Wednesday, February 28, 2007

Tooth Tunes

"Put a rock band in your mouth, along with a dab of toothpaste, with Tooth Tunes, a $10 musical toothbrush from Tiger Electronics, a division of Hasbro. The theory is that two minutes of brushing is needed to give teeth a proper cleaning. So the brush is really a kind of timer.

The feeling is a bit eerie. The sound is transferred through the brush tip, into the teeth, and right into the inner ear, so you feel the music. Because volume is related to pressure, you can turn up the volume by applying steady pressure to your teeth. Unfortunately, you can also hear better when not brushing, which children can soon learn."

- That Tune in Your Head Could Be Your Toothbrush

Quote of the Day

"The fisherman on the Nile, the shepherd in the road and residents of so-called informal communities say their experiences navigating city life have taught them the same lessons: the government is not there to better their lives; advancement is based on connections and bribes; the central authority is at best a benign force to be avoided.

Everything is from God,” said Mr. Mezar, the fisherman, who was speaking practically, not theologically. “There is no such thing as government. The government is one thing, and we are something else. What am I going to get from the government?
-In Arab Hub, Poor Left to Their Fate

See also, Tom Palmer's op-ed- The 'Crime' Of Blogging In Egypt;
"We find it shocking that a university would turn a student over to the authorities to be prosecuted for voicing his views. The future of learning and science is at risk when dissenting views are punished rather than debated. Jointly, we have contacted Egyptian authorities to ask that they correct a clear mistake and release Soliman.

Egypt is a signatory to the International Covenant on Civil and Political Rights, which guarantees the "freedom to seek, receive and impart information and ideas of all kinds, regardless of frontiers, either orally, in writing or in print, in the form of art, or through any other media." The exceptions allowed are narrowly drawn and require proof of "necessity" before restrictions can be imposed. The posting of opinions on a student's personal blog hardly qualifies as a threat to national security, to the reputation of the president or to public order.

Soliman is not a threat to Egypt, but this prosecution is.

Whether or not we agree with the opinions that Abdelkareem Nabil Soliman expressed is not the issue. What matters is a principle: People should be free to express their opinions without fear of being imprisoned or killed. Blogging should not be a crime."

Interview with Tom Palmer on the issue

Lessons from the Crash of 1882

Working paper of the day- The Crash of 1882, Counterparty Risk, and the Bailout of the Paris Bourse by Eugene N. White

“The rapid growth of derivative markets has raised concerns about counterparty risk. It has been argued that their mutual guarantee funds provide an adequate safety net. While this mutualization of risk protects clients and brokers from idiosyncratic shocks, it is generally assumed that it also offers protection against systemic shocks, largely based on the observation that no twentieth century exchange has been forced to shut down. However, an important exception occurred in 1882 when the crash of the French stock market nearly forced the closure of the Paris Bourse. This exchange's structure was very similar to today's futures markets, with a dominant forward market leading the Bourse to adopt a common fund to guarantee transactions. Using new archival data, this paper shows how the crash overwhelmed the Bourse's common fund. Only an emergency loan from the Bank of France, intermediated by the largest banks, prevented a closure of the Bourse.”

Excerpt from the conclusion;

The Paris Bourse just avoided a complete collapse in 1882. The general decline in the market ruined many traders and, in turn, destroyed some brokers, weakening the rest. Not only was the margin demanded of clients insufficient to cover losses from the crash, but the common fund was exhausted and no quick assessment of the solvent brokers was possible. Thus the worst case scenario for contemporary futures markets was played out on Europe’s second largest exchange in 1882. Fortunately, the Bank of France recognized the danger of an expanding liquidity crisis and step in to provide credit to the market, acting appropriately as the “insurer of last resort.” The Bank of France was careful to distinguish this shock as a systemic one, compared to the crash of the gold stocks, where losses did not threaten the liquidity of the financial system and hence did not require intervention. Its prompt action in 1882 may have limited contagion from the crash, explaining why it did not reverberate more strongly beyond France’s borders.”

*The Chart above from NYT- Wall St. Tumble Adds to Worries About Economies

The Highest Price Ever: The Great Seat Sale of 1928-1929 and Capacity Constraints
How Vichy France Paid for its Own Exploitation
A factual account of the functioning of the nineteenth-century Paris Bourse

The Mighty Bee

"A Cornell University study has estimated that honeybees annually pollinate more than $14 billion worth of seeds and crops in the United States, mostly fruits, vegetables and nuts. “Every third bite we consume in our diet is dependent on a honeybee to pollinate that food,” said Zac Browning, vice president of the American Beekeeping Federation.

The bee losses are ranging from 30 to 60 percent on the West Coast, with some beekeepers on the East Coast and in Texas reporting losses of more than 70 percent; beekeepers consider a loss of up to 20 percent in the offseason to be normal."

- Honeybees Vanish, Leaving Keepers in Peril

Do you know China's biggest export?

Read the SPIEGEL article to find out.

The Occupation of Iraq

Iraq Podcast- Ali A. Allawi, senior adviser to the Prime Minister of Iraq on The Occupation of Iraq - Winning the War, Losing the Peace

IMF-World Bank Cooperation

"The International Monetary Fund should stop offering long-term finance to developing countries, leaving the World Bank to be the global development agency, a high-level independent committee reported on Tuesday.

In a hard-hitting report on the lack of collaboration between the two international financial institutions, a six-strong committee concluded that the fund had spread its wings too far over poor countries, its work overlapped with the World Bank and that it should refocus its efforts on macroeconomic areas where it had greater expertise.

“The fund’s financing activities in low-income countries is an area where it has moved beyond its core responsibilities and into activities that increase its overlap with the world of the bank,” the report said, blaming the IMF for tramping on World Bank turf.

“The criteria for fund financing in low-income countries based on the concept of ‘protracted balance of payments need’ is so vague as to be difficult to distinguish from development finance in practice,” the report added.

- IMF told to stay away from World Bank’s turf

What does Satan invest in?

"Satan's Portfolio will track the perfomance of the stocks which Mephistopheles is proud to put his money into, namely, companies who benefit from suffering, death, war, tobacco, nutrasweet and fraud."

Via FP blog

Podcast of the Day- Teacher Quality

"It's a whiteboard jungle out there as educationalists and economists haggle over the surest way to get the best out of our kids. One proposal being considered is more money for teachers whose students get the best test results. The status quo is not an option, and teachers unions are in a difficult position." Listen to the podcast,here's the transcript.

Conference on ‘The Economics of Teacher Quality’
On merit
"Will merit pay for public school teachers lead to better academic performance by students? I don’t know. So far the results are inconclusive."

The Market for Teacher Quality

Alex Barthel: are tertiary students competent in English?
"Does recently published research by demographer Dr Bob Birrell, from Monash University's Centre for Population and Urban Research, tell the whole story? The research has found that one third of international students who received permanent residency here after graduating from an Australian university don't have enough skill in English to be awarded a place in an Australian university, let alone manage a professional job here."

Camden Schools Testing Controversy

The Least Bad is the Enemy of the Good - Thoughts on Education in Finland

Tuesday, February 27, 2007

Pricing Transparency in Healthcare

“Patrick Fontana twisted his left knee last spring while hitting a drive down the fairway on a golf course in Columbus, Ohio. But what really pained him was the $900 bill for diagnostic imaging ordered by his doctor.

Mr. Fontana, a 42-year-old salesman, has a high-deductible health plan coupled to a health savings account. Since he was nowhere near meeting his deductible, he was on the hook for the entire bill.

So he did something that insurance companies routinely do: he forwarded the bill to a claims adjuster, in this case My Medical Control, a Web-based company that reviews doctor and hospital bills for consumers.

