Marginal Revolution

Assorted links

1. Brief survey of Iranian cinema.

2. Nerdy Chicago weather joke.

3. Via Greg Mankiw, Milton Friedman on health care.

4. Should love be easy?

5. Koogle, or "kosher" search.  It shuts down on the Sabbath.

Ali Akbar Khan passes away at 87

A sarod player, he was one of my favorite musicians.  Here is one obituary, noting his father made him practice for 18 hours a day.  Here is another obituary; he once wrote: "If you practice for ten years, you may begin to please yourself, after 20 years you may become a performer and please the audience, after 30 years you may please even your guru, but you must practice for many more years before you finally become a true artist -- then you may please even God."  Here is evidence that Khan understood the Romer model.  Here is my favorite Khan CD.

Should Japan abolish currency?

The idea is being discussed:

With recovery elusive, a population doddering into old age and perhaps a decade of deflation in prospect, Japan may start mulling the most radical monetary policy of all — the abolition of cash.

Unorthodox, untried and, said one Bank of Tokyo Mitsubishi strategist, “in the realms of economic science fiction”, the recommendation has nevertheless begun floating around Tokyo’s corridors of power and economists have described Japan as particularly suitable as a testing ground.

One policy goal is to open up the option of negative nominal interest rates, perhaps as low as negative four percent.  It's worth noting that although you can buy swine placenta drink there, simply by swiping your cell phone, currency in circulation still amounts to 16 percent of gdp.

For the pointer I thank Pin-Quan Ng, a loyal MR reader,

Blaming the Republicans

Ryan Avent has a good post and I agree with much of it (and read him as expressing a good deal of agreement with me).  I do, however, disagree with one part:

...if Waxman-Markey is a bad bill, then it is a bad bill largely because the minority party has an energy plan that scarcely recognises the threat of climate change as a problem. This guarantees that the vote will be close, which guarantees that Democrats will have to wheel and deal and wheel and deal to get the votes they need—the last Democrat to be converted can name his price. It's a little silly to complain about the imperfect bill Democrats have crafted, when the Republican minority has basically forced them to build a law that every last Democrat can accept.

I don't mean to pick on Ryan but I am seeing this idea growing in influence and I wish to push on it a bit.  (By the way, here is his follow-up post.)  A few points:

1. Negative claims about Republican politicians are, in fact, usually true.  I don't wish to defend them or make you dislike them less.

2. If a policy idea cannot survive the opposition being partisan and also lying about it, I submit the policy idea is not such a good one.  You can blame the opposition with all the justice in the world on your side, but still the idea has major, major problems.

3. The notion of a "minimum winning coalition" is commonplace in political science.  Maybe the idea isn't as universal as its early proponents claimed, but still it is an important force in shaping political equilibria.  If a policy idea cannot survive being turned into a "minimum winning coalition" version of itself...well...see #2.

4. Both the Republicans and the Democrats share some common problems and they are known as voters.  And special interest groups.  If your plan cannot survive the influence of voters, and special interest groups...well...see #2.

5. Many government programs can in fact survive all of these negative influences and still emerge as good ideas.

6. The Democrats do in fact rule by more than one seat in both houses of Congress.  So maybe the marginal Democratic legislators don't have so much bargaining power after all.  You can cite 60+ in the Senate but of course this is endogenous to what the Democrats themselves think public opinion will bear.  There is a reason why the Democratic establishment does not, as Matt Yglesias so often recommends, abolish the 60+ requirement.  Often they prefer inaction, combined with the ability to blame the Republicans for such.  See #4.  The often-sad truth is that the Democrats as a whole prefer to tailor policy to pander to their "worst" members.

7. If indeed "the revolution is over" it is a question of critical importance, for progressives, what lessons to take away from the experience.  I'm not yet sure what are the correct lessons, from a progressive point of view (Robin Hanson and I have been chatting about this and I hope to blog it more soon).  Deep in my bones, however, I feel that if the main takeaway were "the Republicans were at fault," that a significant learning opportunity will have been missed.

