August 2006 Archives

Podcast of the Day- Gene Sperling’s Labor Market


Gene Sperling, senior fellow at the Center for American Progress talks with Bloomberg's Tom Keene from Washington about his approach to analyzing the strength of the labor market and the outlook for the midterm elections. Listen to the podcast.

Pro-Growth Progressive-book presentation at Google
Sperling interview with Charlie Rose
Could I ever become a Democrat?-Tyler Cowen
A article on the book by Sperling

Wal-Mart’s Communist Party Branch

| 1 Comment
According to China Daily;
“The world's leading retailer giant Wal-Mart has seen the establishment of the first branch of the Communist Party of China (CPC) and the first branch of the Communist Youth League of China (CYLC) in one of its outlets in the northeastern city of Shenyang, capital of Liaoning Province….

Wal-Mart has set up 59 outlets in 30 Chinese cities since it entered China in 1996. It has more than 23,000 employees in China, including over 700 in Shenyang”

Via Spontaneous Order

China Digital Times
Forget the World Bank, Try Wal-Mart; Between 1990 and 2002 more than 174 million people escaped poverty in China, about 1.2 million per month. With an estimated $23 billion in Chinese exports in 2005 (out of a total of $713 billion in manufacturing exports), Wal-Mart might well be single-handedly responsible for bringing about 38,000 people out of poverty in China each month, about 460,000 per year.
Fight poverty by shopping at Wal-Mart?
Managing Governments: Unilever in India and Turkey, 1950-1980

Authors, Books, Reviews, & Chapters

| 1 Comment

A collection of links on books and reviews.

Books Online
Trigonometric Delights

U.S. Trade Strategy -Free Versus Fair by Daniel W. Drezner,

Chapters Online

The Next Great Globalization: How Disadvantaged Nations Can Harness Their Financial Systems to Get Rich by Frederic S. Mishkin

Expert Political Judgment: How Good is It? How Can We Know? By Philip E. Tetlock
CHAPTER 1 Quantifying the Unquantifiable
John Kay review of the book

Economics and the Law, Second Edition: From Posner to Postmodernism and Beyond
By Nicholas Mercuro & Steven G. Medema

The State of Working America 2006/2007

‘Iraq Is Bound to Fail'


Amity Shlaes summarizes a recent Easterly paper;

“Authors Alberto Alesina and Janina Matuszeski of Harvard University and William Easterly at New York University divided countries into two categories: natural and artificial. A natural state is one defined by ethnicity and geographic features such as mountain ranges. Mountains reinforce ethnic communities -- if only by isolating them. Natural national borders would tend to be bumpy.

The map of an artificial state by contrast looks like it was drawn with a ruler, which it often was. Its straight borders sometimes partition ethnic communities, placing them in two countries. Other times, they place tribes that are hostile to one another in the same nation.

Most nations have borders that are a combination of lines and bumps, so the authors developed a mathematical measure to quantify the extent of border bumpiness, which they called squiggliness. Since borders on oceans are extremely squiggly, the authors controlled for that and studied only the squiggliness of national borders with other nations. Their thesis is that it is better to be natural than artificial, and that squiggliness is good for growth and stability….

Bad weather equal bad government?

The latest edition of The Economist summarizes Leeson and Sobel paper on corruption and weather;

“According to a new paper by Peter Leeson and Russell Sobel of West Virginia University, natural disasters not only wreck property and disrupt lives, but also encourage graft. The academics compared the rate at which public officials were convicted for corruption in different states with the geographical distribution of natural disasters. Their correlation was striking. States which see lots of disasters, such as Mississippi, Florida and South Dakota, are also the most corrupt.

That link, reckon the authors, is not spurious. When disasters occur, the federal government dispenses large dollops of cash in affected areas through FEMA, the Federal Emergency Management Agency. A windfall of federal cash spawns graft in much the same way that oil wealth or foreign aid can cause corruption in poor countries. States with bad weather get more frequent gobs of FEMA cash and hence are more corrupt.

Help from FEMA encourages graft in many ways. Public officials can embezzle cash directly; they can overstate peoples' damage claims in return for a bribe, or demand kick-backs for rebuilding contracts. All told, the impact is big. The authors' calculations suggest that in the average state, an extra $1 per person in money from FEMA increases corruption in that state by 2.5%. Eliminating FEMA relief entirely would cut corruption by more than 20% in the average state. But don't hold your breath.”

Traffic Fatalities and Corruption


An interesting paper- Traffic Fatalities and Public Sector Corruption by Nejat Anbarci, Monica Escaleras, and Charles Register. Abstract;

“Traffic accidents result in 1 million deaths annually worldwide, though the burden is disproportionately felt in poorer countries. Typically, fatality rates from disease and accidents fall as countries develop. Traffic deaths, however, regularly increase with income, at least up to a threshold level, before declining. While we confirm this by analyzing 1,356 country-year observations between 1982 and 2000, our purpose is to consider the role played by public sector corruption in determining traffic fatalities. We find that such corruption, independent of income, plays a significant role in the epidemics of traffic fatalities that are common in relatively poor countries.”

Kevin Drum takes a shining to all the possible wonders that the new California anti-global warming bill will bestow upon the Sunshine state. Indeed, he's so certain, he's willing to place a bet on it (one that another blogger is willing to take up).

Still, this is a good first move, and I'll bet all comers that not only does it not have a negative impact on California's economy, it will have a noticeably positive impact. It will spur R&D in new technologies, it will motivate businesses to become more efficient, and it will make California a better place to live. And as for businesses moving out, I'll bet against that too. Moving heavy industrial plants to new states is a lot less appealing than it sounds, and if it does start to happen I'll bet other states will follow California's lead. After all, what state wants to be the dumping ground for all the poor corporate citizens who are moving out of California because they want to relocate somewhere that doesn't mind them belching tons of pollutants into the air?

Here's my question: what about all of the diverted activity from companies that choose, on the margin, to avoid Cali to begin with. Stores not opened, factories not built, workforces and facilities not expanded...and so on. And, if California experiences growth, what would be the counterfactual? Would there have been more or less growth absent the new bill?

The bet seems rigged to me, focusing only on the most expensive form of altered company behavior, ignoring that this is not the only impact a change in the cost to do business will have on a state's economy. Best of luck to Jane if the bet goes forward. Me, I'd put the money into buying technology to make sure my house uses less power when I'm not home.

For disclosure, I consider myself something of a fence-sitter on global warming. Yup, it's absolutely there. Yup, it's definitely a problem. Nope, no one has a non-slip grip on how big a change and what percentage of the change is due to what factor. (Confidence intervals that include both "no change" and "Hades on a bad day hot" don't make me, well, confident.) And nope, strapping businesses down and squeezing them until they bleed money is not the best way to reduce the problem (unless you happen to like the level of development in the world RIGHT NOW so much that you don't think it should change, and, perhaps, might do with some backsliding).

Verizon DSL Pricing

I'm not sure there's a good reason for Verizon to charge month-to-month payers the same amount for a 768Kbps connection as a 3Mbps connection.


Perhaps most of the monthly fee is accrued to overhead and fixed costs of the pipe, while the marginal cost of additional bandwidth really is zero! But why charge half for a small bandwidth one-year committment, and not charge less for the same max usage to a month-to-month user? Does Verizon need the lower-bandwidth one-year contracts to keep their tubes filled? Are the costs of dealing with month-to-month customers that much higher than one-year contactors?

Podcast of the Day- Loot: real money in virtual worlds

Virtual worlds are flourishing as millions of online players move in to set up their virtual lives. There are fortunes to be made, and there are real world consequences. Lissten to the podcast- the latest Background Briefing from ABC.

Terra Nova blog
Play Money: the wiki
State of Play
Ludium Conferences
Chinese Gold Farmers- video
Worlds without end; "Mr Castronova's thesis is that these synthetic worlds are increasingly inter-twined with the real world. In particular, real-world trade of in-game items—swords, gold, potions, or even whole characters—is flourishing in online marketplaces such as eBay. This means in-game items and currency have real value. In 2002, Mr Castronova famously calculated the GNP per capita of the fictional game-world of “EverQuest” as $2,000, comparable to that of Bulgaria, and far higher than that of India or China. Furthermore, by “working” in the game to generate virtual wealth and then selling the results for real money, it is possible to generate about $3.50 per hour. Companies in China pay thousands of people, known as “farmers”, to play MMORPGs all day, and then profit from selling the in-game goods they generate to other players for real money."

Markets in Everything- Slave Trade


It took 400 years to import 12 million African slaves to the New World. In just the past 10 years 30 million people have been trafficked in SE Asia alone. The “people trade” affects at least 4 million humans valued at $10 billion a year.”- Illicit by Moises Naim

Philippines model for Iraq?

| 1 Comment

Does U.S. war in the Philippines at the turn of the 20th century provide an example of how Americans can win in Iraq? Jon Wiener says no;

“The Philippine war was part of the Spanish-American War of 1898, in which the U.S. promised to bring democracy to the Filipinos by freeing them from the Spaniards. But, as Ricks says, things there "began badly" when a powerful Philippine resistance movement challenged U.S. troops — "like Iraq in 2003." In 1902, after three years of guerrilla fighting, the United States declared victory, although American forces remained in the country for decades, administering it first as a colony and then as a commonwealth. The Philippines was granted independence in 1946 — after almost five decades of U.S. military occupation (interrupted by World War II). Today it's a functioning democracy.

The problem with this version of history is that it doesn't look closely enough at what happened in the Philippines.

First, it neglects the massive differences between the Philippines in 1900 and Iraq in 2006. The guerrillas in the Philippines fought the Army with old Spanish muskets and bolo knives; today's insurgents in Iraq employ sophisticated improvised explosive devices, rocket-propelled grenades and heat-seeking shoulder-fired missiles that can shoot down helicopters. And combat in Iraq takes place in a fully urbanized society where "pacification" is much more difficult than in the mostly rural islands of the Philippines.

‘We can do anything we want’

Police brutality continues in the paradise-breaking news from the Maldives;

"Shaheedha told Minivan News: “Myself, Aniya and Eva were sitting in Republic Square, outside the police headquarters. Two policemen came up to us and told us to leave. Aniya said she could not because, as an MDP official, she was waiting for the MDP delegation to come out from the police headquarters. I said I could not leave because I am a reporter and I am reporting this incident. A plainclothes policewoman then came and hit Eva on the shoulder. Aniya and I held hands and lay down. They started to drag us along the ground by our hair. Aniya was kicked and about five policewomen picked her up by her hair and threw her into a police van. I was then dragged into the van. A policewoman sat on me. I asked her, ‘why are you doing that.’ She replied, ‘we can do anything we want.’

Aniya told Minivan News: “While we were in the van, a policeman opened the door and said something very rude to me. Then he punched me in the face with his clenched fist. The punch landed on the left side of my face. My face is now bruised and swollen. The male police officer then told the female cops: ‘Take them to a dark alley and dump them.’ They took us to a side street near the Maldivian Ports Authority. Shaheedha was pushed out of the van. I was thrown out. Then the police drove away and left us there.”

What continues to amaze me is that how a large segment of the population remains silent in the face of gross violation of their own fundamental rights.

