Miss Landmine

Is this going a bit too far?

Law and Economics in GMU

I'm Going to Law School!

Is it that good a program? And is the The Robert A. Levy Fellowship in Law and Liberty open for international students?

Every City Needs a Myth

Archaeologists in Italy have unearthed caves where it is said that a wolf nursed Rome's legendary founders.

Applications of Benford's Law

Tim Harford;

Benford’s Law does not apply to every set of numbers - for example, it does not apply to post codes or national insurance numbers, which are assigned by bureaucratic processes. But all sorts of “natural” processes should produce Benford data. And since the units in which many quantities are measured are arbitrary (grams or ounces, miles or millimetres, dollars or yen) then converting to a different unit of measurement preserves Benford’s law.

As an example, think about an economy that is growing from an initial value of $10bn. It must grow by 100 per cent before the first digit changes, to $20bn. Then it need only grow by 50 per cent to reach the next digit at $30bn, which is likely to happen more quickly. To grow from $90bn to $100bn requires just over 10 per cent growth; but then to change the first digit back to two, at $200bn, requires that the stock grow by 100 per cent again. That sort of story suggests why Benford data may be common, although quite why Benford’s Law holds so widely is not yet settled.

Regardless, the pattern is a useful test of the plausibility of data. In the early 1970s, Hal Varian, now chief economist at Google, argued that if economic data satisfied Benford’s Law on the way into an economic model but not on the way out, it was worth taking a second look at the model itself.

And Mark Nigrini, an accountancy professor, found fame in the 1990s by using Benford’s Law to discover accounting scams, frauds and tax dodges, such as inventing invoices that were just under some threshold for managerial approval.

John Nye and Charles Moul, two economists at Washington University in St Louis, have now checked some basic macroeconomic statistics using Benford’s Law. They find that OECD statistics fit the law quite well, suggesting that GDP data should follow Benford. But African GDP data do not fit. It is not possible to say whether the anomaly is due to fraud or underfunded statistical offices. But it is a reminder that some data should come with a health warning.

Capitalism by the Guns

Deepak Lal writes

In my last article I had outlined how Russia has now joined the other former Communist countries China and Vietnam in embracing what can be called authoritarian capitalism. The economic prosperity this has brought is now being reflected in large foreign exchange resources accruing to the State, which are increasingly being used to buy shares including outright takeovers - of Western companies. The resulting role of sovereign wealth funds and State-controlled companies in the global economy is now being hotly debated. But the discussion has been vitiated by the reluctance of the participants (notably in the Financial Times) to get to the political heart of the matter by calling a �spade a spade�. This article attempts to fill this lacuna.

Authoritarian capitalism needs to be distinguished from corporatism. It combines varying degrees of economic freedom with political repression. The economic freedom is circumscribed by a major role for the State, with its close relationship with industrial enterprises and the banking system. In its economic lineaments it is a variant of the corporatist model pioneered by Bismarck in Germany in 1871, and adopted by the Meiji reformers in Japan with the promotion of the zaibatsu. After the Second World War, despite the attempt by the Allies to institute the alternative Anglo-Saxon form of capitalism, it was resurrected as the �social market� in Germany and in Japan with the keiretsu replacing the zaibatsu. This corporatism was exported to other Asian countries, most notably South Korea in the 1960s, with the rise of the chaebol.

But, despite being in bed with their favoured industrialists and bankers, the governments of the corporatist form of capitalism, nevertheless, saw themselves politically as very much part of the West. The unique feature of authoritarian capitalism is that the State openly seeks to use this corporatist form of capitalism for political purposes, namely to perpetuate authoritarian rule by commissars who until recently were in the business of burying the capitalist West. Despite their claims to have changed their spots, there must be the continuing worry that these States will use their growing economic power to subvert Western polities.

Similarly, the other source of worry concerns the role of sovereign wealth funds and State-controlled firms in the oil rich autocracies of West Asia (and anti-Western states like Venezuela). These are also countries in the grip of a variant of authoritarian capitalism. Once again the worry is not purely economic, concerning the most efficient deployment of their recently acquired wealth in the world economy, but that it could be used for anti-Western political ends, like the promotion of a worldwide Islamic jihad against infidels and the extinguishing of Israel.

Once the political aspects of the deployment of sovereign wealth by the countries of authoritarian capitalism are openly recognised, many of the calls for the international financial institutions (whose charters prohibit political discrimination) to lay down a code of good behaviour by sovereign wealth agencies seem to be misguided. A code must lay down some general and universally applicable principles. But it is difficult to see how these can be derived when the unstated purpose is to discriminate against some countries that are actual or potential political enemies. Thus consider some of the possible elements of a code.

The most draconian would be to ban all State-controlled entities from investing in Western capital markets or taking over their firms. Though it would have the advantage � at least for classical liberals � that it might force the privatisation of nationalised industries around the world, it would not necessarily lead the States of authoritarian capitalism to cease indirectly directing their seemingly �private� firms to fulfil their political objectives. Whilst at the same time it would make no sense that the State-controlled Norwegian or Alaskan sovereign wealth funds, for instance, could not invest in Western capital markets.

