Thursday, January 31, 2013

Mini Manx

Why revive a dead language that almost no one (except on the Isle of Man) ever spoke?  Oh, government employment, maybe;
Recession in the mid 19th Century forced many Manx residents to leave the island to seek work in England. And there was a reluctance among parents to pass the language down through the generations, with many believing that to have Manx as a first language would stifle job opportunities overseas.
There was a decline in the language. By the early 1960s there were perhaps as few as 200 who were conversant in the tongue. The last native speaker, Ned Maddrell, died in 1974.
The decline was so dramatic that Unesco pronounced the language extinct in the 1990s.
But the grim prognosis coincided with a massive effort at revival. Spearheaded by activists like Stowell and driven by lottery funding and a sizeable contribution (currently £100,000 a year) from the Manx government, the last 20 years have had a huge impact.
Now there is even a Manx language primary school in which all subjects are taught in the language, with more than 60 bilingual pupils attending.  
Wait for it.

Donna Long, a lifelong resident of the island, has four sons who all attend the Manx-language school. She thinks that having her children learn Manx as well as English is a hugely positive experience for them.
"Our friends think that it's a slightly eccentric decision to send all our boys there but they all really enjoy it," she says.
"The best thing is that it will hopefully unlock their brain to learn other languages easily too. They were all completely bilingual in Manx and English by the age of six.
"I don't think Manx will ever be useful outside of the island but I certainly think that in terms of getting jobs, if they do stay on the island - particularly in the public sector - then attending this little jewel of a school and being fluent in Manx can never be a disadvantage."
Emphasis by HSIB. 

Wednesday, January 30, 2013

Basel toff

Charles Calomiris is back, and loaded for bearish (on the likelihood of an improved banking regulation environment);
Unfortunately, I am not optimistic about the prospects for meaningful reform. Politically powerful market participants (borrowers and lenders) are short-sighted – more interested in the next few years of benefits they can extract than in the long-term efficiency of the banking system. 
This would be a good paper to read in conjunction with the recently reviewed The Fateful History of Fannie Mae, by James R. Hagerty. That book provides a wealth of detail (in a mere 200 pages) that supports many of Calomiris' assertions;
In the decades leading up to the recent banking crisis, regulators and supervisors consistently failed in three key areas: (1) they did not measure banks’ risks credibly or accurately, or set sufficient minimum equity capital buffers in accordance with those risks so that banks would be able to absorb potential portfolio losses reliably, (2) they failed to enforce even the inadequate capital requirements that they did impose because supervisors consistently failed to identify bank losses as they mounted, and thus allowed banks to overstate their levels of capital, and (3) they failed to design or enforce intervention protocols for timely resolution of the affairs of weakened banks to limit the exposure of taxpayers to protecting the liabilities of feeble, “too-big-to-fail” banks.
Calomiris is talking about banks in the above, but the same general complaint can be made about Fannie Mae and its regulators while it grew from insolvency in the 1970s into the dominant player in mortgage finance.  Fannie was 'a powerful market participant'.

At one time it was the largest borrower in the country, behind only the Treasury.  At the same time it was absurdly overleveraged, and got there (and stayed so) because of the short term incentives that Fannie executives, its regulators and major politicians faced to allow it.

It's easy to understand Calomiris' cynicism, but that hasn't stopped him from proposing a regulatory reform approach that might improve matters.  Which would be much different from the current Basel-centric ones;
The implicit theory behind these sorts of initiatives, to the extent that there is a theory, is that the recent crisis happened because regulatory standards were not quite complex enough, because the extensive discretionary authority of bank supervisors was not great enough, and  because rules and regulations prohibiting or discouraging specific practices were not sufficiently extensive.
Instead, Calomiris would opt for the virtue of the simpler, the more transparent;
The need is not for more complex rules, and more supervisory discretion, but rather, for rules that are meaningful in measuring and limiting risk, hard for market participants to circumvent, and credibly enforced by supervisors. These qualities are best achieved by constructing simpler rules that are grounded in an understanding of the incentive problems of market participants and supervisors/regulators. At the heart of the failure of regulatory discipline has been the failure to address the basic incentive problems of market participants –which benefit by gaming the system to increase the amount of risk they take at taxpayers’ expense – and supervisors and regulators – who are subject to acute short-term political pressures to keep credit flowing and long-term political pressures to favor the interests of particular borrowers and lenders. 
He goes on to propose 7 measures (click on the link to read them).  Calomiris fans will not be surprised to see that contingent capital (CoCos) are among them.

Jean Baptiste, call your office

Your law--that supply is implicit demand--has just been rediscovered by Hylke Vandenbussche and Jozef Konigs;
Domestic French firms without any international activity benefit from import protection and see their domestic sales rise while exporters, especially those belonging to a global network, lose sales relative to unprotected firms. More in particular we find that antidumping protection raises firm-level domestic sales of non-exporters by 5%. For exporters, we find that antidumping protection lowers their exports abroad by about 8% and this fall is not compensated by an increase in exporters’ domestic sales, which also fall by around 4%. At the product level, extra-EU French exports drop by 36% while total extra-EU exports fall by 21%. We verified that these results are not driven by retaliation policy, endogeneity or the choice of control group.
Say's Law; an oldie, but a goodie.

