Marginal Revolution

0.4% of gdp

Paul Krugman explains.

The history of America since 1980

Brad DeLong spells it out:

1. The end of the Cold War
2. Other winner-take-all factors that have, in combination with education, pushed American income polarization back to Gilded Age levels.
3. The failure of American taxpayers to support their state and local governments in expanding funding for public education--and the impact of reduced public education effort in sharpening the distinction between rich and poor.
4. The computer revolution in productivity growth.
5. The rise of China (and soon, we hope, India) as industrial powers.
6. The extraordinary social liberalization of America--if you had told any Republican in 1980 that 2008 would see (a) a Negro with an Arabic-Swahili name beating a veteran fighter pilot in the presidential polls and (b) gay marriage as the big cultural issue of the day, said Republican would have blown several gaskets. And if you had said that this would have been the result of an "Age of Reagan" said Republican would have melted down completely.

I'm mostly on board (and read the broader post) but, in addition to mentioning Latinos, I'll suggest two revisions.  First, on #3 I doubt if the stagnation of American lower education is the result of insufficient dollars.  It is notoriously difficult to find a convincing link between educational expenditures and educational quality and I don't think that is econometric problems.  On #6 I never saw most of the Reagan Republicans as especially prudish or socially conservative; that was just a lie told to one of the interest groups attending the party.  Revolution in the Head -- which is oddly enough a social history of the Beatles -- is especially good on the connection between 1960s morals and the Reagan Revolution.

"eBay ordered to pay damages in sale of fake goods"

That's the headline, the country is France.  Is there any efficiency rationale for this decision?  The alternative equilibrium involves a fair number of fakes, some good discounts for real items, an overconcentration of trading activity is easily verifiable or not worth faking items, and of course a diminution in the value of brand names.  The latter effect may even be welfare-improving once you consider price discrimination and the association of brand names with monopoly rents.  You can put the penalty on the seller but how is eBay to detect possible fakes?  Buy and inspect the wares?  Shut down trade in any fakeable item?  I would think it is also easy enough to "buy fakes" from your buddy, in essence keep the cash, give him a percentage, and then sue eBay for the "loss."  If the owner of the brand can sue would not the French court consider a suit from the buyer of the fakes as well?

Very good sentences

...many of the same people who ridicule the idea that private-sector output is meaningfully reduced by higher taxes are convinced that private-sector output is meaningfully raised by higher subsidies.

That's from Don Boudreaux.  You'll also find that many proponents of hiking the minimum wage think that subsidizing low-wage jobs will work.  There are models where the relevant effects switch at just the right margins, of course; surely those models are true.

Markets in everything, cultural diplomacy edition

In Paraguay the latest hit record -- and yes it is a hit -- is by the U.S. Ambassador singing Paraguayan folk songs in the language of Guarani.  Crowds love it, though one Paraguayan critic compared it to "the monotone of a tired bird."  The ambassador had no previous professional singing experience.  One Paraguayan Senator is asking his Congress to denounce the diplomat.  "Paraguayans cry when they hear it" is another, more laudatory assessment.  Here is the interesting story.

Here is a speech by the ambassador, excerpt:

We are not building a military base………  We are not stealing the Guarani aquifer………….  We are not buying up the Chaco…………….

The truth is that our agenda is very positive, both for the region and for Paraguay.

With oil at $140 a barrel, can you still love Julian Simon?

Remember Julian Simon, the guy who argued that resource prices would fall, fall, fall in real terms?  I loved spending time with him and to this day he remains an underrated economist.  (By the way, the very first piece I ever wrote was a guide to using Julian Simon for high school debaters.)  But can we still advocate his major thesis?

The possible belief space includes the following:

1. There is still a good chance that future resource and oil prices will fall dramatically, so Simon should not be dismissed.  Still, the single best estimate today can be inferred from the current market price, which implies a good chance that resources will get more expensive.

2. Simon is right and futures markets currently indicate that the price of oil is expected to fall dramatically.

3. Simon is still right, the rest of the world is wrong, and betting on this is how I will get rich.

4. Simon is right but current markets don't allow us to bet on his major claims.  Futures markets extend for only a few years' time, not for say the twenty years or so that are needed to validate his prediction.

4b. The deliverance of plenty is truly far away and no one is willing to take those margin calls for the next 187 years; in this scenario the present expected value of the future improvement is pretty low.

5. Simon is right but nominal interest rates will soon fall so low that successive short selling of oil in the futures market won't yield supernormal returns.  (This can mean, for instance, that you'd rather lock up all your money today at the higher rates, rather than short selling.)

No way does #2 work, though there is often slight backwardation in the futures price.  I've never heard anyone argue #5 and indeed most people haven't even thought of it as an escape hatch.  My belief is closest to #1.  Bryan Caplan argues for #4 but Arnold Kling shows that doesn't fly.  If you're always rolling over a successively renewed short position in the futures market, sooner or later the price decline for oil will yield you supernormal profits; in the meantime your margin deposit is earning the rate of return on T-Bills, noting that you must buy into the new contract cycle before your old contract expires so as not to miss the window of opportunity.  OK there is margin call risk, etc. but if Simon is right that is small relative to your potential gains.

(Alternatively you might argue that if you are in contract cycle #3, the good news will arrive to affect the pricing of cycle #4 before you can buy in, adding on that even after the future good news is announced the MC curve is so steep that you don't gain much on contract cycle #3.  That's possible but a) ex ante you still have supernormal returns since it may not work out that way, and b) the reality is that huge good supply news, whether for oil or some other energy source, would lead to lots of pumping today and a plummeting oil price right away.)

I invite Alex to accept #1 or otherwise indicate his stance.

It's amazing how much, on this issue, some people resort to what can only be called technical analysis -- inferring future price movements from past trends -- when they would scoff at that approach in almost any other context.  It's OK to argue that belief #3 held for most of world history --before we all read Simon and perhaps before there were futures markets in oil -- but I want to know if you are betting on #3 today and if not why not and also what other ways there are to get very rich that you can tell me about (does only the oil market malfunction so?).

I'll also note that current oil prices hardly suggest (do click on that link) a level of bone-crunching, civilization-ending scarcity, so you can believe in #1 and still be an optimist overall, as indeed I am.  I'm just not nearly as much of an optimist as I was when oil was $10-$20 a barrel, wasn't it even $8 a barrel for domestic oil less than ten years ago?

