Marginal Revolution

Who Owns Antiquity?

If by chance a scholar came across the Rosetta Stone in a private collection, she would be discouraged from publishing it in today's leading English-language, archaeological journals.  Those journals have policies against serving as "the initial place of publication or pronouncement" of any unprovenanced object acquired by an individual or institution after December 30, 1970, unless it was in a collection prior to that date, or there is evidence that it was legally exported from its country of origin...Not being acquired or published, and thus neither studied nor deciphered, the Rosetta Stone would be a mere curiosity, Egyptology as we know it would not exist...

That is from James Cuno's excellent Who Owns Antiquity: Museums and the Battle Over Our Ancient Heritage.  The book criticizes nationalistic identity politics, calls for measures to broaden international access to antiquities, and argues that museums should again be allowed to acquire undocumented antiquities.  In other words he favors a cosmopolitan, property rights approach.  Here is the book's web page.  Here is an interview, with incisive questions.

Collier on the Food Crisis

Paul Collier's The Bottom Billion was my pick for best economics book last year (not written by a dear friend), it was smart, hard-hitting and unconventional.  Collier hasn't lost his touch as a great comment, more like an op-ed, on the food crisis over at Martin Wolf's Economic Forum illustrates.

The remedy to high food prices is to increase food supply, something that is entirely feasible. The most realistic way to raise global supply is to replicate the Brazilian model of large, technologically sophisticated agro-companies supplying for the world market.... There are still many areas of the world that have good land which could be used far more productively if it was properly managed by large companies...

Unfortunately, large-scale commercial agriculture is unromantic. We laud the production style of the peasant: environmentally sustainable and human in scale. In respect of manufacturing and services we grew out of this fantasy years ago, but in agriculture it continues to contaminate our policies. In Europe and Japan huge public resources have been devoted to propping up small farms. The best that can be said for these policies is that we can afford them. In Africa, which cannot afford them, development agencies have oriented their entire efforts on agricultural development to peasant style production. As a result, Africa has less large-scale commercial agriculture than it had fifty years ago. Unfortunately, peasant farming is generally not well-suited to innovation and investment: the result has been that African agriculture has fallen further and further behind the advancing productivity frontier of the globalized commercial model.

Read the whole thing.  Many more oxen are gored.

An interesting view on bank regulation

It starts with this:

...there are few crises I have known from the inside that would not have happened if only there was more disclosure. People knew that sub-prime was a poor risk – it is called sub-prime, after all.

Then it moves here:

The alternative model rests on three pillars. The first recognises that the biggest source of market and systemic failure is the economic cycle and so regulation cannot be blind and deaf to the cycle – it must put it close to the centre. Charles Goodhart and I have proposed contra-cyclical charges – capital charges that rise as the market price of risk falls as measured by financial market prices – and a good starting point for implementation of such charges is the Spanish system of dynamic provisioning (Goodhart and Persaud 2008).

The second pillar focuses regulation on systemically important distinctions, such as maturity mismatches and leverage, and not on out-dated distinctions between banks and non-banks. Institutions without leverage or mismatch should be lightly regulated – if at all – and in particular would not be required to adhere to short term rules such as mark-to-market accounting or market-price risk sensitivity that contribute to market dislocation. Bankers will argue against this, saying that it creates an unlevel playing field, but financial markets are based on diversity, not homogeneity. Incentivising long-term investors to behave long-term will mean that there will be more buyers when banks are forced to sell.

The third pillar is requiring banks to pay an insurance premium to tax payers against the risk that the tax payer will be required to bail them out. If such a market could be created, it would not only incentivise good banking and push the focus of regulation away from process to outcomes, but it would provide an incentive for banks to be less systemic. Today, banks have an incentive to be more systemic as a bail out is then guaranteed. The right response to Citibank’s routine failure to anticipate its credit risks is not for it to keep on getting bigger so that it can remain too big to fail, but for it to whither away under rising insurance premiums paid to tax payers.