Tyler Cowen's Blog, page 569

The Destruction of Pompeii

The Art Newspaper: A Unesco report has identified serious problems with the World Heritage Site, including structural damage to buildings, vandalism and a lack of qualified staff….The collapse of a column at Pompeii on 22 December raised further alarm. The column was in a pergola in the courtyard of the House of Loreio Tiburtino, whose adjacent rooms have very fine frescoes.

…The Pompeii crisis came to a head with the collapse of the Schola Armaturarum, known as the House of the Gladiators, in November 2010, along with three further collapses later in the month. This was after extremely heavy rain.

The problems at Pompeii are all too familiar in Italy:

Staffing at Pompeii remains a fundamental problem. The structure is "very rigid", with "jobs ­being secure until retirement", making it "virtually impossible to recruit new staff". Although around 470 people are employed at Pompeii, it is "very short" of professional staff, there are "very few" maintenance workers and only 23 guards are on site at any one time.

The guards do not wear uniforms and fail to display their badges. The experts observed them "grouped together in threes or fours", which meant there was a limited presence on the enormous site. Since 1987, the number of guards has been reduced by a quarter while visitor numbers have increased considerably.

And how about this for an Italian microcosm:

Management changes have resulted in further problems. In July 2008, the Italian government declared Pompeii to be in a "state of emergency", putting it under special administration until July 2010 (two commissioners served during this period: Renato Profili and then Marcello Fiori). There have been four successive superintendents since September 2009: Mariarosaria Salvatore, Giuseppe Proietti, Jeannette Papadopoulos and Teresa Elena Cinquantaquattro.

Markets in everything the culture that is Scot

In 1907, Ernest Shackleton and crew set out on the ship Nimrod to visit Antarctica and, they hoped, the South Pole. The good news was, the entire party survived the trip, thanks in part to the Rare Old Highland Whisky they brought to the frozen continent. But the expedition was forced to evacuate in 1909, some 100 miles short of the Pole they sought. And, as winter ice encroached and the men hurried home, they left behind three cases of the choice whisky.

In 2007, just about a century later, the whisky was found, intact, at the expedition's hut at Cape Royds in Antarctica.

The stuff was made by Mackinlay & Co at the Glen Mhor distillery in 1896 or thereabouts. Mackinlay hasn't been an active brand for a while now, but the current owner of the Mackinlay name, Whyte and Mackay, obtained a few of the precious bottles and set out to do what any right-thinking Scot would do: first, taste the whisky; and second, attempt to analyze and re-create it. The result, a product called Mackinlay's Rare Old Highland Malt Whisky, is, as of this writing, buyable in stores.

The article is here, and the pointer is from Jodi Ettenberg, who serves up her favorite longreads of 2011 here.

Assorted links

1. Photos of jokes by Slavoj Zizek; keep on hitting "page down" to see them, p.s. only one of them is funny.

2. Via Chug, the driverless helicopter.

3. Is it counterproductive to recommend restaurants in Tokyo?

4. Smith on Cowen on Smith, on causes of recovery.

5. Is Hungary economically hopeless or not?

6. Green dogs and cats.

Mexico City bleg

Where should we eat?  I've been there at least ten times, so if you're recommending anything other than food, it should either be very recent or very obscure.

Jeff Madrick, unwittingly, makes the case for fiscal austerity

There is a far better solution. And it would not require the failure of the euro. The eurozone and perhaps the entire EU must act like a unified country, ready to recognize that it must take responsibility for the drastic social effects of rapid spending cuts… A financially unified Eurozone must then issue bonds to raise the money to pay back debts but also to provide a social net for the people of nations that are cutting back their spending on social programs to meet their remaining financial commitments…This can be accompanied by demands for reforms in nations like Greece where taxes must now be collected more efficiently and unusually excessive public spending stopped.

There is more here, and of course similar advice will work for Belgium too.

Markets in everything

Squatting at a makeshift shrine with joss sticks burning beside her, Granny Leung starts bashing a manlike paper cut-out with a pair of sandals.

"I beat you little people, I'm sending you away!" chants the 76-year-old woman, one of the last practitioners in Hong Kong of the ancient Chinese ritual of "da siu yan", or "beating the petty little people".

Granny Leung performs her mysterious incantations in the bustling shopping district of Causeway Bay. And business is booming.

