Marginal Revolution

Division of labor in the Babylonian Talmud

This reminds me of Leonard Read's "I, Pencil," but of course it came much earlier:

Ben Zoma once saw a crowd on one of the steps of the Temple Mount. He said, Blessed is He that discerneth secrets, and blessed is He who has created all these to serve me. [For] he used to say: What labours Adam had to carry out before he obtained bread to eat! He ploughed, he sowed, he reaped, he bound [the sheaves], he threshed and winnowed and selected the ears, he ground [them], and sifted [the flour], he kneaded and baked, and then at last he ate; whereas I get up, and find all these things done for me.

And how many labours Adam had to carry out before he obtained a garment to wear! He had to shear, wash [the wool], comb it, spin it, and weave it, and then at last he obtained a garment to wear; whereas I get up and find all these things done for me. All kinds of craftsmen come early to the door of my house, and I rise in the morning and find all these before me.

Credit goes to Stephen Dubner.

Ezra Klein on Kindle

At the end of the day, the true advances won'€™t come in the Kindle, but in the content. Just as the capabilities of the device will shape what authors decide to do with it, so too will the decisions of authors shape the evolution of the device. The Kindle a€™s homepage already features videotaped testimonials from such literary luminaries as Toni Morrison, Michael Lewis, James Patterson, and Neil Gaiman. But what the Kindle, and Amazon, need is not their kind words, but more of their written words, composed with an eye toward the possibilities offered by electronic text. Just as the early television shows were really radio programs with moving images, the early electronic books are simply printed text uploaded to a computer. Amazon could use its unique position to change that.

Here is more.  Here is Megan McArdle on Kindle: "Best thing since sliced bread."  Here is me on Kindle, before and after trying it.

The best sentence I read today, circa 6:36 a.m.

Nixon, who became vice president at age 40, was well described as “an old man’s idea of a young man.”

That is from this review of Nixonland, a book which is rapidly approaching the top of my pile. 

Department of Uh-Oh

Until recently, nearly all the thinking about the risks of space-rock strikes has focused on counting craters.  But what if most impacts don't leave craters?  This is the prospect that troubles Boslough.  Exploding in the air, the Tunguska rock did plenty of damage...

That is Gregg Easterbrook in the latest Atlantic Monthly, June issue, "The Sky is Falling," not yet on-line.  Here are previous MR posts on the asteroid problem.

What are the benefits of being full professor?

Dan Drezner, who just won the title (congratulations!), gives a list.  Oddly he leaves off the most important (only?) benefit, namely that no one can tell you any more that you won't make full professor.  I know that sounds silly but in essence you choke off the ability of your university to send you one very particular negative status signal.  Nor can they hold that threat over your head.

Sometimes I think this is also a benefit of being married.  Let's say you and your significant other are not married.  In that case proposing, and having that proposal turned down, often causes couples to split up.  By marrying you remove this scenario as the source of a possible split.

There are advantages to sitting at the very top and very bottom of status distributions; it is often the in-between spots that are problematic.

The Man Who Loved China

That's the new Simon Winchester book and it concerns Joseph Needham, who wrote the famous series on the history of science in China and focused the attention of the scholarly world on the question: why no capitalism in China?  This books offers a love story, a story of a quest, a story of science, a tale of politics, and did you know that Needham (unwittingly) was the guy who taught the Unabomber to use explosives?

Here is one short bit from the book:

In 1989, more than half a century after they first met, Needham and Lu Gwei-djen were married in Cambridge.  She died two years later, whereupon Needham invited three other women to marry him.  All politely declined.

Definitely recommended.  The subtitle is "The Fantastic Story of the Eccentric Scientist Who Unlocked the Mysteries of the Middle Kingdom."  Here is one review.

