Monday, January 31, 2011
Friday, January 28, 2011
Malcolm Gladwell looks kinda wrong right now, no? I am seeing some of those types of comments on the blog/twitter feed.
Thursday, January 27, 2011
Wednesday, January 26, 2011
"Never mind that all I’m saying is what Econ 101 textbooks have been saying for the last 62 years."
As Brad Delong points out, more like "since 1829." Krugman:
"Friedman-type monetarists who focus on monetary aggregates, or the new style which says that the Fed can and should target nominal GDP — are, whether they realize it or not, part of the axis of monetary evil as far as the demand-deniers are concerned... they’re essentially in the same camp as Keynesians."
Hayek also believed in stabilizing nominal income and by the 1970s had adopted Friedman's view of the Fed and the Great Depression. So, the "demand-deniers" logically have to lump Hayek with myself and Friedman into the Keynesian camp too. (Sumner and Beckworth made that point a long time ago. They've been trying to save fellow conservatives from themselves).
Labels stink because realities are much more nuanced and complicated. I'm not interested in defending against or avoiding a label at this point. But once someone labels you it tends to stick. If wearing the label offends others, then they've basically offended themselves by the mis-labeling.
Chua makes the claim that Chinese mothers are superior because they don't coddle the self-esteem of their children-- they push their children beyond their limits and have succeed-or-else expectations. She purports that this explains why Chinese children excel above American children. (nutshell) There have been plenty of responses/criticisms (here's The Economist) so I won't rehash them here.
But it reminds me of a point Patrick Lai makes in Tentmaking. The vast majority of our norms in parenting are cultural and not Scriptural. Lai dealt with this because his wife is of a different culture. "Where in the Bible does it say your kids have to go to bed promptly at 8pm every night?" He tells the story of a church that wouldn't recommend a particular couple for work overseas because "they let their children run wild." Upon investigating, Lai found that the children were often allowed to stay up late-- this was common in the nation where the couple was from but very uncommon in the conservative American culture they were now living in. Lai counseled the couple to put their kids to bed earlier simply to not offend their church members (think Romans 14 here).
Lai points out that if you're an American living in a different culture where your kids are expected entertain guests who stay way past midnight, you don't want to kick the guests out just because you think your kids need their sleep because that may ruin your witness for the gospel in that culture (and he provides examples/stories to back it up).
I mention this because my wife and I are working through John Piper's Momentary Marriage (free as PDF on his website). I found his chapter on fatherhood relatively void of any practical use. But it dawns on me that Scripture leaves a huge amount of freedom in raising kids. For example, some people argue that spanking is the way to go, others quote scripture arguing the exact opposite.
I'm not saying there aren't some biblical principles, just that there is not much we can be really dogmatic about. (I want to be dogmatic about Babywise but can't scripturally justify it.)
A relative commented that perhaps as Christians we should be just as motivated as the Chinese mother in areas of spiritual and social development-- perhaps in order that our kids really know Scripture and be at ease in sharing the Gospel. Perhaps.
But I want my children to understand that there is no separation between the "spiritual" and the "secular," that work. is. worship. (a biblical concept that many churches have failed to teach). To know the deep importance of Colossians 3:23. Where I think the Chinese mother gets it wrong is that she wants her children to excel at the violin and piano simply for themselves-- to become great so that they will be praised by men and be inspired to become better (ie: to win more praise?). I want my son to be diligent in whatever he sets his mind to, not for myself and not for himself, but because God expects that from us. Because in doing so he can worship God with whatever he's doing. (Not to earn God's favor, but to worship). I don't want his self-esteem to come from his accomplishment but rather from who He is in Christ.
That requires modeling such beliefs/actions in my own life but I think it also opens the door for a wide variety of means of incorporating that into the parenting process.
I think the reaction to Chua's article (she claims to have received death threats) illustrates how difficult parenting is and how insecure (and therefore overly defensive) all of us are in our parenting. And I confess that it's really hard for me to love people who do things dramatically different than I do.
Monday, January 24, 2011
Nobel winner Stiglitz's first book , Globalization and Its Discontents made a huge impact on me when I worked overseas, it definitely motivated the direction I took with my studies. I'll always remember sitting in Azerbaijan one night reading it and looking up at the TV to see Stiglitz being interviewed by a Baku station about his book-- he was visiting the country. That was one of those really weird coincidences that you feel have to be from God.