After concluding that Mr. Fontana was not getting the best possible price, the company’s representatives called the imaging facility and demanded a lower one, promptly saving him $200 — minus a 35 percent collection fee.

“I asked before I went in to the clinic how much it would cost, and they just will not tell you,” he said later. “I didn’t know until I got the bill, and at that point I figured I had nothing to lose.”

The savings are possible for one reason: medical care is often priced with the same maddening, arbitrary opacity as airline seats and hotel rooms.

“The average provider — doctors or hospitals — has between 5 and 100 reimbursement rates for the exact same procedure,” said Timothy Cahill, president of My Medical Control ( “A hospital chain with multiple locations may have 150 rates for the same procedure. Consumers don’t know this.”...

Over the next decade, health care spending in the United States will double, to more than $4 trillion a year, a fifth of the gross domestic product, according to the federal Centers for Medicare and Medicaid Services. ..

Some critics say these moves toward pricing “transparency” are largely symbolic, an effort to divert attention from the real causes of health care inflation by placing the onus on the consumer with vague talk of “empowerment” and “choice.”

It’s not consumer behavior that is driving rising medical costs in the U.S.,” said Robert G. Evans, a health care economist at the University of British Columbia. “It is the folks on the supply side, the doctors and hospitals.”...

Extrapolating from federal Medicare data, Vimo (, a small Web start-up in Mountain View, Calif., tries to estimate the fees negotiated by insurers for a variety of hospital procedures.

While the price for a cornea transplant at Wills Eye Hospital in Philadelphia is an estimated $15,000, for example, the reimbursement rate negotiated by insurers is likely to be closer to $4,700, according to the Web site..."

- Bargaining Down That CT Scan Is Suddenly Possible

Insulation vs Insurance
The Five Big Questions about Health Care
Healthcare related posts at EconLog
Premium Medicine, Illustrated
The Future of Health Care Policy
Who Wants Health Insurance?

Cost Insulation or Health Insurance?
"Rethinking Healthcare Spending,"
Medicare Meets Mephistopheles (Cato Book Event)
Crisis of Abundance: Rethinking How We Pay for Health Care (Cato Book Event)

Databases on Regulation

Privatization Database
This site provides information on privatization transactions of at least $1 million in developing countries from 2000 to 2005. Search transactions by country, region or sector for a particular time period or for the entire period covered in the database.

Small, and Medium Enterprises Database

Infrastructure Contracts & Licenses Database

The Doing Business Law Library

Above reflects the comparative advantage of the World Bank and what it needs to do more.


A Japanese lesson for China - Larry Summers
"The definitive history of Japan's dismal decade has yet to be written. But most observers would agree that key elements included the bursting of stock market and land bubbles, the resulting problems in the financial system, the collapse of aggregate demand as banks stopped extending credit and the difficulty of moving from export-led growth to domestic-led growth once consumer and business confidence was lost."

A Brave New Wikiworld- Cass R. Sunstein
"Of course, collaborative projects can go badly wrong. Pranksters have altered Wikipedia entries to say that Tony Blair's middle name is "Whoop-de Do"; that David Beckham was a Chinese goalkeeper in the 18th century; that the golfer Fuzzy Zoeller had abused alcohol and drugs; and that John Seigenthaler, a respected journalist, was thought to be involved in the assassinations of both Kennedys (before absconding to the Soviet Union).

The falsehoods about Zoeller and Seigenthaler were no laughing matter, and more serious mistakes, endangering reputations or causing financial losses, are possible. Anyone can vandalize an encyclopedia that "anyone can edit." No less than stock prices, prediction markets may be subject to manipulation. And in medicine and biotechnology, as elsewhere, intellectual property law may be needed to provide adequate incentives for innovation.

But the track record of the new collaborations suggests that they have immense potential. In just a few years, Wikipedia has become the most influential encyclopedia in the world, consulted by judges as well as those who cannot afford to buy books. If the past is prologue, we're seeing the tip of a very large iceberg."

A First Lesson in Econometrics

The Best Free Software

Obituary for a Beautiful Mind
"Experience has shown that in most situations, it is possible to tell a game-theoretic story to fit almost any possible outcome. Although this point is only occasionally acknowledged in the formal literature, it is much more widely accepted in informal discussion"

Is "23" an interesting number?

Religion, Government, and Civil Society

Is an Economist Qualified To Solve Puzzle of Autism?


Discounting the future, yet again

The Science and Economics of Water Shortage- Richard Posner

Sorority signals

27 Planeloads of Cash over Baghdad

Who in their right mind would send 360 tons of cash into a war zone?”

An economist, of course!

"In the first stage, the United States would pay Iraqi government employees and pensioners in American dollars. These were obtained from Saddam Hussein’s accounts in American banks, which were frozen after he attacked Kuwait in 1990 and amounted to about $1.7 billion. Since the dollar is a strong and reliable currency, paying in dollars would create financial stability until a new Iraqi governing body was established and could design a new currency. The second stage of the plan was to print a new Iraqi currency for which Iraqis could exchange their old dinars.

The final details of the plan were reviewed in the White House Situation Room by President Bush and the National Security Council on March 12, 2003. I attended that meeting. Treasury Secretary John Snow opened the presentation with a series of slides. “As soon as control over the Iraqi government is established,” the first slide read, we plan to “use United States dollars to pay civil servants and pensioners. Later, depending on the situation on the ground, we would decide about the new currency.” Another slide indicated that we could ship $100 million in small denominations to Baghdad on one week’s notice. President Bush approved the plan with the understanding that we would review the options for a new Iraqi currency later, when we knew the situation on the ground.

To carry out the first stage of the plan, President Bush issued an executive order on March 20, 2003, instructing United States banks to relinquish Mr. Hussein’s frozen dollars. From that money, 237.3 tons in $1, $5, $10 and $20 bills were sent to Iraq. During April, United States Treasury officials in Baghdad worked with the military and the Iraqi Finance Ministry officials — who had painstakingly kept the payroll records despite the looting of the ministry — to make sure the right people were paid. The Iraqis supplied extensive documentation of each recipient of a pension or paycheck. Treasury officials who watched over the payment process in Baghdad in those first few weeks reported a culture of good record keeping.

On April 29, Jay Garner, the retired lieutenant general who headed the reconstruction effort in Iraq at the time, reported to Washington that the payments had lifted the mood of people in Baghdad during those first few confusing days. Even more important, a collapse of the financial system was avoided.

This success paved the way for the second stage of the plan. In only a few months, 27 planeloads (in 747 jumbo jets) of new Iraqi currency were flown into Iraq from seven printing plants around the world. Armed convoys delivered the currency to 240 sites around the country. From there, it was distributed to 25 million Iraqis in exchange for their old dinars, which were then dyed, collected into trucks, shipped to incinerators and burned or simply buried."

John Taylor interview (The Region)
"And good basic monetary theory came into play. How much of the new currency are people going to demand? How much new currency needs to be printed? And how fast would it be printed? We had to print so much currency that it took 27 747 planeloads to fly it into Iraq. It was printed at seven locations around the world. And then it had to be shipped to 250 distribution points around the country."

Lawmaker: U.S. sent giant pallets of cash into Iraq

Podcasts; John Taylor at Carnegie, Heritage and at a conservative podcast show.

Monday, February 26, 2007

Islamic Art

"Two years ago, Peter J. Lu, a doctoral student in physics at Harvard University, was transfixed by the geometric pattern on a wall in Uzbekistan. It reminded him of what mathematicians call quasi-crystalline designs. These were demonstrated in the early 1970s by Roger Penrose, a mathematician and cosmologist at the University of Oxford.