Letter to the NEJM

The issue of off-label prescribing is heating up again.  A recent article in the New England Journal of Medicine by Randall Stafford made the case for greater regulation.  I am concerned that the benefits of off-label prescribing are not fully appreciated.  Dan Klein and I wrote a letter to the NEJM - which they declined to publish - in response.  Here's the letter:

Dear NEJM,

R.S. Stafford writes that off-label prescribing “permits innovation in clinical practice … offers patients and physicians earlier access to potentially valuable medications and allows physicians to adopt new practices based on emerging evidence.”  Nevertheless, he calls for greater FDA regulation.

In contrast, we argue that the efficacy of off-label usage suggests that less FDA regulation of first or on-label usage would increase innovation and offer patients earlier access to new medications. 

Off-label prescribing is regulated by the judgments of doctors, medical researchers, industry, the patient community, and patients.  This system offers patients a more nuanced approach to care than a top-down approach.  We should extend this approach to new drugs as well as to new uses for old drugs.

Our perspective is bolstered by a large survey of physicians which demonstrates strong support for off-label prescribing and considerable support for reducing FDA regulations on new drugs.

Daniel Klein
Alexander Tabarrok
George Mason University

Where do the kept women go?

Zubin Jelveh reports:

If you're a married woman living in the New York City area, there's a better than 50 percent chance that you don't work, according to a recent analysis of Census data by economists affiliated with the St. Louis Federal Reserve Bank.

More specifically, only 49 percent of white high school-educated married women in their prime working ages were holding down jobs in the New York area as of the 2000 Census. To put that in perspective, there are roughly 2 million woman over 15-years-old who are married in the New York area.

The national average for this particular demographic is 67 percent. At the other end of the spectrum is Minneapolis where almost 80 percent of these married women are employed -- that's larger than the percentage of working men aged 25 and older in the U.S.

And why is this?

Surprisingly, the economists argue, the most important specific thing seems to be traffic.

And if you do work in these traffic-heavy areas, you are likely to work more hours.  But is it all causal?

With all due respect to The Walker Art Center, if I wanted to be a kept woman I would not start my quest in Minneapolis.  High density, as you find in Manhattan, means lots of fun things to do in your copious free time as a kept woman and also a higher degree of income inequality and thus the hope of snaring a rich man.  There's a reason why they didn't set Sex in the City in Paramus and most of the women there will be working even when the traffic gets worse.

Assorted links

1. It hurts to be poor

2. The Bastiat Prize for free-market journalism

3. The 1949 Phillips machine restored

4. Dilbert starts the Economics Party

Russia fact of the day

By 2015, Moscow will boast the 10 tallest office buildings in Europe—and already prime office rents in Moscow are going above $2,000 a square meter, 50 percent higher than the most prestigious skyscrapers of midtown Manhattan.

Here is more, interesting throughout, and thanks to John Bailey for the pointer.

Addendum: Don't forget this part -- about corruption -- either:

Indeed, by some estimates, Russia's GDP growth should have been closer to 14 percent—after all, Russia is the world's largest energy exporter at a time when prices have tripled during the last half decade.

I hate perfume

I really, really do.  All perfume, and yes that means yours too.  But I loved the book Perfumes: The Guide, by Luca Turin and Tania Sanchez.  If you are rating this book along the single dimension of how skillfully it informs the reader, it is one of the best non-fiction books I have read, ever.

Plus it has good sentences like:

Nobody ever died from wearing Mitsouko, but lots of babies were born as a result of it.

And:

Fragrances for men are mostly identical crap, designed to trap you and give you away as a lout.

Recommended.

Bryan Caplan on the McCain/Clinton gas tax relief plan

You'll find his contrarian take in The New York Times this morning.  It's a second best, public choice argument: according to Bryan we are usually too nasty to energy companies in bad times, so sending them some excess profits is a bit of needed TLC.  McCain's plan of course is better in his eyes because it doesn't include the punitive windfall profits tax.  And without a gas tax holiday we might be tempted to do something worse.  Excerpt:

...even a “giveaway” to the oil industry sets a positive course for the future. During the last crisis, the industry was a scapegoat for scarcity. Politicians scrambled to stop oil companies from profiting from the crisis, even though temporarily high profits end shortages by giving businesses an incentive to figure out how to increase output.

