Big bag of blogs

Adam Smith put forward the basic idea of the stationary bandit vs. roaming bandit applied to India. Basically the Britishers overseeing India who expected to leave again were there primarily to take as much they could get their hands on, while those who had a more permanent interest wanted to invest in the country and make it more prosperous. Trying to get the incentives of the temporaries to align was difficult, in part because of the more permanent leaders didn't understand their own interest perfectly either.

People who lived in East Germany were more likely to cheat than people who lived in West Germany.

Cass Sunstein's (and Sumner's) defense of utilitarianism. The most interesting line for me is this argument:

the enterprise of doing philosophy by reference to such dilemmas is inadvertently replicating the early work of Kahneman and Tversky, by uncovering unfamiliar situations in which our intuitions, normally quite sensible, turn out to misfire. The irony is that where Kahneman and Tversky meant to devise problems that would demonstrate the misfiring, some philosophers have developed their cases with the conviction that the intuitions are entitled to a great deal of weight, and should inform our judgments about what morality requires. A legitimate question is whether an appreciation of the work of Kahneman, Tversky, and their successors might lead people to reconsider their intuitions, even in the moral domain.

Large retail chains give higher wages, mostly because there are a lot more middle-management and support positions.

A description of how people lived in Britain 100 years ago. It makes for a fascinating comparison to show how much living standards have improved.

Why you should probably self-publish.

ECO 302: Big Bag of Market Monetarism

We're doing market monetarism in my intermediate macro class tomorrow morning. Here are the handout notes, minus some explanatory material. These are just a few of the things written in the last 45 days on the subject - making the class CURRENT, baby! - without themselves being an attempt to define and explain everything about market monetarism. The main topic is why current inflation rate and interest rate targeting is ineffective, supporting the MM view that we should target the forecast of nGDP growth.

FDR on the Recession: Monetary Targeting

From Rortybomb (via @TimHarford), some political comics of FDR as the grand architect of society. Normally this is a phrase that makes me shudder, but there is something very interesting about this picture. Notice pillar 7 of Pulitzer-Prize winning editorial cartoonist John T. McCutcheon, October 25th, 1933. Oh, wait, is it too small for you? Let's zoom in:











Pillar 7 translates as "target a particular price level" rather than an inflation rate. No inflation, which hawks ought to love; rules based; but in a circumstance like this would encourage the Fed to do a lot more easing than they have. As Rortybomb puts it:

Notice that Pillar 7 isn’t “Buy $X amount worth of Y” (like QE does) but “set the level.”  It’s not a floor or a step but a destination.  The cartoonist understands that the administration must do whatever it takes across all available monetary tools to get us to the targeted destination.

How do you know when the Fed is being successful?

The first question you should ask is: successful at what?

Sumner on the 1936 Fed:

This is one of the most chilling statements I have ever read.  The opening sentence is the sort of thing juvenile delinquents say to each other when their prank has gone horribly awry, and they are nervously working on a joint alibi.  An incredible effort at denial runs all through the piece.  First he admits that they raised reserve requirements because “some recession was desirable.”  Then he claims it was just a “coincidence in time” that the downturn followed the reserve requirement increase, even though the express purpose of the increase was to cause a “recession.”  Then he claims that if they reverse their decision it will look like the previous decision had caused the recession.  Then he said that a depression can’t be happening, because there is no good reason for a depression.  Well it was happening, unemployment rose to almost 20% in 1938.  In the end, they decided to stick with the high reserve requirements throughout the rest of 1937.

Sumner on the 1960's-70s Fed:

The Fed can always raise short term rates.  It’s true that this doesn’t always result in higher long term rates.  But that’s not a sign that monetary policy is ineffective, rather exactly the reverse.  The Fed raises short term rates to keep inflation down close to 2%.  If long term rates don’t budge very much, that’s a sign that monetary policy is credible.  In the 1960s and 1970s both long and short rates tended to rise together, hence increases in short rates weren’t enough to get ahead of the curve.  Real rates didn’t rise, as the Fed wasn’t following the Taylor Principle.  Because the “tight money” policies weren’t credible, inflation expectations rose.