Mr. Lu set about examining pictures of other tile mosaics from Afghanistan, Iran, Iraq and Turkey, working with Paul J. Steinhardt, a Princeton cosmologist who is an authority on quasi crystals and had been Mr. Lu’s undergraduate adviser. The research was a bit like trying to figure out the design principle of a jigsaw puzzle, Mr. Lu said in an interview.

In their journal report, Mr. Lu and Dr. Steinhardt concluded that by the 15th century, Islamic designers and artisans had developed techniques “to construct nearly perfect quasi-crystalline Penrose patterns, five centuries before discovery in the West.”

- In Medieval Architecture, Signs of Advanced Math

Here's the original paper, Peter J. Lu and Paul J. Steinhardt “Decagonal and Quasi-crystalline Tilings in Medieval Islamic Architecture,” Science

Ethanol Fact of the Day

Owen tells us "grain required to fill a 25-gallon SUV gas tank with ethanol will feed one person for a year."

Demand for Ethanol May Hike Food Prices
The U.S. Department of Agriculture said in January that if corn prices rise by $1 a bushel, grocery shoppers should see the price of pork rise about 3 percent within a couple of years...

Pat Westhoff, an agricultural economist at the University of Missouri-Columbia, noted that 6 billion bushels of corn are fed to livestock each year. Even if th % qpice were to increase by $2 per bushel, the $12 billion increase in feed is little compared to what consumers spend shopping.

Remittances in Sub-Saharan Africa

"In 2005, remittances totaled US$188 billion—twice the amount of official assistance developing countries received.Remittances through informal channels could add at least 50 percent to the globally recorded flows"

New working paper from IMF- Impact of Remittances on Poverty and Financial Development in Sub-Saharan Africa;

Summary: This paper assesses the impact of the steadily growing remittance flows to sub-Saharan Africa (SSA). Though the region receives only a small portion of the total recorded remittances to developing countries, and the volume of aid flows to SSA swamps remittances, this paper finds that remittances, which are a stable, private transfer, have a direct poverty mitigating effect, and promote financial development. These findings hold even after factoring in the reverse causality between remittances, poverty and financial development. The paper posits that formalizing such flows can serve as an effective access point for "unbanked" individuals and households, and that the effective use of such flows can mitigate the costs of skilled out-migration in SSA.

Sending money home: a survey of remittance products and services in the United Kingdom
Financial Development and Economic Growth: Views and Agenda
Migration and Remittances : Eastern Europe and the Former Soviet Union
Global Economic Prospects 2006 -Economic Implications of Remittances and Migration

Understanding the Importance of Remittances

Migration in Eastern Europe and the CIS - Picking on the World Bank

IMF Survey

A new IMF Survey is out- contents below;

Tanzania is fourth country to agree to PSI with Fund

IMF quota reform a complex, two-year process

Reforms needed to sustain Latin American recovery: de Rato

Brazil’s challenge: boosting growth without triggering inflation

Postcrisis blues: how sovereign debt evolves at times of crisis
The Level and Composition of Public Sector Debt in Emerging Market Crises

IMF, World Bank urged to help fight global warming

From health care to VAT fraud, IMF research has varied focus

The Fear of Freedom: Politicians and the Independence and Accountability of Financial Sector Supervisors,

Public Pension Reform: A Primer,”

Collateral Damage: Exchange Controls and International Trade,”

Public Expenditure in Latin America: Trends and Key Policy Issues,”

VAT Fraud and Evasion: What Do We Know, and What Can be Done?

What Should Macroeconomists Know about Health Care Policy?

Podcast of the Day- Speaking Truth to Power

Seymour Hersh discusses Abu Ghraib and the Bush administration's shifting Middle East strategy (at American University in Cairo)

Visual Display of Medical Records

Tufte improves on quantitative display of patient medical records.
Via Thinking on the Margin

Quotes of the Day

"But politics is not about facts. It is about what politicians can get people to believe."- Thomas Sowell

"Politicians do what they do to stay in office." - quoted in a post by Russell Roberts

Assorted Religion

Raising the Titanic, Sinking Christianity?

Jesus: Tales from the Crypt

Advanced geometry of Islamic art

Poor Muslim-American Islamic-Investment Strategies
"If you are in the process of putting together $3 million to build yet another mosque in Houston (we already have around 80 mosques for a Muslim population estimated to be around 100,000!). Yes, while we do not have wealthy Muslims, we have some rich ones, so 20 or more people can get together and build such a mosque. But think of the opportunity cost: You can use those $3 million to endow six scholarships for Muslim children who get admitted to top universities but cannot afford to pay tuition. In twenty years, you would have helped 30 young members of the community graduate from the best universities to become successful scientists, engineers, etc. Some of them may even get some crucial patents and generate some serious wealth that can be invested to do even more good: sponsor more research that can help humanity, etc. Having enabled that growth of good deeds decade after decade, and century after century, one surely would have invested today's good deeds much more intelligently that just building another structure."

Infiltrating the extreme

Post 9 / 11, Islam Flourishes Among Blacks

Do “Later” Verses of the Qur’an Abrogate “Earlier” Verses?

Recalling the Historic Adversarial Relation Between Islamic Scholars and the State

Nation of Islam at a Crossroad as Leader Exits

The Economics of Religion

The 'Religion' of Shakespeare
The greatest English playwright is still one of the most mysterious people. He may or may not have been a closet Catholic, and the relationship of the actor's life to his writing is not reconcilable, according to historian William Rubinstein.

The Return of Magic
Just when we thought we were getting more sophisticated, educated, and scientifically aware, magic has stepped off the pages of fairytales and into our lives. Voodoo, hoodoo and Santeria attract middle class followers and simple acts of coincidence are regarded as cosmic synchronicities. Christine Wicker talks to werewolves, vampires, dragons, fairies and hoodoo masters across the USA and discovers the resilience of her faith, and much more.And David Frankfurter joins us to discuss the mythology of evil

The Lost Treasure of Solomon's Temple

Church Agencies and gay adoption

Anti-Zionism and Anti-Semitism, Part 1 and Part 2

What's the Persian for 'liberal'?

The examined life

The Catholic Origin of Everything, Pt 1 and Pt 2

The Contemplative Life

Tomkat, aliens & Scientology: hard facts & science fiction…

India Poised

Interesting article from NYT on the changing nature of the Indian job market;

"Until recently, many Indian families would have frowned on the idea of a young woman dressing in a short skirt and serving strangers on a plane. But a rapidly expanding economy has helped to transform the ambitions, habits and incomes of India’s middle class in ways that would have been unimaginable just a generation ago, not least for young women...

Once entirely dependent on famous British-era railways, Indians are traveling by air more than ever before, so much so that last year, according to government figures, passenger traffic grew by a whopping 50 percent. The Civil Aviation Ministry projects growth of at least 20 percent a year for the next 10 years.

Four private carriers have started flying in just the past two years, doubling the number of private airlines. One headhunting firm estimated that India would need 40,000 cabin crew staff members in the next three to four years to meet the demand. Starting salaries are in the range of $500 a month, an astounding amount for a high school graduate, which is generally the educational prerequisite for a cabin crew position...

Frankfinn, which opened its first training center in 2003 in the commercial capital, Mumbai, formerly Bombay, has 65 centers today, with nearly 15,000 students. At $200 a month, the roughly 12-month course at Frankfinn is costly, by Indian standards. There is no guarantee of a job at the end of the course.

Training includes grooming and communication skills, along with swimming, first aid, and serving cocktails. It also includes a week of sitting in a hulk of an ancient Airbus, built sometime in the early 1970s, long before most of Frankfinn’s students were born..."

