Tyler Cowen's Blog, page 398

An EU-U.S. trade pact?

I do favor the idea, but the bottom line is more likely this:

…[it] would require Europe to open farm, service and other markets that it has been slow to deregulate.

…U.S. officials have been concerned that Europe’s complex politics — of the 27 EU nations, some are avowed free-trade supporters while some veer towards protectionist industrial policy — would make for protracted and perhaps futile negotiations.

The letter from the two senators is a reminder of just how difficult an agreement would be. Goods already flow freely between the United States and the E.U. Much of the value of a free-trade pact would come through reducing regulatory red tape so that — for example — the two sides would adopt common policies on food safety, pharmaceutical testing, patents and other complex regulatory issues.

We cannot deregulate our own country, and yet we think we can deregulate a hydra-headed, 27-nation negotiating sclerotic behemoth?  The big lure here is that the larger EU companies could access government procurement contracts in much of the U.S., but I don’t see that as a political trump by any means, most of all in the smaller countries.  And what is the chance that the U.S. wins concessions only by adopting, in some cases, tougher regulatory policies (in the inappropriate and sclerotic sense)?  Might this in some cases, through perhaps the magic of public choice theory, evolve into a regulatory cartel?

Nonetheless, as mentioned above, I’m all for trying.

What do I think of Obama’s universal pre-school proposal?

Of course there are no significant details yet, but here are a few points.

1. The evidence that this can be done effectively in a scalable manner is basically zero.  Aren’t massive policies (possibly universal?) supposed to be based on evidence?  (How about running a large-scale RCT first, a’la the Rand health insurance experiment?  And by the way, here is a quick look at the evidence we have on pre-school, and here, not nearly skeptical enough in my view.  And think in terms of lasting results, not getting kids to read nine months earlier, etc.  You can find evidence for persistent math gains in Tulsa, OK, but no CBA.)

2. That doesn’t mean we should do nothing.

3. Let’s say we have “the political will” to do something effective (debatable, of course).  Is adding on another layer of education, and building that up more or less from scratch in many cases, better than fixing the often quite broken systems we have now?  I know well all the claims about “needing to get kids early,” but is current kindergarten so late in life?  Why not have much better kindergartens and first and second grade experiences in the ailing school districts?  Or is the claim that by kindergarten “it is too late,” yet a well-executed government early education could fix the relevant problems if applied at ages three to four?  Would such a claim mean that we are currently writing off many millions of American children, as it stands now?

4. This is what federalism is for.  Let’s have an experiment emanating from the state and/or local level.

5. What should we infer from the fact that no such truly broad-based state-level experiment has happened yet?  (Georgia and Oklahoma have come closest.)  That the states are lacking in vision, relative to the Presidency?  Or that a workable version of the idea is hard to come up with, execute, and sell to voters?

6. In Finland government education doesn’t really touch the kids until they are six years old.  Don’t they have a very good system?  Some call it the world’s best.  Maybe the early years are very important, but perhaps pre-schooling is not the key missing piece of the puzzle.  (NB: See the comments for dissenting views on Finland.)

Addendum: Here are good comments from Reihan.  See also this Brookings study: “This thin empirical gruel will not satisfy policymakers who want to practice evidence-based education.”

Valentine’s Day Advice

If it doesn’t hurt, you aren’t signalling.

The path of government spending

Matt Yglesias posts this chart, which I am happy to endorse, alternative scaling here, and related material from Veronique de Rugy here.

The real problem comes about ten years out, due to aging. It’s still the case that, when it comes to fiscal issues, turning on a dime can be very difficult.  In the meantime, it may appear, at times, that not much is happening, but these will be a very critical ten years.

How much does graduate school matter for being an economics professor?

There is a new paper, by Zhengye Chen, an enterprising undergraduate from the University of Chicago:

Of the 138 Ph.D. economics programs in the United States, the top fifteen Ph.D. programs in economics produce a substantial share of successful economics research scholars. These fifteen Ph.D. programs in turn get 59% of their faculty from only the top six schools with 39% coming from only two schools, Harvard and MIT. Those two schools are also the PhD origins for half of John Bates Clark Medal recipients. Details for assistant professors, young stars today, American Economics Association Distinguished Fellows, Nobel Laureates, and top overseas economics departments are also discussed.

There is much more here, and for the pointer I thank Lee Benham.  I’ll add three points:

1. It has been evident for a while that the former “top six” is in some ways collapsing into a “top two,” namely Harvard and MIT.

2. I was surprised that NYU beats out Stanford for the #6 slot.

3. Two Nobel Laureates, John Hicks and James Meade, did not have a Ph.d at all.

*Here’s the Deal*

That is a new Kindle single by David Leonhardt, self-recommending!

Here are comments from Matt Yglesias.

Assorted links

1. The KFC culture that is Japan, and Pizza Hut innovation from China.

2. Critical review of Banerjee and Duflo.

3. What really happened in the Anglo-Irish deal?

4. Competitive wood planing, and does the CBO believe in the great stagnation?

5. Do people swap genes more easily than folk tales?

6. Claims about micro-moments of positivity resonance.

7. Can intangibles explain the UK productivity puzzle?

Health care cost control in Massachusetts, continuing the bad news string for ACA

Representatives from the state’s nonprofit health plans as well as national for-profit insurers doing business in Massachusetts estimated the “medical cost trend,” a key industry measure, will climb between 6 and 12 percent this year — higher than last year’s cost bump and more than double the 3.6 percent increase set as a target in a state law passed last year.

Here is more, and for the pointer I thank Jeffrey Flier.

Sentences about coal

Europe’s use of the fossil fuel spiked last year after a long decline, powered by a surge of cheap U.S. coal on global markets and by the unintended consequences of ambitious climate policies that capped emissions and reduced reliance on nuclear energy.

…In Germany, which by some measures is pursuing the most wide-ranging green goals of any major industrialized country, a 2011 decision to shutter nuclear power plants means that domestically produced lignite, also known as brown coal, is filling the gap . Power plants that burn the sticky, sulfurous, high-emissions fuel are running at full throttle, with many tallying 2012 as their highest-demand year since the early 1990s. Several new coal power plants have been unveiled in recent months — even though solar panel installations more than doubled last year.

Here is more.

How many niches can eBooks fill out?

I’m not sure this will work, but I suppose we will see:

Amazon’s business model has long been dependent on resellers of used books and other merchandise. But a U.S. patent that Amazon Technologies in Reno, Nev., received last week indicates that the mega-retailer has its sights on digital resale, including used e-books and audio downloads. According to the abstract, Amazon will be able to create a secondary market for used digital objects purchased from an original vendor by a user and stored in a user’s personalized data store.

Here is a bit more, and for the pointer I thank Chaim Katz.  And here is news of a new Texas library that will offer digital books only.