Stephen Colbert dissents.  And here's Bryan's own summary of Bryan.  I don't know the data on the average rate of tax paid by energy companies, compared to other endeavors, but looking at that would be one place to start.

The Fermi paradox revisited

I am still thinking about Nick Bostrom's stimulating essay (and Robin Hanson's precursor essay).  Nick of course is worried about finding signs of alien life, which would suggest that life has arisen many times, leading to the question "where are they?" and the fear that life dies out pretty easily.  For Nick it is cheerier, from our point of view at least, to think it is very hard for life to get underway in the first place.

In pondering the Fermi question, I often wonder if I am not simply missing the party, so to speak.  Most people already *do* think they see signs of an alien presence of some kind, of course defining that concept broadly to include The Gods.  So how can we say we don't see "them"?  Maybe I, the agnotheist, don't see "them" (Him?) but surely most other people think they do.

Doesn't that make the Fermi paradox go away in a snap?  No one cites Blind Boy Blake and screams "He doesn't see them!".

Another way of putting it is to say we don't take David Hume's Dialogues on Natural Religion seriously enough.  We really have just one data point, so who can say what "they" look like, or what kind of "display" they would have made for us?

Alternatively, I am struck by the tension between the Fermi paradox with the "We are probably living in a simulation" claim.  Both are popular with the same group of people because they are nerdy ways of making you believe something weird; in reality the two conundrums don't fit together.  If you take the simulation option seriously, you again see the creators all around you, albeit in disguised or cloaked form.  Of course you had to use Bayesian inferential reasoning to see them, but what's wrong with that?  Better than a telescope, some would say.  And since most people believe in God, the creators might even consider their artwork to be already "signed."  (I'll note rapidly in passing that the arguments against the simulation hypothesis also strike at the Fermi worries, but establishing that would take lots of work.)

Either way, it seems we see "them," or ought to think we see them, even if that turns out to be a visual mistake of sorts.

Addendum: I liked Michael Goodfellow's point:

After that first species gets control, it makes all the rules.  If it shells over all the stars, no other life can even develop, since all the planets are frozen solid.  If it wants to let biological evolution continue, it can do that, by avoiding stars with fertile planets.  It can prevent any other technology from arising (by monitoring all the planets where life is evolving.)  It can guide or change any life that it does find.

This may seem horrible to you -- little robots putting all the stars out!  Spreading like a weed and killing or preventing any new life from developing.  But you're looking at it the wrong way...The first species out there gets to decide the future, for every species that follows.  For lack of any other evidence, let's hope it's us.

Splendid, but I part company at the last sentence.  There is some other evidence (of the Bayesian sort) and I think the most logical assumption is -- whether you believe in God or space aliens -- to think of ourselves as their product, one way or another.

Or to put it yet another way, what's the principle of individuation here?  Isn't "seeing us" and "seeing them" more or less the same thing?

Hail David Hume!

In case you hadn't heard

Charity workers have gathered at Myanmar's embassy in Bangkok, Thailand, with vehicles, emergency food supplies and medicine, waiting for their visa requests to be approved.

Here is more.  And more here.

Fragments of Wisdom

... it is important that presidential candidates fear economists...

Brad DeLong, writing about why what a politician says about a minor policy like the gas-tax matters. Of course it is even better if the public are informed and on the gas-tax they seemed to have made the right decision.

Does the CPI understate inflation?

You're hearing this a lot these days, most of all from Kevin Phillips.  David Leonhardt sets the record straight.  Here is one excerpt:

During the 1980s and 1990s, though, did you ever stop and marvel at what a small share of your paycheck you were spending at the supermarket? I didn’t. I also didn’t really notice that gas cost less in the late 1990s than it had in the 1980s. Yet lately, every time my wife or I pass a new benchmark for filling up our tank — $40, $50 and now $60 — we have a conversation about it.

Price increases are simply more noticeable — more salient, as psychologists would say — than price decreases. Part of this comes from the notion of loss aversion: human beings dislike a loss more than they like a gain of equivalent size. If you have to sell your house for less than you bought it for, you’re really unhappy. You hate that ground chuck now costs $2.83 a pound, but you didn’t notice that oranges are 31 percent cheaper than they were a year ago.