A five part documentary from BBC Radio- India Rising - New Wealth, India's Heart of Darkness, TV Nation, Can it all Hang Together?, India Rising Debate

The Hijras of India ;
This is the story of around one million people in India who, in the eyes of the society at large, have no real identity. The story of those who describe themselves as 'transgender'

Walk to Wisdom
Peter Day treks through Uttar Pradesh on a Shodh Yatra (Journey of Discovery) with Professor Anil Gupta of the Indian Institute of Management.

A discussion with Simon Long, South Asia bureau chief of The Economist
“The extraordinary wealth of English-speaking, technically adept graduate talent…has been the foundation of [India's] success in the past. But now that resource is beginning to run out, as it were—soon India will face a shortage there—and to find work for the far more significant portion of the Indian population that is not English-speaking, has not been to college, and works at the moment in the fields or is redundant, India needs to turn, in my view, to labour-intensive manufacturing.”

Mixing up a smash hit in Mumbai

India's economy- India on fire

Four outstanding recent books

Sunday, February 25, 2007

Too much hype about Microfinance

To have money is the result of economic achievement, not its precondition.”- Peter Bauer

A new study from Cato well worth a look- A Second Look at Microfinance: The Sequence of Growth and Credit in Economic History;

"History—the history in the “north” of formal and informal credit use for business investment, and the history of formal and informal credit use for consumption—has a lot to teach us about the credit-for-everybody notions of microfinance. Its lessons might bring our expectations of microfinance more into line with reality. For the economic history of the rich nations strongly suggests that

• earlier forms of microcredit never played a significant role in business start-up or small business development,
• the first efforts at democratizing financial services were almost entirely savings and “thrift” based,
• economic development in fact came before (or at best alongside) the movements to democratize financial services, and
• when credit for the poor did come along, it followed the savings movement and developed almost entirely in relation to consumption.

Build a mega seaport to revolutionise economy-Prof Yunus

Yunus port upgrade plan sparks Bangladesh protests
"Yunus says the port of Chittagong, which handles 80 percent of Bangladesh's foreign trade -- should be upgraded to a continental seaport in the nation's greater economic interest...
Yunus' plan to redevelop Chittagong drew immediate protests from political parties as well as rights and environment groups, who said the project would cut jobs and workers' rights and endanger national security.

The port lies close to the country's main naval base, an airport and other key installations, they said. Dhaka University Professor Serajul Islam Chowdhury said "protection and expansion of capitalism is the ultimate goal of Yunus as all of his projects are business-oriented and deeply linked to capitalism".

"If he becomes a redeemer, he will be one for the capitalists, not for the poor," Saturday's Daily Star quoted Chowdhury as saying.

"Yunus entering politics proves that poverty alleviation is not possible through micro-credit, rather it requires structural and legal reforms," said Anu Mohammad, professor of economics at Jahangirnagar University, near Dhaka.

"His mission has changed from poverty alleviation to opening the port to foreign control," he told reporters.

Parent’s Matchmaker’s Corner

"Tens of millions of China's young people are unmarried and too busy working in the new Chinese economy to look for spouses. In Shanghai, parents are lending a hand with a trip to People's Park. Scott Tong reports"

- Find your child a mate? It's a walk in the park

Via Sepia Mutiny- The Economics of Dating

Art for the Day- Modern Day Caspar David Friedrich

Waterfall, Mama Babies,” by Justine Kurland

Related; Caspar David Friedrich

About Books

Links about books;

Nothing is the new something
Shelley Gare is the author of a book called The Triumph of the Airheads - and the Retreat from Commonsense, published by Park Street Press. In today's program she talks about how many resources are wasted on services which are really quite unproductive

American Fascists: The Christian Right and the War On America

The Black Swan: read vs. unread books

The Science of Orgasm

Climate Change 2007: The Physical Science Basis: Summary for Policymakers

How to Talk About Books You Haven’t Read?

Why do men ignore nagging wives?

"A psychologist has found the answer to the age old question many women have about their husbands: " Why does her husband often seemed to ignore her requests for help around the house?"

New research findings now appearing online in the Journal of Experimental Social Psychology show that that people do not necessarily oppose others' wishes intentionally, but even the slightest nonconscious exposure to the name of a significant person in their life is enough cause them to rebel against that person's wishes.

"My husband, while very charming in many ways, has an annoying tendency of doing exactly the opposite of what I would like him to do in many situations," said Tanya L. Chartrand, an associate professor of marketing and psychology at Duke University's Fuqua School of Business....

Working with Duke Ph.D. student Amy Dalton, Chartrand and Fitzsimons have demonstrated that some people will act in ways that are not to their own benefit simply because they wish to avoid doing what other people want them to.

Psychologists call this reactance: a person's tendency to resist social influences that they perceive as threats to their autonomy..."

- Why do men ignore nagging wives? It's all science

Via Mind Hacks

Child pornography: harmful or harmless?

Controversial question for the day;

"A few weeks ago, Justice Tim Carmody awarded custody of an eight year old boy to the boy's mother . She's a stripper whose boyfriend happens to be one of Australia's worst child porn addicts.

The man had accumulated a stash of 350,000 images and 6400 videos. He's now on bail.

In his decision to remove the boy from his grandparents in Tasmania and dispatch him to his mother in Perth, Justice Carmody said the man was not a risk to the boy because his "interest is in young girls, not boys."

The court wasn't about making moral decisions, the Judge said. And the man had only downloaded the images - he hadn't actually molested any children."

Listen to one perspective on the issue.

My God is bigger than yours dept.

Rep. Virgil Goode at it again;

“I feel that radical Muslims who want to control the Middle East and ultimately the world,” he said, “would love to see ‘In God We Trust’ stricken from our money and replaced with ‘In Muhammad We Trust.’”

Note; Muslims do not worship Muhammad

Did Iran win the Iraq War?

Vali Nasr thinks Iran has gained most from the Iraq War;

“The new Iraq was supposed to be a model for the Middle East and a threat to Iran’s theocracy. Instead, Iran has emerged as the biggest winner of the United States’ war. There is little stability or democracy in Iraq to impress Iranians. Conjuring more fear than hope, the war did nothing to loosen the grip of clerical rule over the country. Iranians rejoiced in the fall of Saddam, who fought an eight-year war against their country that killed hundreds of thousands of people, many by chemical weapons. For Iran, the war in Iraq turned out to be a strategic windfall, uprooting Baathism and pacifying a nemesis that had been a thorn in its side for much of the 20th century. Iraq’s new Shiite—and in good measure, Kurdish—masters enjoy friendly ties with Iran. It was no coincidence that Iran was the first of Iraq’s neighbors to recognize its new government and to encourage Iraqis to participate in the political process introduced by the United States.

In the political vacuum that followed Saddam’s fall, Iranian influence quickly spread into southern Iraq on the back of commercial connections—driven by a growing volume of trade and a massive flow of Iranian pilgrims into shrine cities of Iraq—and burgeoning intelligence and political ties. Iran’s influence quickly extended to every level of Iraq’s bureaucracy, Shiite clerical and tribal establishments, and security and political apparatuses. The war turned a large part of Iraq into an Iranian sphere of influence, and equally important, paved the way for Iranian hegemony in the Persian Gulf. With the Iraqi Army gone, there is no military bulwark in the Persian Gulf to contain Iran’s expansionist ambitions.