This is his follow-up book that, sadly, is not as good (maybe because I now know better). Stiglitz picks up where he left off in his previous book-- continuing to criticize the IMF and rehashing their ineptitude in East Asia, Argentina, etc. But Stiglitz also rails against the Bush administration and just about everyone else (sometimes without naming who he is railing against exactly). So much so that it seems the only entity he likes is the United Nations-- that wonderfully effective body. As such, there are a lot of inconsistencies and rambling.
The chapter on trade is pretty good, though. "We don't know what the benefits of free trade would be because we've never tried it." He points out all of the problems with trade agreements, particularly how the U.S. and other Western countries tip the playing field in their favor. Here is a favorite example:
U.S. industries will often file a petition alleging "dumping" by foreign countries. Rather than comparing the true cost of production in the offending country, trade officials will use costs in some place like Canada as a proxy. So, if one country is selling a product cheaper than what Canada can make it they can have anti-dumping duties (tariffs) imposed on their products. That hurts the developing world that happens to have cheap inputs due to abundant labor.
As the U.S. opened its markets to Vietnam, Vietnamese catfish quickly took 20% of the U.S. market. Congress passed a law stating that only U.S. catfish could be called "catfish," so Vietnamese exporters re-entered the market with a new name, "basa," which they could market as something high-end and sell it for a higher price. U.S. catfish farmers then charged Vietnam with dumping. Stiglitz witnessed all of this "kangaroo court" action while working in the Clinton administration.
He blasts the U.S. for engaging in bilateral trade agreements and rails that it hurts multilateral efforts. This is highly controversial theoretically (mathematically) but Stiglitz pronounces bilateral agreements as harmful as fact. Stiglitz criticizes the U.S. on one page for not doing as the EU did and unilaterally removing its tariff barriers to the developing world. Then a couple pages later he rants on how ridiculous it was that the EU unilaterally removed its tariff barriers because they kept their agricultural subsidy programs intact so as to render the removal ineffective. This type of inconsistency runs throughout the book.
My favorite quote from the book:
"China knows there would be high costs to it--and little benefit to the United States-- were it to allow its exchange rate to appreciate. And presumably, America understands this too."America must not include Paul Krugman who is always ranting about China's currency (along with the media in the last year). A yuan appreciation would simply mean the U.S. would import the same amount of goods from other countries. We're a net importer because I > S while China's S > I. Economics 101.
In all, I give this book 2 stars out of 5. The problems he outlines are vast and complicated. His final solutions are to strengthen the U.N. and I.M.F. while making the I.M.F. more transparent and democratic. He proposes a single world reserve currency and to let U.N. representatives vote on who gets the shares. Just imagine how that would turn out...
Sunday, January 23, 2011
Sunday, January 16, 2011
It is an "Economics 101" lesson that apparently isn't common sense to most people because every day one can find a myriad of examples of businesses and governments that scratch their heads over it. Usually what happens is a firm (or government) raises a price (or increases a tax) in order to increase revenue and instead sees revenue decrease. (I have a few local examples I like to use in class.) They improperly estimated elasticity, essentially facing a demand curve that looks like this:The magnitude of the price change is small relative to the magnitude of the change in quantity demanded and the firm (or government) loses revenue. Oops.
Last week a friend told me about a company whose economists were recommending they raise the price of their product. The economists had done some informal calculations and figured out that at the price they were charging for the product demand was relatively inelastic, meaning the demand curve they face looks like this:
The economists recommended increasing the price because it would generate more revenue-- inelasticity means that the revenue effects of an increase in price outweigh the revenue effects of losing customers due to the higher price. (The percentage change in price is greater than the percentage change in quantity demanded.)
The company exists in a monopolistically competitive environment where its survival hinges on differentiating itself from competitors. A couple of departments within the company were concerned that competitors were catching up and wanted more funding to improve operations, upgrade their inputs and quality, etc. An increase in price would generate more revenue (and profit) for the company and allow them to increase investment in making their product better.
It's a no-brainer for a company to maximize profit. A corporation owes that to its shareholders, or to people who have a stake in the company succeeding. (Studies have found that corporations don't maximize profits as we assume in Economics 101, but that's a different story.) In this case a simple increase in price would do the trick.