Pocket change

In Zimbabwe, they manage to eke out a living, but don't go expecting anything like an election;

Zimbabwe's Finance Minister Tendai Biti has said that the country only had $217 (£138) left in its public account last week after paying civil servants.
However, he said that the following day some $30m of revenue had been paid in.
Mr Biti told the BBC he made the revelation in order to emphasise that the government was unable to finance elections, not that it was insolvent.
Polls are due this year, with President Robert Mugabe's Zanu-PF fighting Mr Biti's Movement for Democratic Change.
Mr Biti has previously complained that diamond mining companies have not been paying revenues to the government.
The power-sharing government set up in 2009 ended years of hyperinflation by using the US dollar, but the economy remains fragile.
Yes, well the US economy, which also uses the dollars is a bit fragile itself right now.

Tuesday, January 29, 2013

Es verdad

Vegetable rights activists, small boys and Taco Bell's advertising agency, unite!  You have nothing to lose but your lunch;
A big government study has fingered leafy greens like lettuce and spinach as the leading source of food poisoning, a perhaps uncomfortable conclusion for health officials who want us to eat our vegetables.
....What jumped out at the researchers was the role fruits and vegetables played in food poisonings, said [Dr Patricia] Griffin, who heads the CDC office that handles food borne infection surveillance and analysis.
About 1 in 5 illnesses were linked to leafy green vegetables - more than any other type of food. And nearly half of all food poisonings were attributed to produce in general, when illnesses from other fruits and vegetables were added in.
It's been kind of a tough month for vegetables. A controversy erupted when Taco Bell started airing a TV ad for its variety 12-pack of tacos, with a voiceover saying that bringing a vegetable tray to a football party is "like punting on fourth-and-1." It said that people secretly hate guests who bring vegetables to parties.
The fast-food chain on Monday announced it was pulling the commercial after receiving complaints that it discouraged people from eating vegetables.

How Fannie Grew (fin, probablement)

It should be stressed that James R. Hagerty's The Fateful History of Fannie Mae: New Deal Birth to Mortgage Crisis Fall is not an anti-government polemic.  Not even an anti-government sponsored housing one.  It's a serious work of scholarly journalism (which is not actually oxymoronic) that details the history of the evolution of that institution.

That said, Housing Cause Denialists will hate it.  Not because Hagerty promotes Fannie (and the other GSEs) as the great villain in the recent economic unpleasantness, but because of all the facts marshaled to show just how big and influential the GSEs had become.  It beggars belief that we could have had a housing bubble without the participation of Fannie and Freddie.

As Hagerty shows, the FMs ran the show for mortgages.  Fannie's software sat on desks of brokers and bankers throughout the country, so it determined who got a loan and who didn't.  Especially after the demise of the Savings and Loans around 1990.  The FM's standards became the industry standards.  They, at one time in the 1990s, owned or guaranteed half of all mortgage loans in the U.S.

Many influential people saw the risk in this (especially their low capital/high leverage model), including Alan Greenspan, David Stockman, Fed vice-Chair Preston Martin, Senator Phil Gramm, Treasury's Larry Summers and Gary Gensler, the WAPO's economics columnist Robert Samuelson, and financial analyst Josh Rosner, who warned (2001); The virtuous circle of increasing home ownership through greater leverage has the potential to become a vicious cycle of lower home prices due to an accelerating rate of foreclosures caused by lower savings....

But all those voices were defeated by the lobbying arm of Fannie Mae.  Which managed to co-opt even Paul Volcker (hired as a consultant to assess its own capital adequacy in 1990).  CEO Franklin Raines commissioned the Fannie Mae Papers written by economists Joseph Stiglitz and Peter Orzag that defended Fannie's risk models and claimed the danger of a taxpayer bailout to be near non-existent (2002).

It might have been the greatest lobbying offensive in U.S. history.  It worked because the benefits of the arrangement to Fannie Mae and its army of consultants, the realtors, builders and lenders, the political activists promoting affordable housing, were concentrated and easily visible to those beneficiaries.  They had powerful incentives to defend their privilege.

Not so the potential--now, after the housing bubble has burst, actual--costs.  Those were dispersed among tens of millions of taxpayers who had lives they could (and had to) live in ignorance of the machinations of the politicized class.  Which is how it was allowed to happen, pretty much the way Buchanan and Tullock predicted back in 1958.

Monday, January 28, 2013

How Fannie Grew (III)

(This is a continuation of a lengthy review of James R. Hagerty's book, The Fateful History of Fannie Mae.)

The inflationary 1970s came close to destroying Fannie Mae, as the rising interest rates for the short term money that it needed (under its business model) to fund its fixed rate long term (30 year) home loans made it technically insolvent by something like $11 billion.  But, the election of Ronald Reagan in 1980 provided Paul Volcker with the cover to arrest double digit inflation, and after a couple of years interest rates began to decline.  Fannie was home free (for awhile).

One measure of its newfound health was that its return on equity jumped from under 10% in 1986 to 33% by 1990.  It had attained that figure by high leverage, under the standard that it made the least risky home loans.  But, that standard wouldn't last.

