Marginal Revolution

A public choice theory of the filibuster

Tyler Cowen

Senators like the filibuster. It keeps them relevant when they're in the minority. It makes their chamber a lot more powerful than in the House, and ensures that the leadership has to listen to their concerns more closely.

That's Ezra Klein, here is more.

False theories of bargaining power

Tyler Cowen

The idea is that publishers could use their robots.txt as a ransom note, selling it to the highest bidder -- Bing or Google.

Here is the link.  Still, it is a cute idea.

*Fanfare* meta-list for recommended classical music recordings, 2009

Tyler Cowen

Every November I scour the critics' "Want Lists" from Fanfare, my favorite classical music periodical.  Then I go and spend a lot of money.  Here is the list of all the new recordings, from 2009, which were mentioned by more than one critic:

1. Mahler's 4th, conducted by Ivan Fischer.

2. John Adams, Doctor Atomic Symphony.

3. Mahler: The Complete Symphonies, conducted by Leonard Bernstein, remastered edition.

4. Kurtag's Ghosts, by Kurtag and Formenti.

5. John Adams, Transmigration of Souls, and other works conducted by Robert Spano.

6. Oppens Plays Carter, by Ursula Oppens.

Of that list, #6 received the most selections.  Here are the meta-list picks from last year, all of which turned out to be excellent, if you like that sort of thing that is.  I hope to be passing along more meta-lists soon.

Cool Japanese Barcodes

Alex Tabarrok

More here.

The best sentence I read today, 7:46 a.m. edition

Tyler Cowen

Someone once told me that there is nowhere we are more honest than the search box.

That's from still-a-Wunder-but-no-longer-a-Kind Ben Casnocha.  Read the whole post (drawing upon Michael Agger), it's one of the best I've seen in some time.  For instance:

There are some remarkable contrasts between "dumb" searches and "smart" ones. People who start their search "how 2" are more likely to search "how 2 get pregnant" or "how 2 grow weed." People who start their search "how one might" are more likely to search "how one might discover a new piece of music" or "how one might for the rise of andrew jackson in 1828."

Another contrast is between people who type in "is it wrong to" vs. people who type in "is it unethical to."  If you type in "is it wrong to" the first suggestion is "is it wrong to sleep with your cousin."  Number two is (yes, I tested it in Google): "Is it wrong to sleep with your step dad after your mom dies."  If you type in "is it unethical to," the first suggestion is "is it ethical to sell customer information."  Next comes a question about animal experimentation.  You'll see the lists of comparisons behind the first two links offered above.

Assorted links

Tyler Cowen

1. Felix Salmon also recommends the new Bob Pozen book.

2. Are dreams just exercise for the brain?  I enjoyed this line: “I argue that dreaming is not a parallel state but that it is consciousness itself, in the absence of input from the senses..."

3. Rene Girard on war and apocalypse.

4. How much do (non-related) animals cooperate?

5. Via Kat, why we fall for "fast news."

6. How to improve the health care bill, by David Leonhardt.

Whoops!

Tyler Cowen

If you believed all the talk from Chrysler about how our tax dollars would help finance its fast-track electric-vehicle future, you're in for a big disappointment.

Chrysler has disbanded the engineering team that was trying to bring three electric models to market as a rush job, Automotive News reports today. Chrysler cited its devotion to electric vehicles as one of the key reasons why the Obama administration and Congress needed to give it $12.5 billion in bailout money, the News points out.

The link is here and I thank John Nye for the pointer.

Markets in everything

Tyler Cowen

"Twitter-equipped scale tells the world how much you weigh."

How's that for purchasing self-constraint?  Or do you just stop weighing yourself?

For the pointer I thank Eric H.

Caplan on Education

Alex Tabarrok

How much does increasing college-going rates matter to our economy and society?

Caplan: College attendance, in my view, is usually a drain on our economy and society. Encouraging talented people to spend many years in wasteful status contests deprives the economy of millions of man-years of output. If this were really an "investment," of course, it might be worth it. But I see little connection between the skills that students acquire in college and the skills they'll need later in life.

Much more here, including answers from Charles Murray, Richard Vedder and others. Hat tip to Arnold Kling.

