Tyler Cowen's Blog, page 455

Can Bernanke precommit?

The most visible effort to clip the Fed’s wings is a bill introduced in the House of Representatives by Kevin Brady, a Republican from Texas, who is vice-chair of the Joint Economic Committee of Congress. His bill would limit the central bank’s mandate to inflation, not employment, and restrict its monetary policy operations to short-term Treasury securities.

Were his bill now law, Mr Brady told the Financial Times, “the Fed would not be able to embark on this third round of quantitative easing”. He said the bill had taken off faster than he had hoped and already had 48 co-sponsors in Congress. “Everyone, whether they agree or not, believes it is the right time to have this discussion.”

And Mitt Romney speaks up for gerontocratic deflation:

“The value of your savings goes down. People who are living on fixed incomes don’t see much interest income any more. And the value of the dollar goes down, and the risk for long-term inflation goes up.”

The full FT story is here.

Elephants all the way down?

Michael Rosenwald reports:

And so it has come to this: Cameras that monitor speed cameras.

This is 100 percent “One Flew Over the Cuckoo’s Nest” crazy. But true. It has to be true: My brain is not sophisticated enough to create something so meta and surreal from scratch.

WTOP’S Ari Ashe is reporting that Prince George’s County is mounting cameras to monitor its traffic cameras.

The rickshaw was (possibly) invented by a Westerner

The rickshaw was invented in 1868 by John Goble, an American missionary living in Tokyo.

The source is Frank Dikötter, Things Modern: Material Culture and Everyday Life in China, which is also a good book.  Wikipedia offers a more complex story about the possible inventors, with some candidates for the inventor being Japanese.  In any case, I had thought of it as a more ancient device than it turns out to be.

Assorted links

1. Andrew Coyne on the great stagnation.

2. Can a fungus make a cheap fiddle sound like a Stradivarius?

3. Poll about the rudest countries to visit (I disagree with the results at the top end of the scale, and might cite Morocco as the rudest).

4. China’s Solyndra economy.

5. Maria Popova’s information diet.

6. DeLong edits Ray Dalio.

Greek Islands for Sale

Telegraph: As international inspectors in Athens scrutinise the country’s fitness to receive the latest aid payment, Prime Minister Antonis Samaras has said commercial exploitation of some islands could generate the revenue lenders need to see to continue funding the country.

The shortlist includes islands ranging in size from 500,000 square meters (5.4 million square feet) to 3 million square meters, and which can be developed into high-end integrated tourist resorts under leases lasting 30 years to 50 years, Mr Taprantzis said.

…The fund reviewed 562 of the estimated 6,000 islands and islets under Greek sovereignty. While some are already privately owned, such as Skorpios by the Onassis shipping heiress Athina Onassis, the state owns islands such as Fleves, which is near the coastal resort area of Vouliagmeni, and a cluster of three islands near Corfu. Mr Taprantzis declined to identify any of the islands.

Legislation needs to be passed to allow development of public property by third parties and reduce the number of building, environmental and zoning permits needed before the plan can proceed, Taprantzis said.

It’s a good idea to move these assets into private hands. The U.S. Federal government also has a lot of land that could be privatized. (For the U.S. see map and note that only a small portion is parkland).

Dutch markets in everything

The Netherlands is rolling out some 6,000 smart garbage cans that can only be used when residents scan an RFID-enabled ID card.  Besides monitoring just how much trash someone disposes of, the cans will also measure and charge the user based on how much refuse they tossed.

Here is more.  Can they join the Pigou Club?  Not so clear.  Still, oddly enough, I don’t think this will do much to encourage littering or illegal garbage disposal.  It may encourage the purchase of less packaging and waste.

For the pointer I thank @ModeledBehavior.

*The Revenge of Geography*

The author is Robert D. Kaplan and the subtitle is What the Map Tells Us About Coming Conflicts and the Battle Against Fate.  I thought it was an excellent and also highly readable book, though without agreeing with every claim or the rather relentless method.  Here is one excerpt:

China’s solution has been notably aggressive.  This may be somewhat surprising: for in many circumstances, it can be argued that naval power is more benign than land power.  The limiting factor of navies is that despite all of their precision-guided weapons, they cannot by themselves occupy significant territory, and thus it is said are no menace to liberty.  Navies have multiple purposes beyond fighting, such as the protection of commerce.  Sea power suits those nations intolerant of heavy casualties in fighting on land.  China, which in the twenty-first century will project hard power primarily through its navy, should, therefore, be benevolent in the way of other maritime nations and empires in history, such as Venice, Great Britain, and the United States; that is, it should be concerned mainly with the free movement of trade and the preservation of a peaceful maritime system.  But China has not reached that stage of self-confidence yet.  When it comes to the sea, it still thinks territorially, like an insecure land power, trying to expand in concentric circles in a manner suggested by Spykman.

Here is one of the book’s bottom lines:

There is an arms race going on, and it is occurring in Asia.  This is the world that awaits the United States when it completes its withdrawal from both Iraq and Afghanistan.

That point doesn’t get enough attention.  My favorite parts of the book were those about China, the South China Sea, India, Pakistan, and Afghanistan.  The sections on Turkey and the United States were less interesting.  Here is a good critical review of the book.

It’s not just monetary policy, it’s Scott Sumner day

I haven’t seen anyone else say it yet, so I will.  The Fed’s policy move today might not have happened — probably would not have happened — if not for the heroic blogging efforts of Scott Sumner.  Numerous other bloggers, including the market monetarists and some Keynesians and neo Keynesians have been important too, plus Michael Woodford and some others, but Scott is really the guy who got the ball rolling and persuaded us all that there is something here and wouldn’t let us forget about it.

I disagree with Scott on a number of points (I think he overrates the importance of sticky nominal wages for instance, and I would like to force him to admit that the private sector can manufacture nominal gdp), and I see the net gains from this policy as smaller than he does.  Still, Scott  deserves our highest level of applause in this matter.

Here is Scott’s very latest blog post on the Bernanke press conference.

It’s not just monetary policy, it’s mortgage policy

From Sober Look, this scares me:

So much for shifting the US mortgage business into the private markets. Going forward the Fed will be a buyer of more than half of all new agency MBS issued. At this point one might as well make the GSEs part of the Fed or give the central bank a mortgage origination capability.

The Fed announcement

Get the details almost anywhere else, read Scott Sumner too.  I’ve been tied up, but I have been able to follow my Twitter feed.

Evan Soltas wrote:

It needs to be said that today’s FOMC statement is a major intellectual win for econ bloggers and academics.

Neil Irwin:

What they’re doing is basically the Evans approach minus explicit numerical targets for unemployment/inflation that trigger tightening.

Ross Douthat:

When the true history of the Obama era is written, it will be a joint biography of Ben Bernanke and John Roberts.

Binyamin Applebaum:

Bernanke: We’re not trying to increase inflation, but we might act more slowly to reduce inflation if it should happen to happen.

I say the rate of price inflation is going up.  I see this as a free lunch, and I am quite curious to find out just how big or small of a free lunch it is going to be.