Seeking reliable, objective sources on economics and energy-policy issues
John Gruber linked a video that looks very interesting – but we can’t view it in Australia. If you know an alternative for Aussies please leave a comment:
ABC News’s exclusive behind-the-scenes look at Foxconn’s Apple product factories. I thought it was both fair and fascinating. Absolutely worth watching.
The Kindle edition of John Taylor’s book has been reduced to only USD 2.40 in honor of the third anniversary of the crash of 2008. John Cochrane supports Taylor’s diagnosis of the causes of the 2008 crash – a run on questionable investment banks:
John Taylor took the trouble to respond to Paul Krugman’s latest outrage on the sources of the financial crisis. Taylor’s post — along with the deeper analysis he points to — is well worth reading.
Krugman’s calumnies are so nonsensical I generally do not find it worth responding.The idea that I now like stimulus is simply preposterous if you bother to read what I write about it. The idea that I or John Taylor don’t think there was a run is even more preposterous. And to top it off, Krugman writes “Anyone else have the impression that something happened in the second half of September 2008?” I mean really, accusing Taylor and myself of thinking that nothing happened in September 2008? Are Krugman’s readers such simpletons that they fall for such unvarnished falsehoods?
Taylor did us a service by taking the time to straighten this one out.
Yes there was a run.
(…)The insight that it was a run is central to my view of how to fix things. If it was a run, echoing, as Krugman says, Friedman and Schwartz’s view of the Great Depression, then some of Friedman and Schwartz’s conclusions are surely warranted! No, this was not some mysterious failure of capitalism and we need to have the Fed run everything under Dodd-Frank. No, this does not require that we save every big institution and protect them from competition and failure forever. This was one run very like the many runs and panics we’ve seen throughout history.
Our run was in the shadow-banking system. I recommend Darrel Duffie’s “Failure mechanics of dealer banks,” the article and the book Once you read these, you naturally see simple ways in which we can fix bankruptcy law and run-prone assets in place of Dodd-Frank. How, exactly? That’s a subject for another post — actually a long series — coming up.
Yes it was a run. And that fact leads directly to some very un-Krugmanlike conclusions.
(If you want to read what I actually have written so far about this issue it’s all here. I’m teaching a class this week on financial crisis — we’re going to spend a lot of time on Duffie and Gary Gorton’s analysis of the run in repo markets.)
Tyler Cowen echoing Scott Sumner — so I will echo Scott one more time as I think this message is extremely important. Both US and UK have completely lost the plot on how to accelerate out of a recession – it is monetary policy that has power, fiscal policy is a weak tool, and to work must have easy monetary policy anyway.
From Scott Sumner, but endorsed by me in full:
Take the current situation in the UK. If I’m not mistaken, the British political system is different from that in America. British governments are basically elected dictatorships, with no checks and balances. Even though the Bank of England is independent, the government can give it whatever mandate it likes. If I’m right then both fiscal and monetary policy are technically under the control of the Cameron government.
So I read the UK austerity critics as saying:
“Because you guys are too stupid to raise your inflation target to 3%, or to switch over to NGDP targeting, fiscal austerity will fail. We believe the solution is not to be less stupid about monetary policy, but rather to run up every larger public debts.”
Is that right? Is that what critics are doing?
Some will argue that my views are naive, that Cameron would be savagely attacked for a desperate attempt to print money as a way of overcoming the failures of his coalition government. Yes, but by whom? Would this criticism come from Ed Balls? Perhaps, but in that case he would essentially be saying:
“It’s outrageous that the Cameron government is trying to use monetary stimulus to raise inflation from 2% to 3%, whereas they should be using fiscal stimulus to raise inflation from 2% to 3%.”
I’m sorry to have to repeat this over and over again, but what 99% of pundits on both sides of the Atlantic are treating as a debate about “stimulus” and “austerity” is actually a debate about stupidity. I’m not saying the pundits are stupid (Krugman certainly understands what I’m saying) but rather they are addressing their audience as if the audience was stupid.