Medical report of another victim
Even Angels Ask! Corruption of Public Discourse in Islamic Countries

Christmas in August at Costco

Taken earlier today:


Couldn't this wait until the temperature dipped below 90°F?

An undergraduate honors thesis on Iraq;

“This thesis, an “Analysis of Possible Oil Industry Ownership Structures in Post-War Iraq” explores the various forms of ownership that could potentially be employed in the oil industry of Iraq. At a time when rapid change is occurring in the country, this thesis discusses the implications of different ownership structures, and how they might relate to the economic recovery of the people of Iraq. As a valuable natural resource, oil has proven to be a significant source of revenue in the past, and could provide an excellent vehicle for economic recovery of the country. Using standard texts, past industry trends, examples of other countries, and the most current statistics available, this thesis attempts to highlight the best possible ownership structure in order to enhance the economy in the foreseeable future.”

Linked to some recent Iraq related news;
Oil Workers Strike in Iraq-Inflation Rate hits 70% amid stagflation
In Baghdad, street kids live on petrol smuggling

Political Scientists?

| 1 Comment

newsolarsystem.bmp'Marxists are retards'

“Recently unearthed documents reveal that Franco's psychiatrist carried out bizarre experiments on members of the International Brigade in 1930s Spain. His aim: to prove that leftwingers are mad

It was here, in 1938, that International Brigade members were subjected to a bizarre set of physical and psychological tests in one of the first systematic attempts to put psychiatry to the service of ideology. Sixty-four years later, the results of Vallejo's project to unravel the "biopsyche of Marxist fanaticism" have finally come to light.

Former prisoners at San Pedro de Cardena remember being subjected to up to 200 tests. They were quizzed on their sex lives, and had their heads and noses measured.

"They made us strip and did all these measurements. We supposed they thought it would be useful if the fascists ever invaded Britain," says Bob Doyle, one of the few remaining survivors of a group of 75 British and Irish prisoners tested at the camp. Another, Carl Geiser, the senior ranking American in the jail and a former political commissar to the Abraham Lincoln Brigade, recalls: "I was photographed with just a small cloth over my penis."

KGB Used Clairvoyants as Agents;

What is Art?

parvati2.jpgArt is a lie that makes us realize the truth’- Pablo Picasso

Some of Vilayanur Ramachandran's speculations about art and neuroscience;

“In particular what I'd like to do is raise the question: "Are there such things as artistic universals?" …

Let me put it somewhat differently. Let's assume that 90% of the variance you see in art is driven by cultural diversity or - more cynically - by just the auctioneer's hammer, and only 10% by universal laws that are common to all brains. The culturally driven 90% is what most people already study - it's called art history. As a scientist what I am interested in is the 10% that is universal - not in the endless variations imposed by cultures. The advantage that I and other scientists have today is that unlike we can now test our conjectures by directly studying the brain empirically. There's even a new name for this discipline. My colleague Semir Zeki calls it Neuro-aesthetics - just to annoy the philosophers.

I recently started reading about the history of ideas on art - especially Victorian reactions to Indian art - and it makes fascinating reading.

For example if you go to Southern India, you look at the famous Chola bronze of the goddess Parvati dating back to the 12th century. For Indian eyes, she is supposed to represent the very epitome of feminine sensuality, grace, poise, dignity, everything that's good about being a woman. And she's of course also very voluptuous.

But the Victorian Englishmen who first encountered these sculptures were appalled by Parvati, partly because they were prudish, but partly also just because of just plain ignorance.

They complained that the breasts were way too big, the hips were too big and the waist was too narrow. It didn't look anything like a real woman - it wasn't realistic - it was primitive art. And they said the same thing about the voluptuous nymphs of Kajuraho - even about Rajastani and Mogul miniature paintings. They said look these paintings don't have perspective, they're all distorted.



Territory size shows the relative tourist profits made, in US dollars;

"The seven highest earning territories (per person) are islands: Bahamas, Palau, Barbados, Seychelles, Cyprus, Malta and Hong Kong. The highest net earnings are made in Spain where a profit of US$33 billion was made in 2003 which is more than twice the profit made by the second highest tourist earner: the United States."

From Worldmapper – a cool set of maps via Thoughts about K4D-they also have the data files in EXCEL.

Today’s Podcasts

A master-dispenser of illegal spoils

The Economist has an obituary of the ex dictator of Paraguay Alfredo Stroessner;

“For 35 years, from 1954 to 1989, Alfredo Stroessner ruled there. Under him, although he brought electrification, asphalt roads and friendship with America, the place became yet more isolated and benighted. The economy was based on contraband: whisky, cigarettes, passports, coffee, cocaine, luxury cars, rare bird skins, anything, until the unofficial value of Paraguay's exports was said to be three times the official figure. The style of government was a spoils system, underpinned by terror of a vicious network of spies and secret police. Foreign policy was a buddies' brigade with other dictators—Videla of Argentina, Pinochet of Chile—to co-ordinate counter-terrorism and assassinations. And the most famous tourist was Josef Mengele, the fugitive doctor of Auschwitz, riding into a village in the Paraguayan wilderness to be welcomed and protected….

His main machine of power was not the army. Although he was a distinguished soldier, rising to brigadier-general by the age of 36, and indeed had done nothing else in life since he was 17, he did not trust military men. He himself had skilfully ridden the divisions in the army to seize power from a civilian president in 1954. His policy was to keep the officers sweet with a cut from the smuggling revenues or a share of the contracts for his grandest project, the Itaipu hydroelectric plant built with Brazil on the Paraná. Some cronies amassed fortunes. General Andrés Rodríguez, who eventually overthrew him in what he contemptuously called a cuartelazo, or barracks revolt, built himself a replica of the Palace of Versailles…

Paraguayans as a whole, however, were much slower to be disillusioned. It was true that he treated the country as his fief, to the point of picking out teenage girls for himself when he presented school diplomas; but he paid for the girls, set them up in houses, and gave their relatives money. You could argue that the Itaipu project left Paraguay with only 2% of the energy and 15% of the contracts; but that 15% had given the country, for eight years in the 1970s, the highest rate of growth in Latin America. General Stroessner was a master-dispenser of illegal spoils. Yet the dark truth of his Paraguay was that he co-opted even his opponents into that system with him.”

Definition of Negro


I was shocked to see the following entry for Negro from the Encyclopedia Britannica, 1798 (emphasis mine);

“NEGRO, Homo pelli nigra, a name given to a variety of the human species, who are entirely black, and are found in the Torrid zone, especially in that part of Africa which lies within the tropics. In the complexion of negroes we meet with various shades; but they likewise differ far from other men in all the features of their face. Round cheeks, high cheek-bones, a forehead somewhat elevated, a short, broad, flat nose, thick lips, small ears, ugliness, and irregularity of shape, characterize their external appearance. The negro women have the loins greatly depressed, and very large buttocks, which give the back the shape of a saddle. Vices the most notorious seem to be the portion of this unhappy race: idleness, treachery, revenge, cruelty, impudence, stealing, lying, profanity, debauchery, nastiness and intemperance, are said to have extinguished the principles of natural law, and to have silenced the reproofs of conscience. They are strangers to every sentiment of compassion, and are an awful example of the corruption of man when left to himself.”

- The History of Human Rights-From Ancient Times to the Globalization Era by Micheline R. Ishay, p.113, try Google Book Search.

Jon Stewart’s “senior black correspondent” Larry Wilmore- The Daily Show
First Chapter of Ishay’s book

Competition and Pandemic Control

Recently I watched the TED speech of Larry Brilliant where he talked about the importance of ‘early detection and early response’ as key for any pandemic control plan. He also talked about the role of public databases like GPHIN in early detection of pandemics and competition it brought to reporting of pandemics. The following article from The Economist summarises some of current data sharing efforts on pandemic diseases;

“The Global Pandemic Initiative, formed in May, is a collaboration between the WHO and the CDC, together with IBM, a large computer firm, and over a dozen other groups. It is intended to develop “the use of advanced analytical and computer technology as part of a global preparedness programme for responding to potential infectious disease outbreaks.” One approach IBM hopes to take is to develop software that will help predict how diseases might spread.

Another new group wants to turn the entire process of identifying outbreaks on its head. Larry Brilliant, a former WHO official who helped to eradicate smallpox in India, dreams of an open-source, non-governmental, public-access network that would help the world move quickly whenever potential pandemics start brewing. He looks for inspiration to the Global Public Health Intelligence Network (GPHIN), an obscure programme run by the Canadian government that searches public databases in seven languages looking for early signs of disease outbreak.

Dr Brilliant, who is now the head of Google's philanthropy arm, made his wish known at the Technology Entertainment Design conference, an annual gathering in California of leading entrepreneurs and thinkers from the information-technology and entertainment industries. His speech so galvanised the gathered titans that he now has the backing of Sun Microsystems, Google and several big Silicon Valley venture-capital funds and investors. They are helping to develop a new “web crawler” that will expand GPHIN to track newspapers and internet blogs in 40 to 100 languages.

A reasonable objection to such a system is that it is based on press reports, not verified scientific data. Even so, its supporters argue that it could prove valuable. Press reports have the virtue of immediacy, and its results will always be subject to verification by the WHO and government authorities, of course. But its very existence might persuade them to act more promptly. After all, that is what GPHIN did a few years ago during the SARS outbreak, when it sounded the alarm and forced the authorities to respond. The direct result, in Dr Brilliant's words: “SARS is the pandemic that did not occur.”

Ahead of His Time -Robert Mundell

picture4sexratio.bmp The latest F&D magazine from the IMF is out. The focus is on demographics, it has also got a profile of Robert Mundell. Some excerpts below;

“He also stays strongly rooted in academia, much beloved by generations of students who have deeply valued how much he has been willing to give of himself to help them grow. He was a professor at the University of Chicago (where he was also Editor of the Journal of Political Economy) from 1966 to 1971—a time famous for its economic talents, including several other future Nobel Prize winners. "As a teacher, he was both stimulating and irritating," says Mussa, explaining that Mundell liked to tease his students with "intelligent questions that weren't entirely well structured and therefore didn't have clear answers." Since 1974, he has been a professor at Columbia University.

David Bloom, Harvard professor of economics and demography and a former Columbia colleague, recalls that the most interesting conversation he ever had with Mundell was about the effect of cross-country demographic imbalances (in age) on international capital flows—a topic that Mundell isn't normally associated with but finds enormously important for macroeconomic performance. In fact, Mundell developed a four-generation model that shows that if one country has a demographic shock, it creates a wave of interest rate changes that bring on, in an open economy, compensating capital movements. The model also highlights the role that the U.S. baby boom has played in U.S. balance of payments and budget deficits, as there was high demand for resources (some of which were internally generated and some of which flowed in from abroad) associated with investing in children.”

The Works of Robert Mundell
Mundell’s Home Page; some of books are being digitized like this one International Economics, Robert A. Mundell, New York: Macmillan

Carnival of Podcasts

A couple of podcasts mostly from Radio National Australia; please note some of discussions start at the end or middle of the audio. Also if you don’t download now, it might not be available next week.

Why don't Americans like soccer?; Economist Allen R Sanderson says that Americans appreciate competitive market forces and incentives that reward ability, hard work and ingenuity, in sport as well as business, and soccer just doesn't make the grade. John Birmingham reflects on the Australian view of the European game.

