Marginal Revolution

*Economist* forum on Justin Lin and banking in developing countries

Lin is chief economist at the World Bank.  You will find the forum here and it includes responses by Antoinette Schoer, Ross Levine, Abhijit Banerjee, Luigi Zingales, Mark Thoma, and others.  My comment is here.  Excerpt:

I can't decide whether I agree with everything in this essay or disagree with everything in this essay. 

I see Mr Lin using the words “should”, “need to”, and phrases like “what matter most” or “not the way to go”. But who or what is the active agent here? The country’s home government? The World Bank? When it comes to all these banking systems, are we simply rooting for particular paths and outcomes—such as small and simple banks—or is Mr Lin making policy recommendations about how to get there? We never know.

Meanwhile, via Kottke, here is the World Cup Stacking Record (recommended).

Assorted links

1. New blog: How Books Got Their Titles; the guy's other blog is even better.

2. Via Chug, bailout art.

3. Interview with Perry Mehrling and Arnold Kling comments.

4. In defense of The Cheesecake Factory (p.s. I don't believe it).

5. The future of cultural signaling.

6. Michael Martin on CYOE and Hayek's Sensory Order.

Intrade vs. MSM: Sotomayor Nomination

What tells you more about the Sotomayor nomination, all of the chatter and debate in the MSM over her "controversial" remarks or the single number from intrade: bids at 98,5, i.e. an estimated probability of confirmation of 98.5% (as of July 14, 11:12 pm EST)?

Loyal-reader Jim Ward writes: 

Do reporters and news Agencies even know to check the betting markets? Or do they just ignore it, because “X sure to happen, nothing to see” is not a story? Or they don’t want to seem biased, and have to provide 2 sides to every story...Why not just throw Intrade odds into every story as an addendum?

I'm actually amazed at how far prediciton markets have come.  In Entrepreneurial Economics I wrote:

...perhaps one day, instead of quoting an expert, the New York Times editorial section will refer to the latest quote on "health care plan A" available in the business pages.

At the time, I didn't think that day would be just a few years in the future. Admittedly, we are not quite there yet but during the last election it was common for media outlets to refer to the prediction markets.  I think this trend will continue.  Can futarchy be far behind?

My Spanish article on Obama

This appeared in Spanish, in the magazine Capital, I believe in October.  I submitted it early last September and it offers my predictions about an Obama administration to come, as an American might try to explain to a Spaniard.  Of course I drew on many web and blog influences but this was a citation-free medium.  Here goes, under the fold:

Guessing the “true economic views” of Barack Obama has grown into a small industry. Some people are convinced that he is a radical left-winger, while others claim he absorbed free market economics during his time as a law professor at the University of Chicago.  Obama’s voting record in the Senate is left-wing, but since he’s been planning on pursuing the Presidency for years, maybe those votes were for public consumption.

My view of Obama’s economics is straightforward one and it is consistent with his public pronouncements. I view Barack Obama as an economic pragmatist who is willing to borrow good ideas from many different sources. He stands further to the left than do most Americans (myself included) but he has lined up the very best centrist economic talent to advise him.

What’s the reason for thinking that Obama is such a pragmatist? If you read’s Obama first memoir (Dreams from My Father: A Memoir of Race and Inheritance), which he wrote before he was famous, issues of identity dominate  He is acutely aware of being a mixed-race person in a community of largely white American leaders. Most of all, I think Obama wants to do a good job as President and he wants to be seen as having done a good job.  That would pave the way for improved race relations and, although Obama would not use these words, it would bring higher status to African-Americans.  When it comes to his subconscious, I see Obama as more attached to the notion of excelling than to any particular view of economic policy. Keep in mind that Obama was raised by a white mother (the father was absent) and he “decided to be black,” and decided to marry a black woman and attend a black church, only later in his life. Oddly, his hopes for improved race relations are the hopes that would be held by a utopian white liberal rather than the vision held by most African-Americans. That is one reason why African-Americans were initially so slow to support him and why so many educated white elites feel so at home with him.

Obama is also famously detached and it seems he never loses his cool. He does not fixate on economic ideology but instead he is focused on creating his own personal success.  That implies a very strong ego but also it again leads to an economic and also a foreign policy pragmatism. 

If Obama is elected, I expect the major economic storyline to be Obama pushing policies in the national interest (as he perceives it) and Congress pushing back with earmarked expenditures and privileges for special interest groups.  It won’t be about Democrat vs. Republican.

There is plenty of talk about Obama being half-black but perhaps the more important fact is that Obama is from Hawaii. Many Hawaiians barely think of themselves as North Americans and they live thousands of miles from the continent. The Hawaiian background is part of where Obama’s cosmopolitanism – which is strong and sincere – comes from.

My description may sound like a very favorable portrait of Obama on economics but he will likely encounter serious problems if he wins the election.  The important American Presidents are those like Reagan who “know a few big things” and push them unceasingly, without much regard for the pragmatic or even the reasonable.  Obama is not used to connecting with mainstream America and if he wins it is because the country is fed up with Republicans, not because the voters have absolute confidence in him.  Congress will test him.  The chance that he makes big mistakes will be small, and that’s all for the better.  But the best prediction is that he will be ineffective in tackling most of America’s biggest problems.

Markets in everything; the culture that is Japanese

This year Japan has gone konkatsu-crazy, with the trend spawning countless magazine articles, a weekly TV drama and a best-selling book.

A Tokyo shrine now offers konkatsu prayer services, a Hokkaido baseball team has set up special seats for those looking for mates, and a Tokyo ward office arranges dating excursions to restaurants and aquariums.

A lingerie maker has even come up with a konkatsu bra with a ticking clock that can be stopped by inserting an engagement ring.

Here is much more.  I thank KunLung Wu for the pointer.