Marginal Revolution

Africa military recruitment fact of the day

My evidence from Uganda suggests that, when coerced, children are the most likely to be indoctrinated and disoriented, and so are the least likely to escape.

Here is much more, from Chris Blattman, interesting throughout.

Pr(Sarah Palin=President)>Pr(John McCain=President)?

Here's a frightening thought, today Sarah Palin may have a greater probability of becoming president than John McCain.  The betting markets are currently giving McCain about a 16% chance of winning.  If McCain wins then let's assume that all things considered Palin has a 40% chance of becoming president (either if McCain dies in office or as his successor).  If McCain loses many people suggest Palin could be a future Republican leader so let's put her chances of becoming president in that scenario at 12%.  Thus:

Pr(Sarah Palin=President) = .16*.4 + .84*.12 = 16.48 > 16% = Pr(John McCain = President).

Abstinence pledges

It seems to boil down to Larry Iannaccone's model of religion:

Bearman and Brückner have also identified a peculiar dilemma: in some schools, if too many teens pledge, the effort basically collapses. Pledgers apparently gather strength from the sense that they are an embattled minority; once their numbers exceed thirty per cent, and proclaimed chastity becomes the norm, that special identity is lost. With such a fragile formula, it’s hard to imagine how educators can ever get it right: once the self-proclaimed virgin clique hits the thirty-one-per-cent mark, suddenly it’s Sodom and Gomorrah.

Here is much more, on the general question of why the teenage children of evangelicals get pregnant so often.  The first question is whether they do, adjusting for all the proper demographics.  Second, I wonder if there isn't also a combined lifecycle/genetic effect.  Maybe if you're rowdy when you're young, you're religious when you're old, but the kids that pop out are on average rowdy too.

Roubini on Structural Problems in the World Economy

In an interesting piece, Roubini points to structural problems in the world economy:

There is a huge excess capacity for the production of manufactured goods in the global economy, as the massive, and excessive, capital expenditure in China and Asia (Chinese real investment is now close to 50% of gross domestic product) has created an excess supply of goods that will remain unsold as global aggregate demand falls.

Odd company or not, note that to the extent that Roubini is correct that past credit excesses have resulted in over-capacity (ala ABC) then our present problems go considerably beyond credit supply.  Tyler is more optimistic than me on these matters.

I want my Felix Salmon

Employees said they were told Thursday that most of Portfolio’s Web site staff would be dismissed and that much of the content unique to the site would be dropped.

Please keep him, we need him (and Zubin too).  I hold out hope in that word "most."  Here is the story.  Media, like new library books, are being hurt by the downturn and the slowing of advertising dollars.  I fear that the non-independent blogosphere may be in for a bit of a financial bloodbath.  So often the bloggers were an "investment in long-term name and image" rather than a profit center.

Update: So far, so good.  Felix lives!

The library regulators also missed the boat

Prince William County is looking at 33 percent reductions. Loudoun is considering program cuts of 5, 10 or 15 percent. Fairfax agencies have been ordered to find cuts worth 15 percent, which would mean closure of 14 community libraries on Fridays, elimination of two hours of Sunday service at eight regional libraries and reduction of new materials by 25 percent. Fairfax libraries would eliminate 305 jobs and purchase 70,000 fewer materials annually if these recommendations are followed, according to a county report.

Fairfax, the region's largest jurisdiction and one of the country's wealthiest, had taken an aggressive approach to maintaining and expanding its library system before the downturn. The county opened three new branches in the past year -- in Oakton, Fairfax City and Burke Centre -- where soaring, spacious architecture and an abundance of computer stations, meeting space and comfortable chairs have attracted brisk business and happy customers.

Here is the story.  New library books will not, alas, be a countercyclical asset.  Comovement is a bitter pill to swallow. 

The Rise of Mutual Funds

Investors preferred closed-end funds to mutual funds because closed-end funds offered the possibility of greater returns due to their use of leverage and the history of their shares trading at premiums.

That's about the 1920s.  It is from Matthew P. Fink's quite interesting and useful The Rise of Mutual Funds: An Insider's View.

Economics Videos from Marketplace

Paddy Hirsch the senior editor at American Public Media's Marketplace radio program has produced a number of delightful videos on economic matters.  The videos are witty, accessible but also well-informed - ideal for a senior high school or undergrad class and also a great place to crib notes if you want to explain to people what is going on when they ask you at parties (Yes, this does happen to me but admittedly I may go to different parties than you.)  Here are a few of my favorites.

• The credit crisis as Antarctic expedition
• Getting naked in short selling
• Untangling credit default swaps

Thanks to Robby Thompson for the link.

Sentences written by me

This trade-off points to a dilemma of financial regulation. The more we protect banks from potential losses, the less banks can protect the rest of us from financial risk.

I'm still working on the longer piece.  The general point is that banks are a mechanism for risk-sharing, as is debt for that matter.

Iceland: what does the endgame look like?

Thrainn Eggertsson writes to the FT:

The government of Iceland has now been offered foreign loans that roughly equal the country's gross domestic product.  The annual interest payments, say 3-4 per cent, approximately correspond to the country's annual economic growth.  Additionally the loans must be paid up.

I believe Thrainn is being generous with that growth estimate.  Then he compares Iceland to Germany in 1919 and predicts similar consequences (I don't think he means that as a threat, however).  Instead, I wonder what it is like for a country to be truly, permanently bankrupt.  And a further difficulty lies on the horizon.  Circa 2000, fish accounted for 70 percent of the country's export earnings.  Here are many articles on dwindling cod stocks, the number one item sold by Icelandic fishermen.

I genuinely cannot imagine what the endgame looks like.