However, the board of directors of the company vetoed the proposal. They argued that an increase in price causes a loss of customers and that that is all that matters. Indeed, if you look at the second graph above the law of demand says that some customers will be lost. But revenue (and profit) will increase, which should be the goal of the management.
The management decided instead to improve its bottom line by cutting costs. So, areas in need of investment got funding cut, workers promised pay increases were told to wait a while, etc. It's "belt-tightening" time in a company that has already determined it has one of the tightest belts in the industry and in the face of an obvious solution on the revenue side.
In this company's case they will keep customers in the short-run but potentially lose them in the long run as they forego much-needed investment to make their product better. Management has sent the message that they are either shortsighted or have goals that don't make sense. If the goal is just to maximize customers, why not just lower the price (or offer it for free)? With an inelastic demand curve lowering price means, of course, losing revenue, but by refusing to increase price the management has made it clear they're not interested in revenue anyway. By forgoing an opportunity to improve their product, they're signaling they don't care much about the long-run for the firm. By "belt-tightening" in the face of an easy solution on the revenue side management puts its economists-- and indeed all of its employees-- in a very awkward position.
(The reasons why this story is blog worthy will have to wait until another day.)
Saturday, January 15, 2011
The cartoon strikes me as problematic for a couple of reasons.
1. It assumes everyone has the same idea about Economics 101-- as if it's common sense.
2. It implies that a now Republican-led House will reinstate economic principles as they purportedly wish to do with the Constitution.
First, what was the idea behind reading the Constitution? The Tea Party made repeated statements about returning to the ideas of our founders--as written in the U.S. Constitution. This is problematic for several reasons, as outlined by Michael Lind of Salon.com in his piece "Let's stop pretending that the Constitution is sacred." He points out that most countries, and our own 50 states, have either greatly amended or even replaced their their constitutions completely over the last 250 years.
"The U.S. Constitution is not the stone tablets of the Ten Commandments, and James Madison and John Adams were not Lycurgus and Solon."Lind later pointed out that many Republicans were violating the Constitution that very day by taking the floor without being sworn in.
I forwarded the article to a friend who is a conservative House staffer with a history degree. He agreed with almost all of Lind's outline.
Conservative David Frum pointed out that the House didn't read all the portions about slavery in the Constitution (because they've been amended irrelevant). If the Tea Party really wants to get back to the ideas of our founding fathers, then slavery has to be included.
Begin to see the problem with worshiping a man-written document? The Constitution was written in an America of quite a different context than today. Legislatures and courts have struggled to make it work as America has changed for over 200 years. The argument that we should "go back to the Constitution" is the same as saying "we should get rid of everything on written our books after 1787," and it's just not very intelligent.
Now, what about a reading of Economics 101? Given that our newspaper is conservative in its leanings, I purport that to mean Economics 101 supports conservative economic principles. But we can learn a lot in Economics 101 that sounds like socialism to some Tea Partiers:
- Government has an obligation to correct negative externalities. That means subsidizing things like education and the National Science Foundation while taxing things like gasoline and carbon. Subsidies and taxes are transfers of income and wealth, anathema to the Tea Party.
- It's okay for governments to run deficits during economic downturns. If it cuts spending and lays off workers during a recession it will create an even worse downturn by increasing unemployment and further decreasing tax revenue.
- It's okay for a central bank to boost the money supply during a downturn. Milton Friedman would have supported the Fed's efforts.
- Free trade is better than some trade which is better than no trade. But Republicans, and Tea Partiers in particular, are more anti-trade than Democrats now.
Tuesday, January 11, 2011
So, my sister-in-law's family in Atlanta is snowed in. But maybe even they don't know how dangerous the "weather bomb" is. Here to help them understand is Steve Osunsami of ABC World News (ep: 1/11/11), who lives in Atlanta. Osunsami did the feature story on the snow storm and ended with this ominous note:
"Health officials...point out that the weight of the snow that falls on your driveway could be equal to the weight of a car, so people should be careful."