Assorted links

Tyler Cowen

1. One calculation of implicit marginal tax rates on the poor.

2. The rise of Andrew Ross Sorkin at the NYT.

3. The problems of health care transition: "drop your bad risks ASAP" is another one.

4. Is there hope for Detroit?

5. "Salvaged [nuclear] bomb material now generates about 10 percent of electricity in the United States..." -- read more here.

6. Debunking of Senate vote chart.

7. UK list of best movies of the decade.

8. New Mark Thoma blog at CBS MoneyWatch.

If I believed in Austro-Chinese business cycle theory

Tyler Cowen

Most of China's growth this year has been unsustainable, driven by stimulus. China's money supply has risen 29% in the past year. At the government's behest, banks have increased their lending by nearly $1.4 trillion, or 32%, during that time.

That flood of borrowed cash has been channeled into new infrastructure and production capacity. These investments will account for up to half of China's gross domestic product this year, according to some estimates.

A key question is whether China needs all of this investment. Analysts at the London hedge fund Pivot Capital Management say that China already has enough idle steel-production capacity, for example, to match the steel output of Japan and South Korea combined.

Meanwhile, the ratio of investment to GDP is rising, suggesting China's investment is less and less efficient, says Edward Chancellor at Boston asset-management firm GMO.

The combination of soaring investment and dwindling returns was seen in Japan in its asset bubbles in the 1980s and in the "Asian Tigers" just before their crises in the late 1990s, he says.

The link is here.  Does anyone know how to say "excess capacity" in Chinese?  Even more importantly, can you get it past the typepad spam blocker?

What does a free service charge signal?

Tyler Cowen

Eduardo Diaz, a loyal MR reader, asks:

A question for you...have you ever compared in the context of "trade repairs" (i.e. garage door repair, plumbing, etc.) the pros and cons of companies that offer free estimates or evaluations vs. companies that charge an inspection charge?   

My intuition would make me hypothesize that: Free estimate company would have a stronger incentive to be nice to get the business.  They might "sugar coat", if they are unethical and think they can get away with holding you up later.  In this model, the customer might feel "obligated" to reciprocate for the courtesy of the free estimate by giving this provider the business. Company that charges for the inspection would have an incentive to be a little more straight with you, this tendency increasing as the inspection charge comes close to cover the cost to the company of the inspection.  Incentive to be nice is less in this case.  Perhaps, the repair techs with "less people/sales skills" might gravitate to this business model.  or perhaps this model attracts more techs that live far away or don't have a "critical mass" of business in a particular area. These trade repair industries are very competitive due to low barriers to entry and difficulty to collude, so I think competition probably drives the cost structure for those companies to a pretty similar point.   Thus, I'd expect my total cost with a free inspection company vs. an inspection-charge company should be the same, assuming I'm properly informed by reading up on-line reviews, getting several quotes, etc. in other words, the no charge companies will need to recoup the cost of all the inspections that don't result in profitable repair work.

If you think you are likely to proceed with the repair work (rather than junk the thing, try to fix it yourself, decide you're in fact a garage door hypochondriac, etc.), you might be more likely to pay the upfront fee for the estimate.  Of course the company knows you will behave this way.  If they have any ability to price discriminate, for the service itself they will charge you a higher price ex post.  You in turn will shy away from this equilibrium.  In essence paying the upfront service charge reveals something about your type, namely that you are eager for repairs.  We're then more likely to see free estimates as the dominant strategy.  Some subset of firms will charge for estimates if they can appeal to customers who in essence want to face price discrimination to ensure higher service quality from the wealthier firms with more valuable long-term reputational franchises.

Alternatively, assume that if you have to pay to learn the price, the said price information is valuable.  Price information is valuable when the market in question isn't so competitive and when search costs are high.  Producers are signaling that their markets are not so competitive when they charge for service estimates and many producers will shy away from letting on about that to their customers. 

Sometimes you can flip this kind of argument.  You, as a customer, might assume that a firm which charged for estimates had especially informed customers.  You might hope to masquerade as another such informed customer and thus patronize such a firm, hoping that it will treat you well because it is used to dealing with informed buyers.  It is an open question whether this equilibrium holds up.