Future of trade liberalisation; With the latest GATT attempts to further open up international trade, the DOHA Round, collapsing some weeks ago, Alan Oxley explains what went wrong and what might happen next

The rise of the carbon traders

John Taylor, former undersecretary for international affairs at the U.S. Treasury and now an economics professor at Stanford University, talks with Bloomberg's Tom Keene from Palo Alto, California, about the outlook for the central bankers' annual conference this week in Jackson Hole, Wyoming, and China's economic growth.

Stephen Roach, chief global economist at Morgan Stanley, talks with Bloomberg's Tom Keene in New York about the state of China's economy, banking system and political environment.

The Nature of Belief : Australian Science Festival Debate

Nazi New Religions, Pt 1

Christian Relics and the Historical Jesus

Conflict: What good is it?

Vietnam Remembered

Travel in the Age of Terrorism

A narrative for a long war

Dictators Watch- Burma


The military dictators of Myanmar (Burma) has got another asset to maintain their tyranny over the Burmese people and play around with neighboring giants- ten trillion cubic feet of natural gas;

“The Great Game of the 19th Century was played between empire builders Britain and Russia, using Afghanistan as their football in seeking control of central Asia. Today, there is a new great game under way between two very different competitors -- China and India. But this time the ball is Burma…

Burma is saturated in more than ten trillion cubic feet of natural gas, and possibly also oil, beneath its offshore waters, which stretch from the border of Bangladesh in the Bay of Bengal down to within sight of Thailand's azure blue coastline, dotted with tourist resorts. It is that rugged and undeveloped coastline of almost 1,000 miles that particularly interests the new great game players.

After much wrangling, and especially after a first-ever visit by an Indian head of state, President Abdul Kalam, to Burma last March, New Delhi thought it had secured exclusive purchase from Burma of 5.6 trillion cubic feet of natural gas. That was the quantity onfirmed by independent U.S. assessors Gaffney, Cline & Associates to be in just one undersea block, known as A-1, of the Shwe field near the port of Sittwe. But while India was sizing up the route of a 960-mile land pipeline bypassing Bangladesh, China swooped in and signed a memorandum of agreement to buy the A-1 gas.”

Burma: Orwellian state, with teashops
Burma's confusing capital move
Annan pays tribute to UN envoy in Myanmar upon his resignation
Junta Pressures Social Welfare Group;
Rangoon’s only funeral service association, under pressure by authorities, is likely to be taken over by a military-backed civilian group, according to social workers in Rangoon

Doha Misconceptions

| 1 Comment

IMF has released a policy discussion paper clarifying what it sees as misconceptions on trade issues; “Trade Issues in the Doha Round: Dispelling Some Misconceptions”- it addresses the following four issues-

- Developing countries would benefit more from liberalization by rich countries than they would from their own liberalization. In fact, research shows that developing countries have much to gain from their own trade reforms.

- Tariff reductions on a multilateral basis could wipe out a large portion of trade between rich countries and developing countries as a consequence of preference erosion. On the contrary, research shows that the magnitude of any erosion is small in aggregate and is of concern for only a few countries and products.

- Agricultural subsidies in many Organisation for Economic Co-operation and Development many (OECD) countries are more damaging than other types of policies, such as tariffs. Actually, import tariffs in OECD countries harm developing countries much more than either production or export subsidies, with the exception of subsidies on cotton. Export subsidies in OECD countries actually benefit developing countries that are importers of subsidized products because they reduce the price of imported goods.

-The recipients of agricultural subsidies in rich countries tend to be small, lowincome farmers. The facts, based on data for both the United States and the European Union, are that a disproportionately large share of government support goes to wealthy farmers.

This and That

Some articles worth reading;

Don’t box yourself in when making decisions by John Kay

“For people in business and in financial services it might be a disturbing conclusion, but even in very simple cases, it is impossible to be certain that a particular mathematical representation of a real problem is a correct description.”

Tourists tell Britain: you’re a rip-off

Forget the World Bank, Try Wal-Mart

The American Standard of Whining by Virginia Postrel

Airports debacle worsened by greed and neglect by Joseph Stiglitz

Seven Questions: Somalia’s Struggle

Multiculturalism: unfolding tragedy of two confusions By Amartya Sen

"The history of multiculturalism offers a telling example of how bad reasoning can tie people up in terrible knots of their own making. The importance of cultural freedom, central to the dignity of all people, must be distinguished from the celebration and championing of every form of cultural inheritance, irrespective of whether the people involved would choose those particular practices given the opportunity of critical scrutiny, and given an adequate knowledge of other options and of the choices that actually exist in the society in which they live. The demands of cultural freedom include, among other priorities, the task of resisting the automatic endorsement of past traditions, when people – not excluding young people – see reason for changing their ways of living."


The Preservation Paradox By Tim Harford

Iraq Runneth Over What Next? By Daniel L. Byman and Kenneth M. Pollack

"The debate is over: By any definition, Iraq is in a state of civil war. Indeed, the only thing standing between Iraq and a descent into total Bosnia-like devastation is 135,000 U.S. troops -- and even they are merely slowing the fall. The internecine conflict could easily spiral into one that threatens not only Iraq but also its neighbors throughout the oil-rich Persian Gulf region with instability, turmoil and war."

Most Expensive Rental Markets In America 2006
"As in 2005 (see " Most Expensive Rental Markets In America 2005"), the New York metropolitan area, which includes New York City and its surrounding counties, topped our list, with an average price of more than $27 per square foot for a high-end apartment.

In Manhattan specifically, the average rent came in at a whopping $48.33 per square foot--an estimate supported by July figures from Citi Habitats, a New York City-area real estate agency. The median monthly rent for a studio apartment in Manhattan is more than $1,900, according to Citi Habitats. If it's a three-bedroom spread that you're after, prepare to fork over somewhere in the neighborhood of $5,000."

Housing prices

The Fame Motive

Personality Traits of the Best Software Developers

Writing about your relationship could help it last

The Female Brain By Louann Brizendine-Chapter One
The Birth of the Female Brain

On the Web, Pedophiles Extend Their Reach

Sane Mutiny: The Coming Populist Revolt

Podcasts Carnival –From BBC

The Economist advises Amazon

| 1 Comment

The latest edition of The Economist looks at the prospects of Amazon;

“Amazon's product range is expanding in much the same way as online sales are. As people become more accustomed to shopping on the internet, they are ordering a greater variety of goods and services from a wider range of websites. In America online sales were up by 25% in 2005 over the previous year, reckons Forrester, a research company. Travel is now by far the biggest category, worth some $63 billion last year, followed by computer equipment and software ($14 billion), cars ($13 billion), clothing ($11 billion) and home furnishings ($8 billion).

Amazon's challengers come from two directions. First, other online retailers are growing rapidly and appear in various forms. Many of the dotcoms are invading each others' turf. From auctioning people's old stuff, eBay now also hosts fixed-priced virtual shops offering new goods for sale. And Google is adding more shopping-type services, such as Froogle, a shopping-comparison service, and more recently its new Checkout payments system, which rivals eBay's PayPal.

Second, traditional retailers are rapidly getting their online acts together. This pits Amazon against giant retailers with huge purchasing power, like America's Wal-Mart and Britain's Tesco. These “multichannel” retailers make a virtue of their ability to offer both “bricks and clicks”. Many provide online customers with the option of picking up goods from the shop down the road. This is proving popular with web buyers who want things immediately or are keen to avoid shipping costs and staying in to accept a delivery. Circuit City, a big American electricals chain, expects in-store pick-ups to account for more than half its online sales this year…

Colbert Celebrates World Breast Feeding Week

Linguistic Abuse

loaded_words_medium.jpgStephen Poole, author of Unspeak,

“In December 2002, two prisoners at the US base in Bagram, Afghanistan, died after trauma to their legs of such severity that the coroners compared it to the results of being run over by a bus. The subsequent official investigation was nothing if not creative. The death of one was explained in this way:

'No one blow could be determined to have caused the death,' the former senior staff lawyer at Bagram, Col. David L. Hayden, said he had been told by the Army's lead investigator. ‘It was reasonable to conclude at the time that repetitive administration of legitimate force resulted in all the injuries we saw'.

The logic of this is startling. You may compare it in some ways to the Chinese method of execution, used until 1905, known as 'death by a thousand cuts'. Since no one cut can be determined to cause death, no one is responsible for the killing. Similar is the principle behind the firing squad: everyone fires at the same time and one soldier has a blank, so no one soldier can be sure that he killed his comrade. But at least in these two cases the intention is avowedly to cause death. To use the argument as an excuse for 'accidental' extrajudicial killing is different. It is perhaps more like a sophistic application of Zeno's paradox of motion. Since at every place in the flight of an arrow it can be considered at rest, an infinite number of such points of rest cannot possibly add up to travel, so the arrow does not actually move and can never reach its target. Similarly, no number of 'legitimate' things can ever add up to something that is illegitimate. It's just one of those unfortunate things.

But this is deliberate linguistic misdirection. The insertion of the word 'legitimate' before 'force' aims exactly to pre-empt the question of legitimacy. Even if one allows that some force might be legitimate, you're dissuaded from wondering whether a repetitive sequence of legitimate blows can be illegitimate. That principle is common in other areas of law: repetitively playing your music too loud can add up to a disturbance of the peace. 'Legitimate' force also implies that the victim had been found guilty of a crime deserving of violent punishment; but the dead prisoners had never had a trial.

A New Maldives in Pictures

| 1 Comment




Photos via ZERO X.

A History of Boredom

bordom.jpgWhen hit by boredom, let yourself be crushed by it; submerge, hit bottom. The sooner you hit bottom, the faster you surface.”- Joseph Brodsky

A review of the book A Philosophy of Boredom by Lars Svendsen;

“Any concept that attracted comment from Kant, Goethe, and other giants accomplished enough to be identifiable by one name must be complex, profound, and worthy of attention even in a sweltering August.

(If you immediately think, "Wait, there's probably some other concept that's drawn attention from other single-named giants such as Beyoncé, Madonna and Brittany - like bling - that's utterly simpleminded," then you possess a genuine philosophical aptitude and should continue reading.)

"Very few people," writes the witty Norwegian philosopher Lars Svendsen, "have any well-thought-out concept of boredom." That hasn't stopped folks from trying to capture it in a phrase or tossed-off digression.

Kierkegaard declared it "the root of all evil," following on church fathers who condemned its forerunner, the sin of acedia. Svendsen, a professor at the University of Bergen, cleverly updates that, noting that boredom has been accused of causing such modern ills as "drug abuse, alcohol abuse, smoking, eating disorders, promiscuity, vandalism..."

Schopenhauer thought boredom "a tame longing without any particular object." For Kafka, it was "as if everything I owned had left me, and as if it would scarcely be sufficient if all of it returned." Theodor Adorno blamed boredom on alienation at work. Russian poet Joseph Brodsky suggested boredom taught us "life's most important lesson... that you are completely insignificant."