When Fannie's CEO, David Maxwell retired in 1991, he took a lump sum pension distribution of $20 million.  Which caught the attention of a lot of people, including the 'housing activists' (one of whom, in a very minor role, being Barack Obama).  Those activists' argument that Fannie and Freddie should be serving low income borrowers, not the well-heeled who could fend for themselves, had new resonance politically.

In short order, the country saw the GSE Act of 1992, which increased the goals of 'affordable home loans' from the 30% that had been compromised on with the Carter Administration, to eventually over half of the FM's lending in the 21st century.  In addition, after Bill Clinton assumed the Presidency, we got his 'housing initiative' to increase the percent of Americans who owned their own homes.  Most notoriously, under HUD Sec'y Henry Cisneros (himself later to make millions of dollars as a housing entrepreneur), the Best Practices Initiative.

The BPI was, in all but name, the Community Reinvestment Act of 1977.  That act hadn't applied to non-bank lenders.  Now, with Democrats in control of both houses of congress as well as the Presidency, Cisneros had a talk with the President of the Mortgage Bankers' Assn, Angelo Mozillo and gave him the option of either 'voluntarily' signing on to HUD's program, or having the CRA extended to  them.  An astute reader can guess what Mozillo and his group decided to do.

The stage was set for the housing bubble.

Sunday, January 27, 2013

How Fannie Grew (cont.)

As we said in the previous post, James Hagerty has produced a gem of exposition of Public Choice Economic theory--though whether he knows that isn't obvious in his text.  The Govt. Sponsored Enterprise known today as Fannie Mae was created in 1938 by FDR, as a minor bit of law to give a boost to the private mortgage market.  Certainly not to replace that market.

It probably should have been put away (as the Works Progress Administration or Civilian Conservation Corp) in the 1940s, as by the end of WWII its raison d'être (the Great Depression) was long since gone, if not forgotten.  However, the closest thing to eternal life, it is often said, is a government program.  Fannie Mae not being an exception.

Constituencies grow up around these programs and they are loath to see the goose fly away with its golden eggs. With the end of WWII,  newly civilian-ized GIs wanted housing, and Fannie Mae was looked upon as a way to provide the funds for it.  Which it did, thus growing even more established (and further from its New Deal roots).

With a change to a Republican presidency after 20 years of FDR and Harry Truman, it might have been thought possible to finally get the federal government out of the business of buying private sector mortgages. Dwight Eisenhower found otherwise.  The entrenched interests couldn't be overcome, even though a new charter, in 1954, for Fannie stated that it should only give 'supplementary assistance' to the mortgage market.

It wasn't until the budgetary pressures on LBJ from the Vietnam War that Eisenhower's idea of privatizing Fannie Mae came to be.  But, not exactly, private.
Therein, the seeds of the 21st century's financial crisis.

More to come.

Saturday, January 26, 2013

How Fannie Grew

Like a little acorn into a mighty oak.  But a blighted oak, according to James R. Hagerty's new The Fateful History of Fannie Mae, which packs an amazing amount of history into a little over 200 pages of  non-technical, very readable prose.

The Wall Street Journal reporter has produced (in its first half) a near masterpiece of an object lesson in Public Choice Economics that would have made the (recently) late Nobel prize winning James Buchanan pleased to see his theories validated.  Born during the New Deal of FDR as the Federal National Mortgage Association (FNMA) to backstop mortgage lending only in times when traditional lenders were retreating from that market, Fannie metamorphosed into the 800lb gorilla (along with its 'cousin' Freddie Mac) of the USA mortgage industry.

The most fateful development came in 1968 when LBJ found himself having to pay for not only his Great Society ambitions, but also the Vietnam War.  For Fannie to have continued as a govt agency would have been for its liabilities to remain on the federal budget, in addition to those obligations.  To have both his guns and butter, and his housing, LBJ needed to remove the latter as an official obligation of the taxpayers.

So, it was privatized...with special accommodations--ability to tap the Treasury for funds, exemption from state and local income taxes, exemption from registration and disclosure with the SEC, and no limits on how much of its bonds federally insured banks could hold.

It was an entity that was a not-by-accident waiting to happen.  And, along with Freddie Mac--created in 1970 by congress at the behest of the Savings and Loan industry--it eventually did.  For entirely predictable reasons; there was money available, and power to be exploited.  I.e., incentives inviting ambitious people to use the two Government Sponsored Enterprises for their own purposes, all in the name of a higher purpose; housing Americans.

That's the story Hagerty tells.  And he tells it well.

More anon.

Friday, January 25, 2013

Not your grandfather's geezer

More like the Get Up and Go (to work) Generation, says economist Timothy Taylor;
The proportion of U.S. adults who are "in the labor force"--that is, who either have jobs or are unemployed and looking for a job--has been falling for a decade,....But for one demographic group, the elderly, labor force participation is rising substantially.
....for men over age 62, rates of labor force participation were falling through the 1980s, bottomed out around 1990, and have been rising since then. For women, the pattern is a little different, because a much greater proportion of women entered the paid workforce in the 1970s and 1980s, and so compared with earlier generations, a larger share of women continued working into their 60s and 70s, too.
The rising labor force participation of the elderly in the last two decades represents a remarkable social change. ....Through the 1950s, 1960s, and 1970s, the notion that more and more people would retire earlier and earlier seemed like an inexorable social trend. But the patterns have changed--and they changed long before the Great Recession.
....a pattern of "keep living more years while working fewer years" was never a viable long-term option.
As millions of Europeans and American public employees are now discovering.