Iraq also changed the context for U.S.-Iran relations. The Bush administration, having named Iran as part of an “Axis of Evil,” categorically ruled out dealing with it—even after the two countries successfully collaborated over the fate of Afghanistan after the fall of the Taliban in 2001. Regime change in Tehran was Washington’s mantra in 2002. Yet, since the war in Iraq began four years ago, Washington has balked at seriously engaging Iran—despite the impasse over the nuclear issue, Iran’s support for Hezbollah and Hamas, and virulent attacks against Israel. Instead, the United States has decided that the path to regional stability lies in confrontation and rolling back Iran’s regional influence. However, growing anti-Americanism in the Arab world, combined with the expanding U.S. military commitment to Iraq, will make it difficult for Washington to contain Iran easily. In short, Iraq has strengthened Iran and weakened the United States

Still, Iran’s gains are matched by new challenges. Tehran may no longer have much to fear from those who rule Baghdad, but the chaos brewing within Iraq’s borders makes Iranian rulers nervous. A failed Iraq—or worse, a warring Iraq infested with radical ideologies and ruled by violent militias—threatens Iran’s stability. Kurdish autonomy or independence could disturb Iran’s own delicate Kurdish situation. Arab capitals are abuzz with talk of the Iranian threat, raising the specter of an anti-Iranian regional alignment. The war in Iraq has turned Iran into the bugbear of the region. But that is ultimately a price Iran is willing to pay for winning in Iraq.”

Other winners according to a panel of experts include Al Qaeda, China, The Price of Oil, Old Europe, Moqtada al-Sadr, Samuel Huntington, Arab Dictators, UN and Israel- none in the panel mentions either Iraq or US.

Listen to a follow up discussion on the issue with Daniel Levy, Daniel Byman, Fawaz Gerges, Steven Tsang and Martin Wolf.

Scramble for Iraq's oil begins as troops start to pull out

Cole in Salon on British Troop Withdrawal

Macroeconomic Implications of War with Iran

Iraq's Civil War by James D. Fearon

Iraq’s Sophisticated Insurgency

Creative Maths

More here.

This and That

London’s congestion charge has taken a wrong turn by John Kay

The Truth About Beauty
by Virginia Postrel

Economic Turbulence

Paul Krugman: Colorless Green Ideas

Four new economics journals, or Devaluing the currency can be a good thing

Supply and Demand for Academic Journals

How to Keep America Competitive- Bill Gates

Job Security, Too, May Have a Happy Medium

Addicted to Spending

Headscarves - they're the new afros

The times they are a-changing for US fundamentalists- Will Hutton

A connected world proves no threat to tyrants

Dear Economist,
My stepfather is an alcoholic and spends his time and money on nothing but self-intoxication. This results in me experiencing great anger and wanting to do something stupidly aggressive.
My mother has less and less money to run the house. I no longer live there but will soon have to contribute money to prevent my mother entering a downward spiral of debt. How do I control an alcoholic who is content only with a bottle in his hand? How do I solve the financial problem? How do I stop myself becoming wound up by my stepfather’s actions?

A Secret History
"For Muslims and non-Muslims alike, the stock image of an Islamic scholar is a gray-bearded man. Women tend to be seen as the subjects of Islamic law rather than its shapers. And while some opportunities for religious education do exist for women — the prestigious Al-Azhar University in Cairo has a women’s college, for example, and there are girls’ madrasas and female study groups in mosques and private homes — cultural barriers prevent most women in the Islamic world from pursuing such studies. Recent findings by a scholar at the Oxford Center for Islamic Studies in Britain, however, may help lower those barriers and challenge prevalent notions of women’s roles within Islamic society. Mohammad Akram Nadwi, a 43-year-old Sunni alim, or religious scholar, has rediscovered a long-lost tradition of Muslim women teaching the Koran, transmitting hadith (deeds and sayings of the Prophet Muhammad) and even making Islamic law as jurists."

Coming Soon: 'The Number 24'

"Two Months Before the Mast of Post-Modernism" Recycled

What Kind of Economy? by James Galbraith

Betting With the House’s Money- Kenneth Rogoff

Inequality and Its Discontents- Robert J. Shiller

The Climate Change Revolution- Jeffrey D. Sachs

The Changing Climate On Climate Change- Joseph E. Stiglitz

Take a Deep Breath- David Warsh

Death and the salesmen

Saturday, February 24, 2007

Sunny Places for Shady People?

The Economist has a survey on offshore financial centres- does a good job of defending OFCs;

“Singling out tax havens as the culprits behind tax flight is out of date, for two reasons. First, the days when a Caribbean island or a European principality could flourish purely as a hiding place for illegal cash are fast disappearing, as our special report in this issue explains. Thanks to international campaigns against money laundering and illegal tax evasion, today's successful tax havens thrive not because of crookery, but because they are well run and well regulated.

Second, tax competition nowadays is mostly about big countries competing with each other. With capital mobile and economies increasingly interlinked, money will continue to move to places where costs, including taxes, are low. Preventing this means either harmonising taxes (a genuine threat to sovereignty) or clamping down on nations, even big ones, that have the gall to streamline their tax systems. This would be ruinous to trade and, in the end, futile: new low-tax centres would emerge as soon as old ones were squashed.”

Listen to audio interview with the author of the survey
Offshore Financial Centers (OFCs):IMF Staff Assessments
Offshore Financial Centers- The Role of the IMF
Tax Evasion, Tax Avoidance and Development Finance”, by Alex Cobham, Oxford, Working Paper No 129, September 2005
Capital Mobility, Agglomeration and Corporate Tax Rates: Is the Race to the Bottom for Real?
Why Have Corporate Tax Revenues Declined? Another Look”, by Alan Auerbach, University of California, December 2006
Further Reading

Thank You for Smoking!

I was having a look at the CBO’s Budget Options report (thanks to Mankiw). It has lot of interesting options of revenue and expenditure measures that are worth having a look-including the one below, increasing the Excise Tax on Cigarettes by 50 Cents per Pack;

“Tobacco is taxed by both the federal government and the states. Currently, the federal excise tax on cigarettes is 39 cents per pack; other tobacco products are subject to similar levies. In 2005, federal tobacco taxes raised a total of $8.7 billion, or about 0.4 percent of federal revenues. At the state level, excise taxes on cigarettes have more than doubled in the past seven years, from an average of 42 cents per pack to 92 cents. In addition, settlements reached with states’ attorneys general require major tobacco manufacturers to pay fees that are equal to an excise tax of about 50 cents per pack. Together, those federal and state taxes and fees boost the price of a pack of cigarettes by $1.81.

This option would raise the federal excise tax on cigarettes by 50 cents per pack. That increase would generate $4.3 billion in additional revenues in 2008 and a total of $26.6 billion through 2012. Because excise taxes reduce the tax base of income and payroll taxes, higher excise taxes would lead to reductions in income and payroll tax revenues. The estimates shown here reflect those reductions, as well as projected declines in cigarette purchases because of higher after-tax prices. Researchers estimate that each 10 percent increase in the price of cigarettes is likely to cause consumption to fall by 2.5 percent to 5 percent (probably more in the case of teenagers).

In general, the fact that taxing an item can cause consumers to buy less of it than they might otherwise can result in a less-efficient allocation of society’s resources—unless some of the costs associated with the taxed item are not reflected in its price. Cigarette use creates “external costs” for society that are not covered in pretax prices, such as higher costs for health insurance (to cover the medical expenses linked to smoking) and the damaging effects of cigarette smoke on the health of nonsmokers. Another problem with tobacco is that consumers may underestimate the harm they do to themselves by smoking or the addictive power of nicotine. Teenagers in particular may not be capable of evaluating the long-term effects of beginning to smoke. Thus, an argument in favor of this option is that raising tobacco taxes would reduce tobacco consumption—and thus its associated costs—by causing cigarette prices to reflect more of the total, long-term costs of smoking that would otherwise be borne by society as a whole and not considered fully by individual smokers.

