Marginal Revolution

Jeff Sachs on water policy

Chapter five of Common Wealth is called "Securing Our Water Needs," an important topic but one neglected by most economists.  One lesson is that climate change will put a big stress on water supplies.  So far, so good, but the recommendations start with greater international cooperation:

A first step, at least, would be to focus on the hardest-hit lands, specifically the world's drylands.  Fortunately, these are covered by the UN Convention to Combat Desertification, which has 191 member governments as signatories.  Unfortunately, the treaty as it now stands is little known and has little clout and financial backing.  Rather than reinvent the treaty, however, it would be better to reinvigorate it.

I would say it needs invigoration, not reinvigoration.  It is no accident that the Convention has little clout and little financial backing.  Many such Conventions are toothless objects, designed to appeal to a least common denominator within the process of the Convention itself (recall, it has 191 signatories).  No one is opposed to "international cooperation" but it is no accident that truly international bodies have to either find a way to make profit (e.g., the World Bank lends to China) or they are usually very strapped for funds.  That's just not where the political rents are and that isn't going to change.

Since Sachs calls this a "first step," his position is in some sense invulnerable.  Whatever you really think should be done can be called the next step.  Sachs writes, however, that the next step is more finance if I understand him correctly he wants to increase funding by more than a factor of 100).  I would prefer finance from national governments, or even from the states or provinces, than finance at the level of international organizations.  Most of the 191 signatories just aren't that good at R&D, funds accountability, or even technology adoption.

I might add that national governments are the ones that subsidize the price of water to ridiculously low levels, most of all for agriculture.  My first step is to remove all these water subsidies, allow water prices to rise, institute more water trading, and then see which innovations the private sector decides to finance (hmm...those are my first four steps).  One role for government would be to ensure that patent law does not hinder international transfer of worthwhile innovations, a point which Sachs makes in other contexts.  That sounds less glamorous than a big international plan, but I think it has a better chance of succeeding.

Is religion for controlling men?

Razib writes:

The researchers' hypothesis was that in religious kibbutzim men would be better collaborators (and thus would take less) than women, while in secular kibbutzim men and women would take about the same. And that was exactly what happened.

Here is more, interesting throughout.

Education isn't mainly about signalling

We find that employer learning about productivity occurs fairly quickly after labor market entry, implying that the signaling effects of schooling are small.

Here is much more.  And here is more yet; this second paper estimates the speed of employer learning and uses that estimate to bound the value of the signal at no more than 28 percent of the value of education.  I consider this devastating to the signaling hypothesis.  How can ?? years of schooling be needed to signal your quality, if your employer often knows your quality within months? 

In my view education is mainly about indoctrination to give you more productive habits.  So yes it is learning, but not in the way they might have told you, and that is why it so often does not feel like learning.

"It's not the economy, stupid"

America's inequality problem -- and I mean the stagnation at the lower end, not the hedge funds guys at the top -- does indeed seem to stem from dysfunctional families and bad education:

We examine changes in the characteristics of American youth between the late 1970s and the late 1990s, with a focus on characteristics that matter for labor market success. We reweight the NLSY79 to look like the NLSY97 along a number of dimensions that are related to labor market success, including race, gender, parental background, education, test scores, and variables that capture whether individuals transition smoothly from school to work. We then use the re-weighted sample to examine how changes in the distribution of observable skills affect employment and wages. We also use more standard regression methods to assess the labor market consequences of differences between the two cohorts. Overall, we find that the current generation is more skilled than the previous one. Blacks and Hispanics have gained relative to whites and women have gained relative to men. However, skill differences within groups have increased considerably and in aggregate the skill distribution has widened. Changes in parental education seem to generate many of the observed changes.

Here is the paper., ungated version here.  The authors use a different method but their results suggest that the earlier Goldin and Katz paper, which focuses on the connection between inequality and the inability to spring into higher levels of education, is essentially correct.  The problems with lower income stagnation do not stem fundamentally from trade, weak labor unions, or for that matter technical change.  I won't call this question settled, but the Goldin and Katz result is looking increasingly strong.  I would also say that we, for better or worse, have more separating equilibria in today's world.

Here's an intuitive way to grasp the hypothesis  Let's say that today you are a young Korean-American, perhaps even a Korean-American from a non-wealthy family.  Are your future income prospects good or bad?  Is upward mobility still there for you, if you want it?  Most people don't even have to go to the numbers to answer these questions.

Here is a not unrelated article about the prospects for affirmative action.  And, if you're more worried about the growth in income inequality that comes from gains at the top, well, the last few months have remedied that just a bit.