Por fin

It's the 21st century and the business of the Spanish people might finally get to;

The Cabinet on Friday approved a draft bill creating a single market that will allow companies and professionals in Spain to offer their goods and services across the country.
Under the proposed legislation, it will be sufficient for a company that has obtained a license from one of the regional governments to sell goods that comply with technical specifications to do so in the rest of the country.
The government said the bill is based on the concept of mutual confidence between administrations regarding their respective legislation, and mirrors the European Union’s own single market. The proposed law could clash with regional legislation.
Companies have been lobbying the administration to cut tape to remove impediments to setting up new companies. The Chambers of Commerce welcomed the move. “This will serve to relaunch the trade, industrial and productive fabric in Spain and increase competition,” the Chambers said in a statement.
The Chambers said there are currently more than 100,000 rules and regulations relating to business activities in the country, two thirds of which have been issued by the regions.

Super Bro'wl?

The NFL should be flagged for a flagrant late hit to a defenseless small businessmen for this;

The NFL pressured an Indiana man to give up his quest to trademark "Harbowl," even though the man might have had a legal right to do so.
Last February, Roy Fox said he spent more than $1,000 to file for the trademarks "Harbowl" and "Harbaugh Bowl," in anticipation that Jim Harbaugh's San Francisco 49ers and John Harbaugh's Baltimore Ravens might soon play in the big game.
....Fox said the league refused to provide him with any remedy. He first asked the league to reimburse him for his costs to file for the trademarks. He also asked for a couple of Colts season tickets and an autographed photo of league commissioner Roger Goodell.
He says the person within the league office he spoke to denied all his requests. After the language got increasingly more threatening, including one note that said the league would oppose his filing and seek to have him pay its legal bills, Fox eventually obliged.
....Whether the NFL would have had the legal right to Fox's trademarks is highly questionable, according to R. Polk Wagner, a professor at the University of Pennsylvania Law School, who teaches intellectual property.
"My view is that the league was being overly aggressive in their interpretation that his marks were confusingly similar to 'Super Bowl,'" Wagner said.

Thursday, January 24, 2013

Hit the Road, Tax

And don't come back no more, at the federal level, only at the state and local, says,  Rohit T. Aggarwala;

From 1956 to 1991, the objective was to build the interstate highway system. Then, the focus shifted to highway maintenance and transit. At this point, local interests became more important and the national mission faded. Absent a grand policy, earmarks kept every congressman invested in a big transportation bill; but these are no more.
As a result, “getting back our share” has become the key objective, so that every state now gets as much (or more) money in transportation grants as it pays in federal gas taxes. Along with the money, the federal government issues various rules for spending it, many of which require the states to put in some of their own money, too. It’s common to hear state transportation officials say that the feds provide 25 percent of the money and 75 percent of the hassle.
Eliminating the federal role would enhance state autonomy and streamline decision making. What’s more exciting is that it would also lead to more and better spending on transportation.
By making governors and state legislators respond to the wishes of their constituents where they live.  What an idea!

Go Fish

New Zealand sets the trend for American fast food, and can barely contain its glee;

McDonald's used the Dollar Menu to help lift its profit in the latest quarter. Now the world's biggest hamburger chain is turning to a pipeline of new menu items to boost slumping sales, starting with
"Fish McBites."
The company is betting that it will be able to beat back intensifying competition and economic pressures with the lineup, which executives said includes new burgers, chicken entrees and breakfast offerings that are performing well in test markets.
The Fish McBites, which will come in three sizes and use the same Alaskan pollock used in the Filet-O-Fish, are set to be launched as a limited-time addition in February.
McDonald's NZ spokesman Simon Kenny said there were no short term plans to bring Fish McBites to New Zealand, but the company would be watching to see how it went in the US.
"Interestingly, Chicken McBites was a product developed in New Zealand and Australia, that was then picked up by other McDonald's markets, including the US," said Kenny.
And fish do come from down under. 