What exactly does that statement mean? I should be careful not to let the snow from my driveway fall on me or else I'll be crushed? That if I'm the size of a driveway I shouldn't stand outside and let 7" of snow fall on me? That I should be concerned about my driveway because it may not be designed to hold the weight of a single car? That I shouldn't tunnel under the snow in my driveway because if it collapses I could be crushed...?
(I think what he meant was that if you're shoveling all of it, it will be heavy. I think the people shoveling their driveways can figure that out, like any exercise. Why this would concern "health officials," who also say we don't get enough exercise, is beyond me).
Note that Osunsami and his camera crew also visit a family that is unable to leave the house to buy milk because the roads are bad. Yet, Osunsami and his crew were able to drive to their house to film them! Hopefully Steve brought them milk when he visited.
I get the hardship, Atlanta doesn't have the hardware to clean this up quickly. But the reporting above seems a bit incomplete. (But not as bad as the incoherent story Sharyn Alfonsi did on ESP last week. At times like these I turn ABC off and wait for PBS NewsHour to come on. SMH.)
Paul Krugman in today's NY Times:
The point is that there’s room in a democracy for people who ridicule and denounce those who disagree with them; there isn’t any place for eliminationist rhetoric, for suggestions that those on the other side of a debate must be removed from that debate by whatever means necessary.
And it’s the saturation of our political discourse — and especially our airwaves — with eliminationist rhetoric that lies behind the rising tide of violence.
Where’s that toxic rhetoric coming from? Let’s not make a false pretense of balance: it’s coming, overwhelmingly, from the right. It’s hard to imagine a Democratic member of Congress urging constituents to be “armed and dangerous” without being ostracized.On the other hand, the Wall Street Journal reported back in 2008:
Mobster wisdom tells us never to bring a knife to a gun fight. But what does political wisdom say about bringing a gun to a knife fight?
That’s exactly what Barack Obama said he would do to counter Republican attacks “If they bring a knife to the fight, we bring a gun,” Obama said at a Philadelphia fundraiser Friday night. “Because from what I understand folks in Philly like a good brawl.”Whatever happened to that Obama guy? Did he get ostracized, as Paul suggests he would? My view: We should and do condemn people for their crimes, not for their metaphors.
And David Brooks on PBS NewsHour last night:
"I have no great love for Sarah Palin. I have no great love for the Tea Party movement or the anti-immigration movement.
But to say that their speech was somehow responsible or created or contributed to the killing of those people, including a 9-year-old girl, to me, that wasn't only irrelevant; that was irresponsible. And that is what I saw all weekend."--------
Me: I ditto the above. Matt Yglesias wrote several posts in the last year arguing that political rhetoric isn't any more charged today than it was in the 1700s. That doesn't mean it's okay, just that it's nothing new. And we haven't seen much connection to actual violence.
From everything I read and see in the exhaustive news coverage the shooter fits the profile of a paranoid schizophrenic-- turning in geometric doodles as homework, rants about government mind control, etc. His neighbors and classmates were terrified of him. The New York Times reported that when he had political views, they were left-wing, not right. There has been no evidence that a single political issue-- health care, immigration, etc. -- set him off. So all of the high-handed rhetoric and comparisons to Oklahoma City are ridiculous. The best comparison is perhaps to that of Sirhan Sirhan, as James Fallows (no conservative himself) points out.
Saturday, January 08, 2011
I think making it completely through Phase 2 and over halfway through Phase 3 was a good accomplishment. During the late fall I would do an occasional Jillian's Shred but didn't work out much and got out of shape. I kept my weight in check, though (I lost some weight immediately following P90x due to loss of muscle mass).
Upon returning from the fattening holidays, I did a full week of Phase 1, which is the first time I'd done Phase 1 full-out without any modifications after having done nothing for a while. It was more brutal than ever, my numbers stunk, but it felt great.
I love P90X, it's been a great investment for me. But it's time-consuming. Every workout is at least 60 minutes plus you typically need time to shower and recover and that eats away at doing other things. My plan is to do it every other day so that I can get more things checked off my list in the off-days.
I also highly recommend the blogs and newsletters on their website. The P90X Newsletter has all kinds of eating tips and recipes.