Nor would a ban on sovereign investment in 'strategic' industries make more sense. Apart from defence-related industries where foreign investment is already banned, should sovereign investment in a country's media or sensitive infrastructure like local gas and electricity distribution (which are natural monopolies) be banned? Once again, if the Norwegian or Alaskan sovereign wealth fund decided to buy Murdoch�s News Corp or my London gas distributor, not many sleepless nights would ensue in the West. But if Gazprom were to buy the local gas distribution networks in Europe (as it has envisaged) I would not sleep easily, as it might decide to cut off the supply to my gas stove, in Putin�s ongoing fight with the UK authorities to send his political enemy � the oligarch Boris Berezovsky � back to Moscow. The thought that Gazprom's newly acquired monopoly could be expropriated by the British state would offer me little comfort, as the entrenched rule of law in Britain (unlike in Russia) would prevent this.

Monetary policy in China and India

The Chinese macroeconomic policy framework by Eswar Prasad


Exchange rate pass-through in India
Ramkishen Rajan, George Mason University

Both papers from this conference

Immigration and Body Mass

Who knows other countries may follow New Zealand's lead;

New Zealand has added another cruel cut to the myriad indignities visited upon those of larger girth: anyone with a dangerously high body mass index (BMI) is likely to be denied permission to emigrate there. Richie Trezise, 35, a Welsh submarine cable specialist, was initially rejected because of a BMI of 42 (25 or higher is regarded as overweight); he lost weight, but his wife Rowan, 33, has not found it so easy. For months she has tried to slim down enough to join her husband; if she can't do it by Christmas, he will have to give up his job and come home.

The government's reasoning is simple: it will take only immigrants of an "acceptable standard of health", ie those "unlikely to impose significant costs or demands on New Zealand's health or special education services" (a requirement that raises the even more controversial possibility of applicants being turned down for mental health reasons). Obese people are more likely to suffer from heart disease, diabetes, strokes and high blood pressure; ergo, obese people are not allowed.

via Emirates Economist

Free Banking- Zimbabwe's Solution?

Steve H. Hanke writes;

Zimbabwe's hyperinflation is destroying the economy, pushing more of its inhabitants into poverty and forcing millions of Zimbabweans to emigrate. Since 1997, inflation has surged by 1,030,217%, while living standards (as measured by real GDP per capita) have fallen by 35%. In addition, hyperinflation has robbed people of their savings and financial institutions of their capital via negative real interest rates. This form of theft occurs, in large part, because the laws and regulations governing financial institutions (pension funds, insurance companies, building societies, and banks) force them to either purchase government treasury bills that yield only a small fraction of the current inflation rate or to make deposits at the Reserve Bank of Zimbabwe that pay no interest.

Not surprisingly, the value of the Zimbabwe dollar has been wiped out. The accompanying figure tells the devastating story— one that is ominously following the same plot as that taken by the mark during the great German hyperinflation of the 1920s. If all that destruction hasn't been painful enough, worse is yet to come. Private sector economists expect Zimbabwe's GDP to fall by 12% in 2007, and the International Monetary Fund projects that year-on-year inflation could exceed 100,000% by year-end.

As I conclude in my recent book, Zimbabwe: Hyperinflation to Growth, the most rapid and reliable way to stop hyperinflation in Zimbabwe is to replace central banking with a new monetary regime. This would signal a clean break with the practices that have created hyperinflation and give Zimbabweans reliable assurance that inflation will henceforth remain relatively low.

One monetary regime that would stop Zimbabwe's hyperinflation is free banking. Under this system, private banks issue notes (paper money) and other liabilities with minimal regulation. A completely free banking system has no central bank, no lender of last resort, no reserve requirements, and no legal restrictions on bank portfolios, interest rates, or branch banking. Free banking systems have existed in nearly 60 countries during the 1800s and early 1900s.

Zimbabwe had free banking from the time the first bank was established in 1892 until the government replaced free banking with a currency board in 1940. Zimbabwe's free banking was among the least restricted that ever existed. At the time, the country had only two commercial banks, the Standard Bank of South Africa and the Bank of Africa (later part of Barclays Bank). They issued notes denominated in pounds, and kept their privately issued pounds equal to the pound sterling—except during the First World War and for a few years afterwards, when the local pound floated along with the South African pound (the predecessor to the rand) against the pound sterling. Free banking ended in Zimbabwe not because it performed poorly, but because the government desired the profit from issuing notes.

Related;
IMF contributes to Zimbabwe's hyperinflation

Notes for Monetary Enthusiasts

A Backgrounder on Zimbabwe from Open Society

Watch this video before you comment;

Canada is catching up with US

Canadian income stages turnaround versus U.S.

Number of Canadians behind bars rises for first time in more than a decade

King Hussian -plucky little king

The Economist,2007
The Hashemite monarch was a brave, decent man. His efforts to end strife in the Middle East should be an inspiration for today's peacemakers

The Economist,1999

Westerners talked of him as a bridge between the Arab world and theirs. True, with his British education and manners, his British and American wives and his several foreign homes, he could speak to westerners in their own language. They felt safe and at ease with him. But basically he was an Arab tribal leader, concerned to keep his extended tribe together. Jordanians are now extravagantly mourning his death as the passing of a tribal father.

He had the authoritarianism, cunning and generosity of a tribal leader. Those who offended him were punished, but then forgiven: his ever-changing circle of advisers would include, most usefully, old enemies. He was approachable. He remained simple: there is a tale of Libya’s Colonel Qaddafi descending unexpectedly on him for dinner when Hussein had sent all his servants to bed for the night.