You can spin many other scenarios, those are just some ideas that came to mind.

NASA FAQ 2012

Alex Tabarrok

NASA scientists are frequently being asked questions concerning 2012 and for this reason they have created a web page to answer these questions and reassure the public. e.g.

Q: Is there a planet or brown dwarf called Nibiru or Planet X or Eris that is approaching the Earth and threatening our planet with widespread destruction?

A: Nibiru and other stories about wayward planets are an Internet hoax. There is no factual basis for these claims. If Nibiru or Planet X were real and headed for an encounter with the Earth in 2012, astronomers would have been tracking it for at least the past decade, and it would be visible by now to the naked eye. Obviously, it does not exist. Eris is real, but it is a dwarf planet similar to Pluto that will remain in the outer solar system; the closest it can come to Earth is about 4 billion miles.

Sigh.... I too fear for our planet.

Countercyclical "asset" of the day -- burglary watch

Tyler Cowen

With a lot more unemployed people, a lot more people are staying home, and they see more in their neighborhood," said Sgt. Thomas Lasater, who supervises the burglary unit of the police department in St. Louis County, Mo., where authorities recorded a whopping 35 percent drop in burglaries during the first six months of 2009.

The falling price of raw materials -- which had been producing copper and other thefts -- may be another reason for the change in trend.  Here is the story and I thank Daniel Lippman for the pointer.

Assorted links

Tyler Cowen

1. Scott Sumner, standing on one (?) foot.  And here is a Sumner podcast with Russ Roberts.

2. The physics of free throw shooting.

3. A mathematician discusses string theory and many other matters.

4. Is older music crowding out newer music?

Unemployment Breakdown

Alex Tabarrok

The NYTimes has a nice interactive graphic on unemployment rates and changes over time by demographic characteristic.  I am in the category--white men ages 25-44 with a college degree-- with almost the very lowest unemployment rate (3.9%).  Just to compare, as pointed out in the comments, black males 15-24 without a high school degree have an unemployment rate of 48.5%.  Check it out.

Hat tip to FlowingData.

Measuring the movie critics

Tyler Cowen

If you want to get a sense of the zeitgeist but can only read one review, you might prefer Rene Rodriguez, whose low standard deviation from the mean review score makes him very nearly a living critical average. If you are interested in an alternative perspective, Mick LaSalle's high standard deviation places him further from the critical pack than any of these peers. Reviews from both Michael Wilmington and Marc Savlov are so regularly and respectively positive and negative that they should perhaps be taken with a grain of salt.

The source article, which contains much more information, is here.  You'll find a visual representation of the critics's stances here.  Hat tip goes to Eric Barker.

If you're wondering, I don't have a "favorite movie critic."  I judge movies by the preview, the director, and by mentally aggregating the first five reviews I happen to read.  This works well for me.  If I had to go by a single source, by far it would be Variety magazine, which offers separate assessments of a movie's goodness and of its popularity with various demographics, a luxury which non-insider publications do not always have.  

China claim of the day

Tyler Cowen

If China remains culturally closed, the Chinese Century will never come to pass. Instead, the United States--a country that has struggled with race and racism for centuries, and in the process has become more culturally open and resilient--will dominate this century as it did the last.

That's from Reihan Salaam, who discusses how far the problem of Asian racism is from being solved.

Berlin memories

Tyler Cowen

I first visited Berlin in 1985, while traveling with Randall Kroszner.  We drove to West Berlin by car and we were terrified for the few hours we were underway in East Germany.  Randy did not drive over the speed limit once.  I was hardly a communist sympathizer but still I was unprepared for the day trip to East Berlin.  I saw soldiers goose-stepping down one of the main streets.  In the stores old ladies yelled and swung their brooms at me.  Many buildings still had bullet marks or bomb damage from World War II.  In a restaurant we ate a rubber Wiener Schnitzel and shared a table with an East German family; they did not have enough trust in their government to speak a word to us.  I was unable to spend my mandatory thirty-mark conversion on anything useful; I carried back some Stendahl and Goethe but didn't want the Lenin.  This was in the capital city in the showcase of the communist world.   