Also on belief #4 note that: forward contracts allow for longer bets than do futures contracts, contract length is endogenous to important events (though synthetic contract positions mean we don't need all of the possible longer term contracts), and it is odd for libertarians -- combinatorial prediction market fans at that -- to suddenly cite missing markets to defend their broader position.

Addendum: Oh, yes, there is one more option.  I call it "#3 is correct but my wife won't let us get rich."  I'll say this in response: for all the virtues marriage has for men, when you look around and study it more closely, you'll find the institution has even more virtues than you had thought.

Second addendum: Here is Jeffrey Sachs on this topic.

What determines fertility?

Here are some thoughts:

So there would seem to be two models for achieving higher fertility: the neosocialist Scandinavian system and the laissez-faire American one. Aassve put it to me this way: “You might say that in order to promote fertility, your society needs to be generous or flexible. The U.S. isn’t very generous, but it is flexible. Italy is not generous in terms of social services and it’s not flexible. There is also a social stigma in countries like Italy, where it is seen as less socially accepted for women with children to work. In the U.S., that is very accepted.”

By this logic, the worst sort of system is one that partly buys into the modern world — expanding educational and employment opportunities for women — but keeps its traditional mind-set. This would seem to define the demographic crisis that Italy, Spain and Greece find themselves in — and, perhaps, Japan, South Korea, Hong Kong, Taiwan and other parts of the world. Indeed, demographers have been surprised to find rapid fertility changes in the third world, as more and more women work and modern birth-control methods become standard options. “The earlier distinct fertility regimes, ‘developed’ and ‘developing,’ are increasingly disappearing in global comparisons of fertility levels,” according to Edward Jow-Ching Tu...the birthrate in 25 developing countries — including Cuba, Costa Rica, Iran, Sri Lanka and China — now stands at or below the replacement level.

Saudi Arabia fact of the day

Saudi Arabia accounted for 28 per cent of all global amphetamine seizures in 2006, the latest year for which data are available...

Yes there are enforcement differentials and various measurement biases, but that still sounds like a lot of amphetamines, especially for a country of only about 27 million people.  Here is the full story.

Can past nuclear explosions advance art history?

A former curator from the State Russian Museum in St Petersburg believes they can. She has developed a new method for dating paintings in collaboration with Russian scientists which, she says, provides “indisputable” evidence of whether a painting was made before or after 1945.

According to the inventors, the new patented technology is based on the idea that man-made nuclear explosions in the 1940s and 1950s released isotopes into the environment that do not occur naturally. The tiniest traces of these isotopes, Caesium-137 and Strontium-90, permeated the planet’s soil and plant life, and eventually ended up in all works of art made in the post-war era because natural oils are used as binding agents for paints.

Therefore, they believe that any work of art originally believed to pre-date World War II, but which registers trace amounts of Caesium-137 and Strontium-90, can be “definitively” declared a post-1945 forgery.

Here is the full story.  It's worth noting that many categories in the art world show rates of forgery approaching 50 percent or higher.

More on speculation

Here is Paul Krugman's model, Mark Thoma covers related ground.  I view this as an intertemporal Hotelling model and not as analogous to a currency model as Krugman suggests.  In the bottom right hand graph of the four graphs in Krugman's post, I don't understand what institutional force hinders a market-clearing price.  More concretely, if expected future price goes up (or interest rates fall), the supply curve in that graph should shift back to the left (wait and pump more later for the higher price) and/or the demand curve in that graph should shift out to the right (buy now rather than later at the higher price).  Measured inventories will rise to the extent the demand curve does the shifting; if the supply curve does the shifting the "excess inventories" stay in the ground.

It is possible to derive Krugman's desired result through another and indeed simpler channel.  Define speculation as the desire to hold more oil because of the perception that oil now has a greater convenience yield.  As Jeffrey Williams points out, a big part of convenience yield is the option value of selling the oil on favorable terms.  If you're guessing that option value will pay off, it's not unreasonable to call that speculation.  We now have a one-line proof: because of "speculation" the demand to hold oil goes up, and so the stocks of oil held will rise.

This again illustrates the value of starting with Holbrook Working when analyzing futures markets.

And it's fair to say, as Krugman still does, there is no evidence that this mechanism is what is driving the higher oil prices.  Of course the people who are blaming "speculation" don't seem to have any coherent definition of the concept in mind; that's another problem with their argument. 

Ching Ching Desserts

If you are ever in Hong Kong try the cream of almond and black sesame soup at Ching Ching Desserts on Electric Street just around the corner from the Tin Hau metro.  It's like drinking marzipan - with a little garnish and served in style this dessert soup could find its way onto the menu of any five star restaurant in the world but you can get a bowl in Hong Kong for less than three bucks. 

Loanwords

Eating lunch in a working man's restaurant in Hong Kong I hear mostly Cantonese but with occassional English words, "passion," for example.  Borrowed words or loanwords surely tell us something important about ideas or concepts that the first language lacks.  Most loanwords are for things (e.g. mouse for a computer device), it's pretty easy to explain the adoption of such words.  But what about words for which the thing has always existed but not the word?  Chinese speakers tell me that there is a word for love but passion is more difficult to translate.

What are some of the major conceptual loanwords?  What do loanwords tell us about the Sapir-Whorf hypothesis? What loanwords does English need?  There appears to be a large literature in linguistics on the adoption and evolution of loanwords but less on the cultural significance of loanwords.  Comments?

The best sentence I read yesterday

Psychoanalysis is about what two people can say to each other if they agree not to have sex.

That is from Adam Phillips, in the new book Intimacies.

How to bargain with aliens

Let's say you meet up with an alien race and you need to bargain with them by radio or some other method of signaling.  You don't have any other information other than your knowledge of human beings.  What traits should you think are overrepresented in humans, relative to what a rerun of evolution can be expected to produce in an intelligent being?  Would you expect them to be more or less benevolent than humans?

Should it matter if they have demonstrated superior technology?  Should such achievement make you think they are more or less cooperative toward "outsiders"?

Let's say the "alien beings" are designed robots, like Cylons.  How would that change your answer?  But unlike in BSG you know only that they were once designed.  What if you know the robots were designed not by evolved beings but by other designed robots?  Does it matter how many levels of robot design enter the picture?

WALL-E

Better than better than good.  It is, however, not recommended for children.  WALL-E is to film as Moses and Aaron is to opera, albeit cast with two robots and a bunch of figures from a Botero painting.  The first week gross will be high but I fear that next week some bold genius at Pixar will be fired.