Via Distributed Presses and 3 Quarks Daily

Poverty’s Effect on the Brain

fig1L_Farah.jpg An interesting paper on the effects of childhood poverty; Childhood poverty: Specific associations with neurocognitive development- abstract;

“Growing up in poverty is associated with reduced cognitive achievement as measured by standardized intelligence tests, but little is known about the underlying neurocognitive systems responsible for this effect. We administered a battery of tasks designed to tax-specific neurocognitive systems to healthy low and middle SES children screened for medical history and matched for age, gender and ethnicity. Higher SES was associated with better performance on the tasks, as expected, but the SES disparity was significantly nonuniform across neurocognitive systems. Pronounced differences were found in Left perisylvian/Language and Medial temporal/Memory systems, along with significant differences in Lateral/Prefrontal/Working memory and Anterior cingulate/Cognitive control and smaller, nonsignificant differences in Occipitotemporal/Pattern vision and Parietal/Spatial cognition.”

Via Neurocritic.


Rushton, J. P., & Jensen, A. R. (2005). Thirty years of research on race differences in cognitive ability

In the mind of the child soldier; Northern Uganda, Democratic Republic of Congo, Liberia, Sri Lanka, Columbia. Some of the world's conflicted countries where young children are recruited, or violently abducted, to serve as soldiers. Two psychologists at the coalface, and a teenage abductee, join Natasha Mitchell to discuss the complex psychology of child recruitment, reintegration and repatriation. Little innocents or self-aware agents? A confronting issue that's not straightforward. Stories of hope prevail too. Listen to podcast.

False memories and young minds; Your memory is your personal archive. But it can trick you too - sometimes with serious consequences. Are children more susceptible to false memories, or adults? Striking new research has important implications for how we handle children in courts and therapy, and for our understanding of this fallible human talent. Here is the podcast.

Insults as Education


Alex Tabarrok is running some Gordon Tullock insults- my favorites from the list;

“The other day Gordon asked me to read one of his papers and I pointed out a few typos. "Excellent," he said, "this will surely be your greatest contribution to economics."

From Eric Crampton;

"Tullock and I share a birthday. Walking over to Buchanan House for a seminar, I told him we had something in common. He replied, "We'll have to do something about that, won't we." When I later asked what he'd planned on doing about it, he informed me that he'd contacted some folks from upstate who'd arranged to have me shot. At his 80th birthday celebrations, I thanked him for throwing me such a great birthday party; he laughed and told me I'd be receiving the bill for the event in the mail.

My favorite Tullock insult, though, was levied at Walter Block. Block was presenting a paper at the Southerns in 1999. The paper was coauthored with Tom DiLorenzo; Walter, in his preamble to the presentation, noted that since his coauthor wasn't there, all the errors in the piece were his. Tullock shot up, pointed at Walter, and said "DiLorenzo wrote the whole thing then, didn't he!"

I've read many recent articles -- and a few older ones -- about investigations, arrests, and releases of men of Middle-Eastern origin buying pre-paid cell phones in bulk at discount stores in the US. By the current reckoning, they're not terrorists or terrorist funders or terrorist sympathizers: they're copyright infringers.

Apparently we must fear first and think later, so national reporters had dutifully reminded us that pre-paid cell phones can be used as remote detonators and untraceable communication devices, that resellers of them can use their profits to fund terrorism, and that end-users can steal from cellular providers. What was the real concern?:

Authorities say the phones are being modified by terrorists to make untraceable international calls and also in the production of roadside bombs.

However, it appears that most of these infamous Wal-Mart, Dollar General, and Radio Shack shoppers are just the first of many middlemen who are going to resell the phones at a considerable markup every step of the way, none of whom have ties to terrorist organizations. However, I think their insistence that they're in a perfectly legitimate business is mostly bombast, as they must surely know about the legal claims Tracfone has brought against Sol Wireless for unlocking its Nokia-produced phones.

Also, I gather that the end user of these phones -- in the US or elsewhere -- is somebody who will use the cell phone as an ordinary cell phone, not a weapon of force or fraud.

Race for the Republican presidential nomination of 1896


Only a Bait; T. C. P. "If this don't fetch trade, then I don't understand the hucksterin' business."

Via HarpWeek, Cartoon of the Day

Books and Colbert

Dictators for Life?


A new report from Freedom House ‘Countries at the Crossroads: A Survey of Democratic Governance’ finds;

The Truth about Globalization and Inequality

According to P. Sainath;

“India is a classic example of engineered inequality. On 20 October, The New York Times had a front page lead celebrating the birth of a class of people in India who spend their weekends at malls. It failed to mention that this year, India slipped three places in the human development ranking of the United Nations. We now stand at rank 127. This year’s UN Human Development Report had found that for the bulk of the Indian population, living standards are lower than those of Botswana – or even the occupied territories of Palestine. So while some of the richest people in the world live in India, so do the largest number of the world’s poor.

The euphoria over one good monsoon (actually, we’ve had several these past 15 years) seems to have erased any debate in the media on what’s happening in Indian agriculture. Small farms are dying. Investment in agriculture is down. Rural credit has collapsed and debt has exploded. Many are losing their lands as a few celebrate at the malls. In March this year, as Professor Utsa Patnaik points out, the per person availability of foodgrain was lower than it had been during the notorious Bengal Famine of 1942-43.

Thousands of farmers have committed suicide since the late 1990s. In a single district of Andhra Pradesh, Anantapur, more than 2400 farmers have taken their own lives since 1997. Elsewhere in India, like in Gujarat or Mumbai, the loss of countless jobs in industry is boosting religious fundamentalism. In the 2002 violence in Gujarat in which over 1500 lives were lost, many of the rioters were workers from shut-down textile mills.
The huge new inequalities are feeding into existing ones: For instance, in a society where they are already disadvantaged, hunger hits women much harder. Millions of families are making do with less food. In the Indian family women eat last. After they have fed their husbands and children. With smaller amounts of food being left over now, poor Indian women are eating even less that they did earlier. The strain on their bodies and health becomes greater. Yet, health care is ever more expensive.”

According to Phillipe Legrain;

Amartya Sen’s Advice to Indians

Outlook India has an interview with Amartya Sen- some excerpts below (free with registration);

The consumption pattern of urban middle-class Indians is becoming increasingly similar to their counterparts of the West. From household goods to food to cultural products, there is now a close resemblance between Indians and those in the West. Are Indians becoming increasingly similar to their counterparts in the West? If so, what are the perils of this trend?

The increase in global contact and association has led to much greater homogeneity of the consumption of the rich across the world—it is not an isolated trend exclusive to India (you see it in Rio, Accra and Johannesburg as well as in Mumbai and Shanghai). This is, in a basic form, an age-old phenomenon. I have discussed in my book The Argumentative Indian how the consumption pattern of rich Indians changed in the early centuries AD, because of the trade in luxury products from China (with plentiful references in Indian literature, including Kalidasa and Bana), to Chinese silk, Chinese fruits, Chinese cosmetics used by the rich. But this is happening on a much larger scale in the contemporary world.

The basic problem is not what commodities the rich spend their money on, but that the economic gap between the rich and the poor is so large and also that it is growing (it has not grown as fast as in China, but it has certainly grown in significant ways). In fact, it is the existence and the expansion of this gap that we have to address. This may be an inevitable part of the price to pay to retain high-skill technical experts within the country and realism may well require that this connection be taken into account. But social ethics also demands that we examine—with realism but also with a sense of equity—what is really inescapable and what can be done to reduce the divergent fortunes of the rich and very rich on the one hand, and the poor and very poor on the other. This is not just a matter of the commodity pattern of the consumption of the rich.

Having said that, however, I should also mention that there is still at least one special problem in the hold of modern Western consumption patterns on the rich in India—and in other poor countries. The labour component in the production of these 'modern amenities' is often quite low in comparison with the older patterns of luxury consumption (for example, widespread services provided directly by unskilled labour), and this can have a negative effect on labour demand and through that on employment. This is not in itself a strong enough reason to curb that type of consumption through government control, but it is a reason to pay special attention to the critical role of employment generation in the process of economic development and to see what can be done to address this issue.

Rice Trade in 16th Century Southern India

“It is worth stressing one again in the context of the south-west coast that the channels for the movement of rice, one of the more important on this circuit, were well defined. Thus, while Kanara rice found its way annually to the Persian Gulf and Muscat, not much made its way to Ceylon, except when the Portuguese Estado intervened to direct a fraction of the thither. Again, while we know of extensive trade in rice between Bengal and the Maldives, not much by way of Kanara rice, which had to travel a much shorter distance than that of Bengal, was exported to these islands. One part of the explanation lies in the re-export of Kanara rice from Malabar to the Maldives, but we must also bear in mind, besides the tastes and preferences for specific varieties, the fact that Bengal shippers and traders had a strong motivation to trade in the Maldives, given the importance of the return cargo, cauris.”

- The Political Economy of Commerce: Southern India 1500-1650 by Sanjay Subrahmanyam, pp.57-58, thanks to Google’s Book Search.

Subrahmanyam columns for Outlook India
Sanjay Subrahmanyam on Nandy: secularism, convivencia, millet system

A Government Free Island Declared

Hulhudheli_beach_erosion.jpgIn the Maldives, an environmental protest by the islanders of Huludheli, continues for the 3rd day with the people locking up all the government buildings in the island;

“The island office has been boarded up, the fishing dhonis remain in their moorings and the jetty has been closed to outside visitors.

Welcome to Dhaalu, Hulhudheli, where one of first public strikes in the Maldives’ history has commenced in one of its smallest communities.

For fifteen years Hulhudheli islanders have complained that coastal erosion is threatening their very existence. On Saturday, their patience with government inaction finally snapped.

Hulhudheli’s 741 inhabitants downed tools and declared the island a government no-go area. The atoll chief, the police and the army have all been warned not to set foot on Hulhudheli.

More photos of the beach erosion.

This is how a protest in another island was ended.

This and That across the Web

| 1 Comment

What if 9/11 Never Happened?

| 1 Comment

The value of counterfactual history lies not in the questions it raises about the past, but the questions it raises about the present and future, and in the reminder that there is nothing inevitable about the world we observe.”
- John Kay

Podcast of the Day- Can we win a civil war?


An average of more than 110 Iraqis were killed each day in July, according to the figures. The total number of civilian deaths that month, 3,438, is a 9 percent increase over the tally in June and nearly double the toll in January.”

Thriving capital markets are the lifeblood of capitalism, with all of that economic system's attendant benefits. Capitalism is the best method yet devised of generating growth, raising living standards and reducing poverty.”
-Anne O. Krueger

A recent working paper from IMF on the “The Jordanian Stock Market--Should You Invest in it for Risk Diversification of Performance?” concludes;

“This study finds that the Amman Stock Exchange is integrated with Arab markets but not with other emerging and developed stock markets. We used both bivariate and multivariate cointegration approaches in our analysis. The multivariate approach shows that Arab stock markets are cointegrated and that they share one long-term equilibrium relationship. The bivariate approach shows that the Jordanian market is individually cointegrated with most Arab markets with the exception of Tunisia and Morocco. However, the results also show that the ASE is not cointegrated with other emerging and developed stock markets.