Wednesday, January 23, 2013


Back in 2009 a little dispute arose between some well known names in economics over the housing wealth effect.  Peter Coy at Business Week did a good job summarizing;
The wealth effect theory, which says that rising home prices stimulated Americans to spend more during the boom years, has been cited frequently by Federal Reserve Chairman Ben Bernanke, and it’s built into the Fed’s main macroeconomic forecasting model. The theory seemed to be corroborated in a 2005 paper by Karl Case of Wellesley and [Yale's Robert] Shiller—the namesakes of the Case-Shiller home price indices, among other badges of honor—and John Quigley of Berkeley.
Today, on, there’s an important posting that denies the existence of the effect. It’s called“The (mythical?) housing wealth effect” and it’s by Charles Calomiris of Columbia and Stanley Longhofer and William Miles of Wichita State. It summarizes a June National Bureau of Economic Research working paper by the authors with the same title.
Calomiris et al. argue their case on both theoretical and factual grounds. In theory, they say, the only people who should be expected to experience a positive wealth effect from rising prices are those who expect to sell their houses soon to cash in. Renters who had hoped to buy should actually experience a negative wealth effect, as they realize they’ll need more money than ever to buy. And people in the middle—most of us—should be neutral. Furthermore, they say, it’s possible that even if consumption does rise when home prices go up, it doesn’t have to be a cause-and-effect relationship. It could be, for example, that both consumption and housing are rising in response to an increase in expectations for future incomes.
Digging into the data, Calomiris et al. reanalyze the Case-Quigley-Shiller data and conclude that there is in most cases no statistically significant effect on consumption from housing wealth once you control for other possible contributions to consumption changes. (The working paper explains how they did this using instrumental variables—read it for yourself if you’re interested.)
I was able to reach Shiller at his office at the height of summer vacation season and he had several top-of-the-head responses, which I will now relay pretty much unfiltered:
“I’m the most behavioral of the three authors on our paper, so this is me speaking: The effects of housing wealth operate through animal spirits rather than cold calculation. … It seems to me that part of the effect is through people’s general sense of the world.”
Which is not very satisfactory as a rebuttal.  But, Case and Shiller are finally back...and are sticking to their guns.  Though no specifics are mentioned that would invalidate the Calomiris et. al. criticisms (the NBER paper is gated).

We eagerly await the next round.

Mo' is a fickle player

Mayor Kevin Johnson finds that when in need of friends with millions, he's a friend indeed;

"Let me be very clear," he said to a crowd of several hundred jammed into the lobby of the Sacramento City Hall, many wearing Kings jerseys and carrying banners and signs. "We are going to do everything that we can to create an environment where we can keep what's ours, our team, here in Sacramento."
Johnson hopes to do that by putting together a group to make a counteroffer to the reported $341 million (to purchase 65 percent of a team valued at $525 million) the Seattle group led by Chris Hansen has agreed to pay.
At the news conference, Johnson announced that 19 local investors had pledged to contribute at least $1 million to become part of an ownership group the city hopes to assemble. A 20th was said to have emerged later in the day.
Thought of calling Phil Mickelson? Maybe it would be easier to find deep pockets to invest in NBA franchises if California wasn't imposing a 13% state income tax on them.

Tote dat barge, lif' dat bale

According to economists Bernard Hoekman and Selina Jackson there are big gains to the trading world if we can make Johnny more Friendly;

Even when tariffs are zero, if firms confront high and uncertain border costs and inefficient and unpredictable logistics they will not be able to compete with firms in other countries that benefit from operating in a more efficient economic environment.
Recent research has shown that the different dimensions of national logistics efficiency – as measured by the World Bank’s Logistics Performance Indicators – are the most important determinants of the trade costs that prevail between any given pair of countries (World Bank 2012). Improving Logistics Performance Indicators performance would reduce average bilateral trade costs ten times more than an equivalent percentage reduction in average tariffs (Arvis et al. 2013). The key factor for the ability of a country to participate in supply chains is the efficiency of local trade facilitation and logistics services. Every extra day it takes in Africa to get a consignment to its destination is equivalent to a 1.5% additional tax (Freund and Rocha 2011).
Which would seem to argue for eliminating privileged positions that have the effect of impeding, or driving up the cost of, the movement of goods.  As does this;
A key problem highlighted by the [World Economic Forum] case studies is that many different policies and administrative procedures can artificially ‘break’ the supply chain by introducing discontinuity and affecting reliability. Supply-chain efficiency is not simply about trade facilitation at the border; it also involves the ability to invest in facilities and protect intellectual property, and the costs of complying with regulatory requirements regarding health, product safety, security, etc. The exercise of market power by a dominant entity that controls access to key services or a lack of competition may hinder the functioning of some parts of a supply chain; examples include port operations, airport cargo handling and freight transport providers. 
Emphasis by HSIB.

Tuesday, January 22, 2013

Perish the thought

Berkeley's David Card and Stefano Dellavigna have been making lists of the goings on at top economics journals (and checking them at least twice), finding some things naughty and some nice;
...we present a descriptive overview of trends among the papers published in the 'top five' economics journals: The American Economic Review (AER), Econometrica (EMA), the Journal of Political Economy (JPE), The Quarterly Journal of Economics (QJE), and The Review of Economic Studies (RES).
For starters;
...the total number of articles published in the top journals declined from about 400 per year in the late 1970s to around 300 per year in 2010-12. The combination of rising submissions and falling publications led to a sharp fall in the aggregate acceptance rate, from around 15% in 1980 to 6% today. Currently, QJE is the most selective of the top-five journals, with an acceptance rate of around 3%, followed by JPE and RES, with acceptance rates of around 5%. The least selective of the top-five are AER andEconometrica, with acceptance rates of around 8%. 
Which could be bad news for younger scholars;
Over time, and especially during the last 15 years, it has become increasingly difficult to publish in the top five journals. Other things equal, this suggests that hiring and promotion benchmarks based on top-five publications (e.g., “at least one top-five publication for tenure”) are significantly harder to reach.
 On the brighter side;
...the number of authors per paper has increased monotonically over time. In the early 1970s, three quarters of articles were single-authored, and the average number of authors in a paper was 1.3. By the early 1990s, the fraction of single-authored papers had fallen to 50%, and the mean number of authors reached 1.6. Most recently (2011-2012), more than three quarters of papers have at least two authors and the mean number of authors is 2.2. This shift worked to partly offset the decrease in the number of articles published per year. Indeed, weighting each paper by the number of co-authors, the number of authors with a top-five journal article in a given year is somewhat higher today than in the 1970s or 1980s. 
And, you can always start a blog.