Don’t talk down to Cameron and Osborne! Don’t say “austerity will fail.” Say “austerity will work, but only if the BOE becomes much more aggressive, otherwise it will fail.” That sort of advice would be USEFUL. Instead we are getting a bunch of pundits getting ego boosts because they can say “I told you so.”
Scream it from the rooftops!
A new $10 million X PRIZE: a self-contained medical diagnostic device. What shall we call it? Hmm… Tricorder has a nice ring to it! Seekerblog is a big fan of science prizes as a vehicle for kick-starting R&D. When a science prize works (think DARPA Grand Challenge), all of us enjoy a public good which was developed by private investment. Even the prize is privately funded. We hope this X PRIZE is a big success.
You can follow progress of the prize competition at The Qualcomm Tricorder X PRIZE Blog.
It’s 3 a.m. Your child is crying and screaming about an earache that has gotten progressively worse all day. Her temperature has been steadily rising and is now at 103°. What do you do now? Head to the hospital? Take her to a pediatrician? Get some Advil and wait it out? But would that interfere with a medication that she might get later at the ER or Urgent Care?
By the way, she is still crying while you are trying to figure this out.
Imagine an alternate universe, one where you take a small sample of her saliva and insert it into an attached sensor on your smartphone. There it gets analyzed, and – bing – on your 3×5-inch screen, it reassures you by telling you:
“Sadie has another ear infection. Please give her some Ibuprofen, because she may react to the aspirin like she did last time this happened in August. The nearest Walgreen’s is two blocks away, and has a prescription filled for a topical antibiotic that should begin to address symptoms within three hours. Her pediatrician has an appointment available tomorrow at 3 p.m. Would you like me to schedule you for this time?”
The Tricorder X PRIZE FAQ is a good source of background information on the competition goals and rules.
The Qualcomm Tricorder X PRIZE is a $10 million global competition where teams will compete to develop solutions capable of diagnosing a set of 15 conditions and capturing metrics for health. Conditions include common ailments and costly diseases, and range from strep throat to sleep apnea to colon cancer. Ultimately, this tool will measure and individual’s health state through a plethora of wireless sensors, imaging technologies, and portable, non-invasive laboratory replacements. Ongoing measurement will enable collection of large volumes of data, enabling powerful computer algorithms combined with artificial intelligence to see patterns of sickness and health not previously possible.
This looks like smart policy:
A series of research and development (R&D) projects has been launched by China’s National Energy Administration (NEA) to improve the country’s emergency response capabilities at nuclear power plants in the event of an extreme disaster.
The NEA said that the projects are aimed at improving safety-related technology employed in Chinese nuclear power plants, taking into account lessons learned from the Fukushima accident in Japan.
A total of thirteen R&D projects are to be conducted by China National Nuclear Corporation (CNNC), China Guangdong Nuclear Power Corporation (CGNPC) and the Institute of Nuclear and New Energy Technology in cooperation with Tsinghua University. Engineers and researchers will work to develop advanced nuclear power safety technology through targeted research and plant site analyses, the NEA said.
The R&D projects will include the development of passive emergency power supply and cooling water systems, as well as development of passive containment heat removal systems. The projects will also analyse the impact of multiple simultaneous external events and response measures. Research into beyond design basis earthquake and external flooding, as well as measures for the prevention and mitigation of used fuel accidents will also be conducted. Projects will also cover beyond design basis accident mitigation equipment and systems, while others are aimed at developing hydrogen control devices and emergency rescue robots. Other projects will study the monitoring and treatment of contaminated ground and water.
All the projects are expected to be completed by 2013. According to the NEA, implementation of the results will improve the safety of China’s second-generation nuclear power plant technology by lowering the probability of large early radioactive releases and reactor core damage.
Researched and written
by World Nuclear News
Alex Tabarrock offers some remarkable history on Marginal Revolution. Talk about a natural experiment!