...The price of major appliances has been flat over the last year. Furniture is 1 percent less expensive. A decade ago, a basic four-door Toyota Corolla LE cost $16,018, according to the company. The 2009 basic model costs $16,650, and it’s a safer, more powerful, more fuel-efficient car than its predecessor.

To top it all off, most people don’t buy any of these items very often. “People tend to remember things they do frequently,” says Stephen Cecchetti, an economist at Brandeis University who studies inflation. “And what do you buy more frequently than gas and food?”

It has electrolytes!

Yes, you really can buy it now.  Brawndo.  The line between irony and reality grows ever finer.

A Public Choice theory of Chinese food

Seth Roberts, citing Jennifer 8 Lee, writes:

Why did Chinese immigrants to America start so many restaurants? Because Chinese cuisine is glorious, right? Well, no. Chinese immigrants started a lot of laundries, too, and there is nothing wonderful about Chinese ways of washing clothes. As Jennifer Lee explains in this excellent talk, the first Chinese immigrants were laborers. They were taking jobs away from American men, and this caused problems. Restaurants and laundries were much safer immigrant jobs because cooking and cleaning were women’s work.

By the way, here is some work on immigrant complementarity with native labor.  George Borjas rebuts.

What I've Been Reading

1. Arts, Inc.: How Greed and Neglect Have Destroyed Our Cultural Rights, by Bill Ivey.  The concrete discussions of cultural issues are consistently interesting and thoughtful; the overall talk of cultural rights which frames the book is not even well-developed enough to be called absurd.  The book is best on copyright and least interesting on the NEA, which Ivey once ran.  Most of all the book reflects a creeping horror that the internet will make its entire series of debates irrelevant.

2. Apples are from Kazakhstan: The Land that Disappeared, by Christopher Robbins.  A substantive travel book about you-know-where; it is both fun and full of substance.  Recommended.

3. The Monetary Policy of the Federal Reserve: A History, by Robert L. Hetzel.  This is a very serious treatment of what is, from a historical point of view, an understudied topic.  Recommended; note that while the monetarist point of view is not heavy-handed, it may not appeal to everybody.

4. Philip Bobbitt, Terror and Consent: The Wars for the Twenty-First Century.  A lengthy and thoughtful volume on how WMD are *the* problem of the future, though I found it didn't get me further to thinking through my views.  A good start, however, for those who don't buy the premise.

5. 1001 Buildings You Must See Before You Die.  One of the best books for browsing I have seen, though don't expect much from the index.  I was most surprised by the Jean-Marie Tjibaou Cultural Center in New Caledonia, have any of you been there?

Assorted links

1. Megan Non-McArdle quits blogging, at least for the time being. 

I've long felt that the routine of married life fits the routine of blogging very well; I really do wake up the same hour each morning, more or less.  If I weren't married I would still blog but I would feel more conflicted about it and perhaps she does too.  ("You're funnier on the blog" one loyal (and beautiful) MR reader once told me upon meeting.)  Dating and blogging either means the blog is a secret (but for how long?) or the potential partner "dates the blog" before dating you.  Do I really want to be explaining "Markets in Everything" on a first or second date?  ("No, I don't want you as a prostitute.  Most of the entries are sad, or satirical, but there is a secret code to indicate the ones I approve of.  For further explanation, go to the middle chapter in Montaigne's second book of Essays.")  Maybe the blog is more charming than I am and I would do better to send it on my dates but that's still an odd place to be.  In any case my guess is that Megan Non-McArdle is doing the right thing by quitting.  We all wish Megan Non- well in her quest for Mr. Non-McArdle, and in her quest for everything else, etc.

Appeasing the Gods

Economists say that people buy insurance to cover themselves if something bad happens.  Some experiments by psychologists suggest that people buy insurance because they think it will prevent the bad thing from happening.   John Tierney has more.