Addendum: Here's one financial analysis of the movie's prospects.  And note that movies with no dialogue in the first half hour are not ideal for DVD sales to children.

Assorted links

1. The world's top twenty public intellectuals?  Lots of Muslims make this list.

2. Let readers rank the bias of news stories, using a digg.com approach.

3. Alan Wolfe on Bruno Frey, Dan Ariely, and behavioral economics; a thoughtful essay.

4. Megan McArdle on Roissy.

5. Ten more stunning bridges.

Oil and the Future

On oil I will make one point adding and one point detracting from Tyler's analysis.  First, on speculation remember that demand and supply are both very inelastic so relatively small changes in either can make a big differrence.  That means that speculation, if that is what you want to call it, can shift prices a lot without being very significant in total demand.  Because of this point Krugman's analysis is quite right for iron ore but a little off for oil - indeed Krugman's analysis of oil is difficult to square with his analysis of the California electricity crisis.

My disagreement with Tyler is an agreement with Caplan. 

Bryan Caplan notes that commodity prices always have fallen back down in the past and argues that is likely to happen again in the future.  I say no, the current price is your best (rough) estimate of scarcity (adjusting for storage costs), don't expect mean-reversion, future returns (but not prices) are a random walk, and extrapolation is a dangerous method to apply to financial time series.   

No, two points.  First, commodities are not stocks and nothing need be a random walk.  Imagine, for example, that you can produce 10 units of commodity X but no more (fixed production).  Thus you produce 10, 10, 10.... Now you know that a big technological innovation is about to increase production possibilities to 20, 20. 20.....   Does the price today necessarily fall?  No.  Price today is determined by supply and demand, supply is fixed and if substitution across time isn't very easy (you still have to get to work today, right?) then demand doesn't have to fall much with expectations of future supply.  Thus the price is high until it drops, even if everyone expects the drop.

Finally, on oil - who really cares what the price is?  The issue is energy, not oil.  I am confident that the long run price of energy will fall.      

Why you should throw books out

I'm guest-blogging for Penguin just a bit, to promote the paperback edition of Discover Your Inner Economist.  Here is my post on why you should throw books out.  Natasha, alas, does not agree and sometimes she pulls them out of the trash and scolds me.  But here is an excerpt in my defense:

Here's the problem. If you donate the otherwise-thrashed book somewhere, someone might read it. OK, maybe that person will read one more book in life but more likely that book will substitute for that person reading some other book instead.

So you have to ask yourself -- this book -- is it better on average than what an attracted reader might otherwise spend time with? No I'm not encouraging "censorship" of any particular point of view, but even within any particular point of view most books simply aren't that good. These books are traps for the unwary. A lot of books don't make the cut of "above average to those readers they will attract" and of course since you've spent some time with the volume you ought to be in a position to know. (But note the calculation is tricky. Sometimes a very bad book can be useful because it might appeal to "bad" readers and lure them away from even worse books. Please make all the appropriate calculations here.)

Note that the smarter and more discriminating are your friends, the higher the standard your book donations to them must meet.  Toss it!

Oil splat

It would take too long to sum up the dialogue, by this point you are either following the discussion or not.  A few points:

1. Bryan Caplan asks a good question: "You know now that the price of oil will be flat for five years, then fall by 10% per year every year thereafter. Everyone else thinks the price will be flat forever."  Can you profit?  Yes, by rolling over your short positions and constructing a synthetic long-term bet, even if the current futures markets extend for only three years or for that matter one year.  Fischer Black said so, so in other words you do have a chance to put your money where your mouth is.

2. Arnold Kling wonders why so many commodity prices have risen at the same time.  I'll repeat that fundamental value -- and thus the concepts of speculation and bubble -- are trickier and vaguer with commodities than in stock markets.  I'll say that "expectations" have driven the general rise in commodity prices.  If those expectations turn out to be wrong, we can call it all a bubble; if they turn out to be right, then it hasn't been a bubble.  What should we call it in the meantime?  We're not going to solve that problem in any factual way.  Make your bets, as they say.

3. Bryan Caplan notes that commodity prices always have fallen back down in the past and argues that is likely to happen again in the future.  I say no, the current price is your best (rough) estimate of scarcity (adjusting for storage costs), don't expect mean-reversion, future returns (but not prices) are a random walk, and extrapolation is a dangerous method to apply to financial time series.  (For instance every time the stock market has fallen it has bounced back up again but that does not mean you can earn supernormal returns by buying on the downticks; even Shiller finds only small gains here.)  I love Julian Simon too but don't let him overrule Eugene Fama.

4. Mark Thoma has an exhaustive post on convenience yield.  The models used are too piecemeal and they allow "inventories," "convenience yield," and "speculation," to serve as free-floating, not necessarily attached concepts.  The discussion here pays insufficient attention to Holbrook Working, who knew that convenience yield was front and center of the entire analysis, just as "the demand for money" is the centerpiece of the quantity theory.  Working himself didn't even think that "speculation" was a well-defined concept in commodities markets; even if he went too far there the concept remains murky.  The current discussions are mixing fundamental conceptual definitions with some broader institutionally-motivated definitions and thus none of the results quite match up.

5. Contra Paul Krugman, invoking convenience yield should not be thought of as an Ptolemaic epicycle or a fudge factor.  The demand to hold oil is the starting point of the whole analysis, see also Jeffrey Williams's work.  The upshot is that if speculation were driving the current price, it would be consistent with either a premium of the futures price over the spot or vice versa; invoking convenience yield to explain the relatively cheap futures is what you might expect in the first place, speculation or not, bubble or not.

6. Interfluidity has the most careful and accurate exposition of the relevant market relationships, mostly because he sticks closely to the Holbrook Working tradition. 

7. The bottom line is that when it comes to the key substantive questions about the oil market - why are prices so high -- the correct answer is the Lachmannian one: "expectations."  If you push one step further on that, and try to evaluate or "source" those expectations, the correct answer is "we don't know."  Jim Hamilton hints at some of this -- and the imprecision of the "inventories" term -- in this insightful post.

Addendum: On other practical matters, this new Op-Ed by Paul Krugman is essentially correct, although his claim that speculation is impossible in the iron ore market shows, better than anything else, the oddity of his semantic choices.

Lots of economic superstars on this blog

That includes Gary Becker, Ed Glaeser, Richard Posner, Bill Easterly and others, read them here, all debating Bill Gates's theory of philanthropy.  The outputs will be turned into a book and the project is being run by Michael Kinsley and Conor Clarke.