Glasner on the September 2011 Fed:

In this environment small changes in expected inflation cause substantial movements into and out of assets, which is why movements in the S&P 500 have been dominated by changes in expected inflation.  And this unhealthy dependence will not be broken until either expected inflation or the expected yield on real assets increases substantially. ...

Operation Twist has almost certainly not been responsible for the rise in stock prices since it was implemented.

Why has the stock market been rising? I’m not sure, but most likely market pessimism about the sway of the inflation hawks on the FOMC was a bit overdone during the summer when the inflation expectations and the S&P 500 both were dropping rapidly. The mere fact that Chairman Bernanke was able to implement Operation Twist may have convinced the market that the three horseman of the apocalypse on the FOMC (Plosser, Kocherlakota, and Fisher) had not gained an absolute veto over monetary policy, so that the doomsday scenario the market may have been anticipating was less likely to be realized than had been feared.

Sumner on the August 2011 and January 2012 Fed:

My hunch is that I misjudged the Fed move back in August, when they promised low interest rates for the next two years.  That seemed pointless without making the promise condition on some sort of nominal growth target (GDP or inflation. Now there are indications that the Fed may do just that at the January meeting. ... It’s interesting that it took me so many months to have second thoughts about my negative verdict on the policy last August.  Equity investors seemed to need only about 30 minutes to figure this out (after the 2:15 announcement.)

And what should the Fed be doing? Here is Glasner arguing in favor of targeting nominal GDP over nominal wages - though both are highly correlated, targeting nominal GDP will avoid mistaking good supply shocks for contractions.

Development in India: The element of time

One of the main differences between those who advocate for more government intervention and less is the time scale involved. Those who tend to favor a bit more free market in their society tend to be thinking on a time scale of a generation or two while those who favor a bit more government tend to be thinking on a time scale of either 1 year or 100 years (depending on if they're an environmentalist or not). "Yes, that program will increase the growth rate, but people are starving today," say the one. "Yes, but lowering the growth rate means more people will starve in the future," say the other. Time plays many different roles:

Scrooge and a Big Bag of Christmas

Marron's Twelve Days of Christmas list for the global (but mostly US) economy, including 10 new Steve Jobses to rise and replace the fallen, 7 fed governors (we've been making do with 5 for the longest time) pushing for a 5% nominal GDP growth target, $3 trillion in budget cuts, and 2 new currencies (letting the Euro drop a couple countries).


Scrooge's name came from misreading the tombstone of Adam Smith's grandnephew? Are you sure this isn't a Dan Brown plot reject? If not, how about considering below the moral hazard of Scrooge:



In which a friend of mine tries to show a Pakistani a Currier and Ives Christmas, and ends up finding its deeper meaning with an Alaskan crab fisherman.


The First Presidency of the Church of Jesus Christ of Latter-day Saints included this in their Christmas message:

This joyful season will bring to each of us a measure of happiness that corresponds to the degree in which we have turned our minds, feelings and actions to the spirit of Christmas.May this Christmas season be a time of prayers for peace, for the preservation of free principles, and for the protection of those who are far from us. Let it be a time of forgetting self and finding time for others. 

C. S. Lewis on two types of causality, that of work and that of prayer: "Prayers are not always -- in the crude, factual sense of the word -- "granted". This is not because prayer is a weaker kind of causality, but because it is a stronger kind."


Delicious satire: a response to Band Aid's "Do they know it's Christmas?" is found in Plaster Cast's "Yes, We Do." (HT: Blattman)

Big Bag of Money and Macro

History a la Sumner: US monetary policy didn't change permanently in 1979 with Volcker's appointment. It happened two years later:

The tight money of late 1979 was not really all that tight, and it lasted very briefly.  By late-1980 monetary policy was highly expansionary, indeed perhaps the most expansionary in my lifetime.  Only in mid-1981 did the Fed seriously commit to tight money.

How highly expansionary? Well, nominal GDP grew by ... 19%. That's some pretty high inflation for you.