No consensus exists about the size of smoking’s external costs, which makes it difficult to determine the appropriate level of tobacco taxes. Some analysts estimate that those costs are significantly lower than the taxes and settlement fees now levied on tobacco. Others maintain that the external costs are greater and that taxes should be raised even more. Technical issues cloud the debate; for example, the effect of secondhand smoke on people’s health is uncertain. Much of the controversy centers on what to include in calculating external costs—such as whether to consider tobacco’s effects on the health of smokers’ families or the savings in spending on health care and pensions that result from smokers’ shorter lives.

One argument against raising cigarette taxes is their regressivity. Such taxes take up a larger percentage of the earnings of low-income families than of middle- and upper-income families, for two reasons. First, lowerincome people are more likely to smoke than are people from other income groups. And second, the amount that smokers spend on cigarettes does not rise appreciably with income.

Some opponents of higher cigarette taxes note that the market has mechanisms that already make individual smokers, rather than society, bear many of the costs of smoking—for example, higher insurance premiums for smokers than for nonsmokers and the voluntary establishment of separate smoking areas in restaurants. In that view, such mechanisms and the penalty they exact for smoking eliminate the need to raise taxes in order to reduce costs to society.

Other opponents object to a tax that is intended to protect consumers from a supposed lack of foresight about the harmful effects of smoking. They argue that consumer protection is a specious justification for focusing on cigarette taxes when many other choices that people make—to use alcohol, consume some types of food, engage in risky sports, or work long hours at the office— can also cause unforeseen health or social problems.”


The File Splitter
The File Splitter is a free Windows program that will split any file into pieces of any size and later combine the pieces to form the original file.

Visuwords™ online graphical dictionary

I'm also looking for a freeware that could join paragraphs when I copy from acrobat (pdf) files to Word documents. Any help appreciated.

Our Kind of Black?

David Friedman on racial discrimination;

"The discussion reminded me of an argument Thomas Sowell offers in Ethnic America. Observing the success of West Indian immigrants to the U.S., he concludes that it provides evidence against both of the popular explanations for the current situation of Afro-Americans. It is evidence against the "official" explanation, which is racial prejudice, since to the eye the immigrants are at least as black as those already here. But it is also evidence against the view, surely widely held if not openly expressed, that the failure of Afro-Americans is due to genetic inferiority, since the West Indians are genetically "blacker," have a higher proportion of sub-saharan African ancestry, as well as visibly blacker. Sowell concludes that the difference is cultural, that the different nature of West African slavery resulted in a culture that produced individuals better able to succeed in our society than those produced by the culture that resulted from plantation slavery in the American south."

Tim Harford on a related issue;

"Senator Joe Biden did himself no favours when he “praised” his fellow presidential hopeful, Barack Obama, as “the first mainstream African-American who is articulate and bright and clean and a nice-looking guy”. It did not take long for the implication to sink in: does Senator Biden think that previous black candidates such as Jesse Jackson and Al Sharpton are inarticulate, dim, dirty or ugly?

Senator Biden has been charging around apologising to everybody, but what nobody really wants to admit is this: one of Senator Obama’s qualities is that he is handsome, and handsome politicians have a habit of getting elected. Economists have found evidence that voters prefer a pretty face in the UK, Australia, Finland, Germany and the US.

Researchers have to be careful when they observe simple correlations between subjective beauty and electoral success. Amy King and Andrew Leigh, who studied Australian elections, wondered whether the findings were driven by ageism or racism: perhaps (mostly white) voters see a black face and believe the face’s owner is both unattractive and unfit to govern. That sounds miserably plausible, but it is not driving the results: restricting analysis only to white politicians, or those in a narrower age band, produces similar estimates of a beauty premium."

Why did Paul Romer sell his idea?

Romer is selling his education company to Thompson Corporation;

“Aplia agreed to this deal because a large, privately held firm provides the perfect environment for carrying out the kind of innovation that has been at the core of our success. I started Aplia because I could see missed educational opportunities. To cite one example, instructors were eager to try experiments in their economics classes. Students enjoyed experiments, learned from them, and retained what they learned. But most instructors couldn't do experiments because the time cost in setting them up was too high.

We set out to fill this gap. Our investors let us spend far more than any professor or campus could devote to creating and perfecting experiments. We created a new kind of business and made it possible for hundreds of thousands of students to experience first-hand the power of supply and demand or the tragedy that comes from common ownership of a natural resource.

Aplia could do this because it was under private ownership, and because it was dedicated to education and committed to doing more than just selling textbooks. Being part of a much larger organization with the same ownership structure and the same dedication and commitment will let us do even more.”

Romer sells an idea
The Product Market and the Market for 'Ideas': Commercialization Strategies for Technology Entrepreneurs
Paul Romer Gets Filthy Rich

A Question on Art Appreciation

Can Atheists and Agnostics Really Appreciate Religious Art?

From Traffic Jams to Sex Problems

Dubai traffic jams are creating too much stress;

"There is no denying that sex is important to strengthen a couple's bond and keep the relationship going, says Dr Saoud Al Moulla, head of the psychiatric department at the Dubai Department of Health and Medical Services (Dohms).

"Sex plays a large role in love. It's important from a psychological and biological standpoint,” he said.

And anything that gives the final push to people psychologically predisposed to stress, depression and anxiety, such as being stuck in traffic for hours day in and day out, can cause people to lose their sex drive and desire, he added. "It's very draining mentally. Driving requires a higher function of the brain. When you keep stopping and starting, watching for someone to turn, to adjust for something and be alert [in traffic jams], it can be more exhausting than driving on a straight long road ,” he said.

In the long term, this can lead to problems in the bedroom, with men temporarily losing the ability to have or sustain an erection.

This condition is called psychogenic erectile dysfunction, according to Dr. Rosie King, a sexual health physician from Australia, who is attending the 3rd Pan-Arab Society for Sexual Medicine Congress in Dubai.

She said the Global Better Sex Survey, which she helped design, found that the ability to have an erection, and therefore sex, was very important to both men and women. "A tired man is not a sexy man. Being stuck in traffic saps people's energy," she added."

Friday, February 23, 2007

Critiques and Responses on World Governance Indicators

A new working paper from the World Bank, addresses some of the criticisms of its governance indicators;

Critique 1: Governance cannot be compared over time using the WGI since they are scaled to have the same global averages in every period

Critique 2: Governance cannot be compared across countries or over time with the WGI since the estimates for governance for different countries or periods may be based on different underlying data sources.

Critique 3: Changes over time in some of the individual indicators underlying the WGI aggregate indicators reflect corrections of past errors rather than actual changes.

Critique 4: The WGI are too imprecise to permit meaningful comparisons of governance over time or across countries

Critique 5: The individual indicators underlying the WGI are biased towards the views of business elites, and thus so are the aggregate indicators.

Critique 6: The data sources underlying the WGI are overly influenced by recent economic performance, and/or the level of development of a country -- rich, or fast-growing countries get better scores simply because they rich or growing fast.

Critique 7: The individual data sources underlying the WGI, particularly those from commercial risk rating agencies, make correlated errors in their assessments of governance, and thus are less informative about governance than they appear.

Critique 8: If some data sources make correlated errors, the aggregation procedure used by the WGI gives too much weight to such indicators.