Wimp out from the fairway

Phil Mickelson says incentives matter...then regrets speaking about a 'private' matter; taxation;

Phil Mickelson says he should have kept his opinions on taxes to himself.
Mickelson had suggested "drastic changes" were in store for him - perhaps moving from his native California - because of changes in federal and state taxes that he says tap into more than 60 percent of his income. He said it "absolutely" was a factor in deciding against becoming part of the San Diego Padres' new ownership group.
The four-time major champion didn't back away from his outlook, only his decision to talk about it.
"Finances and taxes are a personal matter, and I should not have made my opinions on them public," Mickelson said in a statement released late Monday night. "I apologize to those I have upset or insulted, and assure you I intend to not let it happen again."
 If the governments took 100% would that still be a private matter?

Someone open the cheese locker?

C'est l'externalité;

A foul-smelling cloud of gas escaped from a factory in northern France on Tuesday, making life unpleasant from the outskirts of Paris to Britain's shores and prompting scores of emergency calls.
France's Interior Ministry released a statement saying the mercaptan gas escaping from the Rouen chemical factory is harmless. Among other uses, mercaptan is added to otherwise odorless municipal gas to alert people of leaks. The factory has been shut down, and environmental authorities are carrying out tests.
While authorities reassured residents no to worry, winds carried the smell across hundreds of square miles.
Police in the coastal English town of Hastings reassured residents in a tweet with the hashtag "noneedtopanic" that mercaptan from Rouen was the likely cause of the odor.
Worse than what came ashore in 1066?

Monday, January 21, 2013

Free to Schmooze

We have to wonder what 'Unconscious Capitalism' would be;

In “Conscious Capitalism,” [John] Mackey’s first book, the 59-year-old founder and co-CEO of Whole Foods Markets offers nothing less than a full-throated psalm for the power of free markets to create value and lift humanity.
Yet at its core, and true to Mackey’s ability to avoid those hard-and-fast labels, the book also delivers a pointed critique on how capitalism can lead business astray if its practice isn’t grounded in a sound ethical foundation.
“If everybody is always calculating what’s to their advantage, and no one comes with generosity, or kindness, or compassion, or forgiveness — higher virtues — your society starts to break down,” Mackey said in an interview at his company’s Austin headquarters. “I actually think that’s what’s happening in America right now.”
For much of American industrial history, Mackey said, free-market capitalism was underpinned by a sense of Judeo-Christian values.
Capitalism is simply choice.  Adam Smith's famous insight that no one enters into an agreement unless they think that by doing so they will improve their situation. Mackey's company sells one of the necessities of life (food), and no one is forced to buy it from him--and at the prices he charges, it's amazing that many do--they have options. 

If one wants to decry non-'Judeo-Christian values', there are plenty of candidates at which to aim, but they wouldn't be honest businessmen merely offering products and jobs to people who are free to reject the offers.

Super, Bro!

Fraternal rivalry has probably never been given the publicity we're in for the next two weeks (since the idea of Baltimore v. San Francisco isn't exactly compelling);

Some siblings try to beat each other in backyard games. John and Jim Harbaugh will do it in the biggest game of all. Yes, get ready for the Brother Bowl.
It'll be Harbaugh vs. Harbaugh when Big Bro John's Ravens play Little Bro Jim's 49ers in the Super Bowl at New Orleans in two weeks.
As much chatter as there will be about the players involved — from Ravens linebacker Ray Lewis and his impending retirement to 49ers quarterback Colin Kaepernick's sudden emergence — the Harbaugh family angle will make this coaching matchup the most scrutinized in the nearly half-century of Super Sundays.
The Harbaughs' sister, Joani Crean, wrote in a text to The Associated Press: "Overwhelmed with pride for John, Jim and their families! They deserve all that has come their way! Team Harbaugh!"
Who's a parent to cheer for?
The big story will be, 'Who did mom like best?' 

Sunday, January 20, 2013

No sólo de pan

In Spain it's all out war on the bread maker who can deliver el pan;
The mastermind behind the "Valencia bread wars" has lost the mother ship. On December 21, the regional health department shut down José Navarro's main bakery in Ribarroja as a "precautionary measure."
These premises baked most of the 50,000 loaves that were delivered each day to other branches in the Valencia area. Navarro's bread had become famous in the region because it was being sold at 20 cents, a quarter of the regular price at other bakeries.
As a result, people were standing in line for hours to buy his cheap baguettes.The competition had accused Navarro of selling at a loss and of starting a price war that would signal the demise of many small bakeries in Valencia.
Let them eat la torta!