Friedman emphasized how monetary policy was not loose in Japan, despite low interest rates, and his arguments apply just as well here when it wasn't loose for the last 3-4 years (HT: Tabarrok):

 it shows how unreliable interest rates can be as an indicator of appropriate monetary policy. The Japanese bank has supposedly had, until very recently, a zero interest rate policy. Yet that zero interest rate policy was evidence of an extremely tight monetary policy. Essentially, you had deflation. The real interest rate was positive; it was not negative. What you needed in Japan was more liquidity. ... They can buy long-term government securities, and they can keep buying them and providing high-powered money until the high powered money starts getting the economy in an expansion. What Japan needs is a more expansive domestic monetary policy.

Fengler at the World Bank shows some sloppy thinking about food price inflation. Food prices are going up in Kenya, but that does mean it is inflation. Inflation includes increases in wages and other forms of income. If food prices go up 100% and wages go up 100%, how are people worse off? Instead, we see food prices going up 25% and other prices going up 10%. That suggests that there is really 10% inflation and real food prices are going up by another 15% on top of that. That isn't inflation. Inflation is a "tax" on savings, it's a "tax" on holding cash in the sense that your money doesn't buy as much as it used to, but it is a tax that can be imposed by the outside as in this case, unlike any other form of tax that exists.


Evidence that the stock market corrects prices from false information within 7 days.

The original story of what monetary policy looks like as a babysitting cooperative. I have a feeling this is going to make an appearance next semester in my intro macroeconomics course.

The value of nothing

Okay, let's pull out the old chestnut: An economist is someone who knows the price of everything and the value of nothing. Right, right, haha, boy you ignorant peasants sure do have a lot of common sense wisdom we lack thanks to years of studying.

Instead of bowing to the inevitability of the low forms of wit, let me argue the point by talking about the Paradox of Value. In the homework for intermediate micro, they are asked about why teachers are paid so much less than basketball players. The "common sense" conclusion is that our society's values are messed up: we value entertainment more than education.

This is nonsense and we've been talking about it since literally Adam Smith.

What were my students asked and what were my answers? Find out below the fold:

Countries we know not of

Tabarrok recommends Nothing to Envy, a book describing life inside North Korea. He provides this excerpt about a doctor escaping to China:

Dr. Kim looked down a dirt road that led to farmhouses. Most of them had walls around them with metal gates. She tried one; it turned out to be unlocked. She pushed it open and peered inside. On the ground she saw a small metal bowl with food. She looked closer – it was rice, white rice, mixed with scraps of meat. Dr. Kim couldn’t remember the last time she’d seen a bowl of pure white rice. What was a bowl of rice doing there, just sitting out on the ground? She figured it out just before she heard the dog’s bark.
Up until that moment, a part of her had hoped that China would be just as poor as North Korea. She still wanted to believe that her country was the best place in the world. The beliefs she had cherished for a lifetime would be vindicated. But now she couldn’t deny what was staring her plain in the face; dogs in China ate better than doctors in North Korea.

We've also been searching 200 years, apparently, for the economy I was taught about in my introductory economics class. You know, the one whose economy is run entirely by barter before the invention of coinage. Instead, Graeber argues that the first economies ran on credit money, with tablets recording monetary values of debt owed in order to keep track of who owned what without an actual coin responding to it:

As an anthropologist, it’s kind of a professional pet peeve. ... The spot trade, where it’s in the moment and you never see each other again, this is the opposite of any kind of exchange in primitive economies. In order to create the idea that life is just a series of exchanges we can all walk away from - a very antisocial notion of what people are about - you have to eradicate all obligations that people have to each other. ... Credit money is the original form....

A few monetary thoughts

I just read through Hamilton, Pruitt, and Borger's new piece in the AEJ:Macro. They come up with a method for estimating people's daily expectations both of economic outcomes and Fed policy. Sadly, they stop just short of the recent financial crisis. That would really have been the most interesting use: to see how people's expectations of Fed responses adjusted during the crisis. Ah well. Their more modest results for the 1994-2007 show that people do not expect the Fed to react as quickly to changing economic news but that when it does react, the reaction will be larger. Putting the two together makes the Fed's gradual policy changes destabilizing.

Quantitative Easing in the Great Depression - Five Second Beckworth

This QE program was put in motion by FDR telling the public he wanted to return the price level to its pre-crisis level.  In other words, FDR was signalling a price level target.

