Tyler Cowen's Blog, page 69

*Mastering ‘Metrics*

That is the new book by Joshua D. Angrist and Jörn-Steffen Pischke, from Princeton University Press, and the subtitle is The Path From Cause to Effect.  I have not yet had a chance to peruse this book, but the odds are very high that it is a very strong contribution.  The Amazon link for the book is here.

Assorted links

1. Capital controls for Belarus, and worse.

2. The word is that Doug Elmendorf will not be reappointed at CBO.  Doug has done a very good job and he deserves our plaudits.  And Kaiser on the Medicare spending slowdown.  Excellent piece, and if nothing else it shows what a fiscal conservative Elmendorf has been.

3. Interview with Piketty, more than just the usual, recommended, he also needs some PR training.

4. List of films that most frequently use the word “fuck” (yes, someone seems to have counted).

5. “Conspicuous authenticity”?

6. More women get gun gifts.

Darryl Strawberry auction markets in everything

The Internal Revenue Service is putting outfielder Darryl Strawberry’s retirement annuity on the auction block next month.

The annuity, seized by the IRS because Strawberry owed back taxes, was part of a contract he signed in 1985, back when he was slugging home runs for the New York Mets.

The annuity will be worth about $1.3 million, to be paid out over nearly 19 years, when it goes up for sale on January 20, according to court documents.

The starting bid is $550,000.

There is more here, and for the pointer I thank Zachary Klein.

The polity that is Singapore

The city-state will open one of its neighborhoods to driverless cars in 2015…

Combined with a version of Uber it would seem, there is more here.

How much economic potential does Cuba have?

I’m not one of those who thinks Cuba is the next Singapore or even the next Puerto Rico.  Why not?

I’m willing to assume that the end of the American embargo will mean some kind of economic liberalization over the next ten years.  But how much good will that bring?

We could start by looking for relevant comparisons.  We could ask how well have non-British-ruled, non-Dutch-ruled, non-American-ruled Spanish-speaking Caribbean islands done?  There is a fairly clear example of such a country with some ethnic, cultural, historic, and linguistic similarities to Cuba, namely the Dominican Republic.  For non-PPP-adjusted gdp per capita, the D.R. clocks in at about $5800 per year.  And that is about where I think Cuba will end up, after a good bit of turmoil.

Now various official sources put Cuban per capita gdp (again, non-PPP-adjusted) at about that same level.  That is highly misleading, and yes I have been to both countries.  (Other countries at that level don’t have so many hungry people or so many women selling their bodies to tourists.)  In any case I expect Cuban reforms, along with a good bit of additional deindustrialization from U.S. competition, to bring a short-run gdp dip, with an eventual climb into a D.R.-like economy, albeit with big bumps along the way.

Here are a few additional points:

1. The Caribbean in general has done very poorly since the economic crisis of 2008.  Most of it does not show signs of bouncing back.

2. The short-run trends for foodstuffs are not so great.  The major agricultural exports are sugar, citrus, fish, cigars, and coffee.  Sugar is by far the most important of those, and right now the sugar price is well below half of its 2011 level.

3. Cuban industrial production is below half of its 1989 level (pdf, p.8).

4. National savings and investment rates are at about ten percent, well below Latin American averages (pdf, p.8).

5. I don’t in general buy “brain drain” arguments, but they do sometimes apply to islands and for historical reasons they are especially likely to apply to Cuba.  Many of the most talented Cubans were encouraged to leave, or managed to leave, and staying in Miami will be better than going back for a long time to come.

6. Cuba has some of the best beaches in the Caribbean, but I expect most of those returns to accrue to land and capital, not labor.

7. Cuba already imports 30% of its food from America.  Note that sum has been falling lately, as Cuba seeks cheaper alternatives, such as food from Vietnam.  Post-liberalization, trade with America will go up a good deal but we are not starting from zero under the status quo.

8. Cuba is inheriting some very serious problems with institutions, and that is assuming they manage to move away from communism.  In my admittedly limited experience, a fair number of Cubans still believe in communism, while also thinking the revolution somehow went astray.  Emmanuel Todd has argued that Cuban family structures make the country susceptible to authoritarian rule.  I consider that speculative, but still communism has had a long shelf life there, well past the fall of the Soviet Union, so let’s not dismiss it out of hand.  The country also had a notable history of instability well before the Castro revolution.  It is hard to be optimistic on this front.