His manliness—his courage, closeness to his soldiers, his piloting skills, his motor-bikes—appealed to his followers. So did other macho qualities. His tribe had no trouble with him taking (one at a time) four wives: the first an intellectual whom he quickly packed off; the second, the English mother of the new king, Abdullah, a nice Betjeman girl whom he eventually grew out of; the third who died in a helicopter crash; his widow, Queen Noor, an American of Lebanese extraction, powerful and beautiful. Nor did they object to his roving eye for, say, pretty journalists, so long as such matters were conducted with decorum. There would be no Clinton saga for him...

The dangerous times continued. Egypt, under Nasser, tried to knock the young king off his throne. So, continually, did Syria, under Hafez Assad, now a gaunt mourner at the funeral. In 1967 Hussein made his one colossal mistake, joining Egypt and Syria in their war on Israel and, in the process, losing the West Bank and East Jerusalem. Some may consider his verbal support of Saddam Hussein in 1990-91 a second blunder. But was it? True, for a time Jordan lost its American and Gulf aid. But if Hussein had condemned Saddam, against the wishes of his tribe, he might have lost his kingdom.

He was not to repeat his 1967 bloomer. From then on, he remained in close, conspiratorial contact with almost all of Israel’s leaders. Before the 1973 war, he even warned Golda Meir, then Israel’s prime minister, of the Syrian-Egyptian plans of attack—but was not believed. In 1994 he signed an official peace with Israel. Israel claimed him as a friend and, in the interests of his kingdom, he was. But he was no friend to Binyamin Netanyahu, one of the publicity-conscious mourners. He has spoken out passionately against Mr Netanyahu’s Palestinian policy.

A book worth buying and on 'Teaching Stuff'

Imperfect Knowledge Economics: Exchange Rates and Risk by Roman Frydman & Michael D. Goldberg

but only when it's cheaper.

Reviews and Commentary on the book; The Economist, John Kay,Rodrik, Menzie Chinn, Mark Thoma , Econospeak

Related;
Michael D. Goldberg's Teaching Philosophy (italics mine);

A well-designed course of study in economics contains a balance between three components: 1) real-world issues; 2) theory; and 3) empirical evidence. The issues component provides the motivation for learning economic theory. This layer should be clearly and carefully developed in the first few weeks of the course. Clearly developing this issues component communicates to students what the goals are as budding scientists and what they will hopefully be able to understand by the end of the semester. Economic theory helps to shed light on the important issues. At each step in the development of theory, the instructor should refer back to the issues and explain how the theory just taught sheds light on these issues. The empirical component helps us to sort out which theories can be applied usefully to understanding real-world issues. My experience with economics classes, at both the undergraduate and graduate levels, is that the theory component is often large relative to the issues and empirical components. In such classes, the issues become theory related, e.g., are models with perfect foresight stable? In the end, students learn much theory, but have little idea of the meaning and relevance of what they have learned. In such situations, the material becomes merely “stuff” that students try to force into their heads. Nothing is more effective at killing curiosity and engagement on the part of students than teaching them stuff.

Musharraf defender of democracy in Pakistan?

According to Bush;

President Bush yesterday offered his strongest support of embattled Pakistani President Pervez Musharraf, saying the general "hasn't crossed the line" and "truly is somebody who believes in democracy."

Pakistan barred from Commonwealth
Can it make a difference

A Turkey Fact of the Day

Around 46m birds will be served up at the dinner table says the National Turkey Federation, a trade body. Turkey farmers also have reason for cheer. Americans each scoff 16.9lb (7.7kg) of turkey meat annually, up from 8.3lb in 1975. Production reflects this growing appetite: some 272m turkeys will be raised this year compared with 124m in 1975.

In Some Households, Every Day Is Turkey Day

Two weeks ago, Karen Oeh and her husband, Mike Balistreri, who live not far from Santa Cruz, Calif., adopted two turkeys that had been rescued after an airline shipping misfortune in Las Vegas.

“I am like a new parent,” said Ms. Oeh, 39. “I instantly, totally fell in love, and now I just want to stay home with them.”

How Mankiw did his PhD in 2 years

Mankiw writes;

Yes, I managed to earn a PhD in two years of residence at MIT. Here is how:

1. During my last year as an undergrad at Princeton, I took the standard graduate sequence in micro and macro. When I arrived at MIT, I was effectively a second-year PhD student.
2. After my first year at MIT, I went for a year to Harvard Law School, where I was more concerned about writing economics articles than being a diligent law student.
3. After the year in law school, I went to the CEA as a staff economist, where I worked for senior staff economist Larry Summers, who served also as an academic adviser. Because I worked on research between CEA tasks, when I returned to MIT for my second year, I had much of my dissertation already completed.

Why I Blog

Thanks, Chris for the comment.

As usual, it's like being a kid in a candy store. I'm awed by the volume of high-quality daily links in general. Thanks!

I grew up in a poor country starved for information and knowledge- no internet or hardly a decent book. Thank you all bloggers on this Thanksgiving.

P.S. Chris blog is one of the best rising development economics blogs around.

Imagining a Thanksgiving

A Happy Thanksgiving

The Tragedy of the Commons;

Every year around this time, schoolchildren are taught about that wonderful day when Pilgrims and Native Americans shared the fruits of the harvest. "Isn't sharing wonderful?" say the teachers.

They miss the point.

Because of sharing, the first Thanksgiving in 1623 almost didn't happen.

The failure of Soviet communism is only the latest demonstration that freedom and property rights, not sharing, are essential to prosperity. The earliest European settlers in America had a dramatic demonstration of that lesson, but few people today know it.

When the Pilgrims first settled the Plymouth Colony, they organized their farm economy along communal lines. The goal was to share everything equally, work and produce.

They nearly all starved.