From this, we conclude that the Arab stock markets are integrated in an economic sense but that the integration is incomplete. The analysis found that there are five common stochastic trends driving the six stock markets. The five common stochastic trends could be attributed to outside factors determining the stock markets or to barriers to investment and trading among the countries. The countries in the study have common cultural characteristics; they also have implemented several deregulation and privatization projects, and have intensified trade and financial relations. All of these factors may have contributed to existing market integration. As cooperation among these countries increases, it is likely that the number of outside common trends will decrease and that the stock markets will become even more integrated.

Learn from the England

In earlier post I commented that Brookings had suggested that State Department should follow DFID’s lead in the development aid. Now Posner suggests, “We Need Our Own MI5”;

“Intelligence succeeded in part because of the work of MI5, England's domestic intelligence agency. We do not have a counterpart to MI5. This is a serious gap in our defenses. Primary responsibility for national security intelligence has been given to the FBI. The bureau is a criminal investigation agency. Its orientation is toward arrest and prosecution rather than toward the patient gathering of intelligence with a view to understanding and penetrating a terrorist network….

The bureau's tendency, consistent with its culture of arrest and prosecution, is to continue an investigation into a terrorist plot just long enough to obtain enough evidence to arrest and prosecute a respectable number of plotters. The British tend to wait and watch longer so that they can learn more before moving against plotters.

The FBI's approach means that small fry are easily caught but that any big shots who might have been associated with them quickly scatter. The arrests and prosecutions warn terrorists concerning the methods and information of the FBI. Bureaucratic risk aversion also plays a part; prompt arrests ensure that members of the group won't escape the FBI's grasp and commit terrorist attacks. But without some risk-taking, the prospect of defeating terrorism is slight.

MI5, in contrast to the FBI (and to Scotland Yard's Special Branch, with which MI5 works), has no arrest powers and no responsibilities for criminal investigation, and it has none of the institutional hang-ups that go with such responsibilities. Had the British authorities proceeded in the FBI way -- rather than continuing the investigation until virtually the last minute, which enabled them to roll up (with Pakistan's help) more than 40 plotters -- most of the conspirators might still be at large, and the exact nature and danger of the plot might not have been discovered. We need our own MI5, not to supplant but to supplement the FBI…”

More at their weblog.

Podcast of the Day- Patient from Hell

Climatologist Professor Stephen Schneider wrote a book called The Patient from Hell. During his treatment for lymphoma he discovered that the way doctors make decisions is seriously and deadly flawed. Listen to the podcast or see the transcript.

“Q. How does a person use a climate model to predict his own survival?

A Central Banker in a time of war

There is an interesting discussion with the Governor of Central Bank of Israel, Stanley Fischer at Bloomberg. The interview illustrates the difficulties for economic policy makers at a time of war; though the country’s finance minister allocated additional money for the war effort, it will come from reductions in other programs. Fischer also increased interest rates recently. Fischer deserves lot of credit for the resilience of the Israeli economy.

I think the quality of a country’s central bank website gives an indication of the state of development of a country and an assessment of the capacity and expertise of the country’s economic policy makers. On that account Israel does an excellent job, and the neighboring Arab countries have a long way to go.

For comment; What’s the equivalent in the US, of Bank of Israel’s the State of the Economy Index?

The Governor, Stanley Fischer - "Reflections on One Year at the Bank of Israel"
Stanley Fischer - The Role of the Central Bank: The Israeli Case

The Secret of Making a Bollywood Superhit

| 1 Comment

Young and talented Bollywood director Karan Johar has a new film out;

“Bollywood is set to take a big leap this week with the opening of a blockbuster set around marital tensions, a brave departure by an industry known more for showcasing marriage as the heart of Indian family values.

"Kabhi Alvida Naa Kehna" (Never Say Goodbye), an extra-marital potboiler which opens on Friday, is one of the most eagerly awaited releases of the year.

The story begins where most traditional Bollywood plots end -- after a couple hold hands and walk happily into the sunset -- and explores what happens to relationships after marriage.

"The alarming statistics of failing marriages in recent times often made me wonder about the relevance of the institution to our society today," said director Karan Johar.”

In this interview Karan Johar explains his style of film making, including some of his regrets of portraying Hindi patriotism over enthusiastically in one of his earlier movies. I had commented earlier about this aspect of some Hindi movies.

New York Times review takes a different view of the film;

“A French version would have a lot more sex and cigarette smoking. An American one would probably end with a letter opener in someone’s back. But only in Bollywood would the standard-issue marital-infidelity tale include disco-style musical numbers and clock in at almost three and a half hours.”

For Discussion; How important is artistic criticism of a culture for a society? Is Bollywood moving in the right direction or just aspiring to be a clone Hollywood?

Homeland Security warning on Microsoft Windows

The US Department of Homeland Security has urged Windows users to install the latest patches from Microsoft as quickly as possible;

“The Department of Homeland Security (DHS) is recommending that Windows Operating Systems users apply Microsoft security patch MS06-040 as quickly as possible. This security patch is designed to protect against a vulnerability that, if exploited, could enable an attacker to remotely take control of an affected system and install programs, view, change, or delete data, and create new accounts with full user rights”


How to Improve Your Memory


“The keys are to improve your imagination and to improve your ability to associate and locate things. When you do that you are automatically training your creativity and memory, enabling yourself to focus and concentrate more. It's simply a matter of sticking to that task, as any athlete would, so that you become fit in that area.”
-Tony Buzan

“He was often so preoccupied with ideas that he forgot what he was doing. Once, reportedly, he was giving a tour of a Glasgow tannery, and he absent-mindedly fell right into the tannery pit, from which his friends extricated him”
-Jim Powell, referring to absent-mindedness of Adam Smith

A Tale of Two Small Countries


This August 13 marks the notorious Black Friday in the Maldives. There is still a long way to go till the country becomes a decent democracy.

In another small country, Seychelles, things seems to be going smoothly at least on the democratic front;

To the casual eye, Seychelles seems both fortunate and well-governed. The 115 islands, most of them uninhabited, cover a mere 445 square kilometres (175 square miles) of the Indian Ocean, north of Madagascar, and enjoy several advantages over most of the rest of Africa. The weather is never extreme. There is no malaria. The islanders have free education and health care. Their multiracial society is pretty harmonious. With GDP at around $8,000 a head, there is almost no discernible poverty.

But this standard of living has come at a cost: the IMF says its public debt is too high and may be unsustainable. Mr Michel's main opposition, the Seychelles National Party, which scored 46% in the elections, claims that Seychelles, per person, is the world's most indebted country; with some $590m of external debt for just 82,000 people, it is certainly one of them. A black market in foreign currency already exists as speculation persists that the government, unable to meet its obligations, may be forced to devalue. Basic consumer goods sometimes run out. If, as the IMF predicts, GDP falls by over 1% this year, Mr Michel may find his next five years in power more testing than he had hoped.

Podcast of the day-Is Shakespeare still relevant ?

| 1 Comment

A panel discussion from the 8th World Shakespeare Congress, hosted by the University of Queensland, on Shakespeare's relevance to the modern world. Listen to the podcast.


A review of Shakespeare's Twenty-First Century Economics: The Morality of Love and Money;

“Turner writes, "This book makes three arguments, following Shakespeare. First, that human art, production, and exchange are a continuation of natural creativity and reproduction, not a rupture of them. Second, that our human bonds with one another, even the most ethical and personal, cannot be detached from the values and bonds of the market. And third, that there is a mysterious dispensation according to which our born condition of debt can be transformed into one of grace. These three arguments may be taken as refutations of the three reproaches to the market offered by its critics: that the market necessarily alienates us from nature, from each other, and from God." Thus the challenge of Turner's book is twofold: It invites us to rethink our view of Shakespeare, but perhaps more important, it invites us to rethink the relation of our economic to our spiritual life…

War Then and Now

From General Patton’s biography ‘General Patton: A Soldier's Life’, p.278;

“..One of the things he did was to read the Koran. He wanted to get some insight into the character of the native Moroccan population.” Reading the Koran, Patton became especially concerned, because he feared some of the invading troops would have to pass through and desecrate a burial ground. This act might arouse the native population, something Patton wished to avoid.”

Here is a General today.

Senator Clinton questioning Rumsfeld

Birth Pains of a New Middle-East?

| 1 Comment

Robert Pape recently had an op-ed in NYT about the war in middle-east (via Alan Miron);

“Contrary to the conventional wisdom, Hezbollah is principally neither a political party nor an Islamist militia. It is a broad movement that evolved in reaction to Israel’s invasion of Lebanon in June 1982. At first it consisted of a small number of Shiites supported by Iran. But as more and more Lebanese came to resent Israel’s occupation, Hezbollah - never tight-knit - expanded into an umbrella organization that tacitly coordinated the resistance operations of a loose collection of groups with a variety of religious and secular aims.

In terms of structure and hierarchy, it is less comparable to, say, a religious cult like the Taliban than to the multidimensional American civil-rights movement of the 1960’s. What made its rise so rapid, and will make it impossible to defeat militarily, was not its international support but the fact that it evolved from a reorientation of pre-existing Lebanese social groups.

Evidence of the broad nature of Hezbollah’s resistance to Israeli occupation can be seen in the identity of its suicide attackers. Hezbollah conducted a broad campaign of suicide bombings against American, French and Israeli targets from 1982 to 1986. Altogether, these attacks - which included the infamous bombing of the Marine barracks in 1983 - involved 41 suicide terrorists.

Food transport bad for the environment

Environment Agency of UK is worried about the social cost of food transport;

“Food transport has a significant and growing impact on road congestion, road accidents, climate change, noise and air pollution according to a new report published today by Defra.

The environmental and social costs of the impacts are estimated at £9 billion per year with more than half due to road congestion. Consumers travel an average of 136 miles a year by car to shop for food and the quantity of food transported by heavy goods vehicles has doubled since 1974. Food transport now accounts for 25% of all HGV vehicle kilometres in the UK…

Food transport produced 19 million tonnes of carbon dioxide in 2002, of which 10 million tonnes were emitted in the UK (almost all from road transport), representing 1.8% of the total annual UK CO2 emissions, and 8.7% of the total emissions of the UK road sector.”

What would we hear next? Every time you go to the grocery, plant a tree to offset the CO2 emmisons!

Outsourcing- America’s gift to the world?

| 1 Comment

The latest edition of Foreign Exchange is up, this week focus is on outsourcing in the medical practice;

“Are you going in for X-rays any time soon? Well, guess where they're probably being read? Potentially across the world in Bangalore, India. If you worry about outsourcing, bear in mind that it can save Americans as much as 25% on their hospital bills. You will hear the views of two Indian doctors serving American patients from India.”

Other guests on the show include Clyde Prestowitz and Martin Baily.


How Long Will America Lead the World?

Accelerating the Globalization of America: The Role for Information Technology

The Economist reviews World Bank’s recent publication of India Development Policy Review.

Interview with the man who told Thomas Freedman that the world is flat.

The wired man of Bangalore;In his latest innovation, N.R. Narayana Murthy, founder of Infosys, retires this month-
"Infosys, he says, is at the top of the tree. It attracts 1.4m job applicants a year. Wages make up just 14% of its costs, so even an annual increase of 15%, say, would reduce margins by only 2.1 percentage points, which can be matched by productivity improvements."

