is sparse. We investigated the relationship between intelligence and subsequent risk of hospitalisation for bipolar disorder in a prospective cohort study of 1 049 607 Swedish men. Intelligence was measured on conscription for military service at a mean age of 18.3 years and data on psychiatric hospital admissions over a mean follow-up period of 22.6 years was obtained from national records. Risk of hospitalisation with any form of bipolar disorder fell in a stepwise manner as intelligence increased (P for linear trend

Questions that are rarely asked

From the comments, from VTProf:

Another consistency question: can you simultaneously believe that minimum wages have small disemployment effects (implying inelastic demand for labor) and that higher immigration has small negative wage effects (implying elastic demand for labor). Sign me up for relatively elastic demand for labor (in the long run) – that’s why I support immigration and am skeptical about min wage!