Among the measures taken were a devaluing of the price of gold from $20.57/ounce to $35.

Ryan Avent recently summed up QE2 very nicely.  He said QE2 changed the direction of monetary policy, but it didn't set the destination.  That is the problem.

Sumner added: QE did start in 1932, but Hoover opposed dollar devaluation and didn't set a higher price level target. Hence the policy was not credible. … The Fed was worried about inflation by 1936, and raised reserve requirements. Perhaps that could be viewed as an "exit strategy." This policy was similar in spirit to the IOR program. The Fed has indicated they might raise IOR as an exit strategy. And yes, the zero bound problem existed throughout much of this period, with T-bill yields near zero.

Romer’s wonderful analysis of what it means to have a “strong” dollar, recommended to me by economists on both the left and the right (yes, this is old, but I've been out for a while)

The Dark Side: bailouts and path dependence

(via Mankiw) “Our benchmark results suggest that the ARRA created/saved approximately 450 thousand state and local government jobs and destroyed/forestalled roughly one million private sector jobs. State and local government jobs were saved because ARRA funds were largely used to offset state revenue shortfalls and Medicaid increases rather than boost private sector employment. The majority of destroyed/forestalled jobs were in growth industries including health, education, professional and business services.”

 
Blattman refers us to the dark sideof path dependence: “Pogroms during the Black Death are a strong and robust predictor of violence against Jews in the 1920s, and of votes for the Nazi Party. In addition, cities that saw medieval anti-Semitic violence also had higher deportation rates for Jews after 1933, were more likely to see synagogues damaged or destroyed in the Night of Broken Glass in 1938, and their inhabitants wrote more anti-Jewish letters to the editor of the Nazi newspaper Der Stürmer.”

Cardon, commenting on Aid Watch’s citation of his work on development in the US South: “It was the structure of institutions and social capital that had built up around slavery that constrained the South’s ability to make a peaceful and prosperous transition. … Even when we get unambiguous changes from an Evil system (like slavery) to a Good system (like freedom), societies with a new Good system will be constrained by norms and social capital that have accumulated around the Evil system. … Someday, I want to write a paper in which I ask whether cotton was to the antebellum South as oil and diamonds are to some countries today: an exportable commodity that provides high incomes for elites but that masks the underlying pathological institutions."

LDS in Japan and elsewhere

One LDS missionary’s experience in the Japan quake:

For his part, Hiltbrand is itching to get back to the disaster zone.
“I really want to be in Tagajo helping people,” he says. “I have many friends in Tagajo and I don’t know how they are. I don’t know how they will clean it all up and I want to help.” ...

For example, under the direction of Branch President Brad Brough, members in Misawa donated food and warm blankets to those in need in nearby Hachinohe. Elder Holland [right] said that kind of caring is happening in wards and branches across the country.

MSNBC also praised Church efforts in Japan to supply aid, locate all members and missionaries, and prepare its people for just such emergencies so they can take care of each other and their communities.

Archeologists uncover 70 lead plates that COULD be authentic and, IF SO, COULD be quite significant as 1st century commentary on the resurrection and other Christian topics. IF they are what they appear to be, it would be another instance of people recording religion on metal plates, a phenomenon discovered in a number of places after Joseph Smith discovered the Book of Mormon on golden plates. At the time, the claim was that since no one had ever found metal plates before, the entire thing must be a hoax. Now that we know it was common, the claim is that there is no archeological evidence in favor of the Book of Mormon.

This year, the Church of Jesus Christ of Latter-day Saints’ Welfare Program turns 75. They are encouraging members everywhere to engage in a day of service this year to celebrate.

The Vietnamese governments’ comments on the LDS Church

The Africa West area of the church will be introducing internet access to many of its offices, about 64 locations.

Comparative Institutions

What is development and capitalist happiness, USSR edition:

When the Soviet authorities during the 1940s exhibited the 1940 movie The Grapes of Wrath as evidence of how miserable the poor were in capitalist America, it backfired.  What amazed the Soviet audiences was that the Joad family fled starvation by car.