Grand Challenge in Health

Grand challenges in chronic non-communicable diseases;

To develop the grand challenges, we used the Delphi method — the structured, sequential questioning of a panel, with controlled feedback, — to distil knowledge and build reliable consensus among 155 geographically and culturally diverse stakeholders, from 50 countries. We used the following definitions.

A 'grand challenge' was defined as a specific critical barrier that if removed would help to solve an important health problem. The intervention(s) it could lead to might be innovative and, if successfully implemented, would have a high likelihood of impact and feasibility.

Working Paper for the Day

Financial Linkages Between the U.S. and Latin Amercia: Evidence from Daily Data

Summary: Motivated by recent bursts of global financial market turbulence, this paper investigates the linkages between the financial markets in the United States and those of the seven largest Latin American economies, focusing on the impact of shocks originating in the U.S. stock, bond, and currency markets. After documenting that cross-country linkages were different in "tranquil" and "turbulent" times within our sample, we find that: (i) for stock markets, recent episodes of market turbulence stood out from preceding ones as they showed an increased sensitivity of Latin American markets to U.S. shocks, reversing a trend of weakening linkages; (ii) currency markets in Latin America exhibited a decrease in cross-market linkages with the U.S. during the last episodes of volatility, consistent with increased exchange rate flexibility in the region; and (iii) the external bond markets in Latin America remained on a trend of weakening linkages with U.S. corporate bonds, while they increased their sensitivity to movements in other emerging market bond markets.

Climate Change - Getting it Right

Another report - this time from Australia;

Chapter 4: Reviewing Stern - Lessons for Australia By Robert Mendelsohn
Although the Stern Review is sometimes cited as an authoritative account of the economics of climate change, it is more of an advocacy paper for aggressive short-term abatement than a balanced economic analysis. The Stern Review makes four assumptions to support capping greenhouse gas concentrations at 550 parts per million (ppm). First, it examines the cost of its preferred policy only against doing nothing at all. It does not consider more efficient policy alternatives. Second, it chooses a very low discount rate to try to hide the long lag between mitigation costs and climate benefits. Third, it exaggerates climate damages, looking at only the worstcase scenarios. Fourth, it takes a very optimistic view of the cost of abatement, assuming a rapid rate of prolonged technical change will make mitigation inexpensive. Consequently, the Stern Review is not a balanced assessment of the costs and benefits of climate change and the recommended policy of aggressive near-term abatement is most likely a terrible waste of resources. Australia’s Garnaut Climate Change Review should be careful to avoid these same biases.

Chapter 6: Climate change and India - A perspective from the developing world By Jyoti Parikh

The race is on to find a post-Kyoto international framework. Whatever replaces Kyoto will only be effective if it is undertaken as a parallel effort and not instead of the United Nations Framework Convention on Climate Change (UNFCCC), which has been painstakingly created. The UNFCCC has not only ensured the participation of a large number of countries year after year, but also has a framework that could be built upon and expanded with various programs, like a carbon emissions trading scheme. This paper discusses various alternatives for a post-Kyoto regime. It focuses on a three-tier system, a proposal that considers per capita global average emissions as a reference point. It also briefly discusses the Asia-Pacific Partnership on Clean Development and Climate (AP6), in which Australia is playing a leading role. These issues are discussed in the context of the developing countries, especially as they relate to their needs and capabilities. The paper ends with a look at some of the strategies and polices for carbon emissions reduction in India.

Chapter 7: The carbon tax - An alternative to carbon trading By Robert Shapiro

A solid consensus has emerged among scientists and most public officials around the world that emissions of greenhouse gases from burning fossil fuels, especially carbon dioxide (CO2), contribute significantly to climate changes which could have very serious, adverse effects. Since every industrialised nation produces these emissions they all need to be part of the global effort to control them. This paper examines the two most prominent strategies for reducing greenhouse gases: a global system of national caps on the emissions and tradable permits, modelled on the Kyoto Protocol, and global, harmonised, net carbon based taxes. It finds that cap-and-trade systems can achieve their emissions targets year by year, but will introduce significant additional volatility in energy prices. These systems also entail substantial administrative complexities and costs, and their emissions goals can be undermined by evasion and manipulation. Carbon taxes are less certain to achieve their emissions targets year by year, but their levels can be adjusted to minimise this deficiency. They are also easier and less expensive to administer, less vulnerable to manipulation and evasion, and provide more reliable incentives to develop and use alternative fuels and more energy-efficient technologies. Based on economic analyses and evidence, we conclude that carbon taxes are the more environmentally effective and economically efficient strategy for addressing climate change.

Chapter 8: Managing price and targets - Why a hybrid policy is better for Australia By Warwick McKibbin and Peter Wilcoxen

Promising to reach an emissions target on a precise timetable is a popular approach to climate policy – indeed it underlies the Kyoto Protocol. Despite its popularity, there are many problems with this strategy. A better approach is to specify a target but to allow costs to determine the speed at which the target is approached. This can be achieved using a hybrid of targets and emission fees. This paper summarises the targets and timetables approach to climate policy and how it is usually implemented in cap-and-trade permit markets. However, as a basis for domestic policy or for an international climate regime there are major flaws in this approach. We then present the McKibbin Wilcoxen hybrid approach and compare it to the approach proposed by the Prime Minister’s Emissions Trading Task Group.

