Truck and Barter

Al Qaeda’s Strategic Vision

Here’s a translation of what is said to be a key document of Al Qaeda; The Management of Savagery (via The Blotter). Some things that caught my eye in the book;

“The most important skill of the art of administration that we must use is learning how to establish committees and specializations and dividing labor so that all the activities do not fall on the shoulders of a single person or small group of people, in addition to training all of the individuals and passing on practical knowledge until (the point is reached) that if one manager disappears another will arise (to take his place). And it is necessary that each individual be trained in all or a large part of the branches so that it is possible to pass on skills, according to need, from one place to another. Of course, this is without the individuals knowing the secrets of the branches in which they do not work; rather, I mean training and passing on practical knowledge, such as skills and techniques, and no more.

The mastery of the art of administration saves a lot of time and blesses the effort exerted (to acquire it), especially since we are in a race against time and we need to undertake any effort in such a way that we get the best results….

We must make use of books on the subject of administration, especially the management studies and theories which have been recently published, since they are consonant with the nature of modern societies. There is more than one site on the Internet in which one can obtain management books.”

Related;

What makes al-Qaeda a global learning network?

Al-Qaida in Action and Learning: A Systems Approach

News Coverage Granger Causes Terrorism

Fashion Terrorists

Earlier blog posts; The Psychology of Terrorism, Bin Laden Studied Economics, The Appeal of Bin Laden and Al-Qaida

The photo is that of a niece of Bin Laden.

US Government through Google

Google has a new feature- Google US Government Search;

I tried searching for following report from GAO about Treasury’s influence on advancing US interests in the IMF- I couldn’t find it through the Google search engine. Here’s the findings in brief;

“The Department of the Treasury has sustained a formal process for advancing U.S. policies at the IMF. A task force facilitates coordination between Treasury and the U.S. Executive Director and identifies early opportunities to influence decisions of IMF members. Since our September 2005 report, the task force has continued to meet on a regular basis to identify opportunities to advance legislative mandates at the IMF. Treasury continues to promote the task force as a tool for monitoring and promoting legislative mandates and other policy priorities by, for example, including discussion on crosscutting policy issues such as debt relief and focusing attention n on both present and prospective IMF programs.

We have identified 70 legislative mandates that prescribe U.S. policy goals at the IMF, which is similar to the numbers we reported in our previous reports. Since our last report, 9 mandates have either replaced older mandates or represented amendments to mandates, and 1 mandate, concerning direct support to the central government of Cambodia, has expired. Treasury continues to notify the U.S. Executive Director about new mandates through instruction letters.”

Creative Destruction

Why do Galaxies Exist? How have they evolved and what lies at the centre of a galaxy to make the stars dance round it at such colossal speeds?

The latest podcast from BBC’s ‘In Our Time’ show featuring John Gribbin, Visiting Fellow in Astronomy at the University of Sussex, Carolin Crawford, Royal Society University Research Fellow at the Institute of Astronomy at Cambridge and Robert Kennicutt, Plumian Professor of Astronomy and Experimental Philosophy at the University of Cambridge

Related;

Astronomy Picture of the Day

Astronomy Blogs; Tom’s Astronomy Blog, Astronomy Blog, Astronomy a Go-Go, Slacker Astronomy, Universe Today, The Night Sky,

Space & Astronomy News

Sloan Digital Sky Survey

In the beginnings; Young solar systems are like cosmic snooker games, and the universe is flat

Look up on the 4th of July

See also Nature podcasts

Stylized facts about regional disparities of growth in India

The latest IMF survey summarized the working paper ‘Mind the Gap - Is Economic Growth in India Leaving Some States Behind?’ in which the author examines how economic growth has varied across India's states. The following five are given as stylized facts about growth in India.

1. The gap between in income levels across states is widening.

2. Richer and faster-growing states are generally better at reducing poverty.

3. Poor and slower-growing states generated fewer private sector jobs.

4. Capital and labor flows do little to address imbalances in economic activity and
income across states.

5. Growth has been the most volatile in the poorest states.

Some more statistics;

-Between 2006 and 2051, about 60 percent of the projected 620 million increase in the Indian population is expected to occur in three of its poorest states (Bihar, Madhya Pradesh, and Uttar Pradesh)

- The ratio of average per capita income in India’s richest state, Punjab, to that in its poorest state, Bihar, rose to 4.5 percent in 2004, from 3.4 percent in 1970. The pace of growth in real per capita income in India’s fastest-growing states—just over 3 percent a year—has been more than twice as fast as that in the slower-growing poor states.

- On average, richer states have been about 50 percent more effective in reducing poverty, for each percentage point of growth, than poorer states. The pace of job creation in middle- and high-income states has far outstripped that in poorer states. India’s poorest and most populous states account for about 40 percent of the population but capture only one-fourth of jobs in the organized sector.

- About 55 percent of outstanding bank loans in India in FY2004/05 were to borrowers in the five richest states, whereas borrowers in the five poorest states accounted for a mere 15 percent. Moreover, over half of the foreign direct investment inflows into India in recent years have gone to five largely prosperous states.

- Only 6 percent of migration in rural areas and 20 percent of migration in urban areas in recent years has occurred across state borders.

- Take, for example, one of India’s richest and fastest-growing states, Maharashtra (which includes the financial capital of India, Mumbai). It was less successful in translating its growth into jobs and poverty reduction over the past three decades than Rajasthan, which grew much more slowly than the national average (see table).

- Using district-level data, Abhijit Banerjee and Lakshmi Iyer found that areas in which proprietary land rights were historically given to landlords had significantly lower agricultural investment and productivity after independence than areas in which these rights were given to cultivators.

For comment; Why is that female literary is not found to have a significant exogenous impact on states’ growth performance (coefficients are in fact negative)?

Related links;

Economic Growth in South Asia- a recent report from World Bank

Reports on India from Planning Commission

Indian States Database

Water in India; The cost of boom times in India is a surge in demand for everything - and top of the list is water. Industry, agriculture, households in middle class suburbs and global corporations all want as much as they can get. Is privatisation the answer when governments are struggling?

A Tale of Two Giants: India's and China's Experience with Reform and Growth. See also the panel discussion on the topic; China’s economy is three times larger than India’s and contributes significantly more to global economic growth.

Podcast of the Day- OECD Employment Outlook 2006

Latest podcast from RadioEconomics. Raymond Torres, Head of the Employment Analysis and Policy Division, OECD (Paris), discusses the “OECD Employment Outlook 2006.” Areas covered: Purpose, fundamental assumptions and principles of the OECD Jobs Strategy and why it was re-evaluated; overview of the “OECD Employment Outlook 2006”; how the OECD proposes to boost jobs and incomes; is there an immigration problem in the OECD; major concerns and opportunities about employment in the future.

Related around the blogs;

Europe's no basket case

Union decline in 24 countries

Employment

German Business Optimistic, While Individual Germans Save Rather Than Spend

British Success in Employment Rate

Working Hours

Intricate workings- summary of the Employment Outlook from The Economist

The World Cup Paradox

“ I mean the--the World Cup is a paradox because it’s at once a great spectacle of globalization fueled by multi-national corporations giving the world this common language of soccer, but at the same time it’s--it’s a festival of nationalism, so people thought that globalization was going to smush nationalism and the World Cup proves that it can actually facilitate nationalism.”

Franklin Foer, author of How Soccer Explains the World- An Unlikely Theory of Globalization

More from the latest Foreign Exchange show with Fareed Zakaria.

Movie Recommendation from World Bank

“If you cannot imagine how a movie about electricity privatization can move you to tears …” - Jonathan Walters, World Bank

Pablo recommends the film ‘Power Trip’- a documentary about electricity privatization in the former Soviet republic of Georgia. Watching the trailer it gave me the feeling it was very one-sided as commented by one critic;

“Paul Devlin's documentary focuses on Piers Lewis, project director of AES-Telasi. A former classmate of Devlin's, their relationship slants the film in favor of AES managers, portraying them as a fun-loving group of world travelers on an altruistic crusade to save a picturesque country from a descent into a new dark age…

While his interviews with Lewis, AES general director Michael Scholey and CEO Dennis Bakke amply express management's point of view, the people of Tbilisi are either portrayed as thieves who vandalize company equipment, rigging dangerous and illegal connections to siphon off the electricity, or are shown in various stages of distress. Devlin takes his camera into the street to film impressions of the people, but he shoots them, not as individuals, but as a chaotic mob..”

Here is John Giraudo, VP and Chief Compliance Officer, AES Corp. talking about corruption;

“My company, The AES Corporation, is in the thick of improving economic development. We provide an essential good— electricity to many third world countries—27 countries in fact. We are part of the local infrastructure in Venezuela, Brazil, Argentina, Nigeria, China, India, Pakistan, Ukraine, Kazakhstan and many other developing countries. Through 15 distribution companies we deliver electricity to more than 10 million people---for example we keep the lights on for nearly everyone in the city of San Paolo Brazil, the entire country of Cameroon and many of the suburbs of Kiev. As a company, listed on the US stock exchange, we are one of the biggest channels of private sector money to poor countries. It is difficult to think of another private-sector company with such a large investment in third world infrastructure.

Because of our presence in all these places in the world we see lots of corruption—petty corruption and official corruption. Indeed, the biggest challenge our people face in doing business overseas is to resist the corruption around us…”

Now I think I would definitely see the film. I wonder what Georgians think of the movie.

More reviews; The Boston Globe, Village Voice

Corruption of Corruption Watch Dogs

BBC reports that the head of TI Kenya has been sacked over fraud (via Tom Palmer). Earlier I posted about Mr.Githongo.

Nowadays everyone’s favorite topic seems to be corruption and the huge costs it imposes on the society. Why has corruption become such an important topic for the international development community? Has it anything to do with the end of the cold war and the need for international development agencies to find another rational for helping developing countries under the mantra of improving governance?

Related;

Tyler Cowen on the driving license corruption in India - see also this video about what it actually means to be driving in India.

More the same paper at PSD blog- Corruption kills.

Iraqi Virtual Science Library

NYT reports that the number of children enrolled in schools in Iraq rose by 7.4 percent from 2002 to 2005, and in middle schools and high schools by 27 percent in that time- Iraq was once the most educated in the middle-east.

Here is a site that’s an interesting educational initiative- Iraqi Virtual Science Library which provides free, full-text access to thousands of scientific journals from major publishers as well as a large collection of on-line educational materials.

Interestingly contributors does not include multilateral agencies like UN or the World Bank. See also Fighting Poverty with the Espresso Book Machine

Related;

Solution: Break Up Iraq; Reality: It's Not So Easy- have a look at the multimedia on Iraqi cities.

The Zarqawi effect-Bush's Mideast policies have turned a brutal terrorist into an icon of resistance -- and made violent fundamentalism more popular. Juan Cole at Salon.

Iraq’s oil production improves; Iraq's oil minister Hussain al-Shahristani offered an optimistic forecast for the country's industry on Sunday, saying daily output has reached 2.5 million barrels and that Iraq hoped to rival top exporter Saudi Arabia within a decade.

Podcast of the Day- Chinese Spirituality

The Way is how Confucius described his system of moral education, contained in the Analects. The Way is also the path found in the Daoist text, the Daodejing, a nameless, hidden truth that cannot be pursued but only spontaneously manifested. And even older than these, the Yi Jing (also, I Ching or Book of Changes) continues to inform the Chinese on every aspect of life from building homes to auspicious dates. Listen to the podcast. More links at the Radio National site.

A Related Blog; The Useless Tree

Are Asian billionaires Stingy?

Sepia Mutiny raises an interesting question about lack of wealthy Asian especially Indian philanthropists;

“In general, I’m scratching my head trying to understand why rich desis have taken after their white counterparts spending habits in every way except this one: a penchant for big ticket charitable giving. Is it simply that they’ve got new money, and they’ll start to give in a few decades once their appetite for weddings, cars, houses and jewelry has been slaked? Are they simply numb to poverty having grown up with it? Is it something cultural that I’m missing? If so, what - all the desi religions emphasize charitable giving, so it’s not that.

Are rich brown people simply more selfish than rich white ones?”

Some Indian billionaires are known for their lavish lifestyles ( Mittal spend over $ 55 million for a wedding and $ 127 million for a London mansion) but their western counterparts like Bill Gates and Soros are well known for the opposite.

May be Mittal had never read a World Development Report - Bill Gates read a World Bank World Development Report and realised he could do something to improve public health in the world's poorest countries, so he started the Gates Foundation. Or just may be that Asian philanthropists’ work are not publicized enough.

Related;

Deepak Lal tells a tale about a wealthy Indian and how he decided on the inheritor to his wealth in this podcast book discussion.

Blogs discussing the latest World Wealth Report- New Economist and Andrew Leigh

A discussion with Matthew Bishop, American business editor of The Economist who ealry this year wrote a survey of philanthropy in the magazine; “It's very, very striking that the new philanthropists, the likes of Bill Gates or Pierre Omidyar, who founded eBay, or Thomas Hunter, the Scottish retailer, who are coming into the field, are all very concerned about how do we make sure that our money isn't wasted, that it actually does make a difference. And they're rethinking the way philanthropy is done"

A Flavor of Bollywood for the Weekend- Geela Geela

A sample of Bollywood songs from YouTube; have a nice weekend.

Geela Geela

Woh Lamhe

Zara Zara

Dil Samandar (with English subtitles)

Aashiq Banaya Aapne ( not work safe)

A tamil song from Indian musical genius A R Rahman – see also this clip where his music is used in this Hollywood movie with great effect.

Related; Bollywood Comedy

The benefits of corruption are not worth the costs

An interesting paper on corruption; Does Corruption Produce Unsafe Drivers? by Marianne Bertrand (University of Chicago Graduate School of Business, NBER, CEPR and IZA), Simeon Djankov (International Finance Corporation), Rema Hanna (New York University Wagner School of Public Service) and Sendhil Mullainathan (Harvard University and NBER)- quite a handful of authors. Here’s the abstract;

“We follow 822 applicants through the process of obtaining a driver’s license in New Delhi, India. To understand how the bureaucracy responds to individual and social needs, participants were randomly assigned to one of three groups: bonus, lesson, and comparison groups. Participants in the bonus group were offered a financial reward if they could obtain their license fast; participants in the lesson group were offered free driving lessons. To gauge driving skills, we performed a surprise driving test after participants had obtained their licenses. Several interesting facts regarding corruption emerge. First, the bureaucracy responds to individual needs. Those who want their license faster (e.g. the bonus group), get it 40% faster and at a 20% higher rate. Second, the bureaucracy is insensitive to social needs. The bonus group does not learn to drive safely in order to obtain their license: in fact, 69% of them were rated as “failures” on the independent driving test. Those in the lesson group, despite superior driving skills, are only slightly more likely to obtain a license than the comparison group and far less likely (by 29 percentage points) than the bonus group. Detailed surveys allow us to document the mechanisms of corruption. We find that bureaucrats arbitrarily fail drivers at a high rate during the driving exam, irrespective of their ability to drive. To overcome this, individuals pay informal “agents” to bribe the bureaucrat and avoid taking the exam altogether. An audit study of agents further highlights the insensitivity of agents’ pricing to driving skills. Together, these results suggest that bureaucrats raise red tape to extract bribes and that this corruption undermines the very purpose of regulation.”

I learned about it via Sepia Mutiny.

Related Links;

Driving in New Delhi- Don't complain about standing in line at the DMV

Parking tickets, diplomats and corruption

Peter Foster in New Delhi ( the blog of Daily Telegraph's South Asia correspondent)

TI India chapter

Podcast of the Day- Early Childhood and the Developing Brain

Explores how very early childhood experiences can deeply affect the way the brain develops. Human interactions create the neural connections from which the mind emerges, so for very young children, relationships are crucial. But what happens when children are deprived of human relationships in these critical early years? Listen to the podcast.

Related; Research Network on Early Experience and Brain Development

Mutual Hatred?

-The Great Divide: How Westerners and Muslims View Each Other (via FP Passport and Sepia Mutiny)

Related;

Dialogue of Civilizations

A God of the Gaps? John Bradshaw is Professor of Neuropsychology at Monash University in Melbourne and in this talk discusses where we should draw the lines between fairy tales, myths, superstition and religion

US Foreign Aid Reform- Follow UK

A major study by Brookings on reforming the US foreign assistance had the following recommendation amongst many others;

“The establishment of the U.K. Department for International Development (DFID) in 1997 has proven a successful reform. DFID combines in a single cabinet agency the delivery of all overseas aid and has responsibility for analyzing the impact on developing countries of policies on trade, the environment, and conflict prevention.”