Economic Strategy Institute Blog

Syrian Economic Outlook

IMF released their survey of the Syrian economy- one of the few Arab countries that publishes the Article IV consultation reports. Some things that caught my eye;

“Over the medium term Syria faces daunting economic challenges. The decline of oil reserves poses a threat to fiscal and external sustainability, and the associated fall in oil revenues will make it harder to preserve, much less expand living standards. A bulge in labor market entrants will strain an already precarious unemployment situation and increase pressure to protect redundant labor in an overstaffed public sector. These challenges are further compounded by political uncertainties and a volatile regional environment. In this context, the surge in international oil prices has provided a short-term windfall but will aggravate the medium-term outlook when Syria becomes a net oil importer around the year 2010 based on current oil price projections. Based on the latest projections for oil output, staff estimates that budgetary oil revenues and net oil exports will deteriorate by more than 10 percentage points of GDP in the next 10 years.”

“Syria faces two interrelated medium-term challenges posed by the prospective decline in its oil reserves:

- The first challenge is to preserve fiscal sustainability and financial stability: with the budget still relying to the tune of 25 percent of GDP on oil revenues to finance public spending, and with these revenues projected to be halved over the next ten years, current fiscal policies are clearly unsustainable and call for a major fiscal adjustment.
- The second challenge is to boost growth in order to: (i) expand and diversify the production and export base of the economy before oil resources are exhausted, and (ii) absorb a bulge in entrants to the labor force arising from decades of very rapid population growth. With the labor force projected to increase at 4 percent a year,1 unemployment could exceed 20 percent by the end of the decade. An average employment growth rate of 4½ percent a year would need to be sustained over the next 10 years to reverse this trend—a daunting challenge.”

Spread Tolerance and Win $ 100,000


“...if anyone saved a life it would be as if he saved the life of the whole humanity.”- Koran (5:32)

“America faces decades of red ink”

The nearest thing to eternal life we’ll ever see on this earth is a government program.”
- President Ronald Reagan

I wonder why Americans politicians are not listening to their Comptroller General. Following are excerpts from a recent speech David Walker gave World Future Society conference (emphasis mine);

“But, first, I think it’s important to understand how myopia or shortsightedness can undermine a nation’s willingness and ability to act. In the case of the United States, strong economic growth, modest inflation levels, relatively low interest rates, and our current superpower status have given many policymakers and the American public a false sense of security about our nation’s current position and future prospects. Even though we know a demographic tsunami is building silently offshore—I’m referring to the impending retirement of our baby boom generation—America continues to party on and pile up record levels of debt….

In this spirit and in an effort to lead by example, GAO has published an unprecedented report called “21st Century Challenges” that asks a series of probing, sometimes provocative, questions about current government policies, programs, and operational practices. The report brings home how much of the U.S. government reflects organizational models, labor markets, life expectancies, transportation systems, security strategies, and other conditions that are rooted in the past…

The same goes for many tax policies. For example, just this summer, the U.S. government announced it will stop collecting a 3-percent tax on long-distance telephone calls. This doesn’t seem particularly startling until you realize that the tax had been introduced in 1898 to help pay for the Spanish-American War—a war that lasted only a few months!..

Should we subsidize busking?

| 1 Comment

No Busking.jpg
In an earlier post I enquired about street musicians, and now David Tufte has a great post on the economics of busking;

“Believe it or not, busking was actually the best money I ever made as a musician. In London you could consistently make 10-20 pounds per hour ($15-30 at that time, and about $30-60 after adjusting for inflation). If you were serious, it was possible to do this about 4 hours per day, which works out to $25-50K per year, tax free. Few musicians of any caliber make that much. The money you got varied a lot by location: touristy and entertainment areas did the best because people had money to toss and time to listen. Amounts varied less by time of day: congestion tended to discourage individual donations.

Of course ... you had to sell your soul to do it. In London, the best spots were controlled by groups that were willing to defend turf (although this didn't happen much). Essentially, gangs had evolved endogenously to cartelize the market. No one called them gangs or cartels, so I'll stick to groups.

The system worked like this. In London, much busking occurs in the underground. Everyone knew the best spots - decent acoustics, lots of traffic, a big enough area to work, and so on. In the morning, someone from a group would show up and claim a spot for the day. They brought a notebook, and took reservations for one hour slots throughout the day. There was some openness about getting a slot, but the best way to keep that spot working for your group was for everyone to be on the list and to show up on time in order to transfer the spot to the next person. It was often easier to get a slot if the pubs were open, since the competition was likely to be lighter.”

Read the whole post.

I came across the following comment on a post of Tyler Cowen on arts finding;

Child genius Sirena Huang

| 1 Comment

Sirena Huang

On TED Blog.

(Note -- KB: Apologies to TED for not using the standard code to run the video, but it doesn't work on T&B.)

The Vanity of Breast-Feeding


“At the same time, a fashion for breast-feeding took hold among high-society women, a group who had never before concerned themselves with babies who now insisted on suckling their infants in order to fit in with progressive notions regarding motherhood. Women who hardly knew where the nursery was in their own house began compulsively exposing their breasts, often between courses of luncheons and dinners. Once again, the cartoonists stepped in to call for moderation.”

-Alain de Botton, Status Anxiety, pp. 164-166

In some cultures, the artists’ role is still very controversial. Fashions and fads need to be seen within the broad context of time and phase of the society.

* The picture above, A fashionable mother breastfeeding her baby, Coloured etching by James Gillray, English, 1796; James Gillray is best known for biting political satires, but in this piece he pokes fun at a fashionable society woman, fully dressed for an evening out. This 'fashionable mamma' is wearing a dress with slits across the breast so that she can feed her baby before she dashes off to the carriage waiting outside. This mamma is fashionable because, instead of following the earlier 18th-century practice of farming babies out to professional 'wet-nurses', she is following Jean-Jacques Rousseau's fashionable theories of a "return to nature" and is breast-feeding the baby herself.

One Percent Doctrine in Real Life

John Allen Paulos column on the One Percent Doctrine;

“…Suskind describes the Cheney doctrine as follows: "Even if there's just a 1 percent chance of the unimaginable coming due, act as if it is a certainty. It's not about 'our analysis,' as Cheney said. It's about 'our response.' … Justified or not, fact-based or not, 'our response' is what matters. As to 'evidence,' the bar was set so low that the word itself almost didn't apply."…

Imagine what would happen in various everyday situations were the Cheney doctrine to be applied. A young man is in a bar and another man gives him a hard stare. If the young Cheneyite feels threatened and believes the probability to be at least 1 percent that the other man will shoot him, then he has a right to preemptively shoot him in "self-defense."

Or an older woman visits her Cheneyite doctor who, finding that the woman has suffered from a sore throat and fatigue for months, orders that she be put on chemotherapy since the likelihood of cancer is in his opinion at least 1 percent. Further tests, he might argue, would take too long.

A Cheneyite gambler would be a casino's dream. The chance of rolling a 12 with a pair of dice, for example, is 1/36, almost 3 percent, and hence would justify the gambler betting his house on rolling a 12.

And what about a Cheneyite scientist, hard as that may be to conceive? If this scientist decided that the "evidence" for some crackpot scientific theory suggested to him that its probability were at least 1 percent, the scientist would feel comfortable touting it as a reasonable alternative to established theory."

Afghanistan’s Other War

Washington Post writes;

“In recent weeks, the Western-backed government of President Hamid Karzai has moved aggressively to crack down on what Afghans call imported vices. He is acting partly in response to pressure from domestic religious leaders and partly to upstage Islamic Taliban insurgents who are stepping up attacks across the south.

Police in this capital of 4 million, which is also home to several thousand foreigners, have raided about a dozen restaurants and shops suspected of selling alcohol to Afghans and have seized and destroyed thousands of bottles. Officers have detained more than 100 Chinese women as suspected prostitutes, seven of whom were deported at the airport here Wednesday.

The cabinet also approved reviving the Department for the Promotion of Virtue and the Discouragement of Vice, a body that Afghan governments have maintained through much of the country's history. It became notoriously punitive under Taliban rule, from 1996 to 2001, when turbaned enforcers whipped women if their veils slipped and arrested men for wearing too-short beards or playing chess...

"We would be as different from the Taliban as earth and sky," said Sulieman Hamid, an official of the Ministry of Hajj and Religious Affairs who would oversee the virtue and vice monitors. "They used Islam for political purposes. We only want to stop people from committing bad acts and help maintain the honor of Islam."…

"It is very difficult for people here to say they are against the virtue and vice committee, but I am against a department that could be a way of bringing the extremists back," said Shukria Barakzai, a female legislator. "If they want to do something about corruption and domestic violence, fine, but I don't need a department to decide if I am a bad or a good Muslim."

The Story of the Toddy Thief


Dhivehi Observer’s editor explains why he calls Mr. Gayoom, president of Maldives, Golhaabo;

Toddy 'is the sweet sap of a variety of Asian palm tree used as a beverage, either fresh or fermented'. Toddy collecting is a long standing traditional occupation in the Maldives, but despite being hard and risky, it does not provide a substantial income. In fact, they are classed amongst the lowest income earners. To collect the toddy, the flower casing (bud) is cut at the top end before it blossoms and an empty coconut shell is hung to collect the drip (sap). It can take several hours to fill a shell, which usually has a capacity of about 500 ml. This coconut shell collector is locally called 'Golhaa', a word that originated from snail shell because it looks like a coconut shell according to linguists. When filled, the collector, known locally as 'Raaveriya' (toddy collector) or 'Ruh Araameeha' (palm tree climber) climbs up the tree and empties the toddy into a container made of two coconut shells in a vertical configuration, called 'Raa Badhi'. Raaveriyaa then walks around the island selling the toddy by the glass, and if he cannot sell his daily collection, it is cooked to make liquid sugar called 'Dhiyaa Hakuru', which the Maldivians love to eat with rice, coconut and dried fish, in addition to being a main ingredient for several local sweet dishes, such as cakes and sweet breadfruit dessert, among other.

The addition of 'bo' to 'Golhaa' to form 'Golhaabo' came as follows. Down South, in an island, there was a notorious thief, who would drink the hard collected toddy from the Golhaas before the toddy collector could climb up and fetch it. When the people of the island found out about this person, they named him 'Golhaabo', where 'bo' literally means 'drinker', because he steals from the Golhaas and drinks the toddy, taking away the hard earned produce of the toddy collector. People of the island made fun of him and soon he migrated to Male', the capital but even in the capital people shouted 'Golhaabo' at him every time they saw him and in retaliation, he would scream abuse at the people and even sometimes run after small children (in the same way now Golhaa Force, Gayyoom's militia police, runs after and beats the hell out of our youth when they chant 'Golhaabo Faibaa' (Get Off Golhaabo) during demonstrations and gatherings). In fact, it was this old man who was named 'Golhaabo' initially, after being tortured by Gayyoom several times for no reason, that went near the Presidential Palace and shouted "It is true I stole and drank the toddy of a destitute poor toddy collector, it is true I stole his hard earnings, but I was hungry, but look at you 'Maumoon', you are drinking the produce of every single Maldivian, so the title Golhaabo is more suited for you than me, you are the real 'Golhaabo', not me, you are stealing mercilessly from the poorest of the poor". After this incident, the poor soul was tortured, injected with tranquilisers and has been held captive at a mental institute after declaring him insane.”