Chapter 9: Castles in the ground - The prospects for carbon capture and storage By Peter Cook

Carbon dioxide emissions and atmospheric concentrations continue to rise. At the same time, projections of world energy demand indicate increasing use of fossil fuels, especially coal. Because of this, there is interest in using carbon capture and storage technologies as a mitigation option, particularly in Australia because of its dependency on fossil fuels for electricity generation and the importance of its fossil fuel exports. Capture options include post-combustion capture (PCC), integrated gasification combined cycle (IGCC) and oxyfuels combustion. Carbon dioxide can be stored in the ocean and in minerals, but by far the most likely option is storage in suitable geological locations. Australia appears to have abundant geological storage capacity, particularly in saline formations and to a lesser extent in depleted oil and gas fields. Australian capture and storage projects are planned for most states. Acceptance by the community will be dependent in part on cost, but confidence that the technology is safe will be crucial. This will require an effective regulatory regime and appropriate monitoring and verification. For capture and storage to play its part in reducing global emissions, we must aim at large-scale deployment by 2015–2020. Australia could become an early mover in the application of carbon dioxide capture and geological storage.

Islam by West for West

Islam, Slavery and Rape

101 Ways to Create Misunderstanding in this complex world

Assorted Podcasts Carnival

The enigma of Raymond Dart, the Australian discoverer of man's African origins

The nature of altruism
Researchers at the University of California, Berkeley, have studied what motivates people to be altruistic. They've particularly looked at competitive altruism, i.e. people competing to be generous, giving more to impress others.

Dr Egg and the man with no ear

The dangers of teaching philosophy

The Architecture of Diplomacy: Building America's Embassies

The political brain

In praise of elitism: Charles Murray

Creative Commons

Economic embrace: China and the US

Hypothetical: Regulators and feral lawyers
When lawyers are incompetent or dishonest, the regulators step in. But should their role include investigating allegations of bad lawyer behaviour?

A conversation with Don Stewart
This week, we revisit a conversation with a man who has spent most of his life fighting corruption. Don Stewart started his career as a police officer, then went on to be a barrister, a judge, a royal commissioner, and the founding chairman of the National Crime Authority.

Annapolis peace conference and the Jerusalem question

Either Or
Kurt Gerstein was a Nazi SS officer implicated in the gassing of Jews during World War II. A new play by Tom Keneally, Either Or, explores the moral dilemma encountered by Gerstein, who was an evangelical Christian.

Loving the Creator - the Muslims of Cairns


The Milosevic Trial: Lessons for the Conduct of Complex International Criminal Proceedings

The Animated Man: A Life of Walt Disney

Testing times for schools
There's a new kind of primary school coming -- ready or not. Bigger schools, different ways of learning, more special interest groups in class. Not just the three Rs and computers, but character and your place in society taught in all schools across the country, and a chaplain to help with behaviour and mental health.

The Media as Junkyard Dog: One Journalist's Journey From Secret CIA Prisons to the Walter Reed Scand

Sperling Says Clinton Has `Pro-Growth' View on Economy

Humphrey, Economist, Sees U.S. Moving To `Freer Trade'

Reinhart, Economist, Sees `Evolving' Fed Communication

China: growth and democracy
David Poole is an Australian academic who's just come back from six weeks teaching management theory in a provincial Chinese city. He shares his experiences on China, growth and the apparent move towards liberalisation.

Speaking of Music Again: Oliver Sacks

A Piano Master Class with Saleem Abboud Ashkar

Revitalising Australian parliamentary democracy

In Conversation: James Watson

Democracy in Burma, where now?
Dr Peter Ferdinand, director of the Centre for Studies in Democratisation, discusses the future of democracy in Burma after the violent put down of protests in the country.

THE PRELUDE
That poet was William Wordsworth and the poem he started writing was to be his masterpiece. It was The Prelude, an epic retelling of Wordsworth’s own life and a foundation stone of English Romanticism.

Keeping Us Afloat?

MoreOrLess
Tim Harford investigates the numbers behind the news; waiting lists, speed cameras, bird flu and binge drinking.

Kazakhstan Economy

Oliver Sacks, A C Grayling, Monica Grady and Robert Huxley

John Stuart MIll/Robert Nesta Marley

Pakistan and Romania

LoveBolly
Komal Nahata brings you all the latest Bolly news from Mumbai. Raj and Pablo review the soundtrack for Aamir Khan's new film Taare Zameen Par. Plus actor and comedian Rajpal Yadav chats to the boys, live from Mumbai.

Jihad and the Petrodollar

Quote of the Day

'I hope the time isn't far off when I shall be able to establish a regime based on the principles of Qur'an,'

That was allegedly told by Napoléon Bonaparte according to Aljazeera magazine.

I will leave it to Juan Cole for independent verification.

Information Asymmetry reversed

A Doctor’s Disdain for Medical ‘Googlers’;

Can a patient ever show up at the doctor’s office with too much information?

A doctor’s essay about medical “Googlers” — patients who research their symptoms, illness and doctors on the Web before seeking treatment — suggests they can. The report, which appeared in Time magazine, was written by Dr. Scott Haig, an assistant clinical professor of orthopedic surgery at Columbia University College of Physicians and Surgeons. He begins with a description of a patient he calls Susan, who seems to be clicking on a keyboard as she speaks to him on the phone. “I knew she was Googling me,'’ he writes.

Dr. Haig’s disdain for her information-seeking ways becomes quickly evident. He describes the woman’s child, whom she brings to the office, as “a little monster'’ and notes that the woman soon “launched into me with a barrage of excruciatingly well-informed questions.'’ Every doctor knows patients like this, he writes, calling them “brainsuckers.'’