Wednesday, January 05, 2011
But this year we decided to spring the $20 for a subscription to The Atlantic in print. According to this recent New York Times profile, their business model is working and I'm a representative customer. The magazine is 153 years old, so it's a national treasure. It covers a wide variety of topics and, as the Times piece says, "has long enjoyed a certain intellectual cachet," so it appeals to me. But it bled money for years trying to figure out how to operate in an online world. Then they figured it out:
"Since 2005, revenue at The Atlantic has almost doubled, reaching $32.2 million this year, according to figures provided by the company. About half of that is advertising revenue. But digital advertising — projected to finish the year at $6.1 million — represents almost 40 percent of the company’s overall advertising take. In the magazine business, which has resisted betting its future on digital revenue, that is a rate virtually unheard of. "
There are almost 5 million online visitors a month to the main website, millions more to The Atlantic Wire, and now The Atlantic holds conferences that are symposiums for popular thinkers and policymakers.
The irony is that the growth occurred when The Atlantic management decided to remove the paywall and make everything free online. So, if it's free, why do I pay for it?
1. I pay to have the material delivered in a way that I like. I like the photos on paper, I like seeing the advertisements to know what the target demographic is, I like flipping the page.
2. I pay because everything is free. I feel like I'm supporting a cause. I love knowing that part of my subscription goes to fund their bloggers like Ta-Nehisi Coates. Have you seen his blog? It's my guilty pleasure; he lives in the comments and it's like a community there. The other Atlantic bloggers are famous in their own ways.
I use The Atlantic Wire heavily as it's a repository of what everyone is talking about. Want to know what every major blogger or columnist thinks on an event that happened today? You go there to find the links and summaries. It's a wonderful service that makes me happy.
Apparently I'm not alone in my feelings because their revenue has been increasing even in the midst of a recession.
I don't have enough time to read all the things I wish I could, my Instapaper backlog is a testimony to that. But The Atlantic is always worth reading. I learn about topics I never would have bothered thinking about. So, it's coming to my house this year.
Saturday, January 01, 2011
From a distance, Cairo looks like a large town. There are several tall buildings and wide streets. But once you enter the town you realize those buildings haven't been occupied for decades. Everything is either burnt out or boarded up. The roads are mostly empty. The signs and billboards are decades old and advertise places that no longer exist. There are not many storefronts. It is a ghost town.(CC) FLICKR/RBMAN
According to Wikipedia, Cairo's population peaked at 15,203 in 1920. It was a bustling town and a center for railroad and water commerce. It had served as an important Union staging area during the Civil War. Now? The 2000 census lists the population at 3,632 and declining rapidly, the 2009 estimate was 2,996.
Time.com did an article last February about a recent attempt by some young people to open a coffee shop in the town, the first new business to open there in 4 years. We drove by that coffee shop and it is clearly closed with "for sale" signs up now.(CC) FLICKR/GOBUCKS2
On the street I saw drug dealers and the only native vehicles I saw were police cars. The census indicates that the population is predominately black and heavily impoverished. According to Wikipedia,
"the Cairo school district has the highest percentage in Illinois of children in poverty, 60.6%, which ranks fifteenth highest in the United States."
Apparently, Cairo has a history of racial strife. This sad history is recorded in a musical CD effort by Stace England, chronicled by NPR in 2006. Here is a website recounting the history of Cairo--"Death by Racism." Lynchings were seemingly commonplace in the early 1900s. Natural disaster and economic depression caused further during the 1930s. The late 1960s and 1970s saw organized civil rights protests and more violence. Tragically, as African Americans boycotted businesses, the businesses closed up and never returned. (CC) FLICKR/SLACK-A-GOGO
Southern Illinois University's School of Journalism launched The Cairo Project to research and encourage development in Cairo. One researcher found:
"Though most people blame the violence in the 1960s and 70s for Cairo’s economic decline, I found that it was really part of a general decline throughout the 20th century.
… In my research I found that the economic boycott in the 60s and 70s (many white business owners chose to close their businesses and move away rather than hire black employees) was really the final death knell of a town that had already been in decline since the 1920s, well before the Great Depression."
The people in Cairo seem used to being a sort of spectacle, people come to tour their ghost town, shake their heads, and leave. Here is a YouTube clip of the town (note the bridges at the end, driving across these doesn't make me as nervous as they used to and Elias loves them):
I was appalled by my brief drive through the town, I've only seen anything like it in former Soviet Union republics. Never in America.