Tyler Cowen's Blog, page 438
October 17, 2012
Rental markets in everything
FlightCar aims to put vehicles left in airport parking lots to use by offering them up for short-term loans.
Does this increase in the velocity of goods require a monetary policy offset? Here is more, hat tip goes to David Wessel.
Assorted links
1. Koreans win gold medal in Alphabet Olympics.
2. Russ Roberts and John Taylor on why the recovery is weak. A new video method of teaching.
3. “Hot Dog Stuffed Crust Pizza Coming to Pizza Hut Canada.”
4. What makes a technology cool?
5. Affective computing, can computers read your moods?
6. Good and very insightful review of the educational philosophy behind MRU.
7. Jeff Sachs reviews Acemoglu and Robinson.
Sheila Bair’s new book
I put this one in the jaw hits floor category, and for more than one reason. (Sheila ran the FDIC during the financial crisis and her book is titled Bull by the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself).
The book is remarkably full of information and substantive narrative. Few books pack in so much and I mean this in a very positive way. I learned something on virtually every page, even after having read many of the other crisis books.
Yet her running claim that she had a plan to end the bailouts, or abolish “Too Big To Fail” is absurd. (Though most of these people do.) She should be presenting only the more modest argument that it would have been better to distribute more losses on creditors, which indeed she did advocate. Her narrative overreaches by a long mile.
Second, to a remarkable degree, she sees everyone else in the process as filled with fault and herself as never at fault. She has zero qualms about ceaselessly flinging mud out the rear view mirror, and does so for even the tiniest and pettiest of squabbles, including ones the readers never knew or cared about. Geithner by the way is villain number one but no one else on the scene matches her virtue and common sense and scarcely a page flies by when we are allowed to forget this.
She is beloved of sentences such as “Maybe the boys didn’t want Sheila Bair playing in their sandbox.” Who am I to say she is wrong? Reading this book now I know why!
This is arguably the most _______ book I have read, ever, and I am still looking for the right word to fill in that blank. It is in any case stunning.
From yesterday’s media, here is Sheila celebrating the departure of Vikram Pandit from Citibank. I do support full free speech rights, but still I feel queasy when former top-ranking government officials — who have been privy to lots of inside knowledge — speak out on such specific matters and in such a negative way on particular individuals and firms, as opposed to making broader policy recommendations. What are now the incentives for CEOs negotiating with the FDIC or for being honest with regulators the next time around? Former government leaders and regulators should not be settling personal scores in public to such an extent. Do you see many other accomplished statespeople doing the same?
This tract is a performance of terror, in good and bad ways. Few books will teach you more about the politics of bureaucracy and regulation, though not exactly as the author intends.
Median illusions?
From Brad DeLong:
In the past couple of months I have gone pretty much every place I ever went between when I was 15 in 1975 and when I was 25 in 1985. Every place–every place–looks a lot better, richer, a lot busier now than it looked then. How can this be if it really is the case that media and living standards of stagnated since the early 1970s? They are not all 1% or even 10% places, not now and especially not then.
One answer is that between 1975 and 1985 I never went to Scranton or Detroit–but instead to places like Dupont Circle, Adams Morgan, Cambridge, Virginia Beach, greater Orlando, Park Slope, the Lower East Side, the Upper West Side, Jackson Hole, and other places some of which are top 1% places and the others of which are all urban edge Renaissance places benefiting mightily from increased congestion.
Another answer is that not just average income but density of economic activity matters–more dense places look more prosperous because there are more choices. But then shouldn’t the number of choices be factored into our estimates of the median?
But the answer I prefer right now is that our assessment of the prosperity of a place depends on the median dollar spent there rather than on the well-being of the median person there. And practically everywhere the median dollar today is being spent by somebody much richer with much richer tastes than the median dollar some 32 years ago was.
Or perhaps our estimate of economic growth are undershooting reality–even given that you see few signs of the computer and communications revolution out there on the street…
He and I share the same preferred answer. I would add that, when walking around, we don’t “see” the higher prices for medical care and education in the same manner that we see the new plenty of electronics and espresso shops.
October 16, 2012
Where oh where are they?
Bringing the search for another Earth about as close as it will ever get, a team of European astronomers was scheduled to announce on Wednesday that it had found a planet the same mass as Earth’s in Alpha Centauri, a triple star system that is the Sun’s closest neighbor, only 4.4 light-years away.
Here is more. Planets, planets everywhere…
Assorted links
1. How come no one announced that Bhagwati occasionally blogs?
2. India’s schools turn to Khan Academy.
3. What would a 15-hour work week really look like?
5. There is no great stagnation, and Thomas Edsall on TGS and Robert Gordon.
Michael Pollan on Proposition 37
I am a big fan of the food writings of Michael Pollan, but his recent opinion piece on GMO labeling could be stronger.
His argument for voting “yes” on mandatory labeling is mostly mood affiliation, namely that this is part of some broader battle against “Big Food.” He doesn’t for instance consider how the Proposition may damage many smaller farmers, or that GMOs seem to lower carbon emissions and otherwise help the environment. Here is yet another discussion of benefits, or see this survey post.
His final and in fact main argument contains a simple error in economics, all too common among food writers:
…to date, genetically modified foods don’t offer the eater any benefits whatsoever…
He forgot to mention that they increase supply and lower price. Quick question: how did the GMO products otherwise obtain market share?
For the pointer I thank Michael.
Eric Maskin on Patents
From a letter to the NYTimes:
… in the software industry, progress is highly sequential: progress is typically made through a large number of small steps, each building on the previous ones. If one of those steps is patentable, then the patent holder can effectively block (or at least slow down) subsequent progress by setting high license fees.
Moreover, like any other monopolist, it has the incentive to set such fees.
Thus, in an industry with highly sequential innovation, it may be better for society to scrap patents altogether than try to tighten them.
ERIC S. MASKIN
Cambridge, Mass., Oct. 8, 2012
The writer, a professor of economics at Harvard, is a 2007 Nobel laureate in economics.
Water Economics
The next set of lessons in MRUniversity’s development economics course is on water economics. Water is one of the most important issues in developing countries for many reasons, including agriculture, health, and wealth. Every year, millions of people die because of lack of access to clean and safe water. It is estimated that over 1 billion people in the world don’t have adequate access to such an essential resource, and the poor pay the biggest price.
In this section, we cover:
The effects water monopolies can have on consumers
The pros and cons of water privatization in developing nations, including major examples from Buenos Aires, Bolivia, Saudi Arabia and Yemen
Why it’s so hard to regulate private water companies effectively
What can happen to the price of water when it is interfered with through subsidies and price controls
The tragedy of the commons in water economics
How water ethics influences the actual supply of water
And finally, what happens when countries engage in trading water commodities
Do you tip more on-line?
David Popkin writes to me:
I hope all is well. I was having a heated discussion and thought of you and your blog.
Do people tip more/less/same via online delivery services compared to phone orders where they pay cash?
Possible reasons for bigger tips on seamlessweb/online services
-tip disclosed before delivery=pressure to put up or deal with cold food
-credit card money less “real”
-no excuse of rounding (i.e. if $3 is norm, can’t escape it because you only have a $20 to pay the 17.75 order total)
Possible reasons for bigger tips in cash
-looking someone in the face
-poor math skills/rounding
-more willing to tip more after the fact based on speed etc.
I would be most interested to hear what the best and brightest have to say about this.
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