A literature review on connections between agriculture, development, and health. Audibert concludes that the link from agriculture to economic growth is well established, but when agricultural projects are carried out they are not always managed appropriately to prevent the spread of diseases. Improving agricultural methods (e.g. integrated pest management) and investing in public goods (health and education) would significantly improve health and development outcomes. It includes a useful and detailed summary table at the end with numerous papers on the subject. Audibert, Martine (2011) “Endemic diseases and agricultural productivity: Challenges and policy response,” presented to AERC Biannual Research Workshop.
 

The World Bank is contemplating turning into a foundation to fund NGOs. I have several reactions. 1) I really don’t think this is the Bank’s comparative advantage. 2) They haven’t had the best track record in picking winning countries. How are they going to pick winning NGOs? 3) If it amounts largely to a greater willingness to work with NGOs, increase funding possibilities, and have an access route to work around governments, there might be some progress … but there’s going to be a lot of devil in those details. 

On institutional innovation and experimentation:

I for one was very surprised that the UN Security Council endorsed military action against Libya. This is big. I suspect the UNSC’s failure to act in Rwanda and the Congo, and to some extent Iraq, played a big role in their decision. That is institutional evolution in action. That makes me hopeful, because I think unified responses and moral authority matter. … On the other hand, if the world threatens and then backs down, or rewards the most thuggish leaders with coalition governments, we could move in the opposite direction.
The tricky thing: however they turn out, we’ll learn very little from the cases of Libya and Cote d’Ivoire. The effects and institutions will emerge over decades rather than years. So not only do we have low accountability, we have bad feedback.

That doesn't look like inflation

Inflation in the price of vote buying in Uganda … isn’t really inflation. The price of potassium iodide pills went up faster than any economy has ever done with the exception of Hungary in 1946 … and that’s not caused by monetary inflation either. Clever commenter “david” points out that when his local coffee shop increased the price from $0.95 to $1.05 between his purchase of two cups, the “inflation” rate was even faster.

FAO is hosting a series of workshops to help countries devise better strategies to deal with high food prices.

Sumner on learning from history

Most economists have in the back of their mind the idea that Keynes showed monetary policy was ineffective at the zero bound during the Great Depression.  How many of these economists know that by the end of 1933 (with near 25% unemployment) Keynes was complaining that FDR’s monetary policy was too inflationary.

More on monetary policy and the business cycle (K Smith via Sumner):

keep always in the front of your mind that a recession is not simply a series of unfortunate events.  A recession is when the economy produces less. For example,  the AIDS epidemic in Botswana is a horrible event for millions of people that uprooted lives and destroyed families and promises to leave a generation of orphans.

However, Botswana’s GDP growth didn’t turn negative until Lehman Brothers went under.

That a Global Financial Crisis could do what rampant death and disease could not, is an important indicator of the nature of recession.

Supporting this notion is … the history of natural disasters in Asia??

The tsunami of December 2004 and the Kashmir earthquake of October 2005 involved death and destruction on an even wider scale, yet had virtually no impact on growth rates. That was largely because the victims were mostly poor people who added little to GDP. But even the Kobe earthquake of 1995—the second-biggest ever to hit a modern urban area—had a surprisingly modest effect (see article). Within 15 months industrial production in Kobe had almost reached pre-quake levels, and Japan as a whole suffered only one quarter of declining output.

Catching Up: Humor and Miscellany

Imgaine if Republicans realized that we got Reagan confused with Eisenhower.... Would we hear comments like these? According to RNC chairman Priebus: “When I heard about Eisenhower's presidential accomplishments—holding down the national debt, keeping inflation in check, and fighting for balanced budgets—it hit me that we'd clearly gotten their names mixed up at some point.” Gingrich might say: "It's absolutely mortifying to suddenly realize that the man you had long credited as a champion of fiscal conservatism actually tripled the national debt and signed the largest peacetime tax hike in U.S. history." Yes, that's the Onion.

Elliephant recently discovered that I linked to their list of reasons why “you might be an economist if…” a while back and brought a drove of people here. In retaliation, here is some follow up humor from the comments:

Female economists reject single men.
"An economist is a surgeon with an excellent scalpel and a rough-edged lancet, who operates beautifully on the dead and tortures the living." -- Nicholas Chamfort

Learning economics through Monopoly: the perils of deregulation combined with wanton money printing leading to depression and bankruptcy. The excerpt at the link is easily the best part of the article to which it links.