X Prize News

The X Prize Foundation has received $7m in new funding to develop more X prizes and The Aeronautics and Cosmonautics Romanian Association (?!) says they will try to land a robot on the moon within the next 3 months.

Bryan Caplan, REPENT YOUR LOVE FOR THOMAS REID!

Here is a fascinating article from The New Yorker, mostly about itching but not just.  Here is my favorite part:

A new scientific understanding of perception has emerged in the past few decades, and it has overturned classical, centuries-long beliefs about how our brains work—though it has apparently not penetrated the medical world yet. The old understanding of perception is what neuroscientists call “the naïve view,” and it is the view that most people, in or out of medicine, still have. We’re inclined to think that people normally perceive things in the world directly. We believe that the hardness of a rock, the coldness of an ice cube, the itchiness of a sweater are picked up by our nerve endings, transmitted through the spinal cord like a message through a wire, and decoded by the brain.

...Yet, as scientists set about analyzing the signals, they found them to be radically impoverished. Suppose someone is viewing a tree in a clearing. Given simply the transmissions along the optic nerve from the light entering the eye, one would not be able to reconstruct the three-dimensionality, or the distance, or the detail of the bark—attributes that we perceive instantly.

...The images in our mind are extraordinarily rich. We can tell if something is liquid or solid, heavy or light, dead or alive. But the information we work from is poor—a distorted, two-dimensional transmission with entire spots missing. So the mind fills in most of the picture. You can get a sense of this from brain-anatomy studies. If visual sensations were primarily received rather than constructed by the brain, you’d expect that most of the fibres going to the brain’s primary visual cortex would come from the retina. Instead, scientists have found that only twenty per cent do; eighty per cent come downward from regions of the brain governing functions like memory. Richard Gregory, a prominent British neuropsychologist, estimates that visual perception is more than ninety per cent memory and less than ten per cent sensory nerve signals.

And sorry, readers, for shouting in the header; sometimes I get carried away.  By the way, don't let defenders of naive realism tell you that any attempt to contradict it is self-refuting.  Science proceeds in pieces, cross-tested in various ways, and the sum total of those pieces can revise our understanding away from naive realism without producing self-contradiction.

Leonid Hurwicz passes away at 90

He was a Nobel Prize winner last year, here are obituaries.  Here are our previous blog posts on him and his work.

RSS queries

As many of you know I am anti-RSS but I would like to understand the phenomenon better.  So I have a few questions for you.  What feature in an RSS reader do you not have but long for?  What would cause you to switch from one reader to another?  Would you ever consider a reader that forced ads on you, bundled up with the delivered post?

Don't worry, we're not planning or even contemplating changes in our RSS feed, I simply would like to learn.

Assorted links

1. Something else happens, via Bruce Charlton

2. "Civil War," an excellent new paper by Chris Blattman and Edward Miguel

3. Convenience yield, an excellent introduction; by the way Jeffrey Williams is a good author on the intuitive properties of futures and forward markets as they relate to storage.

4. The Japanese equivalent of the Hummer.

5. How to hire new people, by Auren Hoffman

6. Whose incomes are growing riskier?  It's only about five percent of the distribution.

Grand New Party

The authors, Ross Douthat and Reihan Salam, invited me to their book party at Borders -- and I wanted to meet them -- but no I must stay home and read and blog their book!  (I wrote this post last night.)  If there was rush hour road pricing, as indeed they propose, I would have been there in a flash but no I am munching on cherries on my sofa.

The subtitle is "How Republicans Can Win the Working Class and Save the American Dream" and the Amazon link is here.  Their favored policies include the following (with varying degrees of enthusiasm/utopianism on their part):

1. Family-friendly tax reform.

2. Sprawl is OK or at least it could be with rational traffic management policies.

3. Government reinsurance for catastrophic health care expenses, plus they consider the Brad DeLong health care plan.

4. Abolition of the payroll tax for many lower-income earners.

5. Allocate money to public schools on a student-weighted basis, as is done in San Francisco.

6. Reallocate funding toward lower-tier state universities and away from flagship schools.

7. Don't expect old-style unions to come back.

That is only a sampling.  The broader vision is that the Republicans can and must find a way to be more friendly to the non-rich.  Personally I don't see any reason to tie all of this to the Republican Party but I agree with most of their proposals.  There's a great deal of common sense here and it stands as one best general policy books in a long time.

The deep question is why something like this hasn't already happened.  You'll find the superficial "Republicans are just pro-corporate crooks" answer from bloggers like Kathy G.  Another possibility is that Republicans don't get much electoral credit for pro-poor initiatives (just as many voters simply won't believe that "Democrats can be tough").  The more competitive political messaging becomes, the more this constraint binds and so the policies of upward redistribution are more likely to be enacted by Republicans in the resulting political equilibrium.  If the authors are to get their way somehow this dynamic must be reversed.

Addendum: I've met Reihan only in passing and I have not had substantive correspondence with either of the authors.  Nonetheless the authors thank me in the conclusion for having saved them from "all manner of errors"; maybe this is another instance of the influence of blogs.

Second Addendum: You'll find links to video and audio on the book at Ross's blog.

Obama's iPod

Thank you all for your contributions, here is my new insight into Obama, it won't be new for long:

Obama said that, growing up, he listened to Elton John and Earth, Wind & Fire but that Stevie Wonder was his ultimate musical hero during the 70s. The Stones' track Gimme Shelter topped his favourite songs from the band. His selection also contained 30 songs from Dylan. "One of my favourites [for] the political season is [Dylan's] Maggie's Farm. It speaks to me as I listen to some of the political rhetoric."

...The jazz legends Miles Davis, John Coltrane and Charlie Parker were also included...

The worship of Dylan and Wonder and be-bop jazz is consistent with my view of him as a detached, universalist cosmopolitan.

Will mankind survive the death of the sun?

In reference to my Bloggingheads appearance, one loyal MR reader emails me:

you said don't be certain, be 90-10 or 60-40 then [you] said 1-99 that humanity dies out when sun's gone.

Yes, I believe the chance is very small that humanity survives the death of our sun or even gets close to that point.  I'll give it p = .005.  But what's the chance I think that is the correct p or even in the neighborhood of the correct p?  Maybe 60 percent.  Of course my p estimate could go either up or down and after I apply meta-rationality p = .005 is where I end up, for better or worse.  I expect that fragile estimate to undergo lots of revision as I age, read more, etc.  I just don't know if it will go up or down, thereby satisfying one of Robin Hanson's canons of rationality (or some approximation thereof).