My biggest impression was simply that I had never seen evil before.

In the summer of 1990 I stayed in a dorm in East Berlin.  Everyone seemed normal.  Cute girls smiled.  Yet there were few signs of modern German life as a Westerner might understand it; it was as if I had stepped into an alternative science fiction universe.  The Vietnamese ran the street markets and Russian still mattered.  

In 1999 I heard an emotional performance of Fidelio there and most of the audience cried.

I like spending time in Berlin.  But I am never sure I like Berlin itself, West or East.  Berlin is Germany being imperial.  Berlin is Germany looking toward the east.  Today Berlin is Germany pretending it is normal, while not yet having a new identity.  Here is Kurt Tucholsky (in German) on Berlin.  Here is a silly quotation about Berlin:

“Berlin combines the culture of New York, the traffic system of Tokyo, the nature of Seattle, and the historical treasures of, well, Berlin.”

Here is the Berlin Sony Center.  Here is the Reichstag.  Here is the Jewish Museum.  Here is Knut, from the Berlin Zoo.

Assorted links

Tyler Cowen

1. Photos from inside a Colombian prison.

2. How to increase altruism in toddlers?

3. Soviet mathematics as pure status competition.

4. How people count money, across culture (video).

5. Real vs. placebo coffee: people don't know if it's decaf.

High-speed rail fact of the day

Tyler Cowen

American Intercity rail service is slower today than it was in the 1940s.

Here is the full article, by train expert Mark Reutter.  It is a good look at some of the obstacles facing a successful high-speed rail program.

How short a time horizon is needed to motivate catch-up growth?

Tyler Cowen

A few centuries ago, the ratio between the per capita income of the richest country and poorest country was maybe five to one.  Today it is maybe one hundred to one.

The classic example of economic catch-up is given by East Asia in the mid-twentieth century, starting with Japan.  In those days it was possible to obtain near-parity with the West in about thirty to thirty-five years.  In other words, as a young man you could see near-parity before you retired and you could see near-parity for your grandchildren.  You could see your children making it halfway there, even before they are entering the workforce.

What if, in the future, for the remaining poor countries, the West (and East Asia) is so rich that catch-up takes seventy years?  One hundred years?  Will any poor country be bothered?  Won't it all seem too far off to be worth the trouble?  (Catch-up growth takes lots of hard work and savings and sacrifices of previous social norms.)  Or do you believe in a technology-transfer Solow model where the maximum possible rate of catch-up growth keeps on growing?  One hundred years from now, will it be plausible to imagine catch-up growth of twenty or thirty percent a year?

What's actually in the health care bill

Tyler Cowen

Here's a new blog devoted to that topic.

*The Art of Not Being Governed*

Tyler Cowen

The subtitle is An Anarchist History of Upland Southeast Asia and the author is James C. Scott of Yale University.  Here is a summary from the Preface:

...I argue that the [Southeast Asian] hill peoples are best understood as runaway, fugitive, maroon communities who have, over the course of two millennia, been fleeing the oppressions of state-making projects in the valleys -- slavery, conscription taxes, corvée labor, epidemics, and warfare.  Most of the areas in which they reside may be aptly called shatter zones or zones of refuge.

Virtually everything about these people's livelihoods, social organizations, ideologies, and (more controversially) even their largely oral cultures, can be read as strategic positionings designed to keep the state at arm's length.  Their physical dispersion in rugged terrain, their mobility, their cropping practices, their kinship structure, their pliable ethnic identities, and their devotion to prophetic, millenarian leaders effectively serve to avoid incorporations into states and to prevent states from springing up among them.  The particular state that most of them have been evading has been the precocious Han-Chinese state.

Highly recommended, this is a book Gordon Tullock would love.  So far it has received surprisingly little publicity but it strikes me as essential reading about Afghanistan as well.  Here is a much earlier Crooked Timber post on Scott.

Assorted links

Tyler Cowen

1. The vote to defund political science: how it went.

2. Jason Kottke doesn't read books anymore.

3. "Food rewards obsessiveness," the best eater in the United States.  The full article is gated (the link offers only an excerpt), so buy the 9 November New Yorker.  I don't usually link to gated material of this kind, but this was one of the three or four best magazine pieces I'll read in a year.