A DO commentator thinks that people identifying Mr. Gayoom as ‘Golhaabo’ represents a political maturing of Maldivians- which we find hard to accept.The culture of small island communities may also explain the popularity of ‘name calling’.

* The picture shows 'Raa Badhi'- the small container for toddy collection made from coconut shells.

Related; Peter Boettke has an interesting post on tension between rational choice theory and anthropology.

The Man who invented McSurgery

| 1 Comment

dr v.jpg
I am not an idea man, the task is not to aspire to some heaven but to make everyday life divine."- Dr. V

Wall Street Journal has an obituary of Govindappa Venkataswamy, eye-care pioneer (1918-2006), founder of the Aravind Eye Care System ;

“With 2.4 million served, the Aravind Eye Care System in India is in a way the McDonald's of cataract surgery: efficient, effective, influential and -- rare for health care in the developing world -- a clear financial success.

It began with one man, Govindappa Venkataswamy, an ophthalmologist who died July 7 at age 87 after a long illness. Dr. V, as he was universally known, created one of the largest eye-care systems in the world, catering largely to the poor in Tamil Nadu, a state in southern India. He was inspired, Aravind says, by the assembly-line model of McDonald's founder Roy Kroc -- learned during a visit to Hamburger University in Oak Brook, Ill.

Building on those lessons, he created a system for sight-saving cataract surgeries that produces enviable medical outcomes in one of the poorest regions of the globe. Its rapid expansion over three decades was not built through government grants, aid-agency donations or bank loans. Instead, Dr. V took the unusual step of asking even poor patients to pay whenever they could, believing the volume of paying business would sustain the rest. Poor people with cataracts in Tamil Nadu can get their sight restored for about $40. If they can't afford that, it's free."

Trade and CGE Models

The Economist a couple of weeks back had a good article on economic models;

“Economic models fall into two broad genres. Macroeconomic models, the distant descendants of Phillips's machine, belong mostly in central banks. They capture the economy's ups and downs, providing a compass for the folks with their hands on the monetary tiller. The second species, known as computable general equilibrium (CGE) models, largely ignore the vagaries of the business cycle. They concentrate instead on the underlying structure of production, shedding light on the long-term repercussions of such things as the Doha trade round, a big tax reform or climate change…

Trade's virtuous effects are of two distinct kinds. First, trade helps countries make the most of what they already have. It frees countries to allocate their resources—whether they be cheap labour, fertile land or educated minds—as efficiently as possible. But, secondly, trade can also allow countries to accumulate resources more quickly. Indeed, the biggest prizes lie in faster growth, not heightened efficiency; in accumulation and innovation, not allocation.

By their nature, CGE models are better suited to capturing the first effect than the second. They provide “before and after” snapshots of the economy at two points in time. They are therefore good at capturing the one-off gains that might arrive from a redeployment of the economy's resources. They are much less good at capturing the continuing gains that result from a faster accumulation of capital, or a quickened pace of productivity growth. Most trade models, indeed, hold productivity fixed…”

Oxfam recently had a new paper up critiquing the CGE modelling in trade- Modelling the Impact of Trade Liberalisation; A Critique of Computable General Equilibrium Models, by Lance Taylor and Rudiger von Arnim, New School for Social Research;

Podcasts of the Day- Amartya Sen and Morality

Amartya Sen talks about his new book, Identity and Violence: The Illusion of Destiny- via a cool economics blog, Endogenous preferences, by an economist at University of Helsinki.

What is Morality?; Is morality about what we do or who we are? Should we try to do the right thing or should we try to be the sort of person who does the right thing - and what's the difference? Podcast from Radio National’s Philosophers Zone.

Identity and Violence – Amartya Sen
More on 'Identity and Violence'

Richard Easterlin’s book The Reluctant Economist should be more widely read; some excerpts from the first chapter (emphasis mine) -

“Economic theory, as taught to undergraduate and graduate students, starts from the assumption that preferences are given and unchanging. Yet a little reflection by economists on their graduate school experience should disabuse them of this notion. Graduate school not only teaches subject matter but also the values of the economics profession – what are the important subjects of economic research, what is the status hierarchy of the profession, which individuals are the proper role models. Graduate training is indoctrination (Klamer and Colander 1990; Reder 1999)…

I took two courses from Kuznets, one in statistics, which chiefly conveyed a strong skepticism toward the field and urged the use of simple, understandable methods, and one in economic development, which was essentially a course in general economic history. This development course, too, transmitted a strong sense of skepticism, not, however, toward economic history but toward economic theory. Kuznets’s basic point was simple: the “givens” of economics – technology, tastes, and institutions – are the key actors in historical change, and hence most economic theory has, at best, only limited relevance to understanding long-term change. In Kuznets’s view, what was then called “development theory” – even the widely hailed work of Schumpeter – lacked concrete empirical reference.

I was impressed by Kuznets’s intellect, as were graduate economics students generally, but these courses did not make me into a Kuznetsian. Rather, it was chiefly what Kuznets wrote. As a graduate student, I collaborated on several studies of national income with Raymond T. Bowman, the economics department chairman and a great admirer of Kuznets. Thanks largely to Bowman’s urging, I also did a thesis under Kuznets’s direction on conceptual aspects of the measurement of economic growth. As a result of these two lines of work, I read virtually everything Kuznets had written on national income and economic growth. It was this reading that demonstrated for me the scope, depth, and brilliance of Kuznets’s mind.

Kuznets believed that insight into other times and places started not from economic theory but from knowledge of the facts – especially quantitative facts. It is typical of Kuznets that one of his rare speculative pieces, “Towards a Theory of Economic Growth,” is mostly devoted to summarizing the facts that growth theory must explain. In the present age of endogenous technical change and the “new” growth theory, this article remains well worth reading (Kuznets 1955, see also Kuznets 1966).

Biology Determined Culture

Here’s an abstract of an interesting paper, ‘Can the common brain parasite, Toxoplasma gondii, influence human culture? by Kevin D. Lafferty ;

The latent prevalence of a long-lived and common brain parasite, Toxoplasma gondii, explains a statistically significant portion of the variance in aggregate neuroticism among populations, as well as in the ‘neurotic’ cultural dimensions of sex roles and uncertainty avoidance. Spurious or non-causal correlations between aggregate personality and aspects of climate and culture that influence T. gondii transmission could also drive these patterns. A link between culture and T. gondii hypothetically results from a behavioural manipulation that the parasite uses to increase its transmission to the next host in the life cycle: a cat. While latent toxoplasmosis is usually benign, the parasite's subtle effect on individual personality appears to alter the aggregate personality at the population level. Drivers of the geographical variation in the prevalence of this parasite include the effects of climate on the persistence of infectious stages in soil, the cultural practices of food preparation and cats as pets. Some variation in culture, therefore, may ultimately be related to how climate affects the distribution of T. gondii, though the results only explain a fraction of the variation in two of the four cultural dimensions, suggesting that if T. gondii does influence human culture, it is only one among many factors.”

Parasite culture
A Common Parasite Reveals Its Strongest Asset: Stealth
A Nation of Neurotics? Blame the Puppet Masters?; "Lafferty made three straightforward observations.

1. Toxoplasma infection rates vary from country to country. South Korea has prevalance rate of only 4.3%, for example, while Brazil's rate is 66.9%. These rates are determined by many factors, from the eating habits in a country (steak tartar, anyone?) to its climate (Toxoplasma oocysts survive longer in warm tropical soil).

2. Psychologists have measured some of the personality traits influenced by Toxoplasma in these countries. People with Toxoplasma tend to be more self-doubting and insecure, among other things. Among the differences in men, Toxoplasma is associated with less interest in seeking novelty. Toxoplasma-infected women are more open-hearted.

3. A nation's culture can be described, at least in part, as the aggregation of its members' personalities."

Randomized Trials Do Work


An example of randomized control trial used for a program evaluation;

“Career Academies is an educational program that enrolls middle and high school student applicants in academic and technical courses in small learning communities with a career theme and partnership with local employers. Participants’ high school graduation rates are one of the outcome measures of interest. A well-designed RCT of over 1,700 students that randomly assigned student applicants into an Academy or into a non-Academy control group that continued regular schooling found that the intervention did not result in increased graduation rates at the eight year follow-up. By contrast, if the evaluation had used a comparison group design comprised of like students from similar schools, the evaluation would have concluded erroneously that Career Academies increased the graduation rate by a large and statistically significant 33 percent.”

-Source; What Constitutes Strong Evidence of a Program’s Effectiveness?

Peak Oil Theory of the war on Lebanon

onepercentdoctrine_cover.jpgJuan Cole tries a ‘thought experiment’ to explain the US support for the Israeli war on Lebanon;

“I've had a message from a European reader that leads me to consider a Peak Oil Theory of the US-Israeli war on Lebanon (and by proxy on Iran). I say, "consider" the "theory" because this is a thought experiment. I put it on the table to see if it can be knocked down, the way you would preliminary hypotheses in a science experiment…

The regime in Iran has not gone away despite decades of hostility toward it by Washington, and despite the latter's policy of "containment." As a result, US petroleum corporations are denied significant opportunities for investment in the Iranian petroleum sector. Worse, Iran has made a big energy deal with China and is negotiating with India. As those two countries emerge as the superpowers of the 21st century, they will attempt to lock up Gulf petroleum and gas in proprietary contracts.

(Since it is already coming up in the comments, I should note that the "fungibility" (easy exchange) of oil is less important in the new environment than it used to be. US petroleum companies would like to go back to actually owning fields in the Middle East, since there are big profits to be made if you get to decide when you take it out of the ground. As Chinese and Indian competition for the increasingly scarce resource heats up, exclusive contracts will be struck. When I floated the fungibility of petroleum as a reason for which the Iraq War could not be only about oil, at a talk at Columbia's Earth Institute last year, Jeffrey Sachs surprised me by disagreeing with me. In our new environment, oil is becoming a commodity over which it really does make sense to fight for control.)…

In a worst case scenario, Washington would like to retain the option of military action against Iran, so as to gain access to its resources and deny them to rivals. If Iran gets a nuclear weapon, however, that option will be foreclosed. Iran may not be trying for a weapon, and if it is, it could not get one before about 2016. But if it had a nuclear weapon, it would be off limits to US attack, and its anti-American regime could not only lock up Iranian gas and oil for the rest of the century by making sweetheart deals with China. It also might begin to exercise a sway over the small energy-producing countries of the Middle East. (The oil interest would explain the mystery of why Washington just does not care that Pakistan has the Bomb; Pakistan has nothing Washington wants and so there was no need to preserve the military option in its regard.)…

The Herd Instinct and the rise of SUVs

| 1 Comment

Robert Frank tries to explain the rise of fall of SUVs- to a lot of people it will seem quite obvious;

“Economists increasingly recognize the importance of herd behavior in explaining ordinary purchase decisions. A case in point is the sport utility vehicle. Herd behavior helps us understand not only the explosive rise of this market segment in the 1990’s, but also its imminent collapse…

The conventional determinants of consumer demand cannot explain this astonishing trajectory. Cheap fuel was a contributing factor, but clearly not an adequate explanation, because fuel had also been cheap in earlier decades. Similarly, rising average incomes cannot have been decisive, because the pre-S.U.V. decades had experienced even more rapid income growth…

To understand the explosive growth of S.U.V. sales, we must look first to changes in demand caused by new patterns of income growth and then to how others responded to those changes in demand. Unlike the three post-World War II decades, when incomes grew at about the same rate for people at all income levels, the period since the mid-1970’s has seen most income growth accrue to the wealthy

An important feature of the herd instinct is that people are more likely to emulate others with higher incomes. Seeing a wealthy studio executive behind the wheel of a Range Rover instantly certified it as a player’s ride. As more and more high-income buyers purchased these vehicles, their allure grew. And when other automakers began offering similar vehicles at lower prices, S.U.V. sales took off…”

For Comment; Do readers of newspapers really appreciate economists telling them things that appear ‘common sense’? How does topics for op-eds get decided? Does the writer get paid or tipped to write about certain products and issues?