On Measuring Governance: A Roundtable Discussion . Links to the discussion papers.
Aart Kraay on Measuring Governance (podcast)
Construct Validity
Are International Databases on Corruption Reliable? A Comparison of Expert Opinion Surveys and Household Surveys in Sub-Saharan Africa (in French)
Thomas, M.A. 2007. "What Do the Worldwide Governance Indicators Measure?"
Thomas, M.A. 2004. "Factoring in Governance."
Uses and Abuses of Governance Indicators
General Readings on Corruption and Governance
The Colonial Origins of Comparative Development: An Empirical Investigation
An analysis of the causes of corruption in the judiciary
Comparative international study of court performance indicators : a descriptive and analytical account

Quote of the Day

“Many economists – including Viner in the essay I have already quoted – have regarded Smith’s analysis of self-interest in The Wealth of Nations as inconsistent with his discussion of “sympathy” in his Theory of Moral Sentiments. In one of the best-known sentences from The Wealth of Nations, Smith points out “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest”. Smith, so the critics argue, failed to integrate the thinking in his two great works. It would not, to coin a phrase, be a sensible division of labour for me to enter the debate about whether his two great works form a consistent whole or represent two different and inconsistent viewpoints. Smith was a cautious and often obscure author. What we know of his theory of law and government is through the notes of two students who attended his lectures on jurisprudence. His failure to produce the projected third great work means that we do not know what institutions he thought would best support a market economy. But irrespective of what Smith thought, two things are clear. History is littered with failed attempts to order society without reference to individual incentives. And we understand the need for social institutions to constrain our actions.

Since Smith, economists have underplayed the importance of institutions, although there have been notable exceptions such as Douglas North and Ronald Coase. Over the centuries, theories of a competitive market economy have been refined. From these theories flows the remarkable result that, under certain conditions, the pursuit by each person of their individual self interest leads to a more efficient outcome for society as a whole. That work reached its apogee in the post-war work by Kenneth Arrow and Gerard Debreu. Those economic models are, however, silent about many of the institutions that are fundamental to the results.12 But without the appropriate institutions we tend to anarchy not prosperity. The challenge facing us is to design and maintain the right set of institutions or laws, and to abolish the unhelpful ones. And it is that challenge of institutional design to which I now want to turn….

As such, institutions must have, and be likely always to have, widespread support. Their design must meet three principles. First, in order to maximise the breadth and permanency of support, the objective should be as clear as possible. Second, the institution must have the appropriate tools and competence to meet those objectives and be held accountable for doing so. Third, for the institution to command widespread support, the design must reflect history and experience.”

- Trusting in Money: From Kirkcaldy to the MPC , The Adam Smith Lecture 2006 by Bank of England Governor Mervyn King

Why European economies lag behind the U.S?

“Further, I argue that the cause of that dearth of dynamism lies in the sort of "economic model" found in most, if not all, of the Continental countries. A country's economic model determines its economic dynamism. The dynamism that the economic model possesses is in turn a crucial determinant of the country's economic performance: Where there is more entrepreneurial activity--and thus more innovation, as well as all the financial and managerial activity it leads to-- there are more jobs to fill, and those added jobs are relatively engaging and fulfilling. Participation rises accordingly and productivity climbs to a higher path. Thus I see the sort of economic model operating in the Continental countries to be a major cause-- perhaps the largest cause--of their lackluster performance characteristics.

There are two dimensions to a country's economic model. One part consists of its economic institutions. These institutions on the Continent do not look to be good for dynamism. They typically exhibit a Balkanized/segmented financial sector favoring insiders, myriad impediments and penalties placed before outsider entrepreneurs, a consumer sector not venturesome about new products or short of the needed education, union voting (not just advice) in management decisions, and state interventionism. Some studies of mine on what attributes determine which of the advanced economies are the least vibrant--or the least responsive to the stimulus of a technological revolution--pointed to the strength in the less vibrant economies of inhibiting institutions such as employment protection legislation and red tape, and to the weakness of enabling institutions, such as a well-functioning stock market and ample liberal-arts education.

The other part of the economic model consists of various elements of the country's economic culture. Some cultural attributes in a country may have direct effects on performance--on top of their indirect effects through the institutions they foster. Values and attitudes are analogous to institutions--some impede, others enable. They are as much a part of the "economy," and possibly as important for how well it functions, as the institutions are. Clearly, any study of the sources of poor performance on the Continent that omits that part of the system can yield results only of unknown reliability.”

- Entrepreneurial Culture, EDMUND S. PHELPS

Germany's car industry- The big-car problem
The art of the possible;
"In its third annual “Going for Growth” report, published on February 13th, the OECD does its best to explain why reform meets resistance (a relatively simple question) and how opposition might be overcome (a fiendishly difficult one). The report looks at “structural” reforms—policies that, for example, ease entry into goods markets; cut the costs of firing and hiring; or relax barriers to foreign ownership. Better policies should help close the gap between the richest OECD countries (measured by GDP per person) and the rest.

These reports typically reserve most of their concern and criticism for the OECD's European members. But just now, the Europeans may be feeling rather pleased with themselves. The euro zone's economy grew by 3.3% in the fourth quarter of 2006, compared with a year earlier, its fastest pace for more than six years. Better still, some of this improvement has structural causes. Markets are freer than they were, several million jobs have been created and the euro area's natural rate of unemployment seems to have fallen by around a percentage point since its last upturn. Probably, though, the pick-up in growth is mainly cyclical. As Jean-Philippe Cotis, the OECD's chief economist, writes at the start of this week's report, a strong recovery has “ambiguous consequences”, because it makes reforms “both easier to implement and seemingly less necessary to undertake.”

Danish for All? Balancing Flexibility with Security: The Flexicurity Model
Italy's Economic Problems Under The Spotlight

Washington's Legacies

A bit about George Washington that I didn't know about;

"But for all of Washington's commendable belief in moderate alcohol use, he very much appreciated its utility. Esther White, a Mount Vernon archaeologist, told me Washington once lost a 1755 campaign for the Virginia House of Delegates because he didn't treat prospective supporters to a drink. Two years later, he rolled out 144 gallons of refreshment. He won with 307 votes, a return on his investment of better than two votes per gallon. He never lost another campaign.

During the Revolution, Washington was also convinced of the salutary effects of alcohol on his troops: It kept them feeling warm and upbeat and discouraged desertions. In 1777, he instructed the purchasing officer of the Continental Army that "there should always be a sufficient quantity of spirits with the army." He noted in a letter to John Hancock that the "benefits arising from moderate use of liquor have been experienced in all armies and are not to be disputed."

But when he became president, Washington found liquor to be at the center of the biggest rebellion his young government faced. Southwestern Pennsylvania, where a fourth of America's stills were located, rose up against a 7.5-cent tax on every gallon of whiskey that was imposed by Treasury Secretary Alexander Hamilton. Historian Bernard Weisberger notes that distillers were furious not so much at the tax but that "it allowed collectors to snoop in barns, closets and cellars" to catch evaders. The farmers formed their own army, marched on Pittsburgh and captured it. Washington had to send 15,000 militiamen to suppress what became known as the "Whiskey Rebellion."

I recommend all my friends going to Washington to visit the Mt. Vernon estate.

The Legacy of George Washington (podcast)

Women- The Most Wasted Resource in the World?

"Big changes have occurred in female employment over the last half century. The percentage of women working has risen dramatically. In both the developed and the developing world, more women have paid jobs than in the past. In developed economies, women produce just under 40% of official GDP (and a good deal more if their share of housework is added). By some reckoning, women’s increased employment in developed economies has added more to global growth in recent decades than China has. But women’s growing share of the workforce has a limit, and in some countries it has stalled. There is still a lot of scope for them to become more productive as they make better use of their qualifications. Women are the world’s most under-utilised resource. Too many are still excluded from paid work, and many others do not make the best use of their skills. The under-utilisation of women stunts economic growth. Is it inevitable that women’s participation in the labour force will level off? What is the social and economic trade-off between working and raising children? How can women’s resources be better utilised by societies?"

