Tyler Cowen's Blog, page 547

Just arrived in my pile

Need, Speed, and Greed: How the New Rules of Innovation Can Transform Businesses, Propel Nations to Greatness, and Tame the World's Most Wicked Problems, by Vijay V. Vaitheeswaran.

Here is the book's home page.

Assorted links

1. Is Dodd-Frank looking better or worse?

2. A one-home, two-person district in Colorado.

3. "Piggyback bandit" is banned in five states.

4. What happened to that Buffett tax rule?

How much would (did) it cost to build the Death Star?

Oh, and the cost of the steel alone? At 2012 prices, about $8,100,000,000,000,000. Or roughly 13,000 times the world's GDP.

Here is more, via A. Gupta.

Does unemployment drive rebellion?

Maybe not.  There is a new piece out by Eli Berman, Michael Callen, Joseph H. Felter and Jacob N. Shapiro, in Journal of Conflict Resolution, August 2011.  Here is an ungated version, excerpt:

Most aid spending by governments seeking to rebuild social and political order is based on an opportunity-cost theory of distracting potential recruits. The logic is that gainfully employed young men are less likely to participate in political violence, implying a positive correlation between unemployment and violence in places with active insurgencies. We test that prediction on insurgencies in Iraq and the Philippines, using survey data on unemployment and two newly- available measures of insurgency: (1) attacks against government and allied forces; and (2) violence that kills civilians. Contrary to the opportunity-cost theory, we find a robust negative correlation between unemployment and attacks against government and allied forces and no significant relationship between unemployment and the rate of insurgent attacks that kill civilians.

Here is a WQ summary of some additional findings from the paper.

A wee bit of financial history

From William R. Gruver:

If March 4, 1933, and February 11, 2009, marked the nadirs of public confidence in Wall Street, then the years 1928 and 1999 marked the zeniths, when Goldman Sachs sold shares to the public for the only two times in its history. In December 1928, the partners of Goldman Sachs sold shares in a subsidiary called Goldman Sachs Trading Corporation–for its day, a complex, highly leveraged instrument with many layers that made transparency all but impossible. By the time of Roosevelt's inauguration in 1933, the shares were nearly worthless. For the next 70 years, burned by that experience and FDR's excoriation in 1933, the firm's partners retreated to their roots as a private partnership, using their own personal capital with only modest leverage to advance their role as a financial intermediary.

By 1999, Goldman's reputation had recovered to its previous zenith–to the point that a public offering again was possible. Its partners had debated the merits of such a change for years, and, even when the decision was made to go forward, the decision was reached only after vigorous debate and much disagreement. In favor of going public were those partners who saw a need for a larger capital base to allow the firm to compete in the increasingly globalized economy with the larger players both in the U.S. and overseas. Furthermore, once a public market was established for its shares, Goldman would have a currency other than cash with which to acquire other businesses and grow into financial services it could not afford to enter as a private partnership. On the other side of the argument were those partners who were worried about the impact that transition to a public firm would have on the firm's culture. Heretofore, the firm had been known for its low ego and gang-tackling ethos, with aggressive personalities kept in check by the partnership potential that was strongly linked to both productivity and cultural fit.

What neither the firm's partners nor outside observers were able to foresee was the resulting change in the firm's risk tolerance…

For the pointer I thank John Phillips.

*Library Journal* review of *An Economist Gets Lunch*

Part In Defense of Food: An Eater's Manifesto and part Roadfood, this is a culinary coming-out party for Cowen (economics, George Mason Univ.), who up to now has been known for more standard economic works like The Great Stagnation. This latest book combines economic and environmental messages, all written in a highly entertaining and informative style—often with a counterintuitive twist. The real story, though, is the author and his techniques for finding and eating delicious, inexpensive food from all over the world. Thus, we get tips on how to obtain good Chinese food from local, not-so-authentic places; which strip malls are likely to have the best restaurants (who knew they were in strip malls to begin with?); using Google to turn up unexpected restaurant gems; and why places filled with fun, laughing, drinking people often don't have good food. An entire chapter is devoted to barbecue, and another provides specific suggestions for eating well in numerous countries.

VERDICT A fun and informative book that environmentalists, economists, and (most of all) foodies will enjoy. Recommended for all. [See Prepub Alert, 10/7/11.]—Susan Hurst, Miami Univ. Libs., Oxford, OH

Scott Winship summary on mobility and inequality

Read it here, excerpt:

…evidence on earnings mobility in the sense of where parents and children rank suggests that our uniqueness lies in how ineffective we are at lifting up men who were poor as children. In other words, we have no more downward mobility from the middle than other nations, no less upward mobility from the middle, and no less downward mobility from the top. Nor do we have less upward mobility from the bottom among women. Only in terms of low upward mobility from the bottom among men does the U.S. stand out.

Assorted links

1. Which countries were never colonized?

2. Poverty leads to a higher quality of terrorist, and reflections from an econ major.

3. China's currency keeps rising.

4. Henry Miller's Writing Commandments.

5. Gelman on Murray.

*Buckley: William F. Buckley and the Rise of American Conservatism*

By Carl T. Bogus.  It is an excellent and admirable book, highly readable, and also a good example of how liberals should write about conservatives.

You can order it here.  My previous coverage of Carl T. Bogus is here.

Toy nationalism the polity that is Russia

There hadn't been many – indeed any – rallies like it before in Russia. Last month saw dozens of toys, from teddy bears to Lego figurines, standing out in the snow of a Siberian city with banners complaining about corruption and electoral malpractice.

At the time, Russian authorities in Barnaul declared the protest "an unsanctioned public event".

Now a petition to hold another protest featuring 100 Kinder Surprise toys, 100 Lego people, 20 model soldiers, 15 soft toys and 10 toy cars has been rejected because the toys have been deemed not to be "citizens of Russia".

"As you understand, toys, especially imported toys, are not only not citizens of Russia but they are not even people," Andrei Lyapunov, a spokesman for Barnaul, told local media.

The story is here and for the pointer I thank Michelle Dawson.