100 dollar Laptop Microfinance

Sounds an interesting idea;

Accordingly, I urge you to provide for some way to connect OLPC donors with recipients, à la the Kiva microcredit program. With each machine having both a unique serial number and the inherent ability to connect with the net, I would imagine this would be technically trivial.

The Power of Survey Design

Unaids has finally read The Power of Survey Design, I guess.
U.N. Agency Denies Inflating Cases of H.I.V. Deliberately;

The lower figure is based on newer, more accurate surveys in India and several African countries. The costly, time-consuming household surveys made it clear that previous estimates, gleaned mainly from tests on women in urban clinics, were too high.

Dr. De Lay said that Unaids’s job was to give advice and monitor trends, and that its budget did not come from the money that has poured into the field recently to buy drugs and hunt for vaccines.

Also, he argued, “cooking this data would be almost impossible” because it is gathered by health ministries in each country and overseen by several agencies.

Behind the U.N.’s HIV Numbers;

India’s gyrating numbers shine a light on the questionable nature of earlier HIV estimates. The 5.7 million figure was based on tests of high-risk people: Primarily female sex workers, certain drug users and people attending neonatal clinics or clinics for sexually transmitted diseases. Despite the lack of a broader, nationwide sample, figures around five million were the basis for a U.S. government projection, in 2002, of 20 million to 25 million Indians with HIV by 2010. They also helped spur a $2.8 billion plan to fight AIDS in India, set to kick off just as the far lower — though still formidable — infection numbers were announced.

India’s population — 1.13 billion, about 380 million more than in sub-Saharan Africa — means this revision had the biggest effect on the numbers. But the difference between prior estimates, based on samples, and newer national estimates was no less dramatic elsewhere. National surveys in Kenya, Burkina Faso and Ethiopia also resulted in estimates that were half prior estimates, or less. Realizing that antenatal clinics are not representative of the broader population, UNAIDS will now be multiplying clinic HIV rates by 0.8 when extrapolating from them.

“The basic lesson we should learn from this is we should be careful about shooting from the hip without good data,” Gerhard Heilig, chief of the U.N.’s estimates and projections section, told me.

UNAIDS responds to a letter (this was before the revisions)

Editor -- In response to the March 11 Open Forum article by James Chin, "Myths and misconceptions of the AIDS pandemic": UNAIDS disagrees with Chin's assertions on AIDS data. We work with WHO and many of the world's most-respected epidemiologists, as well as individual countries to monitor the status of the AIDS epidemic. Estimates are not produced in isolation, but in close collaboration with national epidemiologists and governments.

We stand by our scientific approach. The AIDS epidemic continues to evolve and the response must evolve accordingly. Counter to Chin's claims, UNAIDS has underlined the need to "know your epidemic" and to focus HIV prevention, treatment and care programs to reach those at highest risk of HIV infection.

Articles such as Chin's minimize the devastation the AIDS epidemic has had, and continues to have across the world. U.N. efforts have been critical in moving many countries out of denial and into action. We will continue to use the best available data to advocate for the most effective response for the millions in need.

PURNIMA MANE, director
Policy, Evidence and Partnerships
UNAIDS, Liechtenstein

Countdown Clocks Offer a Lot of Drama But Little Information
WHO’s counting?

The revision of the figures is mainly a result of better data-collection methods, particularly in India (which accounts for half the downward revision) and five African countries (which account for another fifth). In India many more sampling points have been established, and in all countries better survey methods, relying on surveyors knocking on doors rather than asking questions at clinics, have gathered data from more representative samples of the population.

Sceptics will feel vindicated by the revision. There has been a feeling around for a while that the older survey methods were biased, and that the inflation thus produced was tolerated because it helped twang the heart-strings of potential donors. However, the structures for collecting and distributing money to combat AIDS are now well established, and accurate data are crucial if that money is not to be misdirected.

Do Figures Lie? AIDS Prevalence, Cost-Effectiveness and Donor Priorities

Readings for the Day

Doing growth diagnostics well

How Dangerous Is America?

Easterly Reviews Collier

Resource abundance and corporate transparency

Maternal Education, Home Environments and the Development of Children and Adolescents

Mirror, Mirror on the Wall: Who’s the Richest of Them All?

New comparison of GDP and consumption based on purchasing power parities for the year 2005

Inflation Targeting Lite

Freddie Mac and Fannie Mae back in the news

Our currency and our problem

Do exchange rate overshooting models make sense?

Artist of the Day

"Girl with a Fan" by Titian


Via NYT, Business (Some Unfinished) From Titian, 1500s C.E.O;

Does Titian’s late style betray aging infirmity or maybe impatience, or does it imply that pictures like this aren’t finished? Scholars have pondered this question for years. The truth seems to be that Titian, running a very busy workshop, painted differently for different clients under different circumstances. He recycled images, concocted variations that allowed him to make short cuts, had assistants do work when the assignments weren’t for kings and doges. Like the chef of a four-star kitchen, he might drop by at the end to touch up the results.

Physiology in 1871

Description of the Brain of an Idiot, Journal of Anatomy and Physiology, 1871

via Mind Hacks;

Back in 1871, the term 'idiot' was a proper medical term. It referred to someone we would now describe as having learning disabilities or intellectual impairment.

As the word became used as an everyday form of abuse, it left the realms of medicine because it was deemed inappropriate, and has been replaced by seemingly more appropriate terms. There is a long history of this process and it continues to this day.