Why am I skeptical?  The Fermi paradox, for one thing, plus I observe that humans aren't very good at solving large-scale collective action problems.  Our environment may be more fragile than we had thought and that's without even considering the impact of man.

Arnold Kling is exasperating Paul Krugman

Krugman writes here on why speculation is not driving higher oil prices and offers a simple model here.  I agree with Krugman's conclusion but not his reasoning.  Arnold Kling responds here and basically Arnold is right although his #2 on the Hotelling principle is trickier than his exposition indicates.  The key two points in response to Krugman are: a) oil in the ground can substitute for inventories and thus speculation can be driving prices higher without it showing up in measured inventories; here's that reasoning in more detail, and b) when risk and liquidity premia are changing, the relationship between the spot price and futures price is obscure and difficult to interpret.  In particular a futures price for oil below the spot price does not refute the speculation hypothesis or even provide much evidence against it.

The more general point is that if a bubble, or lack thereof, could be read so easily from the available numbers, bubbles would be scarcer than they are.  There's also a tricky problem in defining a bubble when there is two-way feedback across price and expectations and "fundamental value" at any one point in time itself depends on the marginal unit of supply and thus it depends supplier decisions and expectations.

My apologies to those whom I am exasperating.

If Krugman's cited data don't do the trick, why do I agree with his conclusion that speculation is not the villain?  The simplest alternative story, again blogged by Arnold, is that the earlier low price of oil was an anti-bubble of sorts and one which now has been corrected by market forces.  It was a kind of collective blindness, akin to the view that real estate prices would continue rising in value.  No, I can't prove that is true but I find it the most plausible story, with p (truth) = 0.57.

Addendum: Note that most asset bubbles are based on the psychological property that bullishness is more common than bearishness in asset markets, if only for ESS reasons.  This same general bullishness can drive "anti-bubbles" or artificially low prices in oil markets (high oil prices are bad for good times) even though yes I know that sounds funny and we are used to bubbles bringing artificially high prices.

Second addendum: Paul Krugman responds.

My favorite song

Ever, with explanation and the MP3 link on the left.  And here are the lyrics.

Addendum: The guy actually has the best practical idea I've heard yet for your time travel trip back to 1000 A.D.  If you have a decent voice, use the catalog of the Beatles and others to become the greatest minstrel the world has seen.  It's the low capital costs and low cooperation requirements that make the idea so appealing.

The power of "because"

Behavioral scientist Ellen Langer and her colleagues decided to put the persuasive power of this word to the test.  In one study, Langer arranged for a stranger to approach someone waiting in line to use a photocopier and simply ask, "Excuse me, I have five pages.  May I use the Xerox machine?"  Faced with the direct request to cut ahead in this line, 60 percent of the people were willing to agree to allow the stranger to go ahead of them.  However, when the stranger made the request with a reason ("May I use the Xerox machine, because I'm in a rush?"), almost everyone (94 percent) complied...

Here's where the study gets really interesting...This time, the stranger also used the word because but followed it with a completely meaningless reason.  Specifically, the stranger said "May I use the Xerox machine, because I have to make copies?"

The rate of compliance was 93 percent.

That is from Bob Cialdini's Yes! 50 Scientifically Proven Ways to be Persuasive; here is my previous post on the book.  And here is why motivational posters don't work.

Markets in everything, Japan edition (again)

You could devote an entire blog to this category:

Japanese toy company People has released a new age alarm clock that supposedly helps kids wake up by turning them into Ultraman. It's called the Okiro! Asa Ichiban Taiyou Senshi - Charenjaa Kitto (Wake up! First Sun Warrior of the Morning - challenger kit) and was manufactured for the Japanese Ministry of Education “early to bed early to rise” program. The $38 kit comes with the extravagant eye shield and helmet; a series of talismans and message cards (no doubt world-saving secret missions); and a 27-day program that will involve your child taking orders from "the commander."

The commander wakes the child up at 6 a.m., and prompts players to put on the helmet and hit a "roger" button to acknowledge their wakefulness. Then, they are ordered to count to 10 in five different languages: English, Japanese, German, Swahili and Malagasy. At that point, the player is "allowed to take off the equipment and start the day"...

Here is the full story (with illustrations) and thanks to Yana and Caleb for the pointer.  What if you can't count to ten in Malagasy?  What happens to the rest of your day?  Keep this link in mind or maybe try How to Get a Date in Malagasy.

Is there anything new to say about Barack Obama?

I, for one, have nothing new to say about Barack Obama, even though I am exposed to more news about him than any other single person.  I wish I did, but I don't.

Do you?  Does anyone?  Comments are open, the stipulation is that you must believe what you write about him genuinely represents new insight; it's OK if it's already appeared on your blog, provided it is not a major one, or you can link to the thoughts of others.  Please respect our usual standards of politeness.

Will anyone have anything to say?  Should I hope you do or don't have anything new to say about him? 

The law and economics of surfing

When oh when will this be a Journal of Law and Economics piece?  Here is one excerpt:

The norms (for visitors) of mild localism include:

1) Don’t arrive in a large group[156]

2) Ease into the lineup (don’t compete aggressively too early)[157]

3) Let locals surf most of the best set waves[158]

4) Take extra caution to avoid violating any ordinary surf norms (i.e. don’t get in a local’s way!)

Together, these concrete norms can implement the abstract norm of ‘respect the locals’. Observing these norms demonstrates deference to the locals and helps mitigate the effects of crowding for the locals.

Here is the full treatment, the piece is interesting throughout though it starts off a bit slow with the familiar.  Thanks to Hugh for the pointer.

China/Syria Fact of the Day

I have been talking with GMU President Alan Merten, who is also in Kunming via Syria.  In Syria, Alan was surprised when he was asked to meet with President Bashar al-Assad.  Even more surprising, the President wanted to talk about entrepreneurship, GMU, and how Syria can benefit from better economics.

Later, talking with the Finance minister, Merten learned one of the key drivers of this new openness.  The Finance minister explained that he was meeting with a counterpart in the Chinese government.  "What can we do," the Syrian Finance minister asked, "to increase Chinese investment?"  "Well," the Chinese minister replied, "before we invest in Syria you most open your markets, cut your subsidies, and reduce regulation..."   

What if the shyness drug boosts confidence?