What if you would be shot  if you couldn't do advanced mathematics under pressure?

Some remarkable pictures of the history of Judaism, Christianity, and Islam in Africa

Mormons in Africa series

The Church of Jesus Christ of Latter-day Saints put out a series of news reports last week on the church's activity in Sub-Saharan Africa. The Church's Africa Fact Sheet can be found here. There are nearly 320,000 Mormons in Africa, roughly 100,000 of them in Nigeria. The fact sheet also provides statistics for the church's humanitarian aid. The initiatives are described in more detail here and I regularly link to more information.

Elder Richard G. Scott, a senior member of the Quorum of the Twelve Apostles, visited Mozambique in January. In his last visit in 1999 there were 40 Mormons in Mozambique, while there are now over 5000. He spoke to members in several meetings, with some members traveling two days for a chance to be there, as well as to doctors and nurses teaching neonatal resuscitation techniques to 53,000 medical professionals so far. His message was one of hope, reassurance, and encouragement. Another apostle, Jeffrey R. Holland, prophesied in Burundi that “Africa will someday be seen as a bright land full of ... hope and happiness.” Several African Church leaders tell their stories here.

This article tells several personal stories: one from a rural family in Madagascar who spent 27 years searching for religious truth and two accounts from South Africa. One of them describes the love expressed by white and black members for each other during Apartheid:

Dominic had never seen that type of affection generated from a white person toward someone of darker skin. “You don’t understand how big that was, how amazing it was to see that — how shocking. It went against everything society had taught me.” ... He was baptized and started attending church and was again amazed by the acceptance he felt. “They taught the same thing to me as the white boy sitting next to me at church. That broke a lot of boundaries for me. That said to me in my heart and mind that we are equal.”

This is a first-hand account by an LDS Kenyan journalist. Another article talks in a very introductory way about the 7,000 members in Uganda. The fastest Church growth currently is in the Democratic Republic of Congo.

The Church runs a program called the Perpetual Education Fund which provides low-interest loans to help people to receive education, usually in order to secure better employment. PEF is helping 2,300 people in Africa so far. The average loan in Africa is $1,200 for a year of schooling. 570 people have finished their education with the program and have seen large increases in income. Funds come from donations by members, myself included, and is run by volunteers.

Most genealogical records are preserved orally in Africa. The Church's FamilySearch program is attempting to record and preserve these family history records. The article quotes a Ghanaian proverb: When an old man dies, it is as if a library has burnt down.

Well-Placed Skepticism

Easterly mourns that his and others' critiques are not heeded and the same, tired arguments appear in the same manner as before. In studying the effectiveness of aid criticism, he begins to despair of its usefulness. It's mostly the Millennium Villages Project not listening at the moment, with another, British-led MVP preparing to strike out in a non-randomized fashion in an area of Ghana chosen by the Ghanan government (endogeneity, anyone?).

Barder, who is much more optimistic about what aid accomplishes than Easterly, is also skeptical. He's skeptical that we even need to convince people that development is a good thing. Therefore, the arguments that we need more aid in the national interest are missing the target. People need to be convinced that the aid is effective, and then they jump in gladly, he argues from past focus group sessions. Part of that conviction comes from greater humility in promising what aid can do: we can build schools (ensuring high quality education is harder); we can vaccinate people; we can produce improved seed varieties ethically that increase production; we can do very specific, small-sounding interventions. "The more we defend aid mainly on the basis that it is in our national interest, the more likely it is to be bent to our short-term commercial and strategic interests, the more ineffectively it will be used, the harder it will be to demonstrate its benefits, and the greater the justification for public scepticism." The comments are well-worth reading, particularly the argument that the national interest argument is needed in convincing many US conservatives to work with multilateral organizations.

On net-positive spillovers from emigration (aka Brain Gain, the opposite of the Brain Drain).