Assorted links

1. Me on the Hebrew Bible, in print.

2. Markets in everything, making solicitors pay.

3. Markets in everything, iPhone apps edition, the photo is safe for work.

4. The economics of *The Economist*, and why it still makes money.

5. China Mieville defends Tolkien.

Inner Peace with Economics

The optimal number of lifetime speeding tickets is greater than zero.

Steve Horwitz uses economic reasoning to get some inner peace.  My own entry in this field is here.  

My (short) life as a gamer

For years I've been promising Bryan Caplan and Robin Hanson that I would play an afternoon game with them, if only once.  And for years I've held out.  Since I used to play chess, Scrabble, and other games I cannot claim an intrinsic dislike of gaming.  Yesterday I tried to play Kremlin with them but I had to give up after thirty minutes.  My head hurt and I was not motivated to impose interesting structure on the game as a life activity.  I'm still looking for a simple model of my failure.  One hypothesis is that anyone who deals with university administration, as I sometimes do, will have no marginal taste for playing Kremlin.

Is the revolution over?

Megan McArdle writes:

There's a lot of sadness on liberal blogs these days.  What happened to Hope and Change?  Climate change is coming sometime next year, maybe.  Financial regulation also isn't coming anytime soon, and what's proposed is the minimum set of politically feasible propositions rather than a sweeping overhaul.  And health care? 

There is more at the link and I suspect it is mostly or fully correct.  Here is Ezra on health care reform and the very big chance that it might fail.  I'd just like to repeat a simple question I asked at the beginning of the Obama administration: which would you rather have, the fiscal stimulus or $775 billion in public health programs?

Even better, how about $300 billion in stimulus -- the immediate stuff like aid to state governments -- and $475 billion in public health programs?

At the time no one except a few progressives thought such a question was particularly relevant.

Note that the economy has seemed to stabilize, more or less, and well under ten percent of the stimulus money has been spent to date.  Moving forward, if no further major programs will be put into place, how would you like to spend the rest of that cash?

Seriously.

And I don't mean this post as a poke at Democrats in particular.  Conservatives, libertarians, etc. all commit their own versions of this error, at least if they find their way to power.  The basic mechanism is simply that policy advocates underestimate the opportunity costs of the measures they propose, as they tend to see those measures as more "win-win" than others are willing to believe.

How do recessions affect friendships?

From Slate's new XX blog, here is Emily Bazelon:

Because of the downturn, friendships between two people whose Saturday night spending and overall class status used to calibrate precisely have now turned into trickier relationships between one person who still has money and one person who doesn’t. The sudden uneven footing isn’t easy to negotiate, as I’ve learned from the responses I got to my question about the effect of the recession on friendships.

Do income classes become more clannish in hard economic times?  There is either a very deliberate trade of favors for money, or you stick with those who can spend as you do.  An alternative model is that it becomes easier to ask what the other person can afford, and more gains from friendlly trade are opened up across a variety of income classes.

Response to Christina Romer

From The Economist, there is an entire symposium.  Here is my bit and it closes as follows:

I thought these sentences from Mrs Romer’s piece were excellent: "As someone who has written somewhat critically of the short-sightedness of policymakers in the late 1930s, I feel new humility. I can see that the pressure they were under was probably enormous."

That's the bottom line. With Mrs Romer's piece we have one of the world’s great macroeconomists, yet not quite being allowed to play that role.

In part I was referring to this:

I am least happy with the sentence: "By coupling the expansion of coverage with reforms that significantly slow the growth of health-care costs, we can dramatically improve the long-run fiscal situation without tightening prematurely." So far we have every reason to believe that Congress—and indirectly the American voter—will not allow the growth of health-care costs to be slowed. Mrs Romer's sentence could have been rewritten: "Congress is unlikely to significantly slow the growth of health-care costs, so we cannot dramatically improve the long-run fiscal situation without tightening prematurely."

If you're wondering, all that talk of "Mrs Romer" is a Britishism added by The Economist (should I have offered her a "lovely biscuit" as well?).  I get a kick out of seeing myself having "written" that, but being from New Jersey what I sent in was simply "Romer"; next in line would have been "Professor Romer," "Ms. Romer," or even "Mrs. Romer."