A small, faraway country of which we know little, has a tradition to uphold;

Austrians have voted overwhelmingly in favour of retaining compulsory military service.
With all votes in the referendum counted, except postal ballots, 59.8% voted to keep the draft with 40.2% against, the interior ministry said.
The issue has divided politicians in the coalition government.
Supporters of change said a professional army would be more effective - critics said it would put Austria's cherished neutrality at risk.
Austrian men must serve six months in the army or nine months in civilian service when they reach 18.
Increasingly few European countries demand compulsory military service. France abandoned conscription in 1996, and Germany in 2011.

Friday, January 18, 2013

Low rent

In China there is a market for boyfriends since unmarried women can be harried by their families, but it may not be seen a the role of a lifetime;

"I offer such a service only because I'm bored and know fewer female friends at work," said Ding Hui, 27, a salesman in the plastic industry in Shanghai, with a monthly salary of more than 10,000 yuan ($1,600).
He leased himself twice last year during Spring Festival and National Day.His customers were two 28-year-old women.
He charged 3,000 yuan each, and the customer had to cover his round-trip tickets, accommodations and bought him clothes to make him look smart.More than 260 rent-a-boyfriend services can be found on, with the number climbing.
An anonymous female netizen, who claimed to have rented a boyfriend, said on the website: "My parents are very satisfied, so that my pressure is greatly reduced."
Another comment reads: "It's good that I've fulfilled the wish of my parents".
Ding said trust building is very important, and the job is all about acting, which proved to be tough for him.
"I was exhausted as I had to flatter others for seven days and had to think before I spoke. I don't want to do it anymore," he said.
That's show biz.


Beware of Keith bearing gifts (if you're Barack Obama or a House Democrat).  So you say you want an increase in the debt limit?
The president wants a very large increase in the debt ceiling—he and his team have demanded either no limit at all, or a five-year increase, which means at least a few trillion dollars. His obvious goal is to punt the issue past the 2014 midterm election. Yet if he has to ask Congress for a new increase every few months, the spending problem his administration has exacerbated in his first term will dominate the policy agenda—when he wants to work on other issues.
Republicans should let them have it, good and hard;
He can have a long-term debt-limit increase if he agrees to cut spending, or he can have repeated, short-term increases without spending cuts. If the president continues to dodge the country's long-term spending problem, the solution is to force him to ask Congress every few months to give him the authority to borrow more while facing questions about why he refuses to restrain spending.
And, the Republicans will only  have to provide about 20 of the votes in the House to make it happen.  The President will have to get House Democrats to provide the bulk the 'yes' votes.
It's hard to overstate how much members of Congress in both parties hate to vote for a debt-limit increase, and how entitled to ducking the vote House Democrats feel because they're in the minority. The point of this strategy is to force Democrats to take responsibility for more borrowing without spending cuts, over and over again.
Sir Humphrey Appleby would smile.

Thursday, January 17, 2013

(Mucho) Dinero Tren

El tren in Spain rains money mostly on the politically connected (as elsewhere in the world);

"You won't find a single economist who agrees with the investment in high-speed railways," says [Barcelona University's Daniel] Albalate, adding: "It's possible that the engineering sector has been helped, although French and German companies have benefited most. We now have some knowledge and experience about managing high-speed rail routes, which is not surprising given that we have more kilometers than any other country, apart from China. But we have not generated any wealth through this enormous investment."
Spain's commitment to high-speed railways has impacted negatively on conventional rail routes, as well as the transport of goods by rail: less than four percent of all goods in Spain are carried by rail, compared to Germany's 22 percent, or the EU average of 18 percent. High-speed rails cannot be used by other trains, and are designed exclusively for carrying passengers, an approach that other countries avoided. Routes that can carry high-speed and conventional trains have a top speed of up to 250 km/h. "Opting purely for high speed has meant cutting routes in the regions. We have created a transport network for business passengers," says Albalate. In short, billions of euros have been spent to save 15 minutes on a journey time.
This is a country mired in a deep recession, causing the Spanish government to cut spending on virtually everything...except its high speed trains. For what One travel writer has described ... as "a journey to nowhere, albeit quickly."

Hoax me once

Gets you into the BCS Championship game where you can imitate a defense, but a make-believe romance?

A US college football star is in the spotlight for the wrong reasons after his story of a girlfriend who died of cancer turned out to be a bizarre hoax.
Notre Dame linebacker Manti Te'o, 21, said her death had inspired him to lead his Indiana team on its march to the national championship game.
But he stunned the sporting world on Wednesday night by admitting that his partner, Lennay Kekua, never existed.
Notre Dame said the player had been duped by an online and phone romance.
Then there were those play-action passes...

But Te'o can take solace that the current occupant of the White House had the same problem;
Obama biographer David Mariness discovered that a scene with a white girlfriend portrayed in the Obama book Dreams From My Father never happened. Obama says it was another girlfriend, and that he was combining several girlfriends into a “composite” character.
Funny that that didn't get much attention from the nation's journalists.