Here is report- Security by Other Means: Foreign Assistance, Global Poverty, and American Leadership

And a transcript of a conference discussing the report.

Related; How comprehensive is the new U.S. foreign assistance framework?

What do the Iraqis Think?

An interesting survey about what Iraqis think based on face-to-face interviews conducted between March 23 – March 31, 2006. I found the response to the following curious.

The Iraqi government currently provides cheap fuel to all Iraqis. Would you be willing to accept a small increase in the price of fuel in exchange for a large reduction in Iraq’s international debt, an increase of several hundred thousand new jobs for Iraqis, and significantly improved government services for the poorest Iraqis?
The majority- some 61 percent- said NO.

Here is a link to survey summary. The graph above shows the ratings for economic conditions.

Related Links;

Measuring Progress in Iraq

Some Iraq cost metrics on a one year anniversary

Officer says Iraq firms were slow to return passports

War Post- a blog that posts letters on Iraq 90 Years Apart: Soldiers' Letters from the Mesopotamian Expeditionary Force, 1914-1918, and Operation Iraqi Freedom, 2003-Present

After Zaraqawi; “The Enemy” in Iraq. A podcast featuring Juan Cole.

The Future of Aid

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” - Fredrick Hayek, 1988

The plenary session of the WIDER conference on Aid is available online. My recommendations are Easterly’s presentation and that of Peter Heller.

Easterly’s presentation is almost the same as his discussion at CGD recently.

Related;

The Future of Aid – presentation by Richard Manning, Head of DAC, OECD.

On Jeffrey Sachs by Mankiw

The End of Poverty- a profile of Jaffrey Sachs

The Man Without a Plan- a review of Easterly’s book by Amartya Sen

Foreign aid face-off; Can we end poverty with wads of cash?

Earlier blog posts; A Shocking Fact about Sub-Saharan Africa, Removing binding constraints to growth?

Saving the World through Socratic Method

Pablo links to an interesting NGO, ‘dropping knowledge’ which invites people to ask questions and later plan to host some ‘leading thinkers in the world’ to answer their questions.

See their blog- the drop, and their introductory video.

People seem to have a lot of free time and a lot of money for these types of things- could the money and effort be spent on more worthwhile cause? That’s my question.

Related;

How to save the world; Bolton v Gore

Copenhagen Consensus

The Spanish Inquisition

The latest ‘In Our Time’ program looks at the Spanish inquisition;

”The Inquisition has its roots in the Latin word 'inquisito' which means inquiry. The Romans used the inquisitorial process as a form of legal procedure employed in the search for evidence. Once Rome's religion changed to Christianity under Constantine, it retained the inquisitorial trial method but also developed brutal means of dealing with heretics who went against the doctrines of the new religion. Efforts to suppress religious freedom were initially ad hoc until the establishment of an Office of Inquisition in the Middle Ages, founded in response to the growing Catharist heresy in South West France.

The Spanish Inquisition set up in 1478 surpassed all Inquisitorial activity that had preceded it in terms of its reach and length. For 350 years under Papal Decree, Jews, then Muslims and Protestants were put through the Inquisitional Court and condemned to torture, imprisonment, exile and death.

How did the early origins of the Inquisition in Medieval Europe spread to Spain? What were the motivations behind the systematic persecution of Jews, Muslims and Protestants? And what finally brought about an end to the Spanish Inquisition 350 years after it had first been decreed?”

Contributors include John Edwards, Research Fellow in Spanish at the University of Oxford, Alexander Murray, Emeritus Fellow in History at University College, Oxford and Michael Alpert, Emeritus Professor in Modern and Contemporary History of Spain at the University of Westminster.

Podcast of the Day- The Nanny Nation

A discussion about the proliferation of state regulation. Can't eat this, can't stand there, can't say that. Is the state meant to decide it all for us? Are we handing over too much, too willingly or are we happy having a big nanny? Participated by the following;

Ross Homel; Head of Criminology and Criminal Justice at Griffith University; Homel's 'Pathways to Prevention' work won the 2004 National Violence Prevention Award.
Elspeth Probyn; Chair of Gender and Cultural Studies at the University of Sydney; columnist with The Australian newspaper; author of 'Blush: Faces of Shame, Sexing the Self and Carnal Appetites'.
Andrew Leigh; Lawyer, political adviser, author, economist; currently with the Research School of Social Sciences, ANU; co-author of 'Imagining Australia: Ideas for Our Future'

I liked the suggestion made by one questioner that we have to pass a law making common sense compulsory.

Related;

See more downloads from the Ideas Festival

As if children mattered …I can do no better here than to summarise some of the key points that the famous American developmental psychologist Urie Bronfenbrenner made in a lecture I heard him give in Sydney exactly 25 years ago – a quarter century ago, but with ideas and research findings as applicable today as they were then.

Michael Burleigh on Political Religion; Nazism, Communism and even the French Revolution are clear examples of political movements that aroused 'religious' zeal and made absolutist claims. English historian Michael Burleigh is a critic of extremist movements of the Right and the Left and he joins Rachael Kohn to discuss political religion. Recorded at the 2006 Sydney Writers Festival.

Drug regulation and drug safety; Today a special feature about the regulation of drugs and drug safety. We'll hear from two leading critics of the American system, particularly how the US Food and Drug Administration approves new drugs for release. Norman Swan also talks with an Australian expert about the situation here in this country.

Islam, America and other free reads from The Economist

Islam, America and Europe; Why so many Muslims find it easier to be American than to feel European; The difference between America and Europe in dealing with Islam reaches down to some basic questions of principle, such as the limits of free speech and free behaviour. America's political culture places huge importance on the right to religious difference, including the right to displays of faith which others might consider eccentric. In the words of Reza Aslan, a popular Iranian-American writer on Islam, “Americans are used to exuberant displays of religiosity.” So the daily prostrations of a devout Muslim are less shocking to an American than to a lukewarm European Christian. American society is open to religious arguments—and to new approaches to old theological questions—in a way that Europe is not.

The West and Islam; Tales from Eurabia

How to save the world- Bolton v Gore; A question of priorities: hunger and disease or climate change?

Africa's economy; A glimmer of light at last? Nor have Africa's faster-growing economies done much yet for Africa's millions of poor; about half of sub-Saharan Africa's 750m-plus people still live on less than a dollar a day, a figure that has been pretty static since 1990, whereas in South Asia it dropped from 39% in 1990 to 30% in 2001 and is dropping further, while in eastern Asia (mainly China) it fell from 33% to 17% in the same period and is now falling faster still. Most foreign investment in Africa still goes to oilfields or mines, rather than factories, services or farming. Mineral riches provide governments with cash but do not create many jobs. Most people in Africa still work in the informal sector, while unemployment is rife. With a few exceptions in Africa, private business, especially the job-creating small and medium sort, is weak. Even South Africa, with its diverse economy, has failed to create jobs fast enough: at least a quarter of its people have no work.

Face value- Bill Gates replaces himself as Microsoft's software boss with Ray Ozzie; The first signal that Mr Gates had tapped Mr Ozzie to lead Microsoft into this new world of internet services and advertising came last October, when Mr Ozzie, rather than Mr Gates, wrote a lengthy internal memo called “the internet services disruption”. In it, Mr Ozzie politely but ruthlessly analysed how Microsoft had wasted opportunities to come to grips with the new environment, how it was losing ground to rivals (“Google is obviously the most visible here”) and what it would take to avoid disruption

Brazil's elections; An outsider with a (slight) chance

China's next building site; Building the nation

German history; Still haunted by a communist spectre

Prisons; The British government has been accused of both stuffing prisons and letting too many convicts out. Oddly, both accusations are true

Newspapers; The Tribune Company is in trouble with some powerful shareholders

Chinese tourism; Last year more than 31m Chinese travelled outside mainland China and the World Tourism Organisation expects this number to grow to 50m by 2010 and 100m by 2020

American inflation; The problem is that the Fed's stern talk may backfire. The statistical nuances of owners' equivalent rent suggest that core inflation may rise further and will remain above Mr Bernanke's boundaries for the rest of the year, even as the economy slows. If they are to avoid pushing up interest rates too far, Fed officials may soon have to explain why figures they now regard as “troubling” and “corrosive” are not so worrying after all. That task would be easier if their rhetoric had been more boring in the first place

Fundamental physics; Gravitational waves were predicted by Einstein's general theory of relativity in 1916. This theory views gravity not as a force but as a consequence of the curved geometry of space and time. Space-time, as it is known, has four dimensions: the three familiar spatial ones of length, breadth and height, and time

Agriculture; An international seed bank is being set up in the Arctic

Tintin and the broken metaphor

Keeping cartoons cool

Charles Haughey, four times taoiseach of Ireland, died on June 13th, aged 80

Part-time work; In the past decade there has been a sustained increase in the importance of part-time work, notably in the Netherlands, where it now makes up 36% of total employment. Mostly it is done by women, who account on average for 73% of such work across the OECD. Many governments are taking steps to promote part-time jobs as a means of raising overall employment rates

Stockmarkets

Oil reserves; The world had 1.2 trillion barrels of proven oil reserves at the end of 2005, according to BP. If overall production continues at last year's rate, known oil will last for 41 years. But it will run out more slowly in some countries than in others. At today's extraction rate, Saudi Arabia's reserves, which account for more than a fifth of the world total, will last for 66 years.

Staffing globalisation;As companies send more employees abroad, they are offering fewer perks and finding more recruits in developing countries ($ required)

Economics focus; The euro and trade; IN THE continuing controversies about Europe's bold experiment in monetary union, there has at least been some agreement about where the costs and benefits lie. The costs are macroeconomic, caused by forgoing the right to set interest rates to suit the specific economic conditions of a member state. The benefits are microeconomic, consisting of potential gains in trade and growth as the costs of changing currencies and exchange-rate uncertainty are removed… A new study by Richard Baldwin, a trade economist at the Graduate Institute of International Studies in Geneva, scythes through these and earlier, even higher, estimates….($ required)

Muslims and the West; FOUR authors of recent books about America's conflict with Islamism are like blind men feeling an elephant—each one describes the problem in a slightly different way. What unites them, though, is a single, overarching question: if the jihadists are just a bunch of bloodthirsty, head-chopping, woman-haters, why does the West have such a hard time gaining the moral high ground in what America persists in calling the “war on terror?” ($ required). The four books reviewed are below;

While Europe Slept: How Radical Islam is Destroying the West from Within By Bruce Bawer

Menace in Europe: Why the Continent's Crisis is America's, Too By Claire Berlinski

Storm from the East: The Struggle Between the Arab World and the Christian West By Milton Viorst

The Islamic Challenge: Politics and Religion in Western Europe By Jytte Klausen

The Most Courteous City in the World – New York?

It’s difficult to believe the results of the following survey from Readers Digest- New York the most polite city in world! Simon World thinks the survey is very much culturally biased.

Or could it have to do with Rudolph Giuliani’s "politeness" by-laws in the which was passed in the 1990s, such as a $50 fine for putting feet on subway seats ( or another example of Malcolm Gladwell's suggestion of the success of broken windows policying)

Let us know your views on the issue;

“We sent out undercover reporters—half of them men, half women—from Reader’s Digest editions in 35 countries to assess the citizens of their biggest cities. (In Canada, we tested the people of our two largest population centres, Toronto and Montreal.) In each location we conducted three tests:

• We walked into public buildings 20 times behind people to see if they would hold the door open for us.
• We bought small items from 20 stores and recorded whether the sales assistants said thank you.
• We dropped a folder full of papers in 20 busy locations to see if anyone would help pick them up.

To allow us to compare cities, we awarded one point for each positive outcome and nothing for a negative one, giving each city a maximum score of 60. We did not attempt a strict scientific survey; it was the world’s biggest real-life test of common courtesy, with more than 2,000 tests of actual behaviour.”

Related;

Cussin' Russian MPs to bleep out swearing

Singapore Kindness Movement

Could bad weather be responsible for U.S. corruption?

Asks Peter T. Leeson and Russell S. Sobel in the following paper; Weathering Corruption

Abstract; Could bad weather be responsible for U.S. corruption? Natural disasters create resource windfalls in the states they strike by triggering federally-provided natural disaster relief. Like windfalls created by the .natural resource curse.and foreign aid, disaster relief windfalls may also increase corruption. We investigate this hypothesis by exploring the effect of FEMA-provided disaster relief on public corruption. The results support our hypothesis. Each additional $1 per capita in average annual FEMA relief increases corruption nearly 2.5 percent in the average state. Eliminating FEMA disaster relief would reduce corruption more than 20 percent in the average state. Our findings suggest that notoriously corrupt regions of the United States, such as the Gulf Coast, are notoriously corrupt because natural disasters frequently strike them. They attract more disaster relief making them more corrupt.

Related;

Disaster Relief: Type I & Type II Errors

May be report cards like this could help.

Martin Wolf on World Bank and Economic Reform in India

“The experience with national economic planning has important lessons. It helps us understand what a state can usefully do — and is obliged not do — if it is to see a rise in the living standards of the people for whom it has responsibility.

This undermined the professional integrity of the staff and encouraged borrowers to pile up debt, no matter what the likely returns. This could not last — and did not do so. As Montek Ahluwalia — former economic secretary and later finance secretary — once told me, the Bank was a growing business in a dying industry. It was certain to reach the limit to its growth.

I worked on India as senior divisional economist for three years. During that time, my chief function, so far as the Bank was concerned, was to justify the provision of significant quantities of aid — even though this money was helping the government of India avoid desperately needed policy changes.

As it turned out, those changes were made in the midst of a deep foreign exchange crisis in 1991 — almost two wasted decades later.

The changes were made under the direction of Manmohan Singh — then finance minister — with the assistance of Montek Ahluwalia.

This experience confirmed three lessons: Policy changes could make a huge difference to economic performance. Such changes could be put into effect by relatively small teams of intelligent, motivated and well-disciplined individuals. And most important of all, those changes could not be imposed from outside.

Unfortunately, lending too much was not the World Bank's only fault. It also had to lend to governments.”

Martin Wolf, “Why Globalization Works”

Related; Montek Ahluwalia, Some Lessons from Economic Reforms in India

Some Facts about Bollywood

“Although Bollywood's budgets and box-office takes still do not compare to Hollywood's, the scale of the business is not trivial. According to a PricewaterhouseCoopers report, India's film business earned $1.12 billion in 2004, up from $617 million in 2001, though that would not cover the takings from one Harry Potter film. In 2003, the industry earned more than $703 million. Much of this success is driven by global popularity. An average Indian movie's budget is $500,000 (though the major titles can budget more than $10 million), far below the average $14 million spent in the US.

PricewaterhouseCoopers believes that Bollywood will double its turnover by 2009. Since 2001, the government has allowed financial institutions to finance up to $1 million of a picture's budget or up to about 40% of the total production cost. A Rabo India study indicates that the number of films financed through organized sources last year went up 200% against 2002, though the total corporate finance into films is still quite low and was a little more than $150 million in 2004.

According to a study by KPMG, although India produces more films than any other country, its share of global cinema revenue is a lowly 1%. The US leads with 60%, and India is far behind Japan, the UK and France as well. However, KPMG projects that the revenue of the Indian film industry will cross $2 billion next year and $3.5 billion by 2010.”

- Foreign shoots spread Bollywood's reach

More on India

India: The New Star of Asia

What Detroit Can Learn From Bangalore

India Awakens

India: A Tale of Two Worlds

The India Model

On Bollywood; Welcome to Bollywood and two earlier posts about Bollywood- Bollywood Sarukar and thought of the day.

Access Bollywood;behind the scenes with Bollywood actor Tom Alter.

If India Played the World Cup

Hindu ascetics play soccer on the banks of the River Ganges in Allahabad, India. India did qualify for world cup in 1950. (Via Sepia Mutiny)

Britain can be gateway to Islamic finance- Gordon Brown

Some highlights from Gordon Brown’s speech at Islamic Finance and Trade Conference, London;

“Already, Britain is the largest European trader with many Islamic countries - the largest European investor in Oman, the largest non-Arab investor in Egypt, and second largest global investor in Pakistan and Saudi Arabia;

Second, the foundation for making Britain the gateway to Islamic trade, is to make Britain the global centre for Islamic finance.