4. Why Buffett bought that railroad.

5. Weird stuff McDonald's sells around the world.  In the Philippines it is "spaghetti soaked in sugar."

6. Fruitless endeavors, or not?: translating works of literature into games of chess against each other, using a computer program.

7. Were the Neanderthals just unlucky?

8. Françoise Sagan: an appreciation.

Why it's harder than before to get into your favorite college

Tyler Cowen

Caroline Hoxby reports:

This paper shows that although the top ten percent of colleges are substantially more selective now than they were 5 decades ago, most colleges are not more selective. Moreover, at least 50 percent of colleges are substantially less selective now than they were then. This paper demonstrates that competition for space--the number of students who wish to attend college growing faster than the number of spaces available--does not explain changing selectivity. The explanation is, instead, that the elasticity of a student's preference for a college with respect to its proximity to his home has fallen substantially over time and there has been a corresponding increase in the elasticity of his preference for a college with respect to its resources and peers. In other words, students used to attend a local college regardless of their abilities and its characteristics. Now, their choices are driven far less by distance and far more by a college's resources and student body. It is the consequent re-sorting of students among colleges that has, at once, caused selectivity to rise in a small number of colleges while simultaneously causing it to fall in other colleges. I show that the integration of the market for college education has had profound implications on the peers whom college students experience, the resources invested in their education, the tuition they pay, and the subsidies they enjoy. An important finding is that, even though tuition has been rising rapidly at the most selective schools, the deal students get there has arguably improved greatly. The result is that the "stakes" associated with admission to these colleges are much higher now than in the past.

Here is one summary of the paper.  The ungated version is here.  Note that the incomplete nature of globalization for higher ed means this process still has a long way to run.

By the way, does this logic also apply to romance?  To really good sporting events?  To meeting and befriending celebrities?  Is this a more general prediction in a superstars model?

How to run a successful blog

Tyler Cowen

...They understand that public opinion matters...they understand that it’s a little harder to criticize someone after you’ve met him and he’s given you free cookies...they couldn't possibly have expected to change anybody’s mind, they understand that it’s better to talk to your critics than to avoid them. Waldman talks about some of the techniques used to make the attendees [readers] feel like they were being treated as special guests.

Whoops!  That's not advice for running a successful blog.  Those are James Kwak's comments on how Treasury tries to trick visiting bloggers.  We bloggers should know.  We give away lots of free stuff too, more than cookies even if it is sometimes sour rather than sweet.

Assorted links

Tyler Cowen

1. More lessons from the VHA.

2. Net use does not lead to social isolation.

3. IQ predicts portfolio diversification, at least in Finland.

4. Finish time variation in marathons, across time and across Boston and New York.

5. What your phone might do for you two years from now.

6. John Cassidy on the health care bill.

Talks at TEDx Midatlantic

Tyler Cowen

The talks are here, including one by yours truly on the limits of story-based thinking.  I was happy to meet Sonja Sohn.  One thing I learned from this experience is that if you follow professional entertainers, the "status rub-off" effect dominates the "suffer by comparison" effect.  The audience is primed to be sympathetic to you and many of them do not actually know which of the speakers are truly the high status people.  Perhaps the talk has to meet some minimum quality standard, or involve some minimum level of self-confidence, for the rub-off effect to hold.

Addendum: Arnold Kling comments.

Impressions from Treasury

Tyler Cowen

I will enumerate a few (you can trace other accounts here):

1. Tim Geithner is very smart and he was conceptually stronger than one might have expected.

2. I believe that the long, L-shaped hallways encourage "visits to offices" rather than hallway conversations; this is a speculation and perhaps some reader can confirm or deny it.

3. The quality of the painted portraits of Treasury Secretaries declines as time passes.

4. The free cookies were good and fresh, with a warm, fluid chocolate interior.  There was water to drink, but no mineral water.

5. For all their talk about outreach, etc. I believe at least a few of them wanted to hear from an outside source whether we think they are totally ****ed or not.  They heard. 