Assorted PFM

Bill Dorotinsky (formerly at U.S. Office of Management and Budget and World Bank) has interesting commentary at IMF blog on Public Financial Management;

From Line-item to Program Budgeting - Opening the 'black-box' of spending

Public Finance Reference Reading: Revisiting the Classics -- Schick's Contemporary Approach to PEM (1998)

Another Conference on Corruption

The International Association of Anti-Corruption Authorities- 2nd Annual Conference

Russian Economic Reports

From World Bank, Russian Economic Report, November 2007

Monetary Policy in Afghanistan

Statement by the IMF Mission at the Conclusion of the Discussions for the 2007 Article IV Consultation;

Monetary policy has remained broadly consistent with the program, despite difficulties with liquidity management experienced during and after Ramadan. Growth of currency in circulation surged from 8.5 percent during the first half of 2007/08 to 18 percent in October. Continued exchange rate stability throughout this episode suggests that the temporary excess supply of Afghanis-related to an acceleration of government expenditure-was met with increased demand, reflecting a combination of Ramadan-related seasonality and steep increases in the prices of imported fuel and essential foodstuffs.

Monetary policy will remain focused on containing inflationary pressures. To that end, there is a need for DAB-in cooperation with the MoF-to improve its liquidity forecasting to ensure smooth monetary policy execution. It is also important that DAB's management strengthen the internal consultation mechanism over liquidity forecasts and intervention policy by endowing the Monetary Policy Department with greater ownership and accountability for its policy advice. The mission welcomed the intention of DAB to expand the volume of capital notes auctions with a focus on managing bank liquidity and developing the yield curve.

For Discussion: How does one deal with economic policy when the informal or illegal economy is larger than the formal economy?

Best Comment of the Day

Over at FP blog;

More broadly, Lebanon is just one more example of a mistaken U.S. approach to foreign policy that dates back decades and across administrations of both parties. Here's how it works: The United States says it supports democracy, but ends up backing pro-Western leaders when push comes to shove. Take the case of Pervez Musharraf, whom U.S. President George W. Bush described Tuesday as "somebody who believes in democracy" despite the fact that the Pakistani leader has suspended the Constitution, thrown many of his opponents in jail, and gone after independent media outlets. Or consider the Palestinian territories, where the White House called for elections and then blanched when the distasteful Hamas won them fair and square. Is it any wonder that U.S. rhetoric on democracy isn't taken seriously?

This is what the President Bush said in 2005;

So it is the policy of the United States to seek and support the growth of democratic movements and institutions in every nation and culture, with the ultimate goal of ending tyranny in our world.

Thank You, Rodrik for clarifying it

"The language of "growth diagnostics" and of "removing binding constraints" is becoming so commonplace in multilateral agencies and donor organizations these days that I sometimes wonder whether we have not unleashed something out to the real world before its time. The trouble is that what I see being implemented in practice is often the rhetoric and not the substance."

-Doing growth diagnostics well

Strangest search words of the day

'are women good leaders'

Congratulations to Karen Armstrong

for winning the TED Prize

A list of her books- recommended to everyone.

Milton Friedman Choir

Via Alex Tabarrok

For a different perspective read, watch The Corporation

From NYT

Q & A: Baghdad Correspondent on End of the Surge

Guess the number of reporters NYT has in Iraq.

What Al Gore is up to

Planet-saving VC;

We're sitting in the giant conference room at Kleiner Perkins Caufield & Byers, where the partners hold their weekly meetings. After loading his plate with Chinese food from a buffet, Gore is firing detailed questions at the management team of Ausra, a Kleiner-backed company in Palo Alto whose technology uses mirrors the width of a flatbed truck that focus the sun's energy to generate electricity.

Once Gore is satisfied -- sunlight lags north of South Dakota, an Ausra plant can serve 120,000 homes, and yes, smaller turbines will work fine -- he shifts from inquisitor to fixer. He was chatting with California Senator Barbara Boxer "on the way over," he reports, and he isn't optimistic that Congress will extend the tax credits Ausra has been relying on. On the upside, he offers on the spot to organize a summit highlighting the company's solar thermal technology to educate lawmakers and other policymakers on its potential. He also thinks a powwow at General Electric (Charts, Fortune 500) would be beneficial, even though Ausra is a tiny customer.

"I know Immelt well," he says, referring to GE's CEO. "We ought to set up a meeting."

Gore appears utterly comfortable with this drill, but in fact he's engaging in some on-the-job training. The recovering politician, environmental activist, and Nobel laureate is adding another title to his résumé: venture capitalist. After "a conversation that's gone on for a year and a half," according to Gore, he has decided to join his old pal John Doerr as an active, hands-on partner at Kleiner Perkins, Silicon Valley's preeminent venture firm.

The move is more than another Colin Powell moment (the former Secretary of State signed on as a Kleiner "strategic limited partner" two years ago and has hardly been heard from since). Gore is joining the firm as Kleiner makes a risky move beyond information technology and health-care investing into the fast-growing and increasingly competitive arena of "clean technology."

New York Architecture Guide

New York Architecture Guide

A Short History of the Manhattan Skyscraper

Lawyers after Architect

MIT Sues Gehry

M.I.T. Sues Frank Gehry, Citing Flaws in Center He Designed

The Massachusetts Institute of Technology has sued the architect Frank Gehry and a construction company, claiming that “design and construction failures” in the institute’s $300 million Stata Center resulted in pervasive leaks, cracks and drainage problems that have required costly repairs.