Today British banks are pioneering Islamic banking - London now has more banks supplying services under Islamic principles than any other Western financial centre.

And I want to thank also the Muslim Council of Britain and the many of you here who have worked with the Government through our tax and regulatory reform to support the development of Shari’a compliant finance:

- first, three years ago, for mortgages, enabling the expansion of the Islamic mortgage market to over half a billion pounds - growing by almost 50 per cent in the last year alone;
- then last year, for savings and borrowing and providing proper consumer protection for Ijara products;
- this year, for business finance, with last week Parliament approving measures in the Finance Bill for diminishing musharaka and wakala;
- and now, working with us, to look at international finance, Islamic securitisation and sukuk - and I am pleased that London was the financial centre chosen recently to advise on one of the largest sukuk deals ever done.

All of us are facing up to the challenges of globalisation, to the rise of Asia – one million manufacturing jobs lost from America, Europe and Japan, one quarter of a million jobs offshored, oil prices rising not least because Asia now takes up 30 per cent of demand.

To secure a world trade deal, heads of government should stand ready to use all the resources of leadership and statesmanship. The prize is a 50 per cent increase in world trade - and specifically the World Bank estimates a deal could bring $14 billion increased prosperity to the Middle East and North Africa and a further $2 billion to Indonesia alone.

I am aware of the importance Islam places on education, through the hadith such as: "Seek knowledge from the cradle to the grave" and "Verily the men of knowledge are the inheritors of the prophets."

I was shocked to learn that while Muslims constitute 22 per cent of the world's population, almost 40 per cent of the world's out-of-school children are Muslims. In Pakistan alone there are nearly 8 million children not in school, in Bangladesh nearly 4 million, and over one million in Mali, a total of more than 40 million Muslim children who do not go to school

So I know you will agree with me that it is one of the world's greatest scandals that in total 110 million children do not go to school.

And led by Hilary Benn, our Secretary of State for International Development, we will enter into 10 year agreements with countries to finance their 10 year plans, in total committing at least $15 billion over the next ten years - four times as much as the $3.5 billion of the previous ten years. In Singapore in September, I will press other G8 Finance Ministers to commit to their share..."

Related Links;

The Design of Instruments for Government Finance in an Islamic Economy

Islamic Finance Gears Up

Islamic Financial Systems

Islamic finance in the United States: A small but growing industry

Regulation and Supervision of Islamic Banking in the United States

Heard of Islamic micro-banking?

More links on the topic.

More World Cup Madness

The Ghanaian Football Association has apologised after defender John Pantsil waved an Israeli flag to celebrate the World Cup win over the Czech Republic.

Ghana tells mines to cut power during Cup

University suspends exams for World Cup

Soccer Fever in Seoul

‘I can see Spain facing Argentina in the Final’

Terrorism Index

The latest Foreign Policy Magazine has summary of a survey related to security issues called Terrorism Index. I don’t know whether it qualifies to be referred to as an index. For more see their resources section.

Radio National- the best podcasts on the web

Australia’s Radio National may not have got a webby award, but I think it has one of the best selection of podcasts from any major radio station. They have added a new series to their great selection; Big Ideas which brings you lectures, conversations, features and special series from Australia and around the world. Prominent people are invited to present the results of their thinking on the major social, cultural, scientific or political issues that affect us all.

Kasparov versus Putin

As chairman of the "2008: Free Choice" Committee, Garry Kasparov hopes to mobilize the opposition and is planning a major opposition conference in Russia to coincide with the G8 summit. He’s interviewed by Fareed Zakaria to discuss the “real Russia”: the degradation of civil rights and press freedoms, corruption, and persecution of political dissidents. I salute the courage of this great sportsman.

Anna Politkovskaya- another courageous reporter from Russia

Related;

The Rise of the Corporate State in Russia- Andrei Illarionov, former Economic Adviser to President Vladimir Putin

Putin's Russia – 2005; A three part podcast series from BBC

Confiscating Property- Does it Work?

Development as Accountability

Here’s an interesting speech (though not by content) by Malaysia’s former finance minister Anwar Ibrahim;

“Ibrahim spoke on governance and accountability as drivers for social change, led by development organizations. He drew upon his experiences in Malaysia to illustrate this point, highlighting the positive results from anticorruption initiatives. Ibrahim also tied accountability to freedom, calling it the process of “civilizing power,” and he advocated cooperation with the World Bank to countries that are working toward good governance.”

The speech was high on quotations and referred to Ibn Khaldun, Thomas Jefferson, Isaiah Berlin, Amartya Sen, Mancur Olson, and Kafka amongst others. He also went on to suggest that World Bank should have an independent office of accountability with a broad mandate. His book Asian Renaissance, published in 1996 is decent enough book. I wonder how Mahathir would react to his speech.

Related video; Anwar Ibrahim clarifies his role at the World Bank

I haven’t come across a good economics blog on Malaysia. Let us know if you’ve come across one.

Diversify Out of U.S. Treasury Bills- Lawrence Summers Tells

“Think about it. If a country is able to deploy 10 percent of GNP in a way that produces an extra 5 percent return, that is half a percent a year in free money to the central government. That is a number that compares on a global scale rather favorably with the magnitude of IDA. It is a number that in many countries compares, is not insignificant relative to federal contributions for healthcare or education. It is a number that in many countries half a percent GNP is in excess of the level of spending on combating, uh, AIDS, and it is potentially available simply by investing resources more aggressively."

Lawrence Summers, talking at CGD recently, suggesting that developing countries with unusually high levels of reserves should shift part of their holdings from U.S. government debt to a diversified international portfolio and the higher returns got could be better put to development needs.

See the video of the event.

Related:

Speech made by Summers on Global Imbalances at Central Bank of India

Morning Coffee Videocast: The Inflow of Capital to the United States

Joseph LaVorgna, chief U.S. fixed-income economist at Deutsche Bank Securities, talks with Bloomberg's Tom Keene about the outlook for the U.S. economy and Federal Reserve monetary policy, the impact of the Fed on bonds, and the performance of the U.S. housing market.

An earlier post about Summers and a profile of him at TCS.

Rumsfeld's letter of thanks to Summers

Bill Gates's Post-Microsoft future

Bill Gates is to take a backseat role at Microsoft. He is giving up the chief software architect role, so that he can concentrate his time on the charitable activities of the Bill & Melinda Gates Foundation. One of the $29 billion foundation's key initiatives is improving high-school education in the U. S. Can he make a difference?

BusinessWeek looks at the school reform work of the Gates Foundation.

Another person who left the Microsoft recently and writes also an interesting blog- Scobleizer.

So what do you think Bill Gates should do after he retires from Microsoft?

Is 'Chalk and Talk' the Best Way to Teach Economics?

The following paper suggests that the ‘chalk and talk’ is still the preferred option for educating budding economists- the median of 83 percent remaining almost the same over the last 10 years.

A Little More Than Chalk and Talk: Results from a Third National Survey of Teaching Methods in Undergraduate Economics Courses by Michael Watts and William E. Becker. Here’s the abstract;

“In 1995, 2000, and 2005 the authors surveyed U.S. academic economists in the United States to investigate how economics is taught in four different types of undergraduate courses at postsecondary institutions. They looked for any changes in teaching methods that occurred over this decade, when there were several prominent calls for economists and post-secondary instructors in other fields to devote more attention and effort to teaching, and to make greater use of active, student-centered learning methods, with less use of direct instruction or “chalk and talk.” By 2005, although standard lectures and chalkboard presentations were clearly still the dominant teaching style in all types of economics classes, there was evidence of slow growth in the use of other teaching methods, including classroom discussions (especially teacher-directed discussions) and computer-generated displays (such as Power Point). A growing number of instructors provided students with a prepared set of class notes. Computer lab assignments were increasingly common in econometrics and statistics courses, and Internet database searches were used by a growing (though still small) minority of instructors in all types of classes. Classroom experiments were used by a small share of instructors in introductory courses, but almost never in other kinds of courses. Assignments or classroom references to the popular financial press, sports, and literature, drama, or music were used somewhat more often. Cooperative learning methods were rarely used in most types of courses.”

For Comment; How would economics teaching be like a decade from now? What incentives can we give for instructors to move away from the ‘chalk and talk’ style of teaching?

How to be a good student of Economics

“What makes a good student? It takes more than mathematics. Just because acolytes learn the intricacies of formal reasoning doesn’t mean they necessarily will have anything to say. But then, neither does background knowledge of specifics seem to have to do with it. Apt pupils come from all walks of life, and one of the best young economists of recent years lived in the former Soviet Union until he was sixteen. Scientific temperament is a plus (“desire to seek, patience to doubt, fondness to meditate, slowness to assert, readiness to reconsider, careful to dispose and set in order,”, was how Sir Francis Bacon described it long ago). But the essential gift among those who will have an impact is an aptitude for “thinking economically,” for translating every problem into one that can be addressed by means of the discipline’s standard kit of tools, devising new tools as required.”

David Warsh, “Knowledge and the Wealth of Nations”, p. 11-12, emphasis mine.

Related:

Getting a PhD in Economics, is it worth it? Professors Wendy Stock and John Siegfried discuss with James Reese aspects of the process of getting a PhD in Economics. Areas covered: How much will academic economists make over their lifetime? What is the chief reason for dropping out of a Ph.D. program? What is the reason for the dreaded ABD all but dissertation barrier? Is getting a PhD in economics worth the cost? Wendy and John coauthored articles entitled "Attrition in Economics Ph.D. Programs" and "Time-to-Degree for the Economics Ph.D. Class of 2001–2002." Download the podcast while it is free.

It's the humanity, stupid- Tim Harford interviews Gary Becker

Great Minds in Economics: Paul Samuelson

Game Theory in Soccer

Tim Harford explains why to be good in soccer you’ve to be a master strategist;

“The answer comes from a wartime collaboration between economist Oskar Morgenstern and mathematician John von Neumann. They produced a “theory of games” which, applied to this problem, says the strategy of the striker and the keeper cannot be predicted. The striker might shoot to the right two times out of three, but we cannot then conclude that it will have to be to the left next time.

Von Neumann and Morgenstern also say that each choice of shot should be equally likely to succeed, weighing up the advantage of shooting to the stronger side against the disadvantage of being too predictable. If shots to the right score three-quarters of the time and shots to the left score half the time, you should be shooting to the right more often. As you do, the goalkeeper will respond: shots to the right will become less successful and those to the left more successful. It might sound strange that at this point any choice will do, but it is analogous to saying that if you are at the summit of the mountain, no direction is up.

Von Neumann and Morgenstern did not produce game theory to help footballers: they believed it could illuminate anything from pay negotiations to waging war. The trouble is that for these applications the wrinkles of reality always obscure whether ordinary people actually follow the strategies that game theory predicts they should. Yet penalty taking is different. The objective is simple, the variables easy to observe, and the results immediate.

Ignacio Palacios-Huerta, an economist at Brown University, found that individual strikers and keepers were, in fact, master strategists. Out of 42 top players that Palacios-Huerta studied, only three departed from game theory recommendations. Professionals such as the Brazilian Rivaldo and Italy’s goalkeeper Gianluigi Buffon are apparently superb economists: their strategies are absolutely unpredictable and, as the theory demands, they are equally successful no matter what they do, indicating that they have found the perfect balance between the different options. These geniuses do not just think with their feet.”

Related;

More blogs on the World Cup- My Sofa World Cup, World Cup Hippo, Getty Images-Sports blog, Sports Business, Dead Spin, Labour’s World Cup 2006 blog (British politician).

Economics of Golf; Stephen Shmanske, an economics professor at California State University and author of "Golfonomics," talks with Bloomberg's Tom Keene about the U.S. Open Championship and the economics of golf.

Body Type, Steroids and Sports Performance

Learning Curves

It can be said that a sports team doesn't really belong to its owners, but to the fans. No other product comes in for as much criticism or loyalty as sports does. What other product ever gets a parade afterall? Some teams are good, others bad and so attract various levels of devotion. I've mentioned that I'm an Angels fan(No, I won't type out that monstrocity of a name) before. The organizations story is interesting in that it went from being the second team to the Dodgers to one of the better franchises in sports in the last years. The previous owner, Jackie Autry, had said that the Angels were a middle market team and should act like one. The most recent owner, Arte Moreno, had different ideas and has effectively made the team a big market club.

The Angels are now going through a transition period of replacing aging veterans with rookies. For most teams that had in the past 4 years won the World Series and made the playoffs 2 other times, it could be an ominous sign of years of mediocrity. The Angels, however, are loaded with young talent in the minor leagues. They are now getting their shot at playing and the results are ugly. Not to say ugly in Kansas City sort of way, but rather play has been very inconsistent. Of the five rookies given the opportunity to play everyday, on two have performed at plate adequately, Dallas McPherson and Mike Napoli. This is not to say they have performed in the field though. The team as a whole has 55 errors, bottom in the AL.

At 6 games under .500 and only 6 games back in the west, the situation could be worse. However, after reading the message boards and some blogs, it seems many are ready to give up on the season. You expect rookies to go through some growing pains. Being only 6 games back, if the learning curve effect kicks in and rest of the west maintains mediocrity, this division is easily winnable. The only question is should any moves be made. One in particular is whether the second basemen, one the best defensive players in the AL, should be moved to make room for Howie Kendrick, a .400 hitter in AAA. This would mean 4 rookies would be playing.

If the Angels are, in fact, going to make a move, it should be done now rather than at the trade deadline. It is obvious to everyone that Howie Kendrick will be the second basemen next year unless a blockbuster trade is made. Adam Kennedy will be gone through either a trade or free agency any way. Also, the Angels need a real center fielder. The current one, Chone Figgins, isn't and still makes rookie mistakes despite it being his fourth full year in the majors. More importantly, the uncertainty in the learning curve effects in major league baseball seems somewhat large and it seems unlikely that the current team can consistently perform. With Howie Kendrick and an experienced center fielder, the team on paper looks superior though with a higher variation in possible outcomes. Bill Stoneman, the GM, should pull the trigger. The inconsistency will continue, but if the learning curves kick in they could still make a run at the playoffs in August and September. Playoffs or no this year, 2007 looks great.

Edit: I almost forgot to eat crow. A few years ago I had a post joking about the Angesl drafting this guy. He is now devloping into a top prospect.

Republic of Hill & Knowlton

The UK Telegraph reports that the government of Maldives is using the services of Hill & Knowlton UK to improve its image overseas;

“The Maldives government has enlisted the services of a former Labour spin doctor to try to improve its tarnished image abroad.

Tim Fallon, a public relations expert who was seconded to Tony Blair's election team in 1997, is in charge of the Maldives account for the Hill and Knowlton PR agency.

There are some striking similarities between the New Labour spin machine and the tactics used by President Gayoom's autocratic regime

In May 2004, six months after Hill and Knowlton accepted a £13,000-a-month retainer, the government opened a "strategic communications unit" which almost daily pumps out press releases trumpeting the dictatorship's paper commitments to reform.”

We all have heard about the case of ‘babies in incubators’ during the first gulf war;

“More than 10 years later, I can still recall my brother Sean's face. It was bright red. Furious. Not one given to fits of temper, Sean was in an uproar. He was a father, and he had just heard that Iraqi soldiers had taken scores of babies out of incubators in Kuwait City and left them to die. The Iraqis had shipped the incubators back to Baghdad. A pacifist by nature, my brother was not in a peaceful mood that day. "We've got to go and get Saddam Hussein. Now," he said passionately….

The Kuwait government had to find a way to "sell the war" to the American public, who were interested, but not deeply involved. So under the auspices of a group called Citizen for a Free Kuwait, which was really the Kuwait government in exile (the group received almost $12 million from the Kuwaiti government, and only $17,000 from others, according to author John R. MacArthur) the American PR firm Hill & Knowlton was hired for $10.7 million to devise a campaign to win American support for the war. Craig Fuller, the firm's president and COO, had been then-President George Bush's chief of staff when the senior Bush has served as vice president under Ronald Reagan. The move made a lot of sense – after all, access to power is everything in Washington and the Hill & Knowlton people had lots of that.”