Wednesday, January 16, 2013

Movin' on up

To the northside, is the easy answer to global warming say Klaus Desmet and Esteban Rossi-Hansberg; it's what humans have done in the past;
...we argue that the world has seen climate change before, and how it adapted then – when modern adaptive strategies were not available – may provide valuable lessons for the challenges we face today....
The Medieval Warm Period prompted changes in trade patterns and led to important movements of people:
  • During the 12th and 13th centuries – pre-dating Ricardo’s famous example of comparative advantage – England was exporting wine to France, and vineyards were found as far north as southern Norway.
With these warmer temperatures, population density in the Nordic countries increased and the Norsemen ventured out, settling first in Iceland and later in Greenland and even parts of Newfoundland....
Works for us.

Best things in China are freed

According to three economists--Amit Khandelwal, Peter K. Schott , and Shang-Jin Wei--eliminating textile import quotas in the US, Canada and the EU was a twofer;
The institutions that manage trade barriers are subject to corruption, imposing additional distortions. This column shows that in China, the government misallocated quota licenses permitting firms to export. When the US and EU abolished quotas governing textile exports in 2005, China experienced productivity gains not only from the actual elimination of the quota but also from the termination of the misallocation due to inefficient licensing.
Which they did by comparing exports before and after the abolition of the barriers, and found what good economists would expect;
...we find that the post-quota export growth and price declines of quota-bound versus quota-free goods [from the previous quotas] are dominated by [new] entrants rather than incumbents. Furthermore, we show that the entrants behind this trend are primarily privately owned domestic and foreign firms, and that their growth comes at the expense of state-owned enterprises, who are on average nearly a third less productive than their private-sector counterparts. Additional evidence of misallocation comes from the fact that nearly two-thirds of the price decline observed in the year quotas are removed is due to entrants rather than incumbents. These trends provide strong evidence against the hypothesis that quota licences were allocated on the basis of firm efficiency.
I.e it eliminated the advantages of bribery. So there are gains to be had even in excess of what some trade models predict.

All grown up, and threatening to...

Cast doubt on the validity of the 'science';

The findings of the National Institutes of Health study of 112 children appears to challenge the widely held belief that autism is a lifelong condition.
While not conclusive, the study, in the Journal of Child Psychology and Psychiatry, suggests some children might possibly outgrow autism.
But experts urge caution.
Much more work is needed to find out what might explain the findings.
We'll bet it will be much, much, much more (highly paid) work.
Dr Deborah Fein and her team at the University of Connecticut studied 34 children who had been diagnosed with autism in early childhood but went on to function as well as 34 other children in their classes at school.
Start Quote
On tests - cognitive and observational, as well as reports from the children's parents and school - they were indistinguishable from their classroom peers. They now showed no sign of problems with language, face recognition, communication or social interaction.
Round up the usual hostages.

No business like show business

As in give them one to sate the political hounds;

JP Morgan booked profits of $5.7bn (£3.6bn), up 54% on the $3.7bn the bank made a year earlier.
It also said the total 2012 pay for boss Jamie Dimon would halve from 2011.
He will receive $11.5m, which includes a salary of $1.5m - unchanged from 2011 - and a bonus of $10m in share options, down 54%.
No, that's not an error.  JPM rewarded its CEO for increased profits by cutting his compensation!  The reason being all the adverse publicity given to losses in one department at JPM.

Which would be like Tom Brady being benched by Bill Belichick for throwing an interception in one game this season.

Some enterprising reporter ought to investigate what it took JPM giving to get Dimon not walk to another bank where his talents would be better appreciated. 

Better living through arbitrage

Share the wealth?

A security check on a US company has reportedly revealed one of its staff was outsourcing his work to China.
The software developer, in his 40s, is thought to have spent his workdays surfing the web, watching cat videos on YouTube and browsing Reddit and eBay.
He reportedly paid just a fifth of his six-figure salary to a company based in Shenyang to do his job.
Which is what everyone does who isn't growing his own vegetables, but buys them at a grocery store. All that is missing is the security concerns.

Tuesday, January 15, 2013

Beau Geste

Gary Cooper we are coming?  The foreign legion is on the march;

Troops from a regional West African force will be in Mali within days to help a French intervention against Islamist rebels, Nigeria says.
The force's commander, Gen Shehu Abdulkadir, confirmed the move to the BBC as West African military commanders met in Mali's capital, Bamako.
France has almost 800 troops in Mali, and another 1,700 involved elsewhere.
It began its intervention last Friday with the aim of halting the Islamists' advance south.
And Timbuktu is free again;

French warplanes have carried out a series of air strikes on Islamist positions since the intervention began on Friday.
The raids continued overnight, with President Francois Hollande saying they had "achieved their goal".
....Islamists are reported to have pulled out of Gao and the historic town of Timbuktu, two of the big population centres that they overran in the north last year.
One resident in Timbuktu said the population was "free". "We can go out, we can smoke, people are happy," he told BBC Focus on Africa but added that people were too scared to go out on the streets and openly celebrate.
Louis Reynaud was unavailable for comment.