Tyler Cowen's Blog, page 511
May 13, 2012
Sentences to ponder
Given the complete “credit isolation” of Greece’s banks and the private sector from the rest of the Eurozone, the ECB is powerless to improve liquidity conditions in that nation.
That is from Sober Look.
Markets in everything
And while I knew that retired baseball players sell their autographs for $15 a pop, I had no idea that Pete Rose, who was banished from baseball for life for betting, has a Web site that, Sandel writes, “sells memorabilia related to his banishment. For $299, plus shipping and handling, you can buy a baseball autographed by Rose and inscribed with an apology: ‘I’m sorry I bet on baseball.’ For $500, Rose will send you an autographed copy of the document banishing him from the game.”
That is from Thomas Friedman.
One future path in development economics
Johannes Haushofer writes to me:
The Busara Center for Behavioral Economics is a state-of-the-art facility for experimental studies in behavioral economics and other social sciences, located in Nairobi, Kenya, and hosted by Innovations for Poverty Action, Kenya (IPA-K). Busara is open to be used by researchers and students from universities and institutions around the world. The core of Busara is a pool of participants from the Nairobi slums, combined with a cluster of 20 networked computers with which researchers can investigate economic behavior and preferences (e.g. trust/ultimatum/dictator/public goods games, time/risk preferences, priming studies, auction and market experiments, etc.). A central feature of the computer setup is that all computers have touchscreen monitors; together with specially developed paradigms, this allows for the participation of not only computer-illiterate, but entirely illiterate populations. The lab also includes a 20-person waiting room, 4 individual survey cubicles for private interviews, laboratory space for saliva and blood sampling (a phlebotomist is available), and desk space for visiting researchers and students. The subject pool will reach 1000 members by the end of May 2012; available demographic information for each subject pool member includes age, ethnicity, education, martial status, number of children, cell phone number, and fingerprint. Participants are invited for studies by SMS; once in the lab, their identity is verified by fingerprint, and after the experiment they are paid through the mobile money system MPesa. The weekly capacity of the lab is 200 participants, and studies are run by a team of 5 full-time staff. The standard experimental software is z-Tree, although other software packages can be installed upon request.
For more information on running studies at Busara, visit our website at www.busaracenter.org, or get in touch with Johannes Haushofer (joha@mit.edu). We also invite you to find us on www.facebook.com/busaracenter, where you will find a few pictures of the lab.
May 12, 2012
The culture that is Germany
According to Germany’s Der Spiegel, German police shot only 85 bullets in all of 2011…As Boing Boing translates, most of those shots weren’t even aimed [at] people: “49 warning shots, 36 shots on suspects. 15 persons were injured, 6 were killed.”
In some cases the United States police manage to best that number while firing at a single suspect. The short article is here, the German-language source is here: “Unsere Polizisten sind keine “Rowdys in Uniform”. Of course not, they are too busy counting.
Assorted links
1. Via Robert Martinez, interview with Kevin Shields, on labor market hysteresis and other matters. Excerpt:
I’ve got my own studio, just down the road from here. And in the ten years I’ve had it, I’ve only used it in three of them. The other seven years it’s been empty. I feel quite sad about that.
But I made a few big promises to myself when I was a kid, about 17. And so far I’ve managed to keep them. I was discovering all this great music, and I kept noticing this pattern of bands making great records and then tailing off. I thought “I don’t want to ever do that.” If for some reason I can’t make a great record, I won’t make a record at all. Because all you get is a little bit of money, which goes really fast anyway. It’s easier to do nothing and live on nothing than it is to do something and live on something when you’re running around compromising.
It’s better to do nothing than to do bad work.
KS: I think so. It’s like, being on the dole is better than being in a shit job, so long as you’ve got an interest in your life. Because if you’re in a shit job you don’t really have that much more money, and then after a few years your will to live begins to dissipate. The idea that it’s good to do stuff just for the sake of doing it, it’s a myth, I think. It’s a lie. It’s a very 80s concept – everything, everything being about productivity.