Rappers on *The Economist* magazine

"The style in which they write is simple and concise, how do they get their sentences so precise?" the rappers wonder.

And the chorus is a gem, too: "He reads the Economist so he can get the gist, its solid competence gives him confidence that his intelligence is correct."

The rappers also weigh in on accusations that the Economist pushes a particular line: "Yes, they have a bias; it's pro-democratic. And pro-free trade; they are very emphatic."

The source is Chris Blattman.

Fragments of wisdom

Yet economists talk much more about trade than they do about health care policy, because they think they know something about it in a way the laity don’t...don’t let economist’s tendency to overemphasize their areas of expertise distort your view.

I don't agree with every claim in this Krugman piece, least of all his defense of you-know-who, but I think that psychoanalysis of economists is spot on.

Get politically uninvolved!

The great P.J. O'Rourke:

All politics stink. Even democracy stinks. Imagine if our clothes were selected by the majority of shoppers, which would be teenage girls. I'd be standing here with my bellybutton exposed. Imagine deciding the dinner menu by family secret ballot. I've got three kids and three dogs in my family. We'd be eating Froot Loops and rotten meat.

But let me make a distinction between politics and politicians. Some people are under the misapprehension that all politicians stink. Impeach George W. Bush, and everything will be fine. Nab Ted Kennedy on a DUI, and the nation's problems will be solved.

But the problem isn't politicians -- it's politics. Politics won't allow for the truth. And we can't blame the politicians for that. Imagine what even a little truth would sound like on today's campaign trail:

"No, I can't fix public education. The problem isn't the teachers unions or a lack of funding for salaries, vouchers or more computer equipment The problem is your kids!"

Hat tip to Newmark's Door.

What is the best country music?

That is a request from Bill Russell, a loyal MR reader, and yes I will get soon to more of your requests.  I'm no expert, but my picks are as follows:

1. Hank Williams Sr., get both discs and don't look back.

2. The Byrds, Sweetheart of the Rodeo, The Flying Burrito Brothers (the first two albums), plus Gram Parsons's Grievous Angel.

George Jones and Bob Willis and Merle Haggard are all in my view somewhat overrated.

3. Louvin Brothers, Tragic Songs of Life (some call it bluegrass), Dolly Parton, Dock Boggs, Patsy Cline, the essential Johnny Cash (there's lots of it), and the country/gospel of Elvis Presley.  Dylan's country music is good but is not his strongest suit.

Arguably the best songs of Ryan Adams (alas they are scattered but "Amy" and "La Cienega Just Smiled" are two places to start; does anyone know a more general sourcing?) are as good as anything in the genre.  I like Lucinda Williams as well plus Shelby Lynne, most of all I Am Shelby Lynne.

Alternatively, the best collections from the 20s and 30s are mind-blowingly good; for instance try American Primitive on John Fahey's Revenant label, or the Harry Smith collections.  That's some of the best American music period though in some ways the blues shouts are closer to rock and roll than to country.

I might add the whole list comes from someone who was initially allergic to country music, so if that is you give some of these recommendations a try.  Just think of it as White Man's Blues.

Theorems

Hillary Clinton's proposal is particularly stupid, in my humble opinion, because it tries to get the money back from the oil companies with a windfall profits tax. Tax incidence is tax incidence: if the oil companies can make consumers pay most of the excise tax, then probably consumers can stick them with your windfall profits tax too.

I believe that is what they call "true enough."  Here is more.

Two Indian success stories

Yes, the first is about agricultural productivity, that still-neglected issue:

Ajit Singh, a farmer in the poor northern state of Uttar Pradesh, had never seen a computer until four years ago when ITC, the Indian agribusiness-to-hotels conglomerate, installed a PC in his village, Kurthia.

Now the thin 47-year-old farmer visits the ITC station, known as an "e-choupal" after the Hindi term for "gathering place", every day for online access to news-papers, crop prices, weather forecasts and farming techniques. As ITC's village manager, he passes on what he gleans to fellow farmers.

