Tyler Cowen's Blog, page 444

China’s Solyndra Problem

The NYTimes reports that China has a much bigger Solyndra problem than the United States ever did:

…China’s strategy is in disarray. Though worldwide demand for solar panels and wind turbines has grown rapidly over the last five years, China’s manufacturing capacity has soared even faster, creating enormous oversupply and a ferocious price war.

The result is a looming financial disaster, not only for manufacturers but for state-owned banks that financed factories with approximately $18 billion in low-rate loans and for municipal and provincial governments that provided loan guarantees and sold manufacturers valuable land at deeply discounted prices.

China’s biggest solar panel makers are suffering losses of up to $1 for every $3 of sales this year, as panel prices have fallen by three-fourths since 2008. Even though the cost of solar power has fallen, it still remains triple the price of coal-generated power in China, requiring substantial subsidies through a tax imposed on industrial users of electricity to cover the higher cost of renewable energy.

This bit also seemed familiar:

Mr. Li said in an interview that he wanted banks to cut off loans to all but the strongest solar panel companies and let the rest go bankrupt. But banks — which were encouraged by Beijing to make the loans — are not eager to acknowledge that the loans are bad and take large write-offs, preferring to lend more money to allow the repayment of previous loans. Many local and provincial governments also are determined to keep their hometown favorites afloat to avoid job losses and to avoid making payments on loan guarantees, he said.

New Videos: Leading Thinkers on Development

At MRUniversity we just released over 30 new videos on leading thinkers on development. We cover Amartya Sen (who gets three), Bela Belassa, Karl Polanyi, Adam Smith, Paul Romer, William Easterly and many others. In terms of  the course these videos are optional, they are for dipping into as per one’s interest. In these videos, we sometimes provide a second perspective on issues we discuss in greater detail in forthcoming topic videos.

On Monday we will be releasing a new section of the Development Economics course, Food and Agricultural Productivity.

Can mobile phones boost educational outcomes?

From Jenny C. Aker, Christopher Ksoll, and Travis J. Lybbert:

The returns to educational investments hinge on whether such investments can improve the quality and persistence of educational gains. We report the results from a randomized evaluation of an adult education program in Niger, in which some students learned how to use simple mobile phones (Project ABC). Students in ABC villages achieved test scores that were 0.19–0.26 standard deviations higher than those in standard adult education classes, and standardized math test scores remained higher seven months after the end of classes. These results suggest that simple information technology can be harnessed to improve educational outcomes among rural populations.

An ungated copy is here.

Looking at pictures of cute animals makes you work more carefully and deliberately

Or so we are told:

A new study by Japanese researchers now shows there are more benefits to looking at pictures of these universal delights than just getting a case of the warm and fuzzies. Afterwards, we concentrate better.

Such is the “Power of Kawaii”, as a paper documenting the research is appropriately titled. The Japanese word “kawaii” means cute. The paper was published in the online edition of the U.S. journal Plos One on Thursday. Through three separate experiments a team of scientists from Hiroshima University showed that people showed higher levels of concentration after looking at pictures of puppies or kittens.

For the pointer I thank Mark Thorson.

A third Industrial Revolution?

James Tien has a new paper:

The outputs or products of an economy can be divided into services products and goods products (due to manufacturing, construction, agriculture and mining). To date, the services and goods products have, for the most part, been separately mass produced. However, in contrast to the first and second industrial revolutions which respectively focused on the development and the mass production of goods, the next – or third – industrial revolution is focused on the integration of services and/or goods; it is beginning in this second decade of the 21st Century. The Third Industrial Revolution (TIR) is based on the confluence of three major technological enablers (i.e., big data analytics, adaptive services and digital manufacturing); they underpin the integration or mass customization of services and/or goods. As detailed in an earlier paper, we regard mass customization as the simultaneous and real-time management of supply and demand chains, based on a taxonomy that can be defined in terms of its underpinning component and management foci. The benefits of real-time mass customization cannot be over-stated as goods and services become indistinguishable and are co-produced – as “servgoods” – in real-time, resulting in an overwhelming economic advantage to the industrialized countries where the consuming customers are at the same time the co-producing producers.

Keywords: Big data, decision analytics, goods, adaptive services, digital manufacturing, value chain,

supply chain, demand chain, mass production, mass customization, industrial revolution

For the pointer I thank the excellent Kevin Lewis.