Facts about JP Morgan
The banking unit of JPMorgan Chase alone made $12.4 billion last year. The holding company has over $2.26 trillion in assets and is the largest U.S. bank and 8th largest in the world. The holding company made $29.9 billion in operating income and just over $20 billion in net income for 2011.
So, this initial loss of $800M [TC: with more to come] represents approximately 4% of its total net profit for all of 2011, less than 2.7% of its operating income. Certainly it’s not a good thing. But the reported losses, in and of themselves, are not likely to have a dramatic impact on JPMorgan’s long-term financial stability.
Here is more, hat tip to Angus as well. A $2 billion loss is about one percent of their equity and about 0.1% of their assets.
Addendum: Sober Look adds a good point.
Not as easy as you might think (leaving the eurozone)
Controls on the movement of capital could be a nightmare for banks with loans in Greece, potentially making it illegal for companies to repay debt in euros.
Here is more, but that is the key point. One option is that the Greek government would prevent importers of food and fuel from paying in euros, but I would recommend against such a policy for obvious reasons. Another option is that the importers will be allowed to pay with euros, but then that is one easy way of getting money out of the country. I would expect that Greece’s “measured food imports” would rise rather suddenly, as invoices get reclassified, whether food actually is being imported or not. (If Greece cannot do a good job collecting its taxes, how well can it patrol its exports and invoices?) Then capital flight returns.
Under one scenario, Greece will experience both hyperinflation and hyperdeflation at the same time, depending on which medium of account one is measuring prices in. As Arnold Kling would say, have a nice day.
May 11, 2012
My favorite things Romania
1. Schubert pianist: Radu Lupu.
2. Conductor: Sergiu Celibadache. A high variance obsessive, Amazon doesn’t seem to carry his important recordings. At his peak he is one of the best conductors ever and can force a total rethink of the music upon you. He demanded so much rehearsal time, and so much perfection, that he was often impossible to work with. There is a short YouTube bit here.
3. Painter: I can’t name one, sorry. I have seen some nice folk art icon paintings on glass, see the image at the bottom of this post.
4. Sculptor: Constantin Brâncuşi, with a preference for Bird in Space.
5. Chopin pianist: Dinu Lipatti, especially the Waltzes.
6. Producer of maxims: Emil Cioran. I have enjoyed all of his books.
7. Poet: Paul Celan. I am surprised he is not more widely read in the United States. At his peaks I don’t think any 20th century poet is better or more important.
8. Novelist: Herta Müller, better in German than English, both linguistically and culturally.
9. Violinist: Georges Enescu, of course he was a composer too.
10. Mozart pianist: Clara Haskil.
11. Movie: I’ve tried a bunch of the famous recent ones, but I can’t get through them and this is from a man who gladly watched the entire 7 hour, 12 minute Sátántangó .
12. Former NBA basketball center: G. Muresan.
13. Economist: Nicholas Georgescu-Roegen.
The bottom line: There is some real beauty here, and aesthetic romance, but I don’t have a good theory for why novels and painting are not stronger.
Interview with a safecracker
Interesting throughout, here is one bit:
Q: How realistic are movies that show people breaking into vaults?
A: Not very! In the movies it takes five minutes of razzle-dazzle; in real life it’s usually at least a couple of hours of precision work for an easy, lost combination lockout.
Most vault lockouts are caused by malfunctions. A bank employee over-winds the time lock, a technician makes a mistake servicing the vault, or there was no maintenance because the bank has initiated yet another round of cost cutting.
Another 10-20% of my income comes from law enforcement searches and seizures or estate, aka “dead relative” openings. They hire me and I drill it open, but these are not situations where I like to hang around too long.
Q: Do you ever look inside?
A: I NEVER look. It’s none of my business. Involving yourself in people’s private affairs can lead to being subpoenaed in a lawsuit or criminal trial. Besides, I’d prefer not knowing about a client’s drug stash, personal porn, or belly button lint collection.
When I’m done I gather my tools and walk to the truck to write my invoice. Sometimes I’m out of the room before they open it. I don’t want to be nearby if there is a booby trap.
The full article is here, and for the pointer I thank Anton Radice.
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