The center, which features angular sections that appear to be falling on top of one another, opened to great acclaim in the spring of 2004. Mr. Gehry once said that it “looks like a party of drunken robots got together to celebrate.”

I liked his Dancing House design in Prague.

Reading List for the Day

The Credit Card Bill Comes Due (International Version)

Open Economy Macro

Economics in many lessons: A better brew for Rwanda

Frequent Flier Food

A dollar for your thoughts

Why We Trade

Growth Policy and Poverty Reduction

The Supreme Court's Wrong Turn -- And How to Fix It

A bank in every pocket?

The Seven Wonders of the Totalitarian World

The Seven Wonders of the Totalitarian World

I think the winner is the following; Monument to President Saparmurat Niyazov

Via Bryan Caplan

What Europe thinks about Islam?

Does Islam have a sense of humour?

Was Easterly right about role of Aid Agencies?

The story of HIV infection numbers;

The latest estimates, due to be released publicly Tuesday, put the number of annual new HIV infections at 2.5 million, a cut of more than 40 percent from last year's estimate, documents show. The worldwide total of people infected with HIV -- estimated a year ago at nearly 40 million and rising -- now will be reported as 33 million.

Having millions fewer people with a lethal contagious disease is good news. Some researchers, however, contend that persistent overestimates in the widely quoted U.N. reports have long skewed funding decisions and obscured potential lessons about how to slow the spread of HIV. Critics have also said that U.N. officials overstated the extent of the epidemic to help gather political and financial support for combating AIDS.

"There was a tendency toward alarmism, and that fit perhaps a certain fundraising agenda," said Helen Epstein, author of "The Invisible Cure: Africa, the West, and the Fight Against AIDS." "I hope these new numbers will help refocus the response in a more pragmatic way."

Annemarie Hou, spokeswoman for the U.N. AIDS agency, speaking from Geneva, declined to comment on the grounds that the report had not been released publicly. In documents obtained by The Washington Post, U.N. officials say the revisions stemmed mainly from better measurements rather than fundamental shifts in the epidemic. They also say they are continually seeking to improve their tracking of AIDS with the latest available tools.

Among the reasons for the overestimate is methodology; U.N. officials traditionally based their national HIV estimates on infection rates among pregnant women receiving prenatal care. As a group, such women were younger, more urban, wealthier and likely to be more sexually active than populations as a whole, according to recent studies.

The United Nations' AIDS agency, known as UNAIDS and led by Belgian scientist Peter Piot since its founding in 1995, has been a major advocate for increasing spending to combat the epidemic. Over the past decade, global spending on AIDS has grown by a factor of 30, reaching as much as $10 billion a year.

But in its role in tracking the spread of the epidemic and recommending strategies to combat it, UNAIDS has drawn criticism in recent years from Epstein and others who have accused it of being politicized and not scientifically rigorous.

For years, UNAIDS reports have portrayed an epidemic that threatened to burst beyond its epicenter in southern Africa to generate widespread illness and death in other countries. In China alone, one report warned, there would be 10 million infections -- up from 1 million in 2002 -- by the end of the decade.

Piot often wrote personal prefaces to those reports warning of the dangers of inaction, saying in 2006 that "the pandemic and its toll are outstripping the worst predictions."

But by then, several years' worth of newer, more accurate studies already offered substantial evidence that the agency's tools for measuring and predicting the course of the epidemic were flawed.

Newer studies commissioned by governments and relying on random, census-style sampling techniques found consistently lower infection rates in dozens of countries. For example, the United Nations has cut its estimate of HIV cases in India by more than half because of a study completed this year. This week's report also includes major cuts to U.N. estimates for Nigeria, Mozambique and Zimbabwe.

The art of making an effective argument

Learn from Milton Friedman;

Presidential Management Fellows

If you want to work for the Federal Government;

“The purpose of the Program is to attract to the Federal service outstanding men and women from a variety of academic disciplines and career paths who have a clear interest in, and commitment to, excellence in the leadership and management of public policies and programs."

The application closes on December 4, 2007.

Podcast of the Day

Sunstein on Worst-case Scenarios from Econ Talk

China's Internal Migrants

A good documentary from Al Jazeera;

More then 150 million Chinese workers have left the country's impoverished countryside to find work in the big cities. The abundance of low cost labour they provide helps to fuel China's booming economy. But what is in it for the migrants themselves?

Trade paper of the Day

Export Diversification; What’s behind the Hump? by Céline Carrère, Vanessa Strauss-Kahn, and Olivier Cadot

The paper explores the evolution of export diversification patterns along the economic development path. Using a large database with 159 countries over 17 years at the HS6 level of disaggregation (4’998 product lines) we look for action at the “intensive” and “extensive” margins (diversification of export values among active product lines and by addition of new product lines respectively) using various export concentration indices and the number of active export lines. We also look at new product introduction as an indicator of “export-entrepreneurship”. We find a hump-shaped pattern of export diversification similar to what Imbs and Wacziarg (2003) found for production and employment. Low and Middle income countries diversify mostly along the extensive margin whereas high income countries diversify along the intensive margin and ultimately re-concentrate their exports towards fewer products. Such hump-shaped pattern is consistent with the conjecture that countries travel across diversification cones as discussed in Schott (2003, 2004) and Xiang (2007).

Thanks to Rodrik

Of the authors Céline Carrère lectures in the World Bank Graduate Scholarship Program (Professional Master in Development economics) at CERDI and Olivier Cadot has also done work for the World Bank. Does it mean anything? I don't know.