Assorted links

1. Japan’s first cuddle cafe.

2. New critique of Woodford and ngdp targeting, from Gavyn Davies and others.

3. , and excellent material on Iranian hyperinflation.

4. Some of the maple syrup is seized, and the policy uncertainty costs of horse nationalism.

5. There is no great stagnation (the ostrich pillow), and Thiel and Kasparov and Rogoff and Shuttleworth will debate.

Hyperinflation in Iran

Steve Hanke estimates that Iran’s monthly inflation rate has reached 70%.

When President Obama signed the Comprehensive Iran Sanctions, Accountability, and Divestment Act, in July 2010, the official Iranian rial-U.S. dollar exchange rate was very close to the black-market rate. But, as the accompanying chart shows, the official and black-market rates have increasingly diverged since July 2010. This decline began to accelerate last month, when Iranians witnessed a dramatic 9.65% drop in the value of the rial, over the course of a single weekend (8-10 September 2012). The free-fall has continued since then. On 2 October 2012, the black-market exchange rate reached 35,000 IRR/USD – a rate which reflects a 65% decline in the rial, relative to the U.S. dollar.

[image error]

The rial’s death spiral is wiping out the currency’s purchasing power. In consequence, Iran is now experiencing a devastating increase in prices – hyperinflation.

Iran’s hyperinflation is still well below world leader Hungary whose inflation rate in July of 1946 reached 4.19 × 10^16 percent per month or Zimbabwe’s more recent November of 2008 rate of 7.96 × 10^10 percent per month.

Social Networks and Risk of Homicide Victimization in an African American Community

That is a new paper from Andrew V. Papachristos and Christopher Wildeman, here is the abstract:

This study estimates the association of an individual’s position in a social network with their risk of homicide victimization across a high crime African American community in Chicago. Data are drawn from five years of arrest and victimization incidents from the Chicago Police Department. Results indicate that the risk of homicide is highly concentrated within the study community: 41 percent of all gun homicides in the study community occurred within a social network containing less than 4 percent of the neighborhood’s population. Logistic regression models demonstrate that network-level indicators reduce the association between individual-level risk factors and the risk of homicide victimization, as well as improve overall prediction of individual victimization. In particular, social distance to a homicide victim is negatively and strongly associated with individual victimization: each social tie removed from a homicide victim decreases one’s odds of being a homicide victim by approximately 57 percent. Findings suggest that understanding the social networks of offenders can allow researchers to more precisely predict individual homicide victimization within high crime communities.

Some of those sentences could be framed for their importance.  For the pointer I thank DP.

Here are other papers by Andrew Papachristos.  Here is a paper by Christopher Wildeman.

The new Fable of the Bees literature

From the American Journal of Agricultural Economics, there is a new paper by Randal R. Rucker, Walter N. Thurman, and Michael Burgett (Dept. of Entomology), here is the abstract:

The world’s most extensive markets for pollination services are those for honey bee pollination in the United States. These markets play important roles in coordinating the behavior of migratory beekeepers, who both produce honey and provide substitutes for ecosystem pollination services. We analyze the economic forces that drive migratory beekeeping and theoretically and empirically analyze the determinants of pollination fees in a larger and richer data set than has been studied before. Our empirical results expand our understanding of pollination markets and market-supporting institutions that internalize external effects.

This is a deep and thoughtful analysis which extends the tradition of Steven Cheung.  There is an earlier ungated version here.  Here is a related paper from UC Davis, and here is a related paper on the economics of honeybee pollination in Georgia.  Here is a very good summary of the main piece.

For the pointer I thank Michelle Dawson.

Emails I receive (the consumer surplus of the internet)

…the origins of your name, off by a letter.

RL

> Put the following text into google: freemason Cowan Tyler What is the result?

Interesting. “Tyler” is the title of an officer in the Masonic hierarchy, while a “cowan” is a stonemason who is not a member of the Freemasons guild. This from “Freemasonry for Dummies”:

The Tyler’s job is to keep off all “cowans and eavesdroppers” (for more on the Tyler, see Chapter 5). The term cowan is unusual and its origin is probably from a very old Anglo-Saxon word meaning “dog.” Cowan came to be a Scottish word used as a putdown to describe stonemasons who did not join the Freemasons guild, while the English used it to describe Masons who built rough stone walls without mortar and did not know the true secrets of Freemasonry.