Listen to The Economist debate-“Women are the most wasted resource in the world

Are women economists still stick in the ghetto?
Women in the workforce- The importance of sex
Women analysts
A guide to womenomics

P.J. O'Rourke reads Wealth of Nations

A book presentation at Cato on O’Rourke’s book, On the Wealth of Nations;

“So the thing about Adam Smith that makes The Wealth of Nations so long was that Smith was every bit as willing as my crying child and I are to stray from strictly economic points. Now, for instance, here is Smith, 231 years ahead of himself, holding forth on why Angelina Jolie makes a discreditable, a discreditable, amount of money.

"There are, said Smith, "some very agreeable and beautiful talents of which the exercise for the sake of gain is considered a sort of public prostitution. The exorbitant rewards of players, opera singers, opera dancers, et cetera, are founded upon the rarity and the beauty of the talents and the discredit of employing them."

Now, that is the kind of stuff that makes the rest of the 900 pages of The Wealth of Nations worth reading, or at least some of them...

Anyway, all explanations start out brief. But pretty soon Smith gets tangled up in clarifications and gets intellectually kind of caught out, Dagwood style, carrying his shoes up the stairs of exegesis at 3:00 a.m., expounding his head off, while that vexed and crabby spouse, the reader, stands with arms crossed and slippered, tapping on the second floor landing of comprehension.

For example, in Book One of The Wealth of Nations, Smith is trying to explain how we determine value or price. And Smith says, "If, among a nation of hunters, it usually costs twice the labor to kill a beaver which it does to kill a deer, one beaver should naturally exchange for or be worth two deer."

And I am going, wait a minute. Can killing a beaver really be twice as hard as killing a deer? Deer can run like hell. We know where the beaver lives. It built the beaver dam. We have got the beaver's home address. And even if it does take twice as long to kill the beaver, you know, wading around in the beaver pond, smacking at Bucky's head with the flat side of the canoe paddle, who wants a beaver? It is not like this nation of hunters is wearing a lot of top hats. And after a long day of hunting, take your pick -- a juicy venison tenderloin or beaver stew.

And yet, there is this core of simple clarity to The Wealth of Nations. Smith argues three basic principles. And by plain reasoning and plentiful examples -- very, very plentiful examples -- he proves them. I mean, even intellectuals should have no trouble understanding Smith's ideas….

But by the time that Adam Smith was alive in the 18th century, ordinary people were beginning to have some control over their own destinies. And this did not please philosophers and priests and feudal big shots. And the fact that it did not please them pissed Adam Smith off. We think of irony as being this kind of modern tone. But I will tell you, Adam Smith was pretty good at irony himself. He said, "Is this improvement in the circumstances of the lower ranks of people, is it to be regarded as an advantage or as an inconveniency to society?" …

On the other hand, yes, it took years and years before any of the principles in The Wealth of Nations sunk in. And when the principles in The Wealth of Nations did sink in, it was mostly the wrong ones. Smith made the mistake -- if you do read the book, it is very interesting to turn to Book Five. There are five books in The Wealth of Nations. And Book Five is where Smith tries to take his economic principles and turn them into practical policy advice for the British Government of his time. And he is wrong about practically everything.

It is amazing. I mean, here is the smartest guy in the world, and he is wrong. And he is often wrong in several different ways, or he will be right and then argue against himself. And in there, he starts babbling about taxes. And he goes on to give the government all sorts of -- not advice really about taxes, but he just starts talking about taxes. And it is living proof, if ever anything were, that politics will turn anyone into an idiot. You can take the brightest person in the world. And if you get them to start speaking politically, they will turn into morons. And it happened to Adam Smith.

And the government looked at this. And no matter what advice you give to government, the result is always the same -- more government. It is like telling the dog to stay out of the garbage. All the dog hears is "garbage."

Download and listen to the podcast.

Another discussion with O'Rourke on the book.

Do Women Make Damn Good Leaders?

Molly Kinder, a graduate student at Harvard's Kennedy School of Government thinks so;

"On one hand, the ascent of so many talented women to presidential posts reflects an emerging openness to women (and minorities) that should rightly be heralded as a watershed shift in societal attitudes. But perhaps more importantly, that Ellen Johnson Sirleaf and Drew Gilpin Faust were chosen to lead war ravaged Liberia and unwieldy Harvard University reveals a far more salient reality: that women make damn good leaders and, importantly, different leaders. The fundamental contrast between Ellen Johnson Sirleaf and Samuel Doe and Charles Taylor, and the contrast in style between Drew Gilpin Faust and Larry Summers -- these are both evidence enough of this fact. Consensus building, accomplished, competent, pioneering and principled. (And, notably, all are mothers). Now that's a style of leadership that the developing world -- and my own country -- would do well from."

Helen Fisher on TEDTalks
"...discusses the natural talents of women, and their new significance in the modern world."

Carly Fiorina on Tough Choices
In this excerpt from her book presentation, as hosted by the World Bank Infoshop, former Hewlett-Packard CEO Carly Fiorina discusses business as a woman, globalization, and her career at one of the world’s largest technology companies

Women are the most wasted resource in the world

Thursday, February 22, 2007

Econometric Modelling and Climate Modelling

“Also, it is important to recognise that the scientific models follow a different modelling strategy from standard econometrics. The physics and quantitative chemistry constrain the model parameters, so specifying such models is not simply a curve-fitting exercise; in any case, the complexity of the models, the number of variables of interest that they try to explain, and the number of possible criteria by which to judge goodness to fit preclude choosing the value of uncertain parameters to obtain the best fit...

Assessing the merits of policies entailing different degrees of mitigation and adaptation requires the comparison of very different possible paths for economic development. This is a problem in non-marginal dynamic stochastic cost–benefit analysis quite different from the usual project appraisal approach to cost–benefit analysis that treats macroeconomic parameters such as growth rates and discount factors as given and known.

Let me explain this in the context of scenarios for future greenhouse gas (GHG) emissions. The key points are that, in the absence of an appropriate policy framework, first, global economic growth is likely to lead to rising GHG emissions and, second, incentives to develop and adopt less carbonintensive technologies are and will remain absent.11 This gives rise to a substantial risk of adverse impacts on economic growth and human development, particularly in developing countries, in the future. This risk should be reflected in the policy-maker’s growth modelling and approach to evaluating future benefits in the ‘business as usual’ scenarios. Generally, where extra benefits accrue in more difficult circumstances, they should have higher weight than on more attractive paths.

In the absence of policies to correct the externalities and market imperfections associated with the emission of GHGs and with innovation, markets cannot be expected to deliver efficient or desirable outcomes. Further, fossil fuels, particularly coal, are available in sufficient abundance to make the ‘business-as-usual’ scenarios feasible. Trajectories of GDP and emissions can, and should, be very different from ‘business-as-usual’. This could, we shall argue, be achieved with fairly modest net initial costs relative to ‘business-as-usual’ but very large benefits from avoided damage later in the century. Thus appropriate analysis must be non-marginal in the sense that it must be able to compare possible paths some of which perform very badly later in the century (i.e. those involving ‘business-as-usual’ now) with paths that take corrective action now and that allow continued growth.”

- Reply to Byatt et al. by Nicholas Stern, World Economics, Volume 7, Number 2 (April-June 2006)(emphasis mine)

A Battle Over the Costs of Global Warming
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Leonhardt gets Stern's discount rate wrong