Tyler Cowen's Blog, page 435

Peter Sloterdijk’s *Bubbles, Spheres 1*

I read about one hundred pages from this book and here was the part which stood out the most in my memory:

With this neither gay nor sad science of foams, the third book of Spheres presents a theory of the current age whose main tenor is that deanimation has an insurmountable lead over reanimation.  It is the inanimable outside that gives food for thought in intrinsically modern times.  This conclusion will inevitably drive the nostalgic yearning for a conception of the world, which still aims for a livable whole in the education-holistic sense, into resignation.  For whatever asserts itself as the inner realm, it is increasingly exposed as the inner side of an outside.  No happiness is safe from endoscopy; every blissful, intimate, vibrating cell is surrounded by swarms of professional disillusioners, and we drift among them — thought paparazzi, deconstructivists, interior deniers and cognitive scientists, accomplices in an unlimited plundering of Lethe.

I know that Sloterdijk is sometimes considered a genius on the Continent, and is virtually a household name in Germany, but you can sign me up as one of the professional disillusioners.  Here is part of the problem (from this review):

This is fundamentally a work of philosophy, and its author is in more or less avowed dialogue throughout with the thought of Martin Heidegger, whose disquisitions on time and space describe a rooted, authentic sense of being in the world that Sloterdijk wants in part to counter with his vision of mobile spheres.

Here is one very excellent review.  Here is a more positive review.

Questions that are rarely asked

Japan is about to replace China as America’s biggest creditor. Could you please offer us some meaningless bluster about “getting tough with Tokyo?”

Here is more from Counterparties.

New Videos at MRU

Lots of new material at MRU this week. In earlier videos we look at the relatively direct effect of geography on development, e.g. factors such as malaria and access to the coast. In videos released today we look at how geography can influence growth indirectly through the choice of institutions. We also provide background material on measuring GDP and PPP, using the Rule of 70, and we prepare the way for next week’s more technical videos on the Solow model with a brief, non-technical review of the Solow model.

Assorted links

1. In defense of Yoko Ono.  And Edward Hugh’s excellent update on whether the euro will survive.

2. David Warsh on Shapley.

3. Must dollar bills be stacked face up?

4. Are fruits and vegetables really really good for you?

5. Good reviews of the new Haitian art show in Nottingham.

6. John Cochrane on health care (pdf).

Italian scientists sent to prison for false predictions

Six Italian scientists and an ex-government official have been sentenced to six years in prison over the 2009 deadly earthquake in L’Aquila.

A regional court found them guilty of multiple manslaughter.

Prosecutors had said the defendants gave a falsely reassuring statement before the quake after studying tremors that had shaken the city.

The defence had argued that there was no way to predict major earthquakes even in a seismically active area.

The 6.3 magnitude quake devastated the city and killed 309 people.

Here is the link, here is some back story.

A Macro Homework Question: Answer in the Style of…

I just returned from a trip to South Korea. Today, to prepare for the next trip, I took my jacket to the dry cleaners. Turning the pockets out, I discovered a substantial number of South Korean won. The transaction costs of exchanging the won for dollars are now very high. I will keep the won as souvenirs.

Question: What are the consequences of my decision for the South Korean economy? Answer in the style of a well-known economist. What would Scott Sumner say? (almost too easy!) What about Keynes? Krugman? Cowen? Prescott?

Real wage cuts in the UK recession (a questionnaire of sorts)

2008 and after: -8.5%

That measure of wage decline is from John van Reenen (pdf, useful powerpoints on UK productivity), citing Martin and Rowthorn (2012).

Now I am all for the UK trying ngdp targeting, or for that matter well-targeted fiscal policy, or both.  I never favored their *tax increases*, often misleadingly labeled “austerity” for political reasons.

I would, however, like to get a handle on Keynesian thinking here and thus the questionnaire aspect of this post.  In the traditional Keynesian story, stimulus lowers real wages through nominal reflation.  Is that the Keynesian view here?  If so, why do Keynesians believe that British real wages need to fall more than 8.5%  Why did they need to fall 8.5% to begin with?

I understand this view and accept it in part myself: “Real wages in the UK were way too high to begin with because the country was producing well above potential output.”  Yet Keynesians have been very unwilling to make that argument.

I also have seen Keynesian-style thinkers argue that inflation will make labor markets tighter and raise real wages.  This is either incoherent or at the very least underargued (there is a possible version of the view if you think prices are nominally sticky but wages are not).

In a multiple equilibria view, new information is revealed about the British economy from the financial crisis, and that economy collapses to a lower trust/productivity/risk-taking point, plus it loses some relative weight in its high productivity sectors, such as finance.  That too I understand and also partially accept, though again I don’t see current Keynesians pushing that line (though it need not run counter to Keynesianism, broadly construed).

I also understand what it would look like to mix Keynesianism with an extreme form of a stagnation theory, more extreme than I hold myself.  But again, I just don’t see that view out there.

So what is the current Keynesian view on why British real wages need to be falling so much?  I would like to better understand the alternatives to my views.

I appreciate your help in the comments.

Addendum: Scott Sumner offers very good commentary.

The marketing of Mo Yan

What is it like to win an (approved) Nobel Prize in China?:

On Tuesday, Fan Hui, a local official, paid a visit to Mr Mo’s father to ask him to renovate the family home.

“Your son is no longer your son, and the house is no longer your house,” urged Mr Fan, according to the Beijing News, explaining that the author was now the pride of China. “It does not really matter if you agree or not,” he added.

Mr Fan has earmarked the family home as the main attraction of the “Mo Yan Culture Experience Zone”, but also has plans to create a theme park based on Mr Mo’s 1987 work, Red Sorghum.

Unwanted and unprofitable, Sorghum is no longer planted in the area, but this not regarded as an obstacle…

“One visitor dug up a radish [from Mr Mo's vegetable patch],” reported the Beijing News. “He slipped it into his coat and showed it to villagers afterwards, saying: ‘Mo’s radish! Mo’s radish!’ ”

“A visiting mother picked some yams and told her daughter: ‘I’ll boil them, so you can eat them and win the Nobel prize too!’” Mr Mo’s brother, Guan Moxin, was forced to intervene to stop the family’s corn harvest, which was left lying out in the sun to dry, being swept away by the village tidying committee.

Mr Mo himself has been non-commital amid the excitement. Asked by China Central Television whether he was happy, he responded: “I do not know”.

Asked by Xinhua, the state news agency, whether his win would ignite a passion for literature in China, he said: “I think it will last for a month at most, maybe less, then everything will return to normal”.

He said he planned to use his £750,000 of prize money to buy a “big house” in Beijing. But then he realised that property prices have soared so high he could only afford a two-bedroom apartment.

Here is more, interesting throughout, and here is a related story.  Hat tip goes to Literary Saloon.

Assorted links

1. Garett Jones defends the electoral college.

2. Excellent macro post by Stephen Williamson.

3. The culture that is Japanese juggling (video).

4. Has the Japanese yen ceased to be a safe haven currency?

5. The opera boom in northern Mexico.

In case there was any remaining doubt

The Supreme Court of Honduras ruled today that the Honduras legislation establishing charter or model cities was unconstitutional.  A ruling two weeks ago from the constitutional branch of the court established by a 4-1 vote that the law was unconstitutional. Because that decision was not unanimous, the entire Supreme Court had to consider and vote on the issue.

The full court voted 13-2 that decreto 283-2010 which reformed two constitutional articles to enable the model cities legislation violated the constitution.

There is a bit more here, including some information on one of the companies involved.