Some spin on behalf of rich countries may not be so much of a problem. But spinning for poor undemocratic countries using public money has real costs on the development.

"We are working to assist the government in a process of engagement with international institutions which we believe will ultimately be to the benefit of all the people of the Maldives."

Related Links:

Struggle for democracy exposes the dark side of paradise islands

Sun, sea and single malt

Hill & Knowlton Still Spinning For The Government

Anglobalisation and British Empire

A must listen podcast from the BBC;

“To mark the end of Radio 4's This Sceptred Isle: Empire series, some of this country's best-known historians will be examining how Britain and other countries around the world have been changed by their experience of empire. They'll be discussing whether Britain should apologise and make reparation for its imperial past or glory in it, and asking whether the twenty-first century will see the birth of new empires- Eric Hobsbawm, Niall Ferguson, Robert Beckford, Linda Colley and Priya Gopal.”

The debate gets very heated at times. I think one way to view the role of British Empire and its relation with the colonies like India is to look at it as India or any other colony giving a huge interest free loan to Britain- this point was highlighted by the late Mahbub ul Haq in one of his books.

Related podcast;

Francis Fukuyama- No longer neocon; The man who wrote The End of History? is now disenchanted with American foreign policy. Fukuyama remains a conservative, but has strong views on what has gone wrong. He sees a need to demilitarise the struggle against violent fundamentalism.

‘Crackdown on Sugar Hoarders to be Launched’

Breaking news from Pakistan;

“Monopoly Control Authority (MCA) said Saturday stock 1.2 million ton sugar was available with sugar mills by May 31, 2006, which they didn’t release in the market. However, action on this count would be taken against the hoarders.

A total stock of 2.97 million ton sugar was reported by May 31, 2006 of which 1.738 million ton sugar was sold out and the sugar mills 1.169 million ton sugar amassed in their godowns instead of releasing it in the market, according to Authority.

MCA told a crackdown would be launched on those involved in the sugar hoarding, which skyrocketed the sugar prices in the market.”

Related;

World Bank to double aid to Pakistan -- Will the money help?

Inflation in Pakistan: Money or Wheat?
Summary: This paper examines the relative importance of monetary factors and structuralist supply-side factors for inflation in Pakistan. A stylized inflation model is specified that includes standard monetary variables (money supply, credit to the private sector), the exchange rate, as well as the wheat support price as a supply-side factor that has received considerable attention in Pakistan. The model is estimated for the period January 1998 to June 2005 on a monthly basis. The results indicate that monetary factors have played a dominant role in recent inflation, affecting inflation with a lag of about one year. Changes in the wheat support price influence inflation in the short run, but not in the long run. Furthermore, the wheat support price matters only over the medium term if accommodated by monetary policy.

Lahore School of Economics blog

Climate Change as Terrorism

Lowy Institute, a think-tank in Australia has a new study reflecting on the security implications of climate change;

“In this Lowy Paper we argue that there is no longer much doubt that the world is facing a prolonged period of planetary warming, largely fuelled by modern lifestyles, which is unprecedented in human history in terms of its magnitude and probable environmental consequences. With a few notable exceptions, even sceptics now seem prepared to accept the validity of the basic science underpinning climate change forecasts.

Crucially, however, there is no consensus about appropriate strategies for dealing with the consequences of climate change, primarily because there is no agreement about its seriousness for international security. The reality is that climate change of the order and time frames predicted by climate scientists poses fundamental questions of human security, survival and the stability of nation states which necessitate judgments about political and strategic risk as well as economic cost.

The central problem is the rate at which temperatures are increasing rather than the absolute size of differential warming. Spread over several centuries, or a millennium, temperature rises of several degrees could probably be managed without political instability or major threats to commerce, agriculture and infrastructure. Compressed within the space of a single century, global warming will present far more daunting challenges of human and biological adaptation, especially for natural ecosystems which typically evolve over hundreds of thousands and millions of years.

Our principal conclusion is that the wider security implications of climate change have been largely ignored and seriously underestimated in public policy, academia and the media. Climate change will complicate and threaten Australia’s security environment in several ways. First, weather extremes and greater fluctuations in rainfall and temperatures have the capacity to refashion the region’s productive landscape and exacerbate food, water and energy scarcities in a relatively short time span. Sea-level rise is of particular concern because of the density of coastal populations and the potential for the large-scale displacement of people in Asia….”

It’s fashionable for leaders of small low-lying countries to complain about developed world causing havoc on the earth’s environment- it goes something like this, ‘why should we have to be the ones to pay for the lifestyle of the rich world’. I doubt whether any one living in a coastal community seriously considers that global warming is a real threat- all the talk hadn’t had much of a behavioral change on such communities to prepare for their inevitable fate as depicted in the media and in research.

Related:

It's Getting Warmer- Thomas C. Schelling

Prices and Quantities in Climate Change- John Quiggin

A Test of Our Character-Paul Krugman

Alaska feeling effects of warming earth

Letter from Maldives- Not sinking but drowning; But burning less oil to keep air cool so ice stays ice and the seas don’t warm is too expensive and roundabout a way to meet the danger, Mr Mendelsohn thinks. Wouldn’t it be cheaper, he asks, for Maldivians, and those like them, to move?

Podcasts;

A Panel discussion on Climate- from the Environmental Summit of the Nicholas Institute for Environmental Policy Solutions at Duke University

Collapse- Jared Diamond

First there was Carbon?

The latest from the BBC’s ‘In Our Time’ program focus on Carbon;

"Carbon forms the basis of all organic life and has the amazing ability to bond with itself and a wide range of other elements, forming nearly 10 million known compounds. It is in the food we eat, the clothes we wear, the shampoo we use and the petrol that fuels our cars. Because carbon has the largest range of subtle bonding capabilities, 95% of everything that exists in the universe is made up of carbon atoms that are stuck together.

It is an extraordinary element for many reasons: the carbon-nitrogen cycle provides some of the energy produced by the sun and the stars; it has the highest melting point of all the elements; and its different forms include one of the softest and one of the hardest substances known.

What gives carbon its great ability to bond with other atoms? What is the significance of the recent discovery of a new carbon molecule - the C60? What role does carbon play in the modern chemistry of nanotechnology? And how should we address the problem of our diminishing carbon energy sources?”

Contributors include Harry Kroto, Professor of Chemistry at Florida State University, Monica Grady, Professor of Planetary and Space Sciences at the Open University and Ken Teo, Royal Academy of Engineering Research Fellow at Cambridge University

Related:

Trapping Carbon, Freeing Coal; There is a lot of carbon in the ground. For eons, life forms ranging from microbes to Homo sapiens have trapped the element as part of their fundamental molecular makeup, died and cycled it into the great geologic chain of carbon

Cheap Drinking Water from the Ocean; A water desalination system using carbon nanotube-based membranes could significantly reduce the cost of purifying water from the ocean. The technology could potentially provide a solution to water shortages both in the United States, where populations are expected to soar in areas with few freshwater sources, and worldwide, where a lack of clean water is a major cause of disease

The Power of Survey Design

In a previous post I mentioned about the book by Giuseppe Iarossi on survey design. Here is a link to the video and a podcast of the book presentation.

Related;
Did you see the broken light?
Two posts from Junk Charts; When nothing works and Glass Half Full

A Tipping Point for Infrastructure in Latin America

Some statistics on the state of infrastructure in Latin America from the latest edition of The Economist;

“In Mexico, public spending on infrastructure—electricity generation, roads, railways, water plants and the like—was a third lower in 2004 than a decade earlier, according to a report by Merrill Lynch, an investment bank. The World Bank describes two-fifths of the country's motorways as “pre-modern”. Nevertheless, the government has found the money to spend 0.7% of GDP on subsidising the electricity that is consumed—which does nothing for the poorest, who live in the dark in rural areas…Between 1990 and 2003, Latin America accounted for half of total private-sector participation in infrastructure in developing countries.

In recent years, total spending in the region on infrastructure has averaged less than 2% of GDP. It is not enough. According to the World Bank, 58m Latin Americans lack access to potable water and 137m lack sewerage. In Brazil and Peru, less than a quarter of the main highways are classified as good. In surveys by the bank, 55% of businessmen consulted in Latin America cite infrastructure as a serious problem compared with just 18% in East Asia. The bank says the region will have to double or triple its current spending to bring its infrastructure up to the level of that in East Asia's fast-growing economies.

Chile- the exception…Now the roads that whisk the traveller into Santiago, the capital, from the airport are privately run, as are most other motorways and the airport itself. Nearly all Chile's water is supplied by private companies. Long-term “infrastructure bonds”, denominated in inflation-adjusted pesos, have financed much of the $8 billion investment in roads, airports and the like. Chile is planning to issue contracts for private investors to build and maintain public hospitals.

Brazil,…Infrastructure will be “a point of strangulation”, holding the rate of economic growth to less than 4%, predicts Adriano Pires of the Centro Brasileiro de Infra Estrutura, a consultancy. The federal investment budget is just 0.5% of GDP. Add in lower levels of government and state companies, and public spending on infrastructure totals about 2%—probably not enough to maintain the stock of infrastructure….Since Brazil has little scope for raising taxes and debt and cannot easily re-allocate spending, it will have to rely on the private sector over the next few years, believes Paulo Correa, co-author of a forthcoming World Bank report on Brazilian infrastructure. ..In Brazil 36% of concession contracts have been renegotiated, usually at the instigation of the government—above the regional average of 30%. All but the most profitable investments have been deterred by the high—though now falling—cost of capital.”

Related:

ABCDE Tokyo 2006- Video

A Primer on Risk Management: Applications to Latin America and the Caribbean

Mexico - Infrastructure public expenditure review

Ranking economic policies ($ required)

Asian Highway network gathers speed

Central Banks Teaching Economics

New York Fed has a new feature on their website; Course Readings for University Educators. You pick a course and the relevant readings come up. A great idea other central bankers should copy (via Harry Clarke).

Economists and Journalists

“Report on government as you would report to your siblings on the rental agent your mother hired to handle her Florida condo.”

I found Susan Rasky and Brad De Long’s list of advice to economists and journalists quite interesting. Federal Reserve Bank of Minneapolis also conducts a course for journalists- Supply, Demand & Deadlines – which I think is a great idea for other central banks to follow.

The best thing may be to just read op-eds and columns written by economists and well known economic columnists. I’ve tried to give a sample below;

Tyler Cowen’s latest Economic Scene column - Investing in Good Deeds Without Checking the Prospectus.

John Quiggin’s -When co-operation trumps competition- explains how the internet is changing our ideas about innovation

Virginia Postrel- Cash for kidneys -Legalizing incentives could encourage transplant donations, says a healthy donor.

Thomas Sowell , Random thoughts- When you have 90 percent of what you want, think twice before insisting on the other 10 percent.

John Kay- The Magic Kingdom could save Venice from destruction. If Venice were owned by the Disney Corporation, Venice would not be in peril

Paul Krugman- The Phantom Menace

Truth, bullshit and economics - Samuel Brittan

Edward Lotterman- Supply and Demand Effects Vary by Market

Arnold Kling- Are You a Conservative? Try this test.

Steven E. Landsburg- How Much Should Hotel Web Access Cost? Sometimes it's free. Sometimes it's $20 a day. Why?

Tim Harford- Buy! Buy! Buy! Sell! Sell! Sell! The rational explanation for stock market frenzies and crashes.

Yahoo Finance has columns by Charles Wheelan

Martin Wolf , David Warsh,, Daniel Gross, Sebastian Mallaby are also good.

Steven Levitt- Freakonomics

Sachs, Rogoff, Stiglitz, Schiller and Brad De Long have columns at Project Syndicate.

Rogoff’s open letter to Stiglitz is a classic.

Andrew Liegh has some advice for budding op-ed writers.

Let us know your favorite columnists.

UPIG

I am as likely as anybody to say that business costs are high and that governments should do what it can to impose as few as possible. However, sometimes it is not that business costs are too high, but that some businesses just plain stink. A case in point is an article I ran across while perusing OC Blog which tells of United Plastics Group closing a plant in Anaheim. The OC Business Journal in which the article appears says that "The reason for the shift is a familiar one: the high cost of doing business here." I can say that whether costs are high or low the company would still be likely closing the plant. Other firms that this plant competes with face the same costs as UPIG. The difference is that UPIG is company that should have been barnkrupt a few years if not for the owners putting in more money. The company now is looking for anyway that it can compete. They are moving to Mexico because, one, their customers want a supplier there and, 2, they can't do it in the U.S. The company isnt called UPIG by its owners for nothing.

Interesting

Does this have basis in reality:

The Federal Reserve today reacts to a fiscal expansion by raising interest rates and contracting liquidity so as to try to still hit its inflation target.

These days, except in exceptional circumstances--in a liquidity trap, when interest rates are already so low that the Fed can't or daren't lower them further, or when the fiscal expansion comes as a sudden surprise that the Fed does not have time to immediately offset--fiscal policy has next to no stimulative effect at all because the Federal Reserve takes steps to make sure that it does not. That's the big reason that claims in 1993 that the Clinton tax increases were going to send the economy into recession were wrong.

The Webby Winners Announced- The World Has Become Flat

The Tenth Annual Webby Awards Nominees & Winners has been announced.

Webby Person of the Year was Thomas Friedman

LA Times

Over a year ago, I wanted to break some news, but personal relationships stood in the way over a piece of news about the local blogoshpere's favorite whipping boy. Of course, that would be the LA Times and the news is that the LA branch of the Tribune company is for sale. Since it has broke, I could elaborate a little(it's not much). The LA Times and Newsday was shopped to various people including private equity firms which is how I knew about it. In the article, it mentions that perhaps the latter group would be interested in buying the paper. This seams unlikely since none of them bit at the chance over a year ago. Of course, there is price for everything and perhaps if the tribune company wanted to rid themselves of the albatross they could eventually.

Thought of the Day- Building Walls

“We live in a new age of globalization where everything and everyone move everywhere, right? Well not exactly; governments around the world are putting up barriers these days to stop people. The United States Senate has approved a triple-layered set of fences, snaking along for 370 miles, plus an additional 500 miles of vehicle barriers--all to keep Mexicans out. Tiny Botswana has just built a wall to stop people from Zimbabwe from flooding in. Israel is famously separating itself from the lands where most Palestinians live--something that has produced a dramatic drop in terrorism. The Indian army, impressed by this success, has now built a similar fence along its line of control in the disputed region of Kashmir. Saudi Arabia is currently building a wall to stop poor Yemenites sneaking across the desert sands. So when you next hear that we live in a borderless era, remember that it may be true for goods and capital but it is not true for people.”

Fareed Zakaria, in the latest show of Foreign Exchange

The Hedonic Treadmill

A positive correlation between subjective well-being and GDP per capita at a point in time, and a tendency for gains in subjective well-being to decline when GDP capita exceeds US$ 10 000.

I wonder why Mexico seems to be an outlier.

Related;

Gross Domestic Happiness (via Mankiw blog)

Subjective Well-Being Research

Prosperity Brings Satisfaction - and Hope

An earlier post about GDP and Wellbeing and An Overdose of Happiness

See also New Economist’s posts on Happiness

Does the French have a word for entrepreneur?

One study on entrepreneurship which compared rates of entrepreneurship between and among more than 1,200 pairs of identical and fraternal twins in the U.K and conclude that nearly half—48 percent—of an individual's propensity to become self-employed is genetic. (via PSD blog).

But that isn’t much of help for policy maker. I recommend reading the following primer by Israel Kirzner and Frederic Sautet- The Nature and Role of Entrepreneurship in markets: Implications for Policy;

“This Policy Primer explains the role entrepreneurship plays in markets and provides general recommendations for policy makers. The fundamental, policy-relevant ideas in this primer are twofold:

- Entrepreneurship is not a resource; it is the generation of socially-productive ideas which makes the use of resources possible. It is this generation of ideas and not the existence of resources that matters most to prosperity.

- The entrepreneurial discovery process drives resource allocation. In essence,
resources are allocated as a result of entrepreneurial activity. Policies can affect this process in different ways. The peril of regulation comes, not only because it disrupts the patterns of consumption and savings, but also, and primarily, because it stifles entrepreneurial discovery.”