Under one scenario, the shy become more extroverted and everyone enjoys their new bon mots and witty asides.  Gains from trade increase all around.  Under another scenario, shyness and extroversion are part of a larger positional game.  Some people take the anti-shyness drug, but the previous extroverts, facing new competition for sex and friends, become even more extroverted, thus feeling more strain.  Many of them start taking the drug to stay ahead.  The previously shy exhibit more "juice," so to speak, but without much net result in terms of an improved life since they are still coming in second, so to speak.  And those who don't take the anti-shyness drug are even worse off than before, given the new and higher standard for extroversion.

Some of the remaining shy, however, might in fact feel relieved.  If the new standard of extroversion rises so high that they can't possibly meet it, they might, to some extent, withdraw from social competition.  The truly shy might even form social clubs and band together in the interests of promoting shyness.  If they can signal that they do not take the drug, their shyness might become more socially acceptable than before.

Kevin Hassett on whether NBA refs are crooked

In case you don't know, Kevin is an economist at AEI.  Here is where things stand:

Hassett found no smoking gun.

But he did find some weird stuff in elimination games, when calls seemed to favor extending the series more than in other games.

He also found that home court advantage was much more important in the playoffs than in the regular season, which is a bit odd.

Both findings are consistent with what you'd find if you wanted to have as many money-making playoff games as possible. Basically, if every series ended in a sweep, there'd by very little opportunity to make money. However, if every series gets to Game 7 -- which happens when home teams win every game -- the teams and the League have not only three more chances to make money, but the three most exciting games of the series.

Here is further explanation.  Here is the Hassett piece.  Note that fouls called on a team are often a measure of how tired that team is or how sloppy it is on defense.  So if teams play better with their back to the wall, at home, or if stamina matters more toward the end of the year, these correlations could potentially arise through natural means.

Markets in everything, Ukrainian restaurant edition

Perhaps taking a page from the Pringles inventor who was recently buried in a can of said dehydrated chips, a Ukrainian restaurant is shaped like a coffin on the outside, and boasts a coffin theme inside.

Here is a photo and further explanation.  Many or perhaps all of the entries have themes of death.  Perhaps they should do an economic impact study:

The undertakers hope that their restaurant will be confirmed as the world’s biggest coffin, attracting tourists to a region best known for its mineral-rich bathing waters.

Here are even more photos of interest.

Why do lefties dominate Presidential politics?

Ford, Reagan, Bush I, Clinton, Gore, and now Obama and McCain are all left-handed.  Call it chance or availability bias, but I'm still wondering.  Read more here, and thanks to Martin Weil for the pointer.  Here's one on-line discussion.  Here is a brief survey on Wikipedia.  It is my general view that left-handers have higher genetic variance in a number of dimensions, so they should be over-represented in many different kinds of extreme situations, including the Presidency. 

Assorted links

1. Rules of successful consulting, via Craig Newmark.

2. U. Chicago's new Milton Friedman Center.

3. An anti-shyness drug?  And it is backed by at least one economist, namely Paul Zak.

4. Pele robbed at gunpoint, in Santos, Brazil.

5. Advice on...how to give advice.

6. Tomorrow Museum.

Katrina lessons for Iowa

Dan Rothschild, a co-worker of mine at GMU, writes:

The lesson of Katrina that matters the most is that the promise of federal assistance that will likely never materialize can be as destructive as the initial disaster...

What residents need in this maw of confusion is certainty. They need to know which roads will be rebuilt, and when the power and water will come back online. They need to know that the rule of law will be enforced. In short, they need to know what economists call the "rules of the game" for rebuilding.

These rules are critical to the myriad private-sector decisions that follow and signal whether and how a community will rebuild. Decisions about insurance coverage, when and where grocery stores, banks and numerous other businesses will reopen, and where children will play are vital private-sector decisions that require clear, credible commitments from the public sector to be made efficiently...

What residents of disaster-stricken areas don't need are vague promises from officials that add to the confusion and force residents to delay the millions of decisions, small and large, they need to make to re-create a viable community. And they don't need government leaders to make promises that are unlikely to be kept.

The dirty secret of government disaster response is that what's promised immediately after a disaster seldom comes to fruition. Just ask the 75,000 Louisiana homeowners who are still waiting for their Road Home rebuilding checks, or the Floridians living in FEMA trailers 15 years after Hurricane Andrew.

Tyler Cowen on Bloggingheads.tv

Tyler to Will:

No you can't agree with me because its absurd.  I can agree with your absurd view, but you can't agree with mine.   

That is from my Bloggingheads debut; Robin Hanson reproduces one critical and entertaining part of the transcript, in which I explain which is my most absurd belief.

Here is the link to the show, I am sorry that I cannot embed it.  The chat covers many topics, including whether capitalism will triumph, whether you should have more kids, and which country is most likely to be hit by the next nuclear weapon attack.  Can you guess my pick?  Hint: It's not the U.S. or even Saudi Arabia or Israel.

I conclude with this:

If no one agrees with you, you should be quite worried.  If only a small number of people agree with you, you still should be quite worried.  I don't think it's a numbers game, but I think whatever view you end up with, it doesn't have to be a majority point of view, that reasons have weight, not just adding up whoever agrees with you.  But you still ought to say at the end of the day, look all those other people are against me, maybe I think I'm right probability 57 to 43, but on any truly controversial question among intelligent people, you should never think it's 95 to 5 in your favor. 

Addendum: Ann Althouse embeds the parenting discussion.

How much has globalization helped U.S. wine drinkers?

More than I had thought:

For instance, the real price (in 1988 prices) for the basket of the entire Top 100 list [for the U.S.] was $4,313 in 1988; $3,132 in 1993; $2,533 in 1999; and $2,421 in 2004. That is nearly a 44% decrease in prices from 1988 to 2004. At the same time, there was no significant change in the quality of the wines on the Top 100 list.

Here is much more information, from Karl Storchmann.

China Fact of the Day

I was just speaking with an expert on the Chinese banking and finance system and I asked him what were the major problems with the Chinese banking system.  He replied, "Well, housing prices are falling and many banks have bad loans and if prices fall much further the borrowers won't have the money to pay the loans back."  I kid you not. 

Also, contra the U.S. the Chinese Central Bank is reducing the growth in the money supply to combat inflation.  Interesting times.

Where abroad do the most American citizens get arrested?

Mexico, Mexico, Mexico, London, Toronto, Mexico, etc.  Nassau, Bahamas is the surprise and more Americans get arrested in Guadalajara than Mexico City.  Here is the list of cities and the story.  Beijing is not on the list so Alex can relax though Hong Kong cracks the top ten.