For as little as HK$50 ($6), Leung claims she can curse her customers' enemies and reverse their bad luck by burning paper offerings and hitting paper figures with shoes.

Believers say the ritual can help to drive away evil spirits in general, or a specific nemesis such as a hated neighbour, a business competitor or a love rival.

…Each bout takes about 30 minutes, depending on how tough the villains are and how many times Leung needs to beat them until they are gone.

Another stage of the ritual involves feeding pig lard to paper tigers, which represent malignant beings, so they are full and will not bother people.

Here is more and for the pointer I thank Daniel Lippman.

Assorted links

1. Tyler Brûlé visits New Zealand and Australia.

2. Wilkinson on Rogoff and growth, although Will is closer than he thinks to the view he calls nutty, in fact he seems to hold it!

3. Does the narcissism of a CEO matter?, and the paper is here.

4. Rachel Strohm on development education at SAIS.

5. Economists who are gathering information on what other economists think, and why they are doing it.

Will Karl Smith have called "The Turn?"

Karl Smith assembles some green shoots.  If indeed there is a continuing (modest) recovery, what are we to make of it?  I see a few options:

1. Government responded to the downturn with vigorous policy actions and brought recovery.

2. We were in a liquidity trap, but enough depreciation of capital and consumer durables is pulling us out of it.  As marginal rates of return rise with depreciation, spending will go up.

3. The neo-Keynesian model applies, and enough nominally sticky decisions have been reset to undo most of the initial negative AD shock.

4. The economy had a strong positive technology shock.

5. A mix of default, savings, and refinancing have led to some balance sheet repair.

6. We had a strong positive AD shock through higher global demand for our exports.

7. Banks recapitalized through playing the spread and now they are lending again to marginal borrowers, thereby spurring economic activity.

8. Recalculation has proceeded apace.

Conditional on our economy being in the recovery stage (e.g., no pending eurozone implosion), I would assign most of the weight to #2 and #3 and #5, noting that #2 can operate in a liquidity trap but does not require it.  I see a small bit of #4 and #7 and #8 apiece, and I don't regard #1 and #6 as playing roles in the story, mostly because they are not true.

The New Old Keynesian bloggers tend to downplay the recent bits of good news.  If a real recovery were shown to be taking root, would they invoke a large dose of #2?

Haiti watch

Gambling everything, thousands of Haitians have made their way across the Americas to reach small towns in the Brazilian Amazon over the past year in a desperate search for work, including a surge of hundreds arriving in recent days amid fears that Brazil's government could slow the influx before it overwhelms the authorities here…Companies like Fibratec, a swimming pool manufacturer in southern Santa Catarina State, have even sent managers all the way here to hire dozens of Haitians.

The excellent article is here.  Via Carl-Henri Prophete, here is another story, of an Irish billionaire working to build up Haiti:

Digicel, on the other hand, is the country's largest employer and taxpayer. The privately held company has invested $600 million in Haiti, making it by far the country's largest foreign investor ever, and it has democratized communications with its strategy of selling low-price cellphones and services to the masses.

Mr. O'Brien has profited extensively from Haiti, which is Digicel's largest market and accounts for roughly one-third of its 11.1 million subscribers.

…Digicel, for instance, has put up street signs in parts of Port-au-Prince, serving as reminders of the company's role in public life as much as guides for navigating the city.

Most mornings, people crowd around the reception desk of Digicel's office building, not to complain about the firm's services but to see the mayor and other city officials whose offices are on the sixth floor since the earthquake.

The company provides the space rent-free, Mayor Jean-Yves Jason said, and gave the city computers and furniture. "We have plans to build a new city hall in downtown Port-au-Prince, but we are so comfortable here it is easy to delay," Mr. Jason joked.

The article gives some other stories of growing foreign investment in Haiti.  Here is Twitter and the Haitian earthquake response.  Also via Carl-Henri, here is a Le Monde article on the Haitian elite, and here is their excellent slide show.

I have been reading and enjoying Laurent Dubois's new Haiti: The Aftershocks of History, one of the very best books on the history of the country.  In 1914-15, about eighty percent of the government's revenue went to debt service.  It is one of those rare books where you can know a lot about the topic, and yet still learn something interesting on virtually every page.

The economics of the Arab Spring

Adeel Malik and Bassem Awaadallah now have a paper on this topic.  I would like to give you the abstract, but control-C into WordPress does funny things from this paper.  The link is here, and for the pointer I thank RovingBandit.