Related: The Entrepreneurial Economist and the Red Queen Game

The Chinese Exception

The latest Pew survey of world opinion is out. With regard to national conditions most publics surveyed are dissatisfied with national conditions. But China is a notable exception - 81% of Chinese say they are satisfied with the way things are going in their country, up from 72% in 2005. Only about three-in-ten Americans (29%) say they are satisfied with the way things are going in the U.S., down from 39% last year and 50% in 2003. Levels of national satisfaction in France have followed a similar downward trajectory - from 44% in 2003 to just 20% today.

Earlier we reported on the Chinese views on free markets.

China has also the largest number of infrastructure projects with private participation.

What does this all mean?

Related; War Bedevils American Image

Myths about the Great Depression?

Don Boudreaux recommends the book Depression, War and Cold War, by Robert Higgs who questions the generally accepted view that World War II was the chief reason for recovery from the Great Depression and suggests that the New Deal prolonged it through what he calls 'regime uncertainty';

“It is time for economists and historians to take seriously the hypothesis that the New Deal prolonged the Great Depression by creating an extraordinarily high degree of regime uncertainty in the minds of investors.

Of course, scholars have had their reasons for not taking the idea seriously. For a long time, historians have viewed the statements of contemporary businesspeople about “lack of business confidence” as little more than routine grumbling—sure, sure, what else would one expect Republican tycoons to have said? Historians generally report such statements as if they were either attempts to sway public opinion or unreflective whining.

Since World War II, economists, with only a few exceptions, have overlooked regime uncertainty as a cause of the Great Duration for other reasons, such as the availability of standard macroeconomic models whose variables do not include the degree of regime uncertainty and, even if one wanted to incorporate it into an existing model, the absence of any conventional quantitative index of such uncertainty. Somewhat inexplicably, most economists regard evidence about expectations drawn from public opinion surveys as scientifically contemptible. Moreover, economists crave general models, equally applicable to all times and places, and so they resist explanations that emphasize the unique aspects of a specific episode such as the Great Depression…”

Related;

Arnold Kling refers to a couple of other books on the Great Depression and the New Deal.

The Secret History of the Cold War- A five part series from Radio National.

Highly Recommended; Robert Higgs Czech Lectures

Journal Editors and Book Editors

Every edition of the Australian Economic Review has a section called ‘For The Student’- the latest one looks at the world of economic publishing ; From Manuscript to Publication: A Brief Guide for Economists (freely available online for now) by John Creedy;

“Journal editors are not selected according to their knowledge of the printing and publishing business, or even their administrative abilities. Many therefore know little, and care even less, about those aspects. If journal editors face no sanctions, have little knowledge of the technical and commercial aspects of publishing, and have no financial incentives regarding outcomes, it is inevitable that factors such as power, influence and ego play a role, thereby damaging the selection process. Many editors nevertheless do provide a valued and disinterested service to the scholarly community. It is perhaps surprising how well the system generally works, though there are huge variations in editorial standards.

Book editors are, in contrast, paid professionals whose remuneration depends on the sales of books they commission. There is thus a clear market sanction. There is indeed much mobility within the industry, as successful editors are ‘headhunted’. Book editors typically know the publishing business well from many points of view, having often ‘worked their way’ through a number of departments.

The behaviour patterns of the different editors are therefore, not surprisingly, quite distinct. Journal editors simply wait for submissions to arrive. With limited space available, emphasis is given to the selection process involving the rejection of a large proportion of submitted papers. Editors are generally, though not always, well known and often highly regarded academics. They are confident of their own ability to make judgements regarding the quality of papers submitted, though an important role is played by referees, as discussed below. Furthermore, an editor may consult an editorial board before making a final decision, but this is not common. Journal editors have little, and merely distant, contact with authors. Given the search for original highquality papers, past reputations of authors typically count for little.”

Related;

What are the top economics journals? The American Economic Review and Journal of Political Economy are the two most important journals according to Tyler Cowen.

Broader, Deeper; But four new journals will appear, about two years from now. Their titles have only just been announced (pending a copyright check). The plan is to call each the American Economic Journal: the subtitle to follow the colon. It's clear that the formulators hope the new "aggregate field journals" will render old boundaries more porous, and cause new distinctions to evolve.

Tom Maschler - the writer's business; Today, what do publishers want, or the secrets of the book trade. Tom has been a publisher all his working life—revered for being chairman of Jonathan Cape when it was the best literary publishing house in Britain. He introduced Gabriel Garcia Marquez, Thomas Pynchon, Joseph Heller, Tom Wolfe and Kurt Vonnegut to British readers. Doris Lessing, John Fowles, Arnold Wesker, Roald Dahl, Ian McEwan, Julian Barnes, Martin Amis, and Salman Rushdie were also part of the Cape line-up during his reign. As the story goes, booksellers would simply buy whatever he had to offer just because of his reputation. But since he retired from the publishing world he for the first time went over to the other side of the fence and wrote a book. It's called Publisher and he wrote it because he was recruited by an agent. Listen to the podcast.

Book Recommendation; Writing for the Information Age: Elements of Style for the 21st Century by Bruce Ross-Larson

Note: I’ve classified this post under a new category called ‘Academy’ with a view to present primers and ‘explainers’ to Econ 101 students. I would also suggest reading regularly the 5 blogs - Greg Mankiw’s, Austrian Economists, Aplia Econ blog and EconLog.

Auto Makers Should Advertise on Blogs

“Two years ago, 10 percent of my advertising budget had an online component,...Today it’s 30 percent. Two years from now, it will be 50 percent. And overall budgets are not growing. It’s coming at the expense of television and print.”

- CMO of a U.S. auto company (cited in The Future of Advertising Is Now, an article from the latest edition of the magazine Strategy + Business, registration required)

UNCLE TOM'S CABIN

The latest podcast of ‘In Our Time’ talks about the book Uncle Tom's Cabin;

"When Abraham Lincoln met the writer Harriet Beecher Stowe after the start of the American Civil War, he reportedly said to her: 'So you're the little lady whose book started this big war'. Stowe's novel Uncle Tom's Cabin, published in 1852, is credited as fuelling the cause to abolish slavery in the northern half of the United States in direct response to its continuation in the South.

The book deals with the harsh reality of slavery and the enduring power of Christian faith. It proved to be the bestselling novel of the 19th century, outselling the Bible in its first year of publication. Its fame spread internationally, Lord Palmerston praised it highly and Tolstoy reportedly said it was his favourite novel.

What impact did Uncle Tom's Cabin have on the abolitionist cause in America? How did the book create stereotypes about African Americans, many of which endure to this day? And what was its literary legacy?"

Contributors include Celeste-Marie Bernier, Lecturer in American Studies at the University of Nottingham, Sarah Meer, Lecturer and Director of Studies in English at Selwyn College, University of Cambridge and Clive Webb, Reader in American History at the University of Sussex.

Removing binding constraints to growth?

I learned via P&G blog that the World Bank has launched a new fund called Africa Catalytic Growth Fund. One of the Fund’s targets is removing binding constraints to growth;

“Binding constraints to growth are removed through the ACGF framework for systematically targeting high performing and transformation countries, as well as regional integration initiatives that demonstrate evidence of specific constraints. Increased targeted aid for these countries can enable them to solve immediate problems that present barriers to their development, to implement critical reforms and provide them with the technical and financial assistance to give them the opportunity to break existing barriers, leading to higher sustained rates of growth.”

For Comment: I would like to hear your response after reading the above ‘humble’ objective of the program.

Related Podcast; Two Views on Global Development; Revive the Invisible Hand or Strengthen a "Society of States"?

Einstein Never Used Flash Cards

“The sciences of the mind can also provide a sounder conception of what the mind of a child is inherently good and bad at. Our minds are impressively competent at problems that were challenges to our evolutionary ancestors: speaking and listening, reading emotions and intentions, making friends and influencing people. They are not so good at problems that are far simpler (as gauged by what a computer can do) but which are posed by modern life: reading and writing, calculation, understanding how complex societies work. We should not assume that children can learn to write as easily as they learn to speak, or that children in groups will learn science as readily as they learn to exchange gossip. Educators must figure out how to co-opt the faculties that work effortlessly and to get children to apply them to problems at which they lack natural competence…

The obvious solution is instruction at all levels in relatively new fields like economics, evolutionary biology and statistics. Yet most curriculums are set in stone, because no one wants to be the philistine who seems to be saying that it is unimportant to learn a foreign language or the classics. But there are only 24 hours in a day, and a decision to teach one subject is a decision not to teach another. The question is not whether trigonometry is important — it is — but whether it is more important than probability; not whether an educated person should know the classics, but whether it is more important to know the classics than elementary economics.”

-Steven Pinker, How to Get Inside a Student's Head

People often get carried away in the age we live with all the technology around us. Some say we should give every student a laptop and it would solve today’s education problems. But we may be forgetting the basics- that the 3Rs (reading, writing and arithmetic) matter at the end of the day. It is also important there are simple ways to test the performance of education like this story told by Per Kurowski; “I just saw a short video produced by the World Bank in Peru where they tried to establish whether the kids at the end of their second grade could read 60 words a minute, which supposedly is a minimum, for Spanish. Some could and they were therefore also able to answer some very easy questions on what they had read, but many could not read even one single word and of course had not the slightest idea of what was going on.”

Related;
A presentation at NYPL by Kathy Hirsch-Pasek: Einstein Never Used Flash Cards
How our children really learn and why they need to play more and memorize less. Discover how everyday experiences can provide kids with the foundation for learning. A program for parents, childcare providers, and educators with author and Professor Kathy Hirsch-Pasek, Ph.D., a professor at Temple University in Philadelphia and Director of the Temple University Infant Language Laboratory. She has written nine books including How Babies Talk. She serves as the Associate Editor of Child Development, the leading journal in her field.

Thoughts for the Day

"How will you be of service to your nation and all the world?".."One: What is the nature –– fundamentally –– of the 21st century world? Two: How would you like to change it? How would you like to leave it for your children and grandchildren? Three: What must be done to affect those changes? And four: Who's supposed to do it? Especially, what are you going to do?"
- President Clinton at Princeton University's Class Day Ceremony

“I hope that you will contribute in some measure to economic progress, whether in the United States or elsewhere; and I hope you find some measure of financial reward. But the world has a great deal more to offer than money, and a key question each of you will face repeatedly in your lives is how to use the talent and education that you have been given and the knowledge that you have attained.”
- Ben Bernanke, Commencement Address at MIT

“There is much more to be done, too, in truly integrating Harvard with the world. Students from abroad coming here to study return home changed people, and those they meet here are changed by them. Remember a few years ago the rescue of a doomed Russian submarine crew? This rescue was only made possible by a contact between a Russian admiral and an American admiral - two who never would have communicated if they had not met in a Kennedy School joint military program.”
- Harvard University President Lawrence H. Summers, Commencement Address

“All of which reflects one of the many things that bothers me about our educational system. Considerable parts of it appear designed to teach people to pretend to intellectual tastes and knowledge that they do not possess and that there is no good reason why they should possess.”
- David Friedman (son of Milton Friedman) – he introduces himself as an academic economist who teaches at a law school and has never taken a course for credit in either field.

Open-Source Software in Disaster Management

BBC’s Digital Planet looks at the Sahana- an open source disaster management system which was developed in Sri Lanka in the wake of the tsunami and is being used increasingly across the world.

Does any one know of similar open source disaster management systems?

World Cup and Productivity

In the US;

"The World Cup will likely cost American companies 10 minutes of productivity a day for 21 days, according to the outplacement company of Challenger, Gray & Christmas. That comes to about $121.7 million in lost productivity in the US, a large figure, particularly painful for any company dominated by Englishmen, Germans or Brazilians perhaps."

In UK;

"Based on an average hourly wage of £12.50, the law firm Brabners Chaffe Street calculated that during the tournament, if half of British workers surf the net for an hour a day, it will cost Britain nearly £4 billion in lost time"

Related podcast; A History of Soccer- The Football (or Soccer) World Cup now attracts the largest following of all sporting events. Rear Vision podcast investigates the history of the world's most popular game, participated by Professor Tony Mason (International Centre for Sports History and Culture, De Montford University, UK), Dr Bill Murray (Widely published sports historian School of Historical and European Studies, LaTrobe University Australia), Professor Jim Walvin (Department of History, University of York, UK) and Les Murray, Football commentator, SBS.

Iraq Fact of the Day

“In theory, the Iraqi government buys fuel from neighboring countries at market rates and then resells it to Iraqis at cheaper subsidized prices. Subsidized diesel, for instance, was sold by the government for less than three cents a gallon for most of 2005, meaning that a 9,000-gallon tanker truck carried fuel officially worth around $250. But the same fuel was worth perhaps a dollar a gallon on the black market. With typical rates of $500 for protection money or police bribes and $800 to pay the truck driver, a smuggler could make at least $7,450 by bringing in fuel from Jordan, Syria or Turkey, according to Mr. Alak's report to the Oil Ministry.

After filling their trucks in neighboring countries, the drivers sell their load at a higher rate on the Iraqi black market. The beauty of the system from the smuggler's standpoint is that if arriving at an Iraqi fuel depot with an empty truck cannot be smoothed over with a bribe, the truck can be filled again elsewhere in Iraq at the cheap subsidized price….

Iraqi and American officials said they could not offer a total figure for what smuggling is costing the country every year, beyond asserting that it is in the billions.

But Oil Ministry data suggest that the total was $2.5 billion to $4 billion in 2005, said Yahia Said, a research fellow at the London School of Economics and director of the Iraq Revenue Watch at the Open Society Institute, a policy foundation.

Even at the low end, that would mean smuggling costs account for almost 10 percent of Iraq's gross domestic product, $29.3 billion in 2005.”

- Attacks on Iraq Oil Industry Aid Vast Smuggling Scheme (via Brad Setser)

See also Venezuela’s Non-Paradox of Value; In fact, gas in Venezuela is cheaper than mineral water, a seeming violation of the Paradox of Value.

John Taylor on Iraq

Region: Thinking about international work, some of the most arduous efforts you have undertaken were in Iraq, where you helped to reestablish the central bank. How do you go into countries where the financial infrastructure has been torn apart and begin to rebuild? And are you optimistic?

Taylor: Oh, yes, I'm optimistic about both Iraq and Afghanistan, where I also worked to rebuild financial systems. I think the progress made on the financial side in Iraq was unbelievable. It was amazing how successfully it all went. A whole new currency was put in place in just a matter of months. A new central bank was established; central banking law was developed. There was no financial chaos, which was really a major concern when the Saddam government fell. We prepared for months in advance.

So I think the way I would answer your question is just to be prepared and have some plans that you've worked out even though you don't know precisely what the circumstances will be. This is a management and leadership question. We had to have knowledgeable people on the ground who could talk to the career people in the central bank or the finance ministry after the government fell. Brave people, experienced people, they have to know to report back to Washington if there are changes in the plans. We set up what I called a “reach-back” operation in Washington to provide that capacity. You also have to have communication up through the chain of command in Washington. And you need the best experts you can find. Fortunately, we had Tom Simpson from the Fed Board staff come to Treasury to help us, and he just did a terrific job. Former Fed economist Bill Dewald spent several months in Baghdad under difficult conditions and made an enormous difference. So, good expertise is essential.

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

Region: A huge helicopter drop of money.

Taylor: It was indeed. It was much more than an economic issue. It was also a security issue and a logistical issue. You have to assemble all the things you need to run an organization, keep it running like clockwork, and even then things can go wrong. I was just so thankful that nothing went wrong in the currency exchange.

See the whole interview in the June edition of the Region.

See also the article related to the chart above ‘Interchange Fee Debate; Merchants are seeking relief from rising credit card fees, but the economics are complex and near-term resolution seems unlikely.

May the Best Team Win

Another set of links on the World Cup and Soccer.

Podcast of an interview with Andrew Zimbalist, professor of economics at Smith College; talks about the growth of Major League Soccer in the U.S., corporate interest in World Cup soccer, and the World Cup's financial beneficiaries.

Blast it like Beckham? When taking a penalty kick, a player ought to score (provided the referee applies all the rules). He can fail in two ways: by missing the target altogether, or having a shot on target stopped by the goalkeeper. We can look on taking a penalty as a game, in which both the shooter, S, and the goalkeeper, G, must choose from a finite list of tactics. For each choice made (S might aim low right, G might dive to the left), we can estimate a payoff - the chance a goal will result. The shooter's aim is to maximise his expected payoff, G aims to minimise the same quantity. This is the classical set-up of a zero-sum game.