Mongol

Matt Yglesias offers a good review of this excellent movie, which chronicles the early life of Genghis Khan, or one vision thereof.  There are at least two increasing returns to scale mechanisms in this movie.  First, leadership is focal, which tends to bind groups together and make concentrated rule possible.  Winning battles makes you focal and winning larger battles makes you focal across larger groups.  Second, if you walk or ride alone in the countryside, you will be snatched or plundered.  That causes people to live in settlements and also larger cities.  Put those mechanisms together, solve for equilibrium, and eventually one guy rules a very large kingdom and you get some semblance of free trade.  Sooner or later, that is.  The movie brings you only part of the way there and I believe a sequel is in the works.

The King Monopolist

At the "Silk Market" in Beijing you can buy high quality goods from "Chanel," "Gucci," "Ralph Lauren" and just about any other famous brand.  Prices are very, very low ;).  But there is one brand that no one copies and for which you must pay full price - the 2008 Olympics brand.  It's not good to offend the King monopolist.   

The culture that is Dutch

1. As of July 1, the Netherlands will ban smoking in public places.

2. The smoking of cannabis and hashish, however, will be allowed, at least in licensed cafes.

3. The regulation will be that adding tobacco to the smoke (a popular practice) will be forbidden and that only "pure pot" will be allowed.

4. It is noted that "This year, the Chinese have started to come."

That is from "What are the Dutch Smoking," in the 30 June 2008 issue of Business Week.  Here is one related article.

Markets in everything: lives for sale

He says he's not the first person to put his life on the block.

Australian philosophy student Nicael Holt, 24, offered his life to the highest bidder last year to protest mass consumerism.

American John Freyer started All My Life For Sale (www.allmylifeforsale.com) in 2001 and sold everything he owned on eBay, later visiting the people who bought his things.

Adam Burtle, a 20-year-old U.S. university student, offered his soul for sale on eBay in 2001, with bidding hitting $400 before eBay called it off. Burtle admitted he was a bored geek.

Here is the story.  The current seller is Ian Usher, a lovelorn Australian:

From Sunday, June 22 for one week, Usher's life is up for sale on eBay with the package including his $420,000 (US$397,000) three-bedroom house in Perth, Western Australia, a trial for his job at a rug store, his car, motorbike, clothes and even friends.

Here is a previous MR post on an Australian life for sale.

W.H. Auden on banking

Auden wrote the following praise to Cyril Connolly about his recently published book:

As both Eliot and Edmund Wilson are Americans, I think Enemies of Promise is the best English book of criticism since the war, and more than Eliot or Wilson you really write about writing in the only way which is interesting to anyone except academics, as a real occupation like banking or fucking, with all its attendant boredom, excitement, and terror.

That is from Stefan Collini's often quite interesting Common Reading: Critics, Historians, and Public.

What does campaign finance do?

Here is Ed Lopez's survey article, here is the survey from Thomas Stratmann.  Overall the academics who work on this issue tend to see the practical ramifications of campaign finance restrictions as very often constituting less than meets the eye.  It's also well understood that most campaign finance reform benefits incumbents, who already have name recognition.

The pointer is from Ed Lopez, who notes:

Consider two ratios.

1. In 2000 the federal government spent about 1.8 trillion (~18% of GDP), and total campaign expenditures on all federal elective offices was about $1.85 billion (about $1b on congressional races, $0.35b on presidential, and $0.5b in soft money). So federal public sector advertising was 1/1000th of federal public spending. Ratio 1 = 0.001.

2. In 2000 the private sector share of GDP was about $7.5 trillion (after federal, state and local spending net of intergovernmental transfers), and total private sector advertising, according to Advertising Age, was $240 billion (Statistical Abstract Table 1251). So private advertising was 3.2% of private spending. Ratio 2 = .032.

By this comparison, private sector advertising is more than thirty times greater than the amount we spend on federal elections trying to make sure we get the right person for the job. Given how much we expect from our federal government, isn't it surprising that campaign spending isn’t twice, or even ten times, more than it is right now?

Ed thinks that campaigns need more money flowing through them, not less; I don't have a personal view on this issue.  Reihan Salam offers interesting comment on recent controversies surrounding Barack Obama.

First Stop in the New World

The subtitle is Mexico City, The Capital of the 21st Century.  If you are familiar with this charming metropolis, it is a superb book.  Excerpt:

Apart from the obvious problems of traffic and transportation, the growth created other confusing complications.  Today, out of the city's eighty-five thousand streets, there are about eight hundred fifty called Juárez, seven hundred fifty named Hidalgo, and seven hundred known as Morelos.  Two hundred are called 16 de Septiembre, while a hundred more are called 16 de Septiembre Avenue, Alley, Mews, or Extension.  Nine separate neighborhoods are called La Palma, four are called Las Palmas, and there are numerous mutations: La Palmita, Las Palmitas, Palmas Inn, La Palmas Condominio, Palmas Avenida, La Palma I y Palma I-II Unidad Habitacional.

Here is the Amazon link.  Here is the author's home page and blog, which has an excellent Raymond Chandler quotation.

Is microfinance the new subprime?

Ryan Hahn asks:

In the case of microfinance, however, it seems to me the problem of limited liability is rearing its ugly head. Poor borrowers generally have little or no collateral, so they usually have little reason to avoid a strategic default.

It is a common myth that microfinance loans have no collateral.  I sooner worry that the process of collateralization is too thorough.  Remember that microfinance loans are made to small groups of five to ten people, typically neighbors.  If you don't pay up, your associate has to.  The reality is that the person left holding the bag -- who knows you well -- will come seize your TV set or in some cases the process is a bit less pleasant.  Part of the efficiency of microfinance is simply the separation of the lending and the "thug" functions.  Banks can lend to high-risk individual borrowers without themselves resorting to the illegal intimidation practices of the village moneylender.  The dynamics of cooperative behavior in the village are not always pretty but overall it works better than the moneylender; if nothing else the person seizing the collateral knows that next time around he or she may be the non-payer.  For more detail, see my Wilson Quarterly article with Karol Boudreaux.

Assorted links

1. Seth Roberts on why people touch their mouths

2. Blogging vs. writing, an excellent piece

3. "Eternal, Maiden, Actualization," hat tip goes to my mother (hi mom!)