9. Cuba seems to depend a good deal upon…Venezuela.  Is that an asset you wish to hold in your portfolio?

10. Foreign investors can hire Cuban labor only through a state employment agency, and no this has not led to a form of efficient offsetting power, rather it has kept productivity low.  More generally, this long Brookings study of FDI in Cuba (pdf) shows how difficult the environment is for foreign capital.

11. Costa Rica has far, far better institutions than Cuba and still it is relying on agriculture and tourism.

On the bright side:

12. The island has significant reserves of nickel and cobalt, top five in the world for nickel by many estimates.

13. Literacy is high, probably higher than in the United States, and there is a functioning social health infrastructure which reaches a high percentage of Cubans.

14. Circa 1959, the book value of U.S. capital in Cuba was three times higher than in the rest of Latin America combined (pdf).

15. The Cuban diaspora may nonetheless kick in as a source of talent and investment.

I’m not a super pessimist on Cuba, I just think they will need a long time to get to the point the Dominican Republic is at today.  Being “the next Costa Rica” seems for them impossibly far off.

Television: This or That

Angels/demons versus humans: Dominion > Constantine.

Powerful female politician(s) battling corruption and dystopia: Madam Secretary (Tea Leoni) > State of Affairs (Katherine Heigl)

Reality TV entrepreneurs: The Profit > Shark Tank.

Food competition cornucopias Top Chef > MasterChef > Hell’s Kitchen.

Assorted links

1. The most popular people on Pinterest.

2. NYT covers Los Angeles as a pedestrian city.

3. The rise of livestreaming funerals.

4. You can google to John Cochrane’s WSJ criticism of Keynesianism here.

5. Court in Argentina grants basic rights to orangutan.

6. Cato is and should be unhappy with Vaclav Klaus.

Sentences on digital preservation

“Digital preservation is really just an oxymoron at this point,” says Jan-Christopher Horak, director of the UCLA Film and Television Archive. “It’s really just putting plus and minus electronic charges on plastic — and that plastic has an extremely short half-life. So that most digital media, even if you take it and store it correctly, is probably not going to last more than eight or ten, maybe 15 years.” By contrast, with 35mm film, “we just need to put it into a cold, dark, dry place, pay the electricity bill, and it will last for 500 to a thousand years.”

In one of the most famous examples of the perils of digital preservation, when the makers of Toy Story attempted to put their film out on DVD a few years after its release, they discovered that much of the original digital files of the film — as much as a fifth — had been corrupted. They wound up having to use a film print for the DVD.

From Bilge Ebiri, there is more here.

Sentences from Sony

We have learned in testing that moviegoers respond favorably to Kim Jong-Un when he is seen as more of a recluse who can be charming at times as opposed to a person who is simply a dangerous dictator.

There is more here, on possible commercial reactions to The Interview, interesting throughout.  The pointer is from Adam Minter.

Today is groundbreaking day for Nicaragua’s canal with China

Nicaragua plans to begin building access roads and highways on Monday near the country’s Pacific coast as it starts work on a $50 billion inter-oceanic canal meant to rival Panama’s century-old waterway.

…At an estimated cost more than four times the size of Nicaragua’s $11 billion economy, the project has raised doubts among analysts who point to HKND’s lack of experience in major infrastructure projects and question the need for another Central American canal. Panama is planning to complete a $5.25 billion expansion of its waterway next year.

“I think there is some skepticism about it getting built and getting built on time and on budget,” said Lee Klaskow, a marine shipping analyst with Bloomberg Intelligence. “There are a bunch of active volcanoes in and around the area.”

Nicaragua’s canal would also require higher locks than Panama’s since it is 20 feet more above sea level he said.

There is more from Bloomberg here.  Here is further coverage:

No feasibility study, environmental-impact report, business case or financing plan has yet been released. Instead come platitudes from the Sandinista government of Daniel Ortega about how it will bring a jobs bonanza and end poverty.

So far, it has brought as much fear as hope. Since Chinese-speaking surveyors, backed by Nicaraguan soldiers and police, began assessing land and houses along the canal’s proposed 278km (172-mile) route a few months ago (see map), peasants fearful of their land being expropriated have taken to the streets 16 times. On December 10th several thousand, shouting “We don’t want the Chinese”, protested in Managua, the capital, despite police efforts to keep them in their villages, activists say. Boatmen in Punta Gorda on the Caribbean coast have refused to ferry heavy machinery to be used to begin construction, fearing their livelihoods will be harmed.

Maybe the equilibrium here is “start first, plan later” — what does that imply about the nature of the underlying game?   We’re going to see how good that vaunted Chinese soft power really is.