In our principles textbook, Modern Principles: Macroeconomics, Tyler and I illustrate the importance of property rights with the incentive effects of collective farming and the secret agreement of Xiaogang village. We write:
Farmers from 18 households in Xiaogang signed a secret life-and-death agreement ending collective farming with their thumbprints. (From Cowen and Tabarrok, Modern Principles: Macroeconomics)
The Great Leap Forward was a great leap backward – agricultural land was less productive in 1978 than it had been in 1949 when the communists took over. In 1978, however, farmers in the village of Xiaogang held a secret meeting. The farmers agreed to divide the communal land and assign it to individuals – each farmer had to produce a quota for the government but anything he or she produced in excess of the quota they would keep. The agreement violated government policy and as a result the farmers also pledged that if any of them were to be killed or jailed the others would raise his or her children until the age of 18. [The actual agreement is shown at right.]
The change from collective property rights to something closer to private property rights had an immediate effect, investment, work effort and productivity increased. “You can’t be lazy when you work for your family and yourself,” said one of the farmers.
Word of the secret agreement leaked out and local bureaucrats cut off Xiaogang from fertilizer, seeds and pesticides. But amazingly, before Xiaogang could be stopped, farmers in other villages also began to abandon collective property. In Beijing, Mao Zedong was dead and a new set of rulers, seeing the productivity improvements, decided to let the experiment proceed.
(…)
Via Tyler Cowen from Ricardo Hausmann:
Greece will have to bring its current account deficit down to zero at some point.
This can happen in two ways: either Greece exports more or spends less. Adjusting the current account by spending less would require an additional fall in GDP of 25 per cent, given that in Greece only one in four US dollars of spending cuts goes abroad. This is clearly not a pretty picture. But adjusting by raising exports would require they increase by 50 per cent, not an easy feat. Achieving it through tourism alone would require the industry to triple in size – an unlikely prospect.
And this:
Here’s the bad news for Greece: in our sample of 128 countries, it had the biggest gap between its current recorded level of income and the knowledge content of its exports. Greece owes its income to borrowed foreign spending it cannot pay back. It produces no machines, no electronics and no chemicals. Of every 10 US dollars of worldwide trade in information technology, it accounts for one cent.
This problem cannot be addressed by fiscal Keynesian stimulus, by bland trade facilitation or by paying lip-service to structural adjustment as the November International Monetary Fund agreement implicitly assumes.
‘This is a chance for my child to compete with families that have more money than me.’
Via John Gruber, Alan Schwartz, reporting for the NYT –
Mr. Edwards spoke on a White House panel in September, and federal Department of Education officials often cite Mooresville as a symbolic success. Overwhelmed by requests to view the programs in action, the district now herds visitors into groups of 60 for monthly demonstrations; the waiting list stretches to April. What they are looking for is an explanation for the steady gains Mooresville has made since issuing laptops three years ago to the 4,400 4th through 12th graders in five schools (three K-3 schools are not part of the program).
The district’s graduation rate was 91 percent in 2011, up from 80 percent in 2008. On state tests in reading, math and science, an average of 88 percent of students across grades and subjects met proficiency standards, compared with 73 percent three years ago. Attendance is up, dropouts are down. Mooresville ranks 100th out of 115 districts in North Carolina in terms of dollars spent per student — $7,415.89 a year — but it is now third in test scores and second in graduation rates.
“Other districts are doing things, but what we see in Mooresville is the whole package: using the budget, innovating, using data, involvement with the community and leadership,” said Karen Cator, a former Apple executive who is director of educational technology for the United States Department of Education. “There are lessons to be learned.”
Start with math lessons: each student’s MacBook Air is leased from Apple for $215 a year, including warranty, for a total of $1 million; an additional $100,000 a year goes for software. Terry Haas, the district’s chief financial officer, said the money was freed up through “incredibly tough decisions.”
Sixty-five jobs were eliminated, including 37 teachers, which resulted in larger class sizes — in middle schools, it is 30 instead of 18 — but district officials say they can be more efficiently managed because of the technology. Some costly items had become obsolete (like computer labs), though getting rid of others tested the willingness of teachers to embrace the new day: who needs globes in the age of Google Earth?