Modeling Tactical Changes of Formation in Association Football as a Zero-Sum Game; Although tactical decisions made by managers during a match of team sports are very important, there have been few quantitative analyses which include the effect of interaction between both teams’ decisions, because of the complexity of the problem where one team’s decision will affect the other team’s. A game theoretic approach can be useful for tackling this type of problem. See also Formulaic football and Time Has to Be Right to Risk a Red Card.

Mathematics of the Soccer Ball

History of Soccer Ball; Which One Have You Kicked

On the ball; Data collected from professional soccer matches suggest strongly that the times when goals are scored are fairly random, with two minor modifications: more goals are scored, on average, in a given five-minute period late in the game than earlier; and "goals beget goals" in the sense that the more goals that have already been scored up to the present time, the greater the average number of goals in the rest of the match. But these two points are second order factors: by and large, the simple model which assumes that goals come along at random at some average rate, and irrespective of the score, fits the data quite well.

World Cup Stock Exchange; Instead of buying virtual shares in sports stars, you buy shares in World Cup teams.

Get the most recent coverage about the World Cup from the BBC and their Blog, Google, SoccerBlog, WorldCupBlog.

Live Footy- World Cup Edition (To be able to see Live soccer/bastekball matches without pay even 1 cent, declares the website).

Podcasts Carnival – Economics Edition

Nouriel Roubini, an economist at New York University and a former U.S. Treasury official, talks with Bloomberg's Tom Keene in New York about the impact of monetary policy on the stock market, global economic growth risks and the outlook for the meeting of finance ministers from the Group of Eight nations in St. Petersburg, Russia.

Two Views on Global Development: Revive the Invisible Hand or Strengthen a "Society of States"? Deepak Lal, (Reviving the Invisible Hand: The Case for Classical Liberalism in the Twenty-first Century ), and Ethan Kapstein, (Economic Justice in an Unfair World: Toward a Level Playing Field) debate at Cato

Foreign Aid and Developing Economics

The Undercover Economist; Tim Harford acknowledges that Oscar Wilde's famous definition of a cynic - 'someone who knows the price of everything and the value of nothing' - is now commonly applied to economists (discussion starts later in the program)

Myths, Lies, and Downright Stupidity: Get Out the Shovel—Why Everything You Know is Wrong; Featuring John Stossel, Co-Anchor of ABC's 20/20

A New Era at the Federal Reserve: Some Challenges and Opportunities for Change; Featuring Shadow Open Market Committee members: Charles Plosser, Cochair; Anna Schwartz, Cochair; Gregory Hess; Lee Hoskins; Alan Stockman; Bennett McCallum; and Mickey Levy.

Harvard Kennedy School of Government Professor George Borjas, often called America’s “leading immigration economist,” discusses with James Reese the American immigration situation.

Dr. Roszbach, is a research economist at The Riksbank in Stockholm, the oldest central bank in the world, founded in 1668. He discusses with James Reese the banking systems in Sweden and Europe.

What IN: Inside Innovation Is All About (Business Innovation).

Mr. Risk Goes to Washington;Why Paulson will make a difference at Treasury

Medical Guesswork; when the effectiveness of most treatments cannot be demonstrated

Business in India; discussion with Simon Long, South Asia bureau chief of The Economist.

Science fiction and reality; a discussion about the latest Technology Quarterly in The Economist.

Making Poverty History: Slogan or Reality? Charles MacCormack, President, chief operating officer, and member of the board, Save the Children Federation

TCS Daily Hayek Series Event: The Creative Class vs. Capitalism (video)

Professor James Robinson, Harvard University, discusses the nature of institutional persistence and examines the mechanisms whereby elite minorities are able to manage the distribution of economic and political authority. See also an earlier post about him; Politician Proof Policy.

Happiness and Economics; Research by Professor Andrew Oswald has questioned the supposed link between economic growth and happiness and indicated that it may not be in our national interest to continue our focus on increased consumption

Melissa Hageman on Open Access; Information technology isn’t just for surfing the web and listening to audio. Developing countries can take advantage of ICT to increase transparency in governance, improve their financial infrastructure, or reduce waste. By linking people together across borders, information technology can also serve as a cheap way for sharing knowledge. Melissa Hageman of the Open Society Institute discusses open access initiatives in this podcast.

Anderson and Hoekman on International Trade; In this session, we step past our borders toward the question of international trade. Because it is the most basic unit of interaction between countries, trade is one of the building blocks for the development process. Kym Anderson, Lead Economist, and Bernard Hoekman, Research Manager, comment on trade liberalization and international negotiations

Robert Bates on Governance Systems and Political Effectiveness

Water Management in Australia; A new study by the CSIRO says the cost of water is set to rise dramatically, while politicians are arguing over who should have the ultimate responsibility for water management. So have the states neglected our water infrastructure? Should there be more water trading between regions? And will it take higher prices to finally force consumer change and less wastage?

The Wal-Mart Effect; Author Charles Fishman calls the giant US retailer Wal- Mart the world's most powerful company. He argues that it has had a profound effect on America - it has transformed its economy, its working life and the way it sees the world.

Torn Curtain - The Secret History of the Cold War; Episode 1, Episode 2, Episode 3, Episode 4.

The politics of abuse, and the abuse of politics; Spiked.com columnist Mick Hume says that the more acrimonious an argument or election contest appears to be, the less likely it is that anything of principle is really at stake. He says the current leadership battle at the top of British politics is evidence of this

Nine Lies about Global Warming; Are we being lied to about Global Warming? In a new publication Ray Evans argues that we are told nine big lies about Global Warming. We discuss the evidence and consensus on Global Warming with two scientists; Dr Michael Manton and Dr Vincent Gray.

Some more; Brad De Long has now started a series of podcasts- Afternoon Tea Podcasts.

Radio Economics is also starting a new series of podcasts.

World Bank News Podcasts and their other more useful podcasts.

University Warwick has more podcasts including the World Cup specials which I linked before.

And finally Microeconomics Lectures from a Berekely course (via Harry Clarke).

Podcasts Carnival- World Cup Edition

How to Predict a Winner; After analysing the outcomes of 4500 international games Henry Stott gives his guide to the likely World Cup champions.

On Beckham and English Managers

Going global in a frenzy of football

Trends in Football Management; New research by Dr Sue Bridgewater from Warwick Business School has revealed that over 500 managers from the four top English divisions have been dismissed from their post since 1992 bringing damaging instability to the game. However she also outlines how a new professionalism in the post of manager is already achieving results on the pitch and could thus help managers stay post longer.

Damo's Bedside Guide to the World Cup: Everything you never knew you needed to know; The World Cup of football was the brain- child of FIFA's third president, Frenchman Jules Rimet. The World Cup was intended as more than just a sporting competition. Rimet was an idealist whose vision of the tournament had grown alongside the internationalist movement for peace that swept through Europe in the aftermath of World war One. Rimet had enormous optimism in the potential of football as a unifying force and believed that a truly international tournament, which brought together nations in a spirit of friendly competition, would help to diminish the threat of another Great War

Garry Richardson chats to footballing legend Pele, FA Chief Executive Brian Barwick and John Barnes.

The Apthorp

John Tierney via Peter Gordon:

"Who knows what evil lurks in the soul of a New York tenant? Nora Ephron knows — sort of."

"She has broken the code of silence of Manhattan's most exclusive aristocracy. She became the crème de la crème of the city's rent-regulated tenants by bribing her way into an eight-room apartment for $1,500 a month at the Apthorp, the palatial building at Broadway and West 79th Street.

By chance, I happen to have spent quite some time in the Apthorp during my college days. I even wound up in the elevator with Conan O' Brien. I didn't live there myself, though I knew two non-social-elites who lived in rent-stabilized (not rent-controlled) apartments in the building. They used strong personal connections to get in on the deal.

Market rent at the Apthorp is $19,000 a month for 11J, a completely renovated 3000 sqft home, and $10,000 a month for a two-bedroom two-bath...

A Puzzle for Freakonomics Fans

I’ve often wondered how does street musicians outside major metro stations decide on who should be the one to play on a given day. Does it work on a first come basis? I doubt it. How does a Chinese, an African American and a white country singer coordinate to play on alternative days?

Demand and Supply of Nurses

Source; U.S. Plan to Lure Nurses May Hurt Poor Nations (via Poverty & Growth blog)

IMF on the US External Balance, again

“The ease with which the United States has financed its record current account deficit has been remarkable, but is unlikely to be sustained indefinitely. A number of (possibly temporary) factors, such as short-term interest rate differentials and increasing demand for long-term bonds, have helped support the U.S. current account deficit and dollar over the past year. However, most forecasters project that the current account deficit will rise further in coming years, which may begin to strain the global appetite for U.S. assets. Delaying the inevitable multilateral adjustment will mean continued increases in U.S. external indebtedness, magnifying the potential for disruption to exchange rates, financial markets, and growth, both domestically and abroad.”

- United States of America—2006 Article IV Consultation, Concluding Statement of the IMF Mission

Related Audio Links:

The U.S. Current Account Deficit Once Again- Brad De Long’s Afternoon Tea.

Allen Sinai chief economist at Decision Economics, talks with Bloomberg's Tom Keene about stagflation risk in the U.S. and Federal Reserve Chairman Ben S. Bernanke's comments about monetary policy..

Have Everybody Bet?!

An interesting error on the front page of NYTimes.com:

(Note that by the time I posted this, 15 minutes had passed, and the error was already corrected.)

What is Superman's Comparative Advantage?

There is an ever-growing crop of excellent ideas about what Superman should do to best "improve the macroeconomy". (Note that the phrasing of this verbal maximization function doesn't specify Superman's abilities and constraints; and what does "improve" really mean?) Anyway it remains to be seen just how Superman will optimize his efforts and coordinate with us mortals in his endeavors. And there are several practical considerations people aren't yet talking about -- all of which come out of realizing that advising and managing Superman has to be far more difficult than running the largest corporations or the most powerful governments:

First of all, Superman cannot waft through every request for his services, so he needs to set up a bureaucracy -- an inner circle of apparatchiks and an enormous staff-- to process and deal with all the demands for his time and energy. (Won't people write to Superman like they write to Eminem and the US President? They'll want him to care, and to do something about their individual plights. How will they react to a form letter and signed photo?) These people will have enormous power and responsibility, and it's unclear to me who should fill these roles.

Second, Superman most likely doesn't have a comparative advantage in analyzing and comparing the relative costs and benefits of performing any given task, so he will need a team of specialized analysts to provide bottom-line benefit and risk scenarios. Whom will Superman benefit by helping build a space elevator today? How much is that benefit? Is that a better option than finding and exploding all IEDs in Iraq before they are used to kill someone? On August 28-29, 2005 should he have been in New Orleans shoring up the levees?

Third, it's unclear whether Superman -- even though he is altruistic and incorruptible -- will really make good decisions about what he must do to improve the macroeconomy, and how he should balance this with other goals. How will he do making his own decisions compared to the median response of a random sample of the world's adult population? Superman has a absolute advantage in many realms of space, defense, and transportation, but not decision-making. If we can demonstrate (say via simulation or trial and error) that Superman is a poor decision-maker, to whom can we entrust the power of "decider" for Superman?

Google Spreadsheets Beta Not Ready for PrimeTime

Some people have noted the lack of pivot tables and graphing capabilities, but I've had far more fundamental problems using Google Spreadsheets Beta in Firefox 1.5.0.4. These aren't bugs, but differences in usage from Excel that make it unlikely that I will be transferring to GS any time soon:

1) Formulas in INactive cells DON'T automatically change with a cut and paste. If in any cell (say D20) you write a formula that links to another cell (say B1), and then cut and paste B1 to any other cell, your formula in D20 isn't told of that the cut and past, so it continues to link to B1, even though there's nothing in it. And it doesn't matter if D20 links to $B$1 or B1. This alone kills the app's usefulness for me, as I do tons of manipulation requiring this functionality.

2) Some formulas in a cut cell DO change with a cut and paste. If you have a formula in D20 linking to B1, and cut and past D20 to D21, the cell will now link to B2 instead of B1. This is unexpected. You have to link to B$1 in order for a cut and paste of D20 to not change the row number D20 links to. This isn't terrible in and of itself, but I'm not used to the app working this way, since in Excel, when you cut and paste a cell, the formula in the cell doesn't change, ever.

3) There is no specialized right-click menu. Which I should have realized immediately. All you get is the standard browser right-click functions. I right click A LOT in Excel, and immediately say a tremendous decrease in productivity having to hunt for menus.

Will have to check to see how well GS works in IE.

Better than Trial and Error

A recent article in the Forbes magazine on randomized trials of development projects (via PSD blog);

“The Indian antipoverty group Seva Mandir runs an educational program that teaches 4,000 kids ages 7 to 10 math and reading and writing in Hindi. Seva Mandir had a problem: The teachers, recruited from the villages, often with only a tenth-grade education, would show up at the school only 60% of the time. While a teacher could be fired for excessive absenteeism, the remote locations throughout the impoverished state of Rajasthan ruled out regular monitoring.

A classic way of dealing with this problem is to throw money at it--which is what officials at Seva Mandir proposed to do. They would hire an additional teacher for each classroom, doubling the cost. But in stepped a group of development economists from the Massachusetts Institute of Technology. For a few years now the group has been testing antipoverty programs using the same scientific technique pharmaceutical researchers use to evaluate new drugs: the comparison of a randomized test group with a control group.

The idea is to divide a targeted population into two groups, then give the aid--microcredit, computers, textbooks, teacher incentives, health care programs--to one group but not the other and compare the results. "We aren't really interested in the more-aid-less-aid debate. We're interested in seeing what works, and what doesn't," says Abhijit Banerjee, a development economist at MIT who (with Esther Duflo of MIT and Sendhil Mullainathan of Harvard) helped found MIT's Poverty Action Lab.”

Abhijit himself was an ‘activist’as a student in India. There course on Evaluating Social Programs is also conducted at Centre for Micro-Finance in Chennai as well.

A Reality Check on Iraq

After watching the latest Foreign Exchange show, it seems to me that the only way forward in Iraq is Divide and Heal- the hatred among the three parties is really unbelievable.

Nir Rosen author of In the Belly of the Green Bird: The Triumph of the Martyrs in Iraq, discussed the new reality that is emerging in Iraq- a bleak plunge into civil war.

For Comment; do you agree with Fareed Zakaria?

“I'm glad that the president has finally admitted to some mistakes in Iraq. But what worries me is that he still seems to be persisting in one important error. In his press conference last week, the only concrete plan he outlined to move forward—on a path out of Iraq—was a better-functioning Iraqi Army and police force. In this respect Bush is hardly alone. Many who criticize him on the right and left say that the training of Iraqi troops is happening too slowly, or that we need more American troops, or that we should flood the city of Baghdad with forces to stabilize it. But all of these solutions are technocratic and military, while the problem in Iraq is fundamentally political. Until we fully recognize this, doing more of the same will accomplish little.”

Related; Juan Cole's suggested reading list on Middle East, and these photos by Nir tell the story vividly.

Corruption in Infrastructure

“A very promising research area is the use of randomized field experiments. A recent paper by Olken (2005) reports the results of such an experiment in Indonesia which measures missing expenditures in over 600 village projects. To do so, the author relied on a comparison of the villages’ official expenditure reports with estimates of the prices and quality of all inputs used in road construction and maintenance, each made by independent engineers. This approach allows a separation of the sample into sub-samples designed to test the effectiveness of various types of policies in reducing corruption.

What do these studies show? Most of the evidence confirms the expectations. First, the basic data analysis from the Global Competitiveness report suggests that the frequency with which firms have had to make undocumented extra payments or bribes to get connected to public utilities or to gain public contracts is, on average, negatively correlated with the income of the countries. These responses suggest that the poorer a country is, the bigger the corruption problem in infrastructure. While useful these data are also far from being precise. They are based on executive surveys which are known to have their share of problems. More importantly, it tells us little about what the government or the residential infrastructure users think about corruption. Second, corruption can be tracked to greater constraints on utility capacity and lower competition among utilities. This is found by Clarke and Xu (2004) for 21 Eastern European countries. They also find that public ownership in that region is more correlated with corruption than private ownership of utilities. Third, corruption can be associated with higher than expected costs. The most detailed studies ( Flyvbjerg and various colleagues) show that excess costs can be attributed to procurement rules that give bidders an incentive to announce low costs to increase their chances of winning projects, then renegotiate….

