Tyler Cowen's Blog, page 557

*Cato Papers on Public Policy*

It is a new journal, edited by Jeffrey Miron, summary:

This new publication is an annual volume of innovative, original articles on current and critical economic and public policy issues. Each article is written by a recognized national expert, most often a senior member of a prestigious university. The overarching goal of the publication is to provide in-depth, imaginative new research on key economic and public policy matters combined with a range of potential improvements and solutions.

The cloth version is $15, $6.99 for the eBook version.  At the link you will find the first table of contents, I have not yet read any of my copy.

Very good sentences

From Tim Harford, about the UK:

…as Mr Summers pointed out, even China seems to have been shedding manufacturing jobs over the last couple of decades. Perhaps the data deceive here, but the Chinese manufacturing boom seems to be more about increasing output per worker than employing more workers. If the Chinese can't generate jobs through manufacturing I am not sure we should be expecting too much from that strategy.

Rewarding Virtue

In the Elizabethan period, business was sneered upon. In Shakespeare's plays, the only major bourgeois character, Antonio, is a fool because of his affection for Bassanio. There is no need to dwell on how the other bourgeois character in "The Merchant of Venice," Shylock, is characterized.

She contrasts this with attitudes 200 years later. When James Watt died in 1819, a statue of him was erected in Westminster Abbey and later moved to St. Paul's cathedral. This would have been unthinkable two centuries earlier. In Ms. McCloskey's view, this shift in perceptions was central to the economic take-off of the West.

From a profile of Deirdre McCloskey in the WSJ.

Assorted links

1. Roger Scruton on his farm.

2. Is this what (American) austerity looks like?, and drug tests for legislators.

3. Two-hour Star Wars remix, not for everyone.  For anyone?

4. Think of this as a "poem" about libertarians.  Funny.

5. Why Spain and Portugal are in big trouble.

6. The new Valerie Ramey paper on fiscal stimulus.

The boycott Elsevier movement

Many of you have asked me about this recent movement.  A few points:

1. I largely agree with the goals and views of the perpetrators.

2. If I never published again in an Elsevier journal, it would not hurt my career (I have been tenured for twenty-six years).  It would be a cheap endorsement for me personally.

3. In the past my career has benefited from publishing in Elsevier journals.  They have provided useful outlets for some of my pieces and for some of the pieces of my friends and colleagues.  Although I would prefer to move to a new and more open publishing model, I do count this past relationship for something.

4. In the future I likely will wish to help my students publish, including in Elsevier journals.

5. If I were to pick three boycotts to see through, would this be one of them?

My current conclusion is that I should not join this boycott in any formal sense, again while expressing support for the final vision.  I do contribute to the open science idea in a number of ways, including through this blog.

In my forthcoming An Economist Gets Lunch: New Rules for Everyday Foodies you will find a more extensive discussion of the economics and ethics of boycotts.

Addendum: Via Claire Morgan, here is an interesting discussion of metrics for on-line influence.

Hunting Endangered Species

Can hunting save an endangered species? Yes. In Africa hunting has been critical to the conservation of a number of species, despite the sometimes opposition of the United States which can prohibit US citizens from hunting even in foreign countries.

I was surprised to discover, however, that "some exotic animal species that are endangered in Africa are thriving on ranches in Texas, where a limited number are hunted for a high price." Texas hunters have saved several endangered African species, unfortunately for the animals, the story does not end happily. Video from 60 Minutes below–some excellent material on incentives, ethics and conservation for classroom discussion.

www.youtube.com/watch?v=4r9-WeNXzTQ

Not your grandpa's aggregate demand shortfall

Andrew Smithers, of the consultancy Smithers & Co, said in December that US profit margins were at a record level and had expanded in the past three years even as output fell.

"Margins have been as good as it gets," says Graham Secker, European equity strategist at Morgan Stanley. He adds corporate profitability over the past 20 to 30 years has gained from factors such as technological advances, falling corporate tax rates, low funding costs and declining commodity prices.

Analysts at Citigroup say operating margins at S&P 500 companies are close to the highs of 2007, partly because of the fall in unit labour costs. "A reluctance to hire more employees as well as outsourcing to lower-cost alternatives have left management teams with lean and mean companies," they say.

Some analysts remain optimistic about prospects for the US. Gerard Lane, equity strategist at Shore Capital, says: "Even though US margins are extended, they do not necessarily have to fall at the moment.

"As a long-term trend, these businesses are gaining more of their profits from overseas. It is only when unit labour costs at S&P companies start growing at more than 2 per cent a year that margins will start to fall."

Here is more, from the FT.

The export machine that is Washington D.C.

From Steven Pearlstein:

If you remember one number, let it be this one from my George Mason University colleague Stephen Fuller: Other than goods and services sold to government, only 12 percent of the region's output is sold to people and businesses outside the region, a number that has fallen in recent years rather than risen.

What's wrong with Britain?

Scott Sumner has the microphone:

I was curious to see just how tight British fiscal policy actually is, so I checked the "Economic and Financial indicators" section at the back of a recent issue of The Economist.They list indicators for 44 countries, including virtually all of the important economies in the world.  Here are the three biggest budget deficits of 2011:

1.  Egypt  10% of GDP

2.  Greece:  9.5% of GDP

3.  Britain:   8.8% of GDP

Egypt was thrown into turmoil by a revolution in early 2011.  Greece is, well, we all know about Greece.  And then there's Great Britain, third biggest deficit in the world.

I suppose some Keynesians work backward, if there is a demand problem it must, ipso facto, be due to lack of fiscal stimulus.  If the deficit is third largest in the world, it should have been second largest, or first largest.

A slightly more respectable argument is that the current deficit is slightly smaller than in 2010 (when it was 10.1% of GDP.)  But that shouldn't cause a recession.  Think about the Keynesian model you studied in school.   If you are three years into a recession, and you slightly reduce the deficit to still astronomical levels, is that supposed to cause another recession?  That's not the model I studied.  Deficits were supposed to provide a temporary boost to get you out of a recession.  At worst, you'd expect a slowdown in growth.

To get a sense of just how expansionary UK fiscal policy really is, compare it to France (5.8% of GDP), Germany (1.0% of GDP), or Italy (4.0% of GDP).  Lots of people blame ECB policies for the recession, but Britain is not in the eurozone.  Outside the eurozone you have Denmark (3.9% of GDP), Sweden (zero), Switzerland (1% surplus).

Obviously there must be some problem in Britain that isn't affecting some of its more prosperous northern European neighbors.

Most blogosphere writings on this topic do not demonstrate nearly enough sophistication, fact, or detail.  The rest of Scott's post discusses ngdp for Britain.  I have a piece in the Sunday Times (of London) this weekend on these topics and TGS, though no link because the whole system is gated.  If you have a pdf, I would be appreciative if you could send it to me, for my private use only.

Assorted links

1. More on animal nationalism, a tweet.

2. Perspectives on Ireland.

3. Should we de-fund college libraries?  A lot of publishing models would change, books too.

4. Placebo markets in everything.

5. How do states act after they get nuclear weapons?