Via Michael Blowhard

Cost of Conflicts


“According to the nonprofit Iraq Body Count Database Project(, between 34,000 and 39,000 Iraqis had died as a result of the conflict by the end of April 2006. While any estimates are controversial, these numbers are actually quite close to theestimate of 30,000 Iraqi casualties that President Bush provided in December 2005. Using the low end of the estimated number of casualties and a VSL calibrated to Iraq’s prewar GDP per capita, the cost of Iraqi lives lost so far tops $150 billion.”

-The Iraq War: The Economic Costs, Milken Institute Review (a quarterly magazine from the Milken Institute, freely available with registration)

Fiasco, Fiasco II, Fiasco III
Lebanon’s Future- podcast
Iraqis are Chicken
World Peace Through Films? – a must see presentation by Jehane Noujaim at TED conference

Wal-Mart’s CEO Lee Scott on Charlie Rose

Charlie Rose interviews Lee Scott, CEO of Wal-Mart.


Wal-Mart; The behemoth from Bentonville (a couple of book reviews)

Measuring the Wal-Mart effect;

"America is home to more Wal-Mart employees (1.3m) than high-school teachers. A typical store is manned by 150-350 people; the bigger “supercentres”, which sell groceries, employ 400-500. But even as Wal-Mart creates some jobs, it displaces others. What is the net effect? According to the company, “new businesses spring up near Wal-Marts and existing stores flourish as they take advantage of the increased customer flow to and from our stores.” Global Insight reckons that a 100,000 square-foot (9,300 square-metre) Wal-Mart creates 97 retail jobs, after the dust has settled, but destroys 30 in wholesale.”

For people outside the US, it is not very clear why there’s such a controversy about Wal-Mart in the States.

Two articles on the history of Wikipedia via Marginal Revolution; The Hive and Can Wikipedia conquer expertise?

Another explanation from The Economist;

“This success has made Wikipedia the most famous example of a wider wiki phenomenon. Wikis are web pages that allow anybody who is allowed to log into them to change them. In Wikipedia's case, that happens to be anybody at all. The word “wiki” comes from the Hawaiian word for “quick”, but also stands for “what I know is...”. Wikis are thus the purest form of participatory creativity and intellectual sharing, and represent “a socialisation of expertise”, as David Weinberger, who is currently writing a book on collaborative intelligence, puts it.

Among the new media, wikis are the perfect complement to blogs. Whereas blogs contain the unedited, opinionated voice of one person, wikis explicitly and literally allow groups of people to get on the proverbial “same page”. This is the main reason for the failure of a Los Angeles Times experiment with wikitorials, described in the previous article. Wikis are good at summarising debates, but they are ill-suited for biased opinion.”

Here’s Colbert’s attempt at explaining the Wikipedia; see also this video.

The major innovation I’m looking forward is when the Wikibooks gets a real take off- I don’t think it’s wikiality!

Yerkes-Dodson law and War in Iraq

menwomen mental.gif
NYT has an article on a study of the effects of military duty in Iraq and its effect on mental capacity;

“A large study of Army troops found that soldiers recently returned from duty in Iraq were highly likely to show subtle lapses in memory and in ability to focus, a deficit that often persisted for more than two months after they arrived home, researchers are reporting today…

The research team led by Dr. Vasterling administered a battery of mental tests to 654 male and female soldiers who served in Iraq at various times from April 2003 to May 2005. The tests, more than 20 in all, were given before and after deployment, and included one in which participants had to pay close attention to a computer screen as letters flashed by, waiting to flag each F they saw. In another test, they were asked to memorize simple diagrams and try to recreate them 30 minutes later.

The soldiers did significantly worse in tasks that measured spatial memory, verbal memory and their ability to focus than did 307 soldiers who had not been deployed to Iraq.

But the returning soldiers scored about the same as their peers on most of the other tests. And they outperformed those who had not been deployed in a test of reaction time, measured in the fraction of a second it takes to spot a computer icon and react. This finding in itself suggests that the soldiers’ minds had adapted to the dangerous, snap-judgment conditions of war, experts said. ..

In effect, the brain, like the rest of the body, builds the muscles it most uses, sometimes at the expense of other abilities, say psychologists who study short-term memory and concentration. If reaction time is more critical to survival than verbal memory, the brain will devote its limited resources to that mental quickness.”

Via The Frontal Cortex blog; a commentator invokes the Yerkes-Dodson law to explain the effect.

I wonder whether there were marked differences among the sexes.

Related; Differences between the sexes; The mismeasure of woman- an article from the latest edition of The Economist, the chart above from the article.

Iraq Quote of the Day

fiasco.jpg"President George W. Bush's decision to invade Iraq in 2003 ultimately may come to be seen as one of the most profligate actions in the history of American foreign policy. The consequences of his choice won't be clear for decades, but it already is abundantly apparent in mid-2006 that the US government went to war in Iraq with scant solid international support and on the basis of incorrect information -- about weapons of mass destruction and a supposed nexus between Saddam Hussein and Al Qaeda's terrorism -- and then occupied the country negligently. Thousands of US troops and an untold number of Iraqis have died. Hundreds of billions of dollars have been spent, many of them squandered. Democracy may yet come to Iraq and the region, but so too may civil war or a regional conflagration, which in turn could lead to spiraling oil prices and a global economic shock."

- Thomas Ricks, Fiasco: The American Military Adventure in Iraq, via David Warsh

A review of the book from NYT.

Lomberg with Fareed Zakaria

The latest Foreign Exchange show is up; discusses change in Saudi Arabia, interview with Lomberg, Mexican immigrants and a perspective on Dubai.

“While many rulers flush with oil profits are wasting their opportunity to build for their future, Dubai is going against the stream and it is not going unnoticed. Both Bahrain and Qatar are now trying to join Dubai as the world’s premier tourist destination. This summer you may be visiting Europe or Yosemite, but soon your flight plans may take you to the Middle East for rest and relaxation.”

The previous two shows are also worth a look.

Identity and Violence – Amartya Sen

Prospect magazine reviews Amartya Sen’s latest book;

“At the heart of the book is an argument against what Sen calls the communitarian view of identity—the belief that identity is something to be "discovered" rather than chosen. "There is a certain way of being human that is my way," the Canadian philosopher Charles Taylor wrote in his much-discussed essay "The Politics of Recognition." "I am called upon to live my life in this way." But who does the calling? Seemingly the identity itself. For Taylor, as for many communitarians, identity appears to come first, with the human actor following in its shadow. Or, as the philosopher John Gray has put it, identities are "a matter of fate, not choice."

Sen will have none of it. "There are two issues here," he says when I meet him at King's College, Cambridge, where he was master until returning to Harvard two years ago. "First, the recognition that identities are robustly plural and the importance of one identity need not obliterate another. And second, that a person has to make choices about what relative importance to attach, in a particular context, to their divergent loyalties and identities. The individual belongs to many different groups and it's up to him or her to decide which of those groups he or she would like to give priority to." We are multitudes and we can choose among our multitudes.

Singapore, a heaven for corrupt cronies?

| 1 Comment

In an earlier post I mentioned that Professor Acemoglu doesn’t think that Singapore is a democracy. The following article suggests the country’s financial sector also has serious flaws of transparency;

“Singapore finally agreed to negotiate an extradition treaty last year after years of Indonesia begging for one. The process has been ridiculously drawn out. At least six rounds of talks have been held. Indonesia is angry and feels that Singapore is being obstructionist. But why should Singapore be slow? Probably because it is a haven for Indonesian crooks on the run, and they bring their money with them. Billions of dollars in corruptly obtained funds have flowed into Singapore's property market and its banks.

It's a sensitive matter because financial services account for 22 per cent of Singapore's economy. You can imagine the situation from Jakarta's point of view. Singapore lectures Indonesia about the importance of the rule of law while giving its criminals a haven….

The US doesn't have an extradition treaty with Indonesia but co-operation by US officials saw the fugitive Indonesian David Nusa Wijaya, wanted in connection with embezzlement of about $US140 million, return to Indonesia from San Francisco earlier this year….

Kenneth Rogoff, a professor of economics at Harvard University and former chief economist at the International Monetary Fund, talks about the outlook for global economic growth, Treasury Secretary Henry Paulson and the IMF's role in global economics at Bloomberg. Listen to the podcast.

Graham Vickery gives an overview of the information and communication technologies (ICT) industry for the OECD countries for 2006. Topics discussed amongst others; Market growth across the OECD and Non-OECD ICT markets, Top 250 ICT firms, World semiconductor market 1990-2005, Structural change in the ICT sector, ICT globalisation and trade, New trade competition, ICT-enabled service globalisation and offshoring; China and ICTs; ICT skills and employment; IT policy in OECD countries. Podcast from Radioeconomics.

Some highlights from a major speech by IMF Managing Director at Center for Global Development today;

“Earlier this year, I set out a road map for implementing the International Monetary Fund's Medium-Term Strategy. This afternoon I want to talk about a particular aspect of the strategy: the Fund's relationship with low-income countries…

The Medium-Term Strategy is based on the premise that the Fund needs to adapt to help all of its members deal with the challenges of 21st century globalization. The strategy covers all areas of the Fund's activities, including the way we conduct surveillance of individual members' economies and of the global economy; our instruments for preventing and dealing with crises in emerging markets; and the Fund's own governance. The measures proposed in the strategy are important not only for systemically important countries and emerging markets, but also for low-income countries. Tackling global imbalances will reduce the risk of chaotic exchange rate movements, abrupt shifts in financial markets, and crippling protectionism. Avoiding crises in emerging markets will help keep down the cost of low-income countries' borrowing and maintain demand for their exports. And low-income countries as well as clearly underrepresented emerging markets have reason to be concerned about their voice and representation in the Fund.

Telling countries to avoid debt is likely to be most effective if we can offer them alternative sources of finance. As the Irish playwright George Bernard Shaw wrote, "I can't talk religion to a man with bodily hunger in his eyes." It is therefore important that the international community address the urgent needs of low-income countries by offering sufficient grants and highly concessional loans to enable them to finance development without relying on expensive debt. This leads me to the second part of the Gleneagles compact: a significant increase in aid.


Powered by Movable Type 5.02

About this Archive

This page is an archive of entries from August 2006 listed from newest to oldest.

July 2006 is the previous archive.

September 2006 is the next archive.

Find recent content on the main index or look in the archives to find all content.