Easterly has argued that it was a mistake to give so much aid to Egypt, though the evidence for the conclusion is nothing but a pie chart showing that a lot of aid went through government hands. Birdsall says the question is pretty difficult to answer. "As Nicolas van de Walle shows here, leaders get worse at leading the longer they stay. He recommends donors exit if a leader stays more than 12 years." But does that mean that things (which ones?) would be better in Egypt, Israel, and the Middle East if the US had stopped sending aid that direction 18 years ago? Or as Douthat puts it:

“But history makes fools of us all. We make deals with dictators, and reap the whirlwind of terrorism. We promote democracy, and watch Islamists gain power from Iraq to Palestine. We leap into humanitarian interventions, and get bloodied in Somalia. We stay out, and watch genocide engulf Rwanda. We intervene in Afghanistan and then depart, and watch the Taliban take over. We intervene in Afghanistan and stay, and end up trapped there, with no end in sight.”

Oh, and if you're going to forecast the future, make sure you aren't wrong in Romania just in case they decide to try you as a witch.

The Lighter Side of Miscellany 1

The streets of Ponte A Poppi in Italy have some colorful traffic signs, including angels, devils, and a crucified figure signaling a T-intersection.


Some economics haiku. Not included:
If you are so smart --
Understand how markets work --
Then why aren't you rich?

Warsh tells us the story of a wealthy economist: David Ricardo, inside trader. He learned the eventual outcome of the Battle of Waterloo early, told the English government of the glorious victory, and "Then he went down to his customary chair at the Exchange – and sold! Other traders, suspecting the worst, sold too, the prices of Treasuries tumbling, until at last, Ricardo reversed course and bought and bought and made a killing, his greatest coup ever, one that put even the Rothschild brothers in the shade."

The third in a series, Wondermark presents Socrates, railing against the written word as an abominable technological progres.

Socrates lays out an argument that the written word cannot defend itself in dialogue, and thus cannot effectively teach anything worth knowing. For only through banter, through back-and-forth discussion and rhetorical argument and the working out of problems, can true knowledge be conveyed. Reading mere words, in his mind, is akin to looking at a lake rather than swimming in it — or worse, looking at a lake and thinking that now you know how to swim.

The argument then happened in reverse as the telephone was going to destroy all the advantages of the telegraph, and today text messaging destroys the advantages of the telephone. 

Big Bag of Development

Quote of the day from before my birth:

In 1976, U.S. relations with Nigeria reached an all-time low in the face of a particularly clumsy American handling of the Angolan-Cuba-South African issue. Henry Kissinger, whose indifference to Africa bordered on cynicism, decided at last to meet Joseph Garba, the Nigerian foreign minister, at the United Nations. In a gambit of condescending pleasantness, Kissinger asked Garba what he thought America was doing wrong in Africa. To which Garba replied stonily: “Everything!” Kissinger’s next comment was both precious and, I regret to admit, true. He said: “Statistically that is impossible. Even if it is unintentional, we must be doing something right.”

An interactive map showing where the US is providing aid through its four largest programs.

CGD reviews how the policies it recommended to help Haiti have faired over the last year. The largets victories were in trade and debt relief, with migration and training issues heavily neglected and reforestation almost tried.


"China has lent more money to other developing countries over the past two years than the World Bank"

I was introduced this week to a wonderful new blog that stocks useful data resources for development: devecondata.blogspot.com. 27 data sets relevant for agriculture so far, over 20 for education, more than a dozen for democracy, politics, trade, geography and demography, 11 relevant for Africa, and lots more.

Bill Gates confesses: development is harder than I thought at first. Okay, the actual quote was that "We were naïve when we began."

Blattman credits big pushes with success in at least one area: disease eradication and reduction. He critiques an article claiming that malaria eradication is hopeless.

This Month in Food News

Rodrik notes how most development groups are a very dismal bunch: low food prices are bad for the poor and so are high food prices ... just for different groups of poor people. He argues that this accentuating the negative and living off bad news makes for bad public policy. Oxfam retorts that while they do point out who suffers from whatever is currently happening, this hasn't changed their policy recommendations. World Food Prize winner Pinstrup-Andersen, who has just begun blogging, also speaks out on the culture of negativity in a new post on Food Apocalypse Fatigue.