What can we do to reduce corruption in infrastructure? There are basically four main directions in which theoretical researchers have been pushing for over 20 years: (i) privatization, (ii) regulation and related processes, (iii) increased decentralization, and, (iv) adoption of participatory process in the selection, implementation, and supervision of projects. Since many countries have tried these recommendations, we now have enough new facts to analyze. This analysis is still very young but already yielding interesting results.”

Infrastructure: A survey of recent and upcoming issues

The paper comes from the Annual Bank Conference on Development Economics - ABCDE Tokyo 2006.

Here’s a podcast overview and a video of the opening session.

A related conference in South Africa- see especially the paper 2010 World Cup- Infrastructure Challenges.

PSD Blog has more on corruption.

Orwell and Bono on Soccer

"Football, it seemed to me, is not really played for the pleasure of kicking a ball about, but is a species of fighting."
- George Orwell

World Cup "closes the schools, closes the shops, closes a city and stops a war."
-Bono

Thanks Pablo for an excellent set of links on the coming World Cup. Just to add some more links.

The Economist has a article ($ required) on virtual stock markets betting on the World Cup teams; STOCCER, Ball Street, Cortal Consors, Postbank, Eurosport, Handelsblatt, Wmxchange,TradeSports, Bluevex, Prognosys Electronic Stock Markets.

Coverage from some blogs; Social Econ Blog, Eldis News Weblog, This Blog Sits Here on the Mystery of Soccer.

Going Global in a Frenzy of Football- a podcast coming up in next Friday.

Some country slogans- my favourites;

Brazil - "Vehicle monitored by 180 million Brazilian hearts"
Costa Rica- "Our army is the team, our weapon is the ball. Let's go to Germany and give it our all"
Japan - "Light up your Samurai spirit!"
Mexico - "Aztec passion across the world"
Saudi Arabia - "The Green Hawks cannot be stopped"
Trinidad and Tobago - "Here come the Soca Warriors – the fighting spirit of the Caribbean"
Tunisia – "The Carthage Eagles... higher and stronger than ever"
Iran - "Stars of Persia"
USA - "United we play, United we win"

Is Daniel Drezner right after all?

“Soccer will never bring about peace on its own. The flip side is also true -- by itself, soccer cannot start a war. The World Cup, like the Olympics, suffers from a case of overblown rhetoric. Bono's assurances to the contrary, the passions inspired by the World Cup embody both the best and worst forms of nationalism.”

I don’t know whether soccer or anything else will bring peace on earth. I think Bono is stating a fact and a possibility. The best part of a game is not the game itself, but at the end of the game when players hug, handshake and share their T-shirts – competition and cooperation are built into out genes.

Jesus' Descendants and Probability

John Allen Paulos’ latest column is up and talks about the "The Da Vinci Code" amongst others;

“Probability theory tells us, however, that if Jesus had any children, his biological line would almost certainly have either died out after relatively few generations, or else would have grown exponentially so that many millions of people alive today would be direct descendants of Jesus.

Of course, this is not a special trait of Jesus' descendants. If Julius Caesar's children and their descendants had not died out, then many millions of people alive today could claim themselves Caesar's descendants. The same can be said of the evil Caligula and of countless anonymous people living 2000 years ago. It is not impossible to have just a few descendants after 2000 years, but the likelihood is less than minuscule.

The research behind these conclusions, growing out of a subdiscipline of probability theory known as branching theory, is part of the work of Joseph Chang, a Yale statistician, and Steve Olson, author of "Mapping Human History: Genes, Race, and Our Common Origins."

Going back another millennium, we can state something even more astonishing. If anyone alive in 1000 B.C. has any present day descendants, then we would all be among them. That is, we are descended from all the Europeans, Asians, Africans and others who lived 3,000 years ago and have descendants living today.

Consider the implications for future generations. If you have children and if your biological line doesn't die out, then every human being on earth 2,000 or 3,000 years from now would be your direct descendant.

Getting back to "The Da Vinci Code," we can conclude that if the heroine of the book were indeed descended from Jesus, then she would share that status with many millions if not billions of other people as well. This makes the book's plot even harder to swallow, but then probability was never much of a match for fiction or Hollywood.”

Related Podcasts;
Who’s Who in the Time of Christ
Chinese Brother of Christ
The Da Vinci Code Controversies

Poverty Rate in Iraq

“Any discussion of poverty in Iraq must contend with the security situation that has prevailed in the country over the past few years. It is hard to collect truly representative data on poverty when some parts of the country are difficult to visit and when there is substantial ongoing movement of internally displaced people, refugees, and returnees. The best available evidence suggests that Iraq has an incidence of absolute poverty that is between 8 and 10 percent, and an additional 12–15 percent of the population appears to be close enough to the $1 poverty line to be considered vulnerable (World Bank 2005). This puts Iraq at the high end of the range for countries in the Middle East and North Africa. Two notable features of the poverty profile in Iraq are a distinct regional pattern, with the northern Kurdish areas being relatively better off and the southern governorates having much higher poverty incidence rates; and a distinct gender pattern, with female-headed households having median incomes that are 15 –25 percent below comparable male-headed households.”

- Sustaining Gains in Poverty Reduction and Human Development in the Middle East and North Africa

More on the World Bank Report at Poverty and Growth Blog

Ten Reforms to Make the World More Conducive to Development

1. A “development box” in the WTO that legitimizes the use of trade and industrial incentives (including export subsidies) for developmental purposes (with burden of proof on those that argue the intervention is not developmental.

2. A recognition by the US, in particular, that prudential restrictions on capital flows (“capital account management”) in the developing world is an integral part of a development agenda.

3. Preparation of a “developmental impact statement” as a necessary requirement for any international agreement (including the costing out of the financial implications for LDCs, and laying out the modalities of how these will be financed).

4. Adoption of the “odious debt” notion, whereby debt contracts signed by oppressive regimes are no longer enforceable in Northern courts.

5. A 0.10% financial transaction tax on foreign currency transactions, with proceeds spent on global public goods.

6. Willingness to share information with LDC governments on Northern bank accounts held by LDC residents.

7. A temporary work permit scheme that allows workers from developing nations to spend 3-5 years in the advanced countries. (Revolving pool of workers; low and high skill; return important)

8. A multilateral agreement that disciplines the subsidization of DFI. (The only significant form of industrial policy that (a) is not banned; and (b) clearly transfers resources from developing to developed countries.)

9. Ending the monopoly of the World Bank in generating and disseminating policy ideas, particularly in the lowest income countries, by breaking it up into a number of competing agencies.

10. Moving the IMF’s Policy Development and Review (PDR) Department (and its staff) to a developing country, and rotating it in, say, among different African capitals every five years.

Those are list from Dani Rodrik.

See the rest of papers from the conference- Equality and the New Global Order, especially the one by Branko Milanovic.

Summary of Milanovic’s presentation by Jon Mandle at Crooked Timber;

“Does concern with global inequality require a different approach to international aid?
This presentation was very heavily empirical and gave an interesting insight into the theoretical difficulties of measuring inequality. He began by talking about the significance of the Gini coefficient and the extent of global inequality in income. But, he observed, any such measurement involves aggregation. So, if members of a wealthy country contribute to a poor country, it might turn out that some poor members of the wealthy country are subsidizing wealthy members of the poor country who are better off than they are. (See Rodrik’s example, above.) For many pairs of countries, this would be very unlikely to happen – there are few people in the poor country that have higher incomes than anyone in the rich country. But sometimes it might. For example, the wealthiest 15% of Chinese have a higher income than the poorest 5% of Germans. If we want truly progressive redistribution, we should have a way of measuring this likelihood. So, we need to take the internal distribution of a country into account. A progressive redistribution between countries should minimize the likelihood of regressive transfers. Furthermore, such redistributions should not make the national distribution more unequal. For example, even if the poor in a rich society are better off than the rich in a poor society, transferring from the former to the latter, although progressive, would increase the inequality within each country. The bottom line is that not only the richer, but also the more unequal a country is, the more it should contribute to the relief of global poverty.”

Related: World Inequality in the Second Half of the 20th Century

State of the Economy

“With the economy now evidently in a period of transition, monetary policy must be conducted with great care and with close attention to the evolution of the economic outlook as implied by incoming information. Given recent developments, the medium-term outlook for inflation will receive particular scrutiny. There is a strong consensus among the members of the Federal Open Market Committee that maintaining low and stable inflation is essential for achieving both parts of the dual mandate assigned to the Federal Reserve by the Congress. In particular, the evidence of recent decades, both from the United States and other countries, supports the conclusion that an environment of price stability promotes maximum sustainable growth in employment and output and a more stable real economy. Therefore, the Committee will be vigilant to ensure that the recent pattern of elevated monthly core inflation readings is not sustained.”

- Chairman Ben S. Bernanke

Related Links:

More coverage by William Polley

Latest podcasts from Bloomberg; Drew Matus, a senior economist at Lehman Brothers and Raymond Stone, managing director of Stone & McCarthy.

Learning (or non-learning) from the Classical Age; Or, what if George W. Bush had lived in 480 BCE; would we all be speaking Persian? Asks Menzie Chinn.

Gay Marriage: Evidence from Europe?

Cato recently had a discussion on Gay Marriage, participated by William N. Eskridge Jr., and Maggie Gallagher;

"As the Senate prepares to debate the Federal Marriage Amendment many scholars are looking at evidence from Scandinavia, Belgium, and the Netherlands. Some observers have argued that experience in those countries shows that legal recognition of same-sex unions leads to a decline in traditional marriage and marital child rearing. A new book challenges that analysis. William N. Eskridge Jr. and Darren R. Spedale find that the argument often advanced is inconsistent with the Scandinavian evidence. In no way, they write, has marriage in the Nordic countries suffered from legalization of same-sex unions. A close look at the data suggests that the sanctioning of gay marriage in the United States would neither undermine marriage as an institution nor harm the well-being of children. Maggie Gallagher argues that the move toward gay marriage in Europe is part of a larger marriage crisis, including a powerful trend away from marriage as a social norm for childbearing and child rearing."

Related Links;

The Legislation Possibilities Curve

Becker and Posner debate;

The Law and Economics of Gay Marriage - Posner

On Gay Marriage-BECKER

Gay Marriage--Posner's Response to Comments

Response on Same Sex Marriage-BECKER

The Sexual Revolution- Posner

An earlier post on porn legalisation in Denmark.

And Why Not Legalise Polygamy; First, it's important to note that polygamy (specifically polygny) not monogamy is the norm in human society - some 75% of the known human societies have approved of polygny.

A Shocking Fact about Sub-Saharan Africa

Mankiw declares the war on poverty is being won citing Xavier Sala-i-Martin. Harry Clarke earlier cited the same paper.

But we have a long way to go. I was shocked to see the accompanying chart about Sub-Saharan Africa ( in most recent Global Monitoring Report). The report quotes, ‘Africa has been at the forefront of innovation in water and sanitation for the last 20 years by replacing central planning approaches with community-based management of village water supplies and by implementing technologies like easy-to-maintain hand pumps and low-cost pit latrines” (p.40).

Over 30 percent having no access to any form of sanitation is quite shocking.

Related Multimedia;

Is Global Inequality Rising? – an economic forum at IMF

What Are the Major Advances in Growth Theory since Solow?

Perspectives on Growth, Inequality and Poverty

Understanding the Growth, Poverty, and Inequality Nexus

Easterly Urges Independent Evaluation of Foreign Aid

Robert Bates on Governance Systems and Political Effectiveness

A couple of blogs discussing similar themes; Africa Unchained, Poverty and Growth blog, The World Economic Forum blog- they have got a new 'white papeer' on Strengthening Healthcare Systems in Sub-Saharan Africa.

An Expert on Corruption

A professor at GMU Janine Wedel has written a lot about the alleged corruption case involving Andrei Shleifer, himself considered a world’s leading authority on corruption. Here is her article in the Boston Globe written in March- the following two paragraphs were cut from the original piece.

"The system is virtually incapable of dealing with such players' infractions and lack of transparency in a timely fashion. It is not for lack of inquiries. A series of governmental and business investigations into the handling of U.S. assistance for Russian economic reforms entrusted to Harvard began as early as 1996. That year the Government Accountability Office published a report calling USAID's oversight over Harvard's Russia project "lax." (GAO staff entrusted to me a copy of their original draft report, which is even more critical.) The following year the Justice Department embarked on its investigation. Yet another case charging Harvard University, Shleifer, and another Harvard principal with fraud was brought by The Forum Financial Group, a Portland, Maine-based mutual funds firm working in Russia. That case was settled out of court in 2002. Only recently has Harvard opened an investigation.

While these probes were in process, Shleifer's star, like that of many such players, was steadily rising, not falling. Remarkably, Shleifer has continued to testify before congressional committees and publish articles in reputable journals as an expert on corruption, work with a World Bank anti-corruption unit, and write for Foreign Affairs on the supposed success of Russian "reforms"--without disclosing his role in crafting them. He was awarded the American Economic Association's prestigious John Bates Clark Medal in 1999. And, of course, he remains a tenured full professor at Harvard."

David Warsh’s latest column also talks about the issue;

"Why worry about it if the government didn't have enough evidence to charge him with a crime?

Certainly it is true that criminal and civil law represent different perspectives on conduct. Only the government can charge a crime. The accused is guilty if convicted. The logic of the code, its very language, is that of misdeed, punishment and rehabilitation.

Civil law, on the other hand, governs relationships among private individuals and delineates their rights and obligations. Disputes over torts and contracts ordinarily lead to some kind of compensation for the aggrieved party. There is a sense that such disagreements are an inevitable part of doing business. In most cases, there is not much shame.

And while government pursued a criminal investigation for a time -- a grand jury was empanelled and heard a good deal of testimony -- nothing came of it in the end. Thus Shleifer and Harvard are not said to have been convicted of anything, or to be guilty, or even to have done anything illegal. Instead they are described as having been found to have committed various frauds and breached their contract, respectively….

…A 31-year-old Russian expatriate -- deemed a leading authority on corruption, no less! -- who immediately begins semi-publicly flouting American law and communist sensibility to line his own pocket, and who, after he is caught, persuades the great Harvard University to maintain his innocence. Does this sound like material for a Frank Capra movie or a John Adams opera?

The Shleifer problem is symptomatic of confusion over a distinction that goes much deeper than that between the civil and criminal law -- between the ethical systems that govern the private and the public realms. The locus classicus here, at least in Western civilization, is to be found in Plato, I suppose. …"

For Comment; What do you think is the moral of the story? I wonder what Mankiw thinks about the whole issue.

When Goalkeepers Strike

Even if you don’t like soccer you might find the following couple of videos educational and humorous;

Colombia goalkeeper scoring against Poland

Fabien Barthez, the ever peripatetic French goalkeeper who was rarely to be found in goal but mostly charged out to tackle opposing strikers.

Maradona’s nightmare ad; he was apparently paid $350,000, by brewer Guaraná for this TV ad, who again happens to be one of the main Brazilian national team sponsors.

Some Soccernomics;

Learning About Globalization By Watching A Soccer Game; Soccer is not only the world's most popular sport, but also probably its most globalized profession. It is inconceivable that Brazilian, Cameroonian or Japanese doctors, computer scientists, blue-collar workers, or bank tellers could move from one country to another as easily as Brazilian, Cameroonian or Japanese soccer players do.

Game theory and Soccer; According to data from 2,885 matches in Italy, England and Spain, a bad team playing at home is more likely to score than a good one playing away.

The Case of Penalty Kicks in Soccer; In Europe, Levitt is feted as one of the authors of the "penalty-kick paper". Probably only a trio of economists would have watched videos of 459 penalties taken in the French and Italian football leagues. The authors were testing a complex point of game theory. What they found was that the best place to put a penalty was the middle of the goal, largely because goalkeepers always dive. Yet few penalty-takers actually choose the middle. "I think one reason people don't is that it's just incredibly humiliating to a kicker if he kicks in the middle and doesn't score," guesses Levitt.

The Great World Cup ticket scandal and Red card for Fifa in World Cup tickets fiasco?