6. I worry less than did some of the other bloggers about the Treasury awareness of major economic problems going forward.  As governmental institutions go, Treasury has a real incentive to a) worry about the fiscal future, and b) worry about worst-case scenarios, including for financial institutions.  Their daily interaction with the bond market gives them a longer time horizon and a more economics-friendly perspective than most of their bureaucratic counterparts.  The problem is Congress.  For instance if someone at Treasury had a Yves Smith view of the banking system, they could not much act on it.

7. "You guys are a welcome change of pace," or something like that, remarked one senior Treasury official.  Although this was flattery, I believe it was meant sincerely.  They were also a welcome change of pace.

8. I asked one senior Treasury official which book, thinker, or economic theorist had most shaped his thinking about the financial crisis.  In the ensuing discussion the book Lords of Finance was recommended, though I could not say whether it was intended as a totally direct answer to the question as stated.

*You Are What You Choose*

Tyler Cowen

Scott DeMarchi and James T. Hamilton have a new book out and the subtitle is The Habits of Mind That Really Determine How We Make Decisions.  I take this to be the key paragraph:

It's called fast food, but your decision-making process in ordering a chicken sandwich can be incredibly complex.  In the following section, we describe six core habits of mind that affect how you make decisions in all areas of your life.  We call these TRAITS: Time, Risk, Altruism, Information, meToo, and Stickiness.

Here is a review and explication of the book.

The wisdom of Garett Jones

Tyler Cowen

Workers mostly build organizational capital, not final output. This explains high productivity per 'worker' during recessions.

That is from Twitter, the link is here.

Give them your tired, your poor, your huddled masses

Alex Tabarrok

Three countries that relied on low-skilled immigrant workers during good times — Japan, Spain, and the Czech Republic — have recently introduced voluntary return programs programs, popularly known as "pay-to-go" programs, in an effort to reduce the number of unemployed immigrants.

The programs established in 2008-2009 generally provide unemployed legal migrants with stipends that cover the cost of a one-way plane ticket "home." Some programs also offer migrants a lump-sum payment.

More here.

Assorted links

Tyler Cowen

1. Geithner meets with bloggers, and here: "We were offered a tray of cookies at the meeting, from which I abstained on principle. Those of you who think that's silly have no idea how much I like cookies."

2. Assuming a can opener, more on health care costs.

3. More on the multiplier (shout it from the rooftops).

4. Mandates don't stay modest.

5. Lane Kenworthy reviews Create Your Own Economy.

Do cellphones outnumber light bulbs in Uganda?

Tyler Cowen

Maybe so.

Hat tip goes to the always-impressive Rachel Strohm.

One path to the Georgist solution?

Tyler Cowen

Without bankruptcy protection, a city that couldn’t pay bondholders would be forced to raise taxes until it could. This happened to West Palm Beach, Florida in the Depression and property tax rates rose to 42.5 percent of assessed value.

Here is more (interesting throughout) and I thank Chug for the pointer.

Fifty Years of Economic History in one Figure

Alex Tabarrok

David Beckworth sums up a lot of recent economic history in one figure.

A few thoughts:  I wish Arnold Kling were correct that inflation is around the corner.  We could use some inflation to get back on track.  Nominal wages are simply not flexible enough to get the job done in short order and there is much to fear from populist backlash.

See also the link above for a remarkably similar figure for the OECD which illustrates the US's role of monetary hegemon. 

How to save The New York Times?

Tyler Cowen

I was reading an NYT account of its finances and came across the following:

More radical moves, like dropping the sports section, have been rejected because they would undermine the quality of The Times or would not save much money, Keller said.

"Or"?  Which is it?  It would not  undermine the quality of the paper from a Platonist point of vew; the NYT sports section isn't even as good as USA Today.  It's hard to believe the section is cheap to produce, but if it were that again would imply it wasn't so special.

Is Keller trying to say something like: "We also don't think the section is that good, but if we cut it we'll lose those subscribers who take only one paper and still demand minimum sports coverage"?  For these subscribers, is it not possible to rent out somebody else's sports section and stick it in the paper with a NYT label on it and maybe an extra article about the Knicks?