Knowing the fair market value of crops allows farmers to fetch better prices and circumvent local traders who used to dictate terms. Farmers can also sell wheat and other crops to ITC.

The result has been a big jump in crop productivity. Annual incomes in Kurthia have risen from Rs40,000- Rs50,000 ($1,000-$1,230) before e-choupal to Rs100,000- Rs120,000 now, says Mr Singh.

Here is the link.  Here is the second story, with photos at the link:

Mukesh Ambani, the fifth richest man in the world, is building the most expensive single family residence ever, a $2 billion -- yes, BILLION -- 27-story skyscraper in downtown Mumbai.

New issue of Econ Journal Watch

It is here, and I'll cover the contents once I've had a chance to read them.  Here is a symposium on why so few women in economics?

Guesstimation, or The City in the Sky

On average, how many people are airborne over the US at any given moment?

That's a typical question from the new Princeton University Press book by Lawrence Weinstein and John Adam.  The title is Guesstimation and the subtitle is: Solving the World's Problems on the Back of a Cocktail Napkin.

What's your guess and why; let us know in the comments and I'll post their answer later today.  The book also tackles such hoary chestnuts as "How many piano tuners are there in Los Angeles," although for mysterious reasons (are they mostly part-timers?) they fall far short of the actual number in the L.A. Yellow Pages.

This book isn't for everyone but if you think you might like it you probably will.

Addendum: I post the authors' answer at about comment #31.

When should you take photographs?

JKottke, a loyal MR reader, asks:

Is taking a photo or video of an event for later viewing worth it, even if it means more or less missing the event in realtime? What's better, a lifetime of mediated viewing of my son's first steps or a one-time in-person viewing?

If you take photos you will remember the event more vividly, if only because you have to stop and notice it.  The fact that your memories will in part be "false" or constructed is besides the point; they'll probably be false anyway.  In other words, there's no such thing as the "one-time in-person viewing," it is all mediated viewing, one way or the other.  Daniel Gilbert's book on memory is the key source here.

Furthermore you don't need the later viewing for the photo or video to be worthwhile.  It's all about organizing your memories in the form of narratives and that is what cameras help us do, if only by differentiating the flow of events into chunkier blocks of greater discreteness. 

A photo that requires retakes might be more effective than a photo you get right the first time.

Personally, I take pictures of Yana only when she tells me to, which I might add is often.  I've never owned a camera, but for most people I recommend the photos. 

By the way here are 21 ways to take better photographs.

What do I think of the Cowles Commission?

Angry at the Margin asks in the comments:

I'm curious to know what you think of these authors, beyond the fact that they achieved mainstream success, given that the Economics that came out of the Cowles Comission is more or less the exact opposite of the Economics coming out of GMU.

Here goes:

1. Tjalling Koopmans.  He is a father of operations research and certainly worthy of a Nobel Prize, although perhaps in mathematics (if they had one).  His work on optimal routing theory remains central to transportation management and he also laid some foundations for quantum chemistry.  True, he doesn't really appeal to my inner Austrian but he was an awesome intellectual figure and he also helped us win WWII.  We should all bow down and pay homage to Tjalling Koopmans.

2. Kenneth J. Arrow.  His reputation now far surpasses that of Samuelson's and he was more philosophical to boot.  Where to start?   He understood his own impossibility theorem better than did the commentators plus he is the father of modern health care economics and that is maybe 1/10th of his total contribution!  People who know him also claim he is the greatest polymath they ever met.

3. Gerard Debreu.  He is the father of general equilibrium theory and also, as a philosopher of time, the real successor to Proust, as he once explained in an interview.  His extremely minimalistic approach to economics is better when it comes from the star than from the second-tier imitators but of course a real star he was.  I think of him as the father of economic science fiction and no I don't mean that as a snub.

4. James Tobin.  About fifteen years ago I realized he was in fact one of the deepest Keynesian thinkers.  He also proposed the Tobit model and laid the foundations for modern portfolio theory.  He lives in an intellectual world different from my own but he is clearly deserving of his Nobel Prize several times over.