Football 'to deliver £1bn kick to spending'; WORLD CUP-related purchases are expected to boost total consumer spending by an extra 50 per cent to £3 billion during the month of the tournament.

On Choosing England’s Manager; The search for the next England manager highlights three problems faced by many organizations looking for a new boss: incommensurabilities, cognitive biases and groupthink. These problems mean it’s very hard to identify the “best” candidate.

Soccernomics 2006; The world economy will benefit most from an Italian victory at the football World Cup in June/July, according to ABN AMRO's economists in their 'Soccernomics 2006' study, which they have prepared – both for education and enjoyment – for the third time. With the World Cup in Germany only three months away, the ABN AMRO Economics Department has made a prediction, as it did in the run-up to previous major football competitions, as to which country would benefit the global economy the most if its team were to win the World Cup. This time it is Italy

A workshop on Economics and Psychology of Football

Economics Professor Seeks U.S. Soccer Model; He recently tried to talk an engineering student out of leaving Columbia to join a youth soccer program that Gulati himself helped to create. "It's very different than it is in England or Brazil, or in Italy where a gifted 17-year-old isn't thinking about the University of Rome, he's thinking about playing for A.C. Milan," Gulati said. "If a kid is choosing between a place like Columbia, that's a different decision from somebody who doesn't have 1400 SATs and might be thinking about another alternative. Opportunity cost, as we would say in Principles of Economics."

Some podcasts on soccer from Radio National;

Going totally Dutch; The Australian Socceroos are off to the World Cup with a secret weapon in their Dutch coach Guus Hiddink, who was a part of one of football's great innovations, the Dutch idea of 'total football'

Australia versus Greece; The most recent installment of the Socceroos' journey to Germany for the 2006 World Cup

Globalisation and Sport; Globalisation now describes just about everything, from the way we do business to the way we watch football. So what are the implications for sport in a world where global is rapidly replacing local?

The Birth-Month Soccer Anomaly; If you were to examine the birth certificates of every soccer player in next month's World Cup tournament, you would most likely find a noteworthy quirk: elite soccer players are more likely to have been born in the earlier months of the year than in the later months. If you then examined the European national youth teams that feed the World Cup and professional ranks, you would find this quirk to be even more pronounced. On recent English teams, for instance, half of the elite teenage soccer players were born in January, February or March, with the other half spread out over the remaining 9 months. In Germany, 52 elite youth players were born in the first three months of the year, with just 4 players born in the last three

Maradona Explains Monetary Policy; At the annual Mais lecture at City University's business school last night, Merv took the audience back to the 1986 World Cup in Mexico, when England were single-handedly demolished by two goals from Diego Maradona (see the picture above), one a blatant handball to all but the ref and linesman and one a work of genius. The Hand of God goal was comparable to the old 'mystery and mystique' approach to central banking, he said, as the action was unexpected, time inconsistent and against the rules. His second, involving a mazy run past five England players before burying the ball in the back of the net, represented the power of expectations in the modern theory of interest rates, apparently. See Mervyn King’s speech

Some blogs covering soccer related economics; PSD Blog, The Sports Economist, Soccerblog.

Globalization with a Chinese Face!

“I never think of the future. It comes soon enough”- Albert Einstein

Shell Global Scenarios to 2025 propose three possible political environments for business. The scenarios are based on the results of the interplay between three global forces identified as efficiency, social justice and security. They are:

“Low trust globalization”, in which globalization continues but an ongoing crisis of security and trust leads to a legalistic world of overlapping and conflicting laws with intrusive checks and controls.

“Open doors”, in which cooperation between governments, investors and civil society flourishes in a pragmatic fashion producing a more transparent world.

“Flags”, in which suspicion of outsiders and conflicts over values, religion and national preferences creates regulatory fragmentation, gated communities and a dogmatic world.

Canuckflack has more on the last year’s scenario.

Related;

- Managing Globalization- a blog Daniel Altman

- OECD Forum 2006- Balancing Globalization

The Big Bang to MS Office

PC Magazine has a review of the Microsoft Office 2007 Beta 2 version, one of features being a blogging tool for MS Word;

“Like Google's free Blogger for Word add-in, Office's equivalent new feature works with Blogger, but it also works, of course, with Microsoft's own blogging services. You use the File/New menu to open a new blog entry; specify your blog service, username, and password, and then create a new entry or download existing ones for editing.”

Edward Tufte might faint after seeing the chart in the figure as an example of good graphing feature of the Excel 2007.

Related Links;

- Go for a video tour of the new interface. Some ‘official’ blogs covering it; Jense Harris and Microsoft Excel 2007. The talk is more about focusing on results.

- Junk Chart have more some of the new graph features in Excel.

- J-Walk Blog; Those who will have the most difficulty adapting are the great masses of office workers who have learned how to perform a dozen or so common tasks in Excel or Word, and they do them day after day. These people, for the most part, will experience serious frustration. In many cases, these workers don't even look at the "big picture." Rather, their task is broken down into a series of very specific steps that they've learned over the years. What happens when those steps no longer work? …There are millions of customized Office apps in use that use toolbars and/or custom menus. If you load such a file in Office 2007, your familiar menu modifications and toolbars do not appear. Well, they are still there, but the user must know to click the Add-Ins tab. Then, all of the toolbars and menu modifications are visible, stuffed into a single unorganized chunk. Toolbars are no longer free-floating, and you may need to do some serious scrolling to even find the toolbar button you're looking for. And once a toolbar is displayed, there's no way to hide it.

Which Econometrics textbook did Robert Engle use?

Nobel laureate Robert Engle, talks about his analysis of equity market volatility, quantitative finance and more in this podcast.

In an earlier interview Engle says;

“Well, it was very interesting, because Ta Chung was a real dynamo. The year when I was taking econometrics he was in Taiwan helping reform the tax system, and so I took my first econometrics class with Berndt Stigum. It was a very small class, and we went at a high level using Malinvaud’s text, which had just appeared in English. The following year when T.C. came back from Taiwan I took the course again, and that time we used Goldberger. Those two books back to back provided a great econometrics background.”

Related Link;

A profile in the Economist; Mr Engle's approach, ARCH (for autoregressive conditional heteroscedasticity, should you insist on knowing) gave researchers the power to test whether and how volatility in one period is related to volatility in earlier times. There often is a link, as casual observation suggests. After several days of stockmarket upheaval, there may be several days of calm. A 3% rise or fall in shares is often heralded by increasing volatility, much as an earthquake is preceded by tremors. Mr Engle's high-powered maths has made market risk easier to forecast. Thus banks and investors who use “value at risk” techniques to analyse their portfolios owe much to Mr Engle. So does the Basel committee which is drawing up new rules for banks' capital requirements.

Not Your Father's Nobel Prize

Risk and Volatility: Econometric Models and Financial Practice (Nobel Lecture of Engle)

GARCH 101: The Use of ARCH/GARCH Models in Applied Econometrics

What Good is a Volatility Model

Managing Volatility and Crises: A Practitioner's Guide

Team ARCH Weblog

Medical History of the Heart

The latest ‘In Our Time’ program from the BBC talks about the heart;

The 17th century physician William Harvey wrote in the preface to his thesis On the Motion of the Heart and Blood in Animals, a letter addressed to King Charles I. 'The heart of animals is the foundation of their life, the sovereign of everything within them...from which all power proceeds. The King, in like manner, is the foundation of his kingdom, the sun of the world around him, the heart of the republic, the foundation whence all power, all grace doth flow'.

Harvey was probably wise to address the King in this manner, for what he laid out in his groundbreaking text challenged scientific wisdom that had gone unquestioned for centuries about the true function of the heart. Organs had been seen in a hierarchical structure with the heart as the pinnacle. But Harvey transformed the metaphor into something quite different: the heart as a mechanistic pumping device.

How had the Ancient Greeks and Islamic physicians understood the heart? What role did the bodily humours play in this understanding? Why has the heart always been seen as the seat of emotion and passion? And why was it that despite Harvey's discoveries about the heart and its function, this had limited implications for medical therapy and advancement?

Contributors include David Wootton, Anniversary Professor of History at the University of York, Fay Bound Alberti, Research Fellow at the Wellcome Unit for the History of Medicine at the University of Manchester and Jonathan Sawday, Professor of English Studies at the University of Strathclyde.

Related Links;

Panic Disorder and Heart Disease; Recent studies by Australian researchers suggest that the risk of cardiac problems is increased in patients with panic disorder

Scientific Poetry: Bad for the Digestion? Associate Professor and Chair of Medieval and Early Modern Studies at the University of Western Australia, Yasmin Haskell, talks about how poetry has been used to teach people about science.

The drawing above is from William Cheselden: Osteographia, or The anatomy of the bones.

First Kill All Economists!

Satoshi Kanazawa at LSE in a recent paper titled, “First Kill All Economists…”

“Microeconomics and its model of the singular and unitary actor can no longer adequately explain organizational behavior now that there are men and women in corporations. Evolutionary psychology, with its premise of fundamental and inherent sex differences, is necessary to replace microeconomics as the predominant theoretical perspective in business and management schools. The recent Safeway fiasco illustrates the danger of continuing to use microeconomics in the study of management in the 21st century.”

He has also made other predictions as well;

"The productivity of male scientists tends to drop right after marriage,…Scientists tend to 'desist' from scientific research upon marriage, just like criminals desist from crime upon marriage…Men conduct scientific research (or do anything else) in order to attract women and get married (albeit unconsciously),.. "What’s the point of doing science (or anything else) if one is already married? Marriage (or, more accurately reproductive success, which men can usually attain only through marriage) is the goal; science or anything else men do is but a means. From my perspective, scientists are no different than anybody else; evolutionary psychology applies to all humans equally,"

Unsolicited advice to Kanazawa, paraphrasing Hayek, “an evolutionary psychologist who’s only an evolutionary psychologist cannot be a good evolutionary psychologist”. For some pitfalls of evolutionary psychology read the book Ramachandran's Phantoms in the Brain.

Some related posts;

Where do Norms come from?

Darwin’s Nightmare

Phantoms in the Mind

Linguistics and Cultural Roots of Innumeracy

Economics of Witch Hunting

Why Do Magicians Hate Children?

Intellectual Trespassing

Intellectual Trespassing and Socratic Humility

Take This Internship

-Take This Internship and Shove It

Mankiw gives the following advice to his students;

“I recommend that every student planning a career as a professional economist try to spend a summer, or even a year, working at a place like the CEA, CBO, or the Fed.”

Should India go for Capital Account Convertibility?

What does John Williamson, the father of the Washington Consensus think;

“I therefore see a series of reasons for India to take a go-slow approach in moving to liberalise the capital account. That it would be wise to liberalise one day I do not doubt. That there are some liberalizing measures that should be made early – of FDI, of portfolio investment, of small private transactions – I find compelling. But there are many other liberalizing reforms – from electricity pricing to making the courts work expeditiously to pruning the fiscal deficit – that deserve to be priorities over complete capital account liberalisation for the next 10 years (at least). At this stage full capital account liberalization promises no large benefits, while it increases the risk of things going badly wrong.”

The Economic and Political Weekly have an interesting debate on the capital account convertibility issue in India.

Related Links;

Pablo points to another article by Williamson on the Indian economy. Listen a discussion with Williamson on the Washington Consensus.

Charles Wheelan talks about taking his students to India on an International Policy Practicum – interesting idea for teaching economic policy.

World Economic Forum- India Summit. See also India posts at New Economist and Indian Economy blog.

A Survey of Business in India from the latest edition of The Economist; This survey will argue that Indian business can play a big part in delivering faster growth, but only if the government helps. The successes of the past 15 years have been, in a sense, the easy part. Many of the bars that caged the Indian tiger have been removed, leaving the beast free to roam and roar. In particular, India has been able to exploit its great comparative advantage in an era of broadband communications and globalisation: its wealth of technically adept, English-speaking talent. Now, however, further reforms are needed. Here is an interview with the author.

Indians on the Indian economy (multimedia);

Y.V. Reddy, Governor, Reserve Bank of India, Professor B.B. Bhattacharya, Vice-Chancellor of Jawaharlal Nehru University, New Delhi

P. Chidambaram, Finance Minister of India on U.S.-India Economic Relations and the Evolving World Economy. And here is the latest budget speech.

Raising Children for Dummies

“A new website was launched this month to explain the science of bringing up baby. It is the brainchild of Divonne Holmes á Court , who with Warren Cannon, director of the Victorian parenting centre, explains why we need such a free service.”

Here is the podcast and the transcript of the discussion.

Links; Raising Children Network and ABC Parents

I would also recommend Landsburg’s book, Fair Play: What Your Child Can Teach You About Economics, Values, and the Meaning of Life

A couple of more articles from him; The economics of spanking, Do daughters cause divorce?, Maybe Parents Don't Like Boys Better

GDP and Wellbeing

"Work may drive growth, but for most people, more free time contributes to well-being, as long as it is not accompanied by lower income. Still, one often-heard remark about the gap in economic performance between OECD countries is that US workers may earn more money but they work longer hours, whereas Europeans prefer more leisure to more work, or indeed, more money, and so are better off. But would ascribing monetary values to leisure time, however arbitrarily, alter GDP per head rankings in favour of European countries? Not by much, according to the latest Going for Growth report. By estimating workers’ time devoted to personal (unpaid) activities, it reports that leisure-adjusted GDP per capita relative to the US is higher for most countries than for the normal measure. But the ranking of OECD countries stays broadly unchanged, with the US still in the top five.

Separately, the OECD Factbook 2006 reports that US household spending on leisure has risen faster than the OECD average over the last decade. It measures spending on recreation and culture by households and government on a range of items from music, show business and sport to pets and photography. Gardening and gambling are also included, but restaurants, hotels and most travel are not. By this measure, the US spends more than France, but less than Spain or the UK."
-OECD Observer

Why is GDP not the best possible indicator of well-being?

- GDP is a production concept, whereas well-being depends more on income and
consumption of individuals and households.

- GDP is a “gross” concept: It makes no allowance for the using-up of capital equipment in
the production of goods and services, and the corresponding need to re-invest part of the
output to maintain production capacity unchanged.

- GDP makes no allowance for the using-up of non-renewable resources, which will
impact on the well-being of future generations.

- GDP excludes leisure, which is clearly of value to society and contributes to well-being.

- GDP does not distinguish between different varieties of income distribution. A society in
which there were a few colossally wealthy families, but the bulk of the population lived
in abject poverty, would presumably enjoy a lower level of “general well-being” than one
with the same GDP but where there was no acute poverty.

- Production might entail the co-production of “bads” (e.g. pollution and deterioration of
the environment). These are rarely taken account of in the GDP accounts.

Doha Round, Subsidies and Opium

Some statistics and figures from the latest Foreign Exchange show;

- The developed world spends nearly $1 billion a day in subsidies to its farmers.

- A “typical cow” in the European Union receives a government subsidy equivalent to $2.20 a day. That’s more than what 1.2 billion of the world’s poorest people live on every day.

- Afghanistan; Last year farmers in Afghanistan harvested more than 4,500 tons of opium, nearly 90-percent of the world’s market. According to the United Nations, 87-percent of the world’s heroin comes from poppies grown in Afghanistan. In 2005 the UN warned that Afghanistan is in danger of becoming a narco-state, controlled by drug traffickers. In response, the United States put $780 million into Afghanistan’s anti-narcotic efforts for the 2005 harvest season.

A lesson in opportunity cost; more than $7,000 if opium gorwn . If only cotton, could get 320 kilograms (120 dollars); a field of poppies earned 60-times more than a field of cotton. While 7,000-dollars is a huge income for an Afghan farmer, the heroin made from this crop will bring about 4,000,000-dollars in the streets of London.

UN peace keeping costs $5 billion a year for about 90,000 personnel deployed around the world and UN wants more. Currently there are 17 UN peacekeeping operations worldwide. The largest mission is in The Democratic Republic of Congo, with 17,000 UN personnel from 48 countries. The US provides no troops, but 1/3 of the operation’s $746 million annual budget.

Related:

Ben Muse on the Doha Round.

Controversy over World Bank trade & poverty estimates; Three years ago the World Bank said that freeing international trade of all barriers and subsidies would lift 320 million people above the $2 a day poverty line by 2015. But new World Bank projections emphasizing $1 a day poverty and based on new data and methods put the number at just 32 million people.