Tyler Cowen's Blog, page 497

Assorted links

1. How fast can you translate to the Finnish?

2. Two hundred years of hospital costs and mortality, as seen through the lens of one hospital.

3. Can Spain and Italy pursue an export-led recovery?

4. Why do so many prices end in .99?

5. Champagne markets in everything.

What is the correct Bayesian inference from this British message?

I found a little card in my bathroom, perched above the toilet and near the shower:

This bath has a non slip surface in part.  If you would like a rubber bath mat in addition please contact housekeeping.

And so what does that mean?  Here are some options:

1. The part without the non slip surface is really, really slippery.  Watch out!

2. We are boasting about having a non slip surface “in part,” yet without appearing to be boasting too explicitly.

3. We are not sure which is your best course of action (there is human heterogeneity), but we want to get you thinking about the non slip surface and also the slip surface.  We are sure you will put the information to good use and also we are showing our respect for your decision-making and autonomy.

4. We have attempted to word this message as emotionally neutrally as possible.  We are therefore signaling that we are a quality hotel, without intending to offer any particular advice about the non slip surface or for that matter the slip surface.  We also did not fall into the trap of hyphenating “non slip” (though we did elsewhere in the bathroom hyphenate “co-operation”), nor did we place a comma after “addition” as you barbarians might have done.

I am not intelligent enough to discern which of these might be true.

Assorted links

1. Where Chicago law and economics is at right now, and Bruce Lee plays ping pong (fake short video).

2. Via Chris F. Masse, iPads on the menu?

3. Why a bumper Indian wheat harvest isn’t leading to much good.

4. How the Greek bank jog is also a form of insurance, for some that is.

5. Pending lawsuits against football.

Quick Spain thoughts

Is there actually any news in the “deal”, summarized here?  It’s long been known that Spain would end up getting a chunk of ESM and/or ESFS (indeed they had a quota of 93 billion euros and this is barely more at 100 billion euros), and now they have, although the details still are not announced.  And Spain already had been given an extension on their austerity target, so not attaching “austerity conditionality” to this deal isn’t quite news either.  Their obligations are already “floating” in this regard, because even the previous target could not be met.

Did I mention there were already a trillion euros lent from the ECB since December (not all to Spain)?

Is the deal in some way a new signal?  I would think the new signal is that if you play a bit tough with the Germans you get a more relaxed deal, at least nominally in a way that you can take to your citizens.  Maybe you think the more relaxed deal is a better outcome, but in the longer run does this keep the Germans on board?  Does it keep Ireland on board?  Do Greece and Portugal now wish to renegotiate?  One hundred billion euros is unlikely to be enough, so what precedent is created when Spain negotiates for the next round?

Doesn’t this all mean that Netherlands, Finland, and Slovakia are getting somewhat rolled?  They feel less responsible for the rest of the eurozone than Germany does.

How senior will the debt be from this new package?  That seems like the key question to me.  Very senior debt will kill the Spanish bond yields, but very junior debt will make this pure aid.  How many eurozone countries are up for supporting pure aid on this scale?

The wisdom of Dani Rodrik

Sometimes agnosticism is so…appropriate:

The main lesson I take from all this is the need to avoid easy generalizations that do not respect country peculiarities. Fiscal austerity missionaries are surely off base when they say Latvia’s experience decisively proves Keynesians and advocates of currency depreciation wrong.  It is too early to judge the Latvian experience a success.  But it is also too early to say Latvia has been a failure.  Growth may continue, in which case the country will look better and better.

The full post is here, and it is full of interesting detail.

Posner on Patents

Our patent law is by and large judge created and thus it is judges rather than legislators who are responsible for most of the dysfunction in patent law. It was judges who expanded (or endorsed) patents to cover business methods, software and animals. It was judges who weakened the obviousness, enablement and possession requirements. Finally, it was judges who interpreted vague patents broadly, thereby midwifing fearsome patent trolls.

Fortunately, judges also have the power to reform patent law which is why Judge Posner’s recent suggestion that he may dismiss with prejudice the Apple v. Google/Motorola  suit over smartphone patents is potentially ground breaking.

We don’t yet have a full ruling but in early rulings Posner referred to claims made by Apple and Motorola as “silly” and “ridiculous.” Most importantly, Posner has said:

“injunctive relief would impose costs disproportionate to the harm to the patentee and the benefit of the alleged infringement to the alleged infringer and would be contrary to the public interest….”

which I read as saying that Posner is tired of the patent system being used by big business as a cudgel against competitive innovation.

Posner is a founder of the law and economics movement and one of the most influential judges in America. Indeed, as I have said before, Posner is the only person in the world who deserves a Nobel prize in economics and a seat on the Supreme Court so this ruling will be closely followed.

Peak fax Japan

As of March, according to Japan’s Cabinet Office, fax machines could be found in 59 percent of Japanese homes. (That penetration rate, after climbing for years, has peaked in the past five years.)

Coming up with a similar number for the United States would require a “polite fiction,” said Jonathan Coopersmith, a Texas A&M University associate professor and an expert on the history of the facsimile. But even in the early 1990s, only about 3 percent of U.S. homes had the machines, he said.

In terms of fax reliance, “I don’t think any other nation comes close to Japan,” Coopersmith said.

The article is interesting throughout.  Kevin Drum offers comment.

Absurd Patent of the Day

…Apple has been awarded a patent on wedge-shaped computers. Once again it is difficult to see why this sort of competition-stifling government-enforced monopoly would be beneficial to the overall cause of innovation. It’s absolutely true that the record should reflect the fact that Apple made wedge-shaped computers popular and the new wave of Ultrabooks are slightly lame imitators. But we progress as a society because of imitators! People come up with good ideas and then those ideas spread.

Copied from Matt Yglesias who I take it will not mind that I am helping to spread good ideas.

Assorted links

1.  Species extinction and international trade (gated past the abstract).

2. New paper on Canadian inequality.

3. The case that China will do OK.

4. Bob Keleher has passed away at 67; he pioneered a market price approach to monetary policy.

5. Video games that adapt themselves to your Twitter feed and Facebook page.

*Economic Fables*, the new Ariel Rubinstein book

It is summarized here:

I had the good fortune to grow up in a wonderful area of Jerusalem, surrounded by a diverse range of people: Rabbi Meizel, the communist Sala Marcel, my widowed Aunt Hannah, and the intellectual Yaacovson. As far as I’m concerned, the opinion of such people is just as authoritative for making social and economic decisions as the opinion of an expert using a model.

Part memoir, part crash-course in economic theory, this deeply engaging book by one of the world’s foremost economists looks at economic ideas through a personal lens. Together with an introduction to some of the central concepts in modern economic thought, Ariel Rubinstein offers some powerful and entertaining reflections on his childhood, family and career. In doing so, he challenges many of the central tenets of game theory, and sheds light on the role economics can play in society at large.

Economic Fables is as thought-provoking for seasoned economists as it is enlightening for newcomers to the field.

The book can be read freely here.  Rubinstein’s home page is here.