5. Franco Modigliani.  He is one of the guys who could have won more than one Nobel Prize.  That's one for the Modigliani-Miller theorem (the implications of being able to chop up and carve up assets), one for the lifecycle hypothesis, and perhaps even another for his 1944 article on liquidity preference, which showed the concept was probably not enough to drive the Keynesian model except for the unusual case where liquidity preference was infinitely strong.  Sadly this piece remains neglected by modern purveyors of the liquidity trap idea.

6. Herbert Simon.  Bounded rationality and behavioral economics have already taken the profession by storm; his insights on computation, neurology, and artificial intelligence have not yet been incorporated into the mainstream in an effective manner, so his long-run influence will only increase.

7. Lawrence Klein.  I can't say I am a fan of his macro modelling approach, but I'll admit I haven't spent much time with his work.

8. Trygve Haavelmo.  He pioneered how to attack identification problems in econometrics; among other things without him there would be no Steve Levitt and no Freakonomics.  He didn't just get the Nobel Prize because he was a Scandinavian.

9. Harry Markowitz.  The father of modern portfolio theory, enough said. 

Amazing, isn't it?  I still think the profession as a whole overdoes theory (even today) and undervalues breadth and real world experience, but these are nonetheless thinkers to be revered.  Arrow and Simon are, by far, the two who have influenced me the most.  It's also fair to say that GMU economics often extends in other directions, but except perhaps for Herbert Simon these are well-mined thinkers by the rest of the mainstream so not every economist need run in their direction.

The Cowles Foundation Monographs in Economics

You'll find them here, free and on-line, courtesy of Division of Labor and Michael Greinecker.  The most famous is Kenneth Arrow's Social Choice and Individual Values but there are many classics in the series; in fact the hit rate is remarkably high even if they are not all recommended for the general reader.  Here is Wikipedia on the Cowles Commission, and by the way it is pronounced "coals."  Here is much more background, including links to photos.  Here is the current home page of an institution which is no longer distinctive precisely because it triumphed.  How is this for a casual sentence:

Several Cowles associates have won Nobel prizes for research done while at the Cowles Commission. These include Tjalling Koopmans, Kenneth Arrow, Gerard Debreu, James Tobin, Franco Modigliani, Herbert Simon, Lawrence Klein, Trygve Haavelmo and Harry Markowitz.

Economic update

On Intrade.com, the probability of a formal recession (two successive quarters of negative growth) in 2008 has fallen from the 70 percent range to the 30 percent range.

Some time ago I had proposed "the N word" economic indicator, namely that things would be really bad if lots of people were talking about the idea of nationalizing the banks.  That hasn't happened and indeed the people who predicted widespread solvency problems seem to have been wrong.

Paul Krugman has had numerous good posts on the Ted spread as an indicator of ongoing problems in financial markets.  I'll say this: during the Great Depression no one had to cite a spread to convince anyone that things were going very badly. 

Economic knowledge is always subject to revision, but so far the evidence points in the direction of a mild recession, in the informal sense, and that The Great Moderation is still with us.

Do local currencies do any good?

You know, like BerkShares, the local "currency" in Massachusetts.  Tim Harford is skeptical:

True, community currencies may very gently encourage trade with locals rather than strangers. But the gains from more trade with locals are more than offset by the losses from less trade with strangers.

See the full post for much more.  I am more positively inclined than is Tim.  First, local currencies blossom when the nominal money supply is too low and wages and prices are sticky downwards.  A boost in the real money supply is needed and the private sector will do it -- albeit at high transactions costs -- even if the government will not.  That's why so many of these local currencies blossomed in the 1930s but then disappeared.  They did good but then they were stamped out or ceased to be necessary.

Second, private currencies can serve as a form of price discrimination.  By accepting private currency from your local customers, and indeed only your local customers, you can charge them a lower net price and without being very public about it.  That's useful if the local economy is in the dumps.  Note that as the local community recovers, this motive for the local currency goes away as well.  It also implies that local currencies will be most popular with merchants who hold excess inventory and have some market power.