4. Interview with the very fetching Steven Pinker

5. Yes, medicine is backwards

China's Silver Lining

An hour and a half out of central Beijing, traveling through orchards of apples and pears and still the smog blankets the fields obscuring the view.  Pollution like this I have never seen.

And yet the intensity of the pollution makes me optimistic.  Pollution in China isn't like the demise of the snail darter or some wispy thing that might take a few weeks off your life if you live long enough.  Pollution here irritates, it chokes and it kills young and old.  Pollution like this people are willing to pay to avoid and as the economy grows the Chinese are willing to pay more and more.  James Fallows, who is living in Beijing, suggests that pollution could be China's Silver Lining, and ours.  I read the piece before arriving but after being here a while it rings true.

High commodity prices

Guillermo Calvo writes:

Incentives to stockpile commodities stem from the combination of low central bank interest rates (especially in the US) and the growth in sovereign wealth funds. The latter, in my view, is the crucial factor. Sovereign wealth funds have been created partly with the intent of switching the composition of government wealth from highly liquid but low-return assets to more risky but much more profitable investment projects. Thus, their attempt to get rid of excess liquidity resembles the econ 101 exercise in which the student is asked to trace the effects of a portfolio switch away from money and into capital.  The answer is – of course – higher prices.

The piece is interesting throughout, hat tip to Mark Thoma.

Atmospheric Disturbances

It may be that friendship is nourished on observation and conversation, but love is born from and nourished on silent interpretation...The beloved expresses a possible world unknown to us...that must be deciphered.

That is Gilles Deleuze and it is the front quotation in the new novel Atmospheric Disturbances, by the very beautiful Rivka Galchen.  The key premise of this novel is that a 51-year-old psychiatrist suddenly believes that his wife has been replaced with an exact look-alike; he refers to her as the Simulacrum.  I read it straight through.  Here is an interview with the author.

Pay For It: Radical Water Privatization for Poor Countries

Here is my piece for Forbes.com on the privatization of residential water supply in the Third World.  Excerpt:

And no, I don't mean a water concession with a price regulated by the government, I mean true laissez faire in water supply. No price regulation, no rate of return regulation, no government ownership of assets, no political pressure to keep prices low. Water companies should be allowed to maximize their profits, and because supplying water is nearly always a monopoly, they should be allowed to make monopoly profits. I know the idea sounds crazy--to an economist, water supply is a classic "natural" monopoly--but on closer inspection the other alternatives might be worse.

And more:

If complete deregulation is too radical for you, consider the interesting compromise proposed by the economist Jeffrey Sachs, currently heading the Earth Institute at Columbia University. He suggests that the private company be allowed to charge high prices, but only under the condition that it allocates a minimum amount of water for everyone, either for free or at a much lower price. Basic water needs would be met, and the company still might make a profit.

That said, I'm less worried about high prices than Sachs. Let's say the new water prices were so high as to capture all the benefits that buyers would receive from the new supply of water. We can expect much lower rates of diarrhea and other diseases, if only because the water supplier can charge more for cleaner and safer water. The resulting decline in disease means that children will die less frequently and adults will be healthier and more energetic. Those long-term social benefits are of enormous help to poor communities, even if high prices take away many of the initial, upfront benefits of the new water supply. In other words, we should consider radical privatization precisely because water is a public good and because clean water is so important for long-run economic growth.

Read the whole thing.

Podcast of my cultural economics talk

It is here, iffy sound quality (I only tested the beginning) but I believe it is mostly intelligible.  I talk about Facebook, Second Life, Kindle, and many other recent changes in cultural markets.  I make the bold claim -- true in my view -- that the last five years have seen more changes in "cultural economics" than in any other five-year period in human history.

Review of Stephen Marglin on economics and community

Wow, is this scathing (or try this version).  It's by E. Roy Weintraub.  I found the pointer on the Oxonomics blog.

More Sex is Safer Sex

In More Sex is Safer Sex Steven Landsburg famously argued (based on work by Michael Kremer) that if more people, especially more sexually conservative people, had sex the AIDS epidemic could be reduced.  Landsburg wrote:

Imagine a country where almost all women are monogamous, while all men demand two female partners per year. Under those circumstances, a few prostitutes end up servicing all the men. Before long, the prostitutes are infected; they pass the disease on to the men; the men bring it home to their monogamous wives. But if each of those monogamous wives were willing to take on one extramarital partner, the market for prostitution would die out, and the virus, unable to spread fast enough to maintain itself, might well die out along with it.

In The Wisdom of Whores (see also my earlier post) Elizabeth Pisani says that such a country exists, it's Thailand, and the results of more sex were safer sex - exactly as Landsburg argued. Here's Pisani's story:

Thailand used to fit the the classic 'virtuous girls, philandering boys' model.  At the start of the 1990s, 57 percent of twenty-one-year-old men in Northern Thailand trooped off to the brothel to do their philandering.  More than half the sex workers who soaked up their excess energy were HIV-infected....

Then...the Thai economy boomed.  Girls were getting better educations than ever before...Educated girls were waiting longer before getting married, but not before having sex.  By the end of the 1990s, 45 percent of girls aged 15-21 in northern Thailand admitted to having sex with boyfriends before marriage, compared to less than a tenth of that in a nationwide survey in 1993.

...So at the end of the decade, we have a lot more premarital sex and not all that much condom use with girlfriends.  But now that these young, cash-strapped guys can have sex without paying, they've stopped handing over cash for sex.  By the end of the 1990s, only 7 percent of young men were paying for sex, and HIV prevalence in sex workers had come down too.

....In short, more women having premarital sex equals less HIV.

Pisani cites neither Landsburg nor Kremer so I believe her account is independent.  Note that Pisani also credits Thailand's successful condom program.

Size Matters

Beijing has more modern architecture than perhaps any other city and more of it is going up every day.  Judging by the buildings you would think China is a rich country and it is but China is a rich country composed of poor people.  What China loses in per-capita terms it makes up for in volume.  We are used to thinking of total and per-capita wealth as highly correlated - the EU and the United States being key examples.  We need to rethink some issues such as inequality, power and foreign policy when they are not so correlated.

By the way, the architecture is great but hard to see!  Visibility is limited to 3 or 4 blocks after which everything is a grey haze.  I haven't seen the sun for days. 

Also, I found a way to access Marginal Revolution using an anonymizer.  This is good since the thought that one billion could not access the wisdom at MR was deeply disturbing.

Who is the greatest modern-day thinker?

Stephen Dubner as