Families pay $50 a year to subsidize computer repairs, though the fee is waived for those who cannot afford it, about 18 percent of them. Similarly, the district has negotiated a deal so that those without broadband Internet access can buy it for $9.99 a month. Mr. Edwards said the technology had helped close racial performance gaps in a district where 27 percent of the students are minorities and 40 percent are poor enough to receive free or reduced-price lunches.
Others see broader economic benefits.
“Even in the downturn, we’re a seller’s market — people want to buy homes here,” said Kent Temple, a real estate agent in town. “Families say, ‘This is a chance for my child to compete with families that have more money than me.’ Six years from now, you’ll see how many from disadvantaged backgrounds go to college and make it.”
Unfortunately the NYT article has no depth – not a scrap of information on the methodology, what software, what content? E.g., are they using an Kahn Academy.
John Gruber reviews Isaacson’s biography. This is by far the most useful book review that we have seen. John closes with this:
(…) Note that my complaints here are not about Isaacson being insufficiently deferential. That the book is not a hagiography is to its credit. The personal stuff — documentation of Jobs’s cruelty (and histalent for cruelty), his tantrums, his tendency to claim for himself the ideas of others — that’s not problematic. Isaacson handles that well, and what he reports in that regard jibes with everything we know about the man. My complaints are about outright technical inaccuracies, and getting the man’s work wrong. The design process, the resulting products, the centrality of software — Isaacson simply misses the boat.
You could learn more about Steve Jobs’s work by reading Rob Walker’s 2003 New York Times Magazine piece than by reading Isaacson’s book, but even then we’re left wanting for the stories behind any of Apple’s products after the iPod. Isaacson’s book may well be the defining resource for Jobs’s personal life — his childhood, youth, eccentricities, cruelty, temper, and emotional outbursts. But as regards Jobs’s work, Isaacson leaves the reader profoundly and tragically misinformed.
Isaacson gives us the story of an asshole. But the world is full of assholes. What we need is the story of the one man who spearheaded so many remarkable products and who built an amazing and unique company.
Searching for facts on California’s actual coal-fired electricity consumption, I found the Milford et al report “Clearing California’s Coal Shadow from the American West” [PDF]. The latest data therein is 2004, when California’s coal-fired electricity consumption was about 20%. California politicians prefer to quote the “inside California borders” coal burning stats, which according to EIA data was around 1.2% in 2010. The strategy of the politicians has been to drive energy-intensive businesses out of the state, and to outsource the pollution associated with power generation so that other Western states can “enjoy” the coal mining and burning.
Far from the southern California beaches, the movie studios of Hollywood, and the Golden Gate Bridge, a fleet of coal plants in distant western states churns out power for the California market. These coal plants discharge vast quantities of air pollution, consume huge amounts of water and emit destructive global warm- ing gases. Some of the largest mining operations in the United States tear up the land to provide the coal they burn. While the power from these coal plants is transmitted many miles to customers in California, the pollution and environ- mental disturbances stay behind, sending a cascade of human health and environ- mental impacts across the American West and the globe. Although coal-fired electricity production accounts for a smaller share of California’s power mix than it does in other western states, the sheer size of the California market means that the Golden State’s consumption of coal-based power casts a long shadow over the American West.
(…) In 2004, coal plants located in the interior West supplied an estimated 20% of all electricity in California, which is twice the share that comes from renewables. Large quantities of air pollution are discharged from these coal plants.
(…) Coal-fired power plants owned by California utilities also consume precious water in the Southwest. The Navajo Generating Station and the Four Corners Power Plant each con- sume more than 8 billion gallons of water every year. The environmental footprint of coal-fired power plants further extends to the coal-mining operations that supply them. The Black Mesa-Kayenta mining complex, which supplies the Mohave and Navajo generating stations, is one of the largest strip-mining operations in the United States.
[From 
Recent Comments