Showing posts from November, 2008

Thanksgiving prayer

Eliezer Yudkowsky : And as she said this, it reminded me of how wrong it is to give gratitude to God for blessings that actually come from our fellow human beings putting in a great deal of work. So I at once put my hands together and said, "Dear Global Economy, we thank thee for thy economies of scale, thy professional specialization, and thy international networks of trade under Ricardo's Law of Comparative Advantage, without which we would all starve to death while trying to assemble the ingredients for such a dinner as this. Amen."

Somali pirates capture huge oil tanker

Amazing. How long can this go on? The longer that shipping companies and their countries continue to allow ships being held hostage, the better equipped and organized the pirates will get; the longer their range will be; the more ships and the more valuable ships they will hijack; the higher ransoms they'll demand; and the more difficult they will be to eventually eradicate. These trends are already underway : The location of the latest attack, far out to sea, suggested that the pirates may be expanding their range in an effort to avoid the multinational naval patrols now plying the Gulf of Aden and the Arabian Sea. “I’m stunned by the range of it,” said Adm. Mike Mullen, the chairman of the Joint Chiefs of Staff, at a news conference in Washington. The ship’s distance from the coast was “the longest distance I’ve seen for any of these incidents,” he said. The vessel was headed for the United States via the Cape of Good Hope when it was seized, Reuters reported. [...] Only

Skilled, unskilled, unaware

A 1999 paper by Kruger and Dunning, Unskilled and unaware of it , has recently been receiving attention. In summary, they tested people on a few tasks while measuring their self-assessments, and found that the worst performers consistently rated themselves above average in the tested tasks. They attributed this effect to a deficiency of metacognitive skill in the worst performers, a conclusion that found resonance with many readers - including me at the time. But Robin Hanson points to Burson, Larrick and Klayman's 2006 paper which reinterprets Kruger and Dunning's work. They argue that the issue at work is not a metacognitive deficiency, but effectively that people tend to estimate their absolute performance in a task (how well they'll do on an objective performance metric), and do not compensate for that the task is either easy or difficult for everyone. Estimating absolute performance requires awareness of oneself and the task, whereas estimating relative performance

The clever rebooting by Windows Update

If I ever meet the guy who cleverly decided that, after automatically installing an update, Windows should reboot unless you explicitly postpone, even if you're doing other things on the computer, and cannot see the damn Postpone window - well, if I ever run into that fellow... I'm going to kick him in the balls, and I'm going to keep kicking until my foot hurts. Several times now, me and my wife have played games, and it has happened that Windows helpfully went and rebooted itself while playing . This is because no one clicked the Postpone button, you see, and if no one clicked that button, then obviously no one cares. The fact that no one sees the Postpone dialog because a game is running full screen, well, apparently that didn't enter anyone's equation. The manager responsible for this feature, please present yourself to Frigate Bay so I can kick you in the balls. Bring spare balls. I'll kick you once for each time this has happened. Yes. I know I can sw

"The case for forward-looking protectionism"

The Financial Times Economists' Forum published this bone-headed article by Ha-Joon Chang , a South Korean now at University of Cambridge, who studied under Robert Rowthorn, "a leading British Marxist economist". Among other things, Ha-Joon Chang calls for the U.S. both to employ some protectionist policies, as well as to encourage developing countries to make use of them to develop their fledgling industries; as if their own protectionism isn't part and parcel of what's been obstructing progress for developing countries in the first place. He also makes a pointless appeal to Alexander Hamilton, citing the weighty argument that he appears on the $10 bill (so his policies must have been good). Here's my response (currently awaiting moderation on FT): Trade barriers imposed by developing nations necessarily: (1) Help only those infant industries whose consumers are predominantly local. (2) Harm those same local consumers by restricting their access to more

They can't even cut the power right in St. Kitts

I wrote last month about how there was a fire in the St. Kitts power station that damaged two of the largest generators and cut the generating capacity in half. Thus began a period of power outages which started daily and prolonged (8-12 hours, depending on the part of the island) and which has recently improved to 2-6 hours per day or so, at least where we live (Frigate Bay). Of course, the day after the fire, officials were predicting how this load shedding would be necessary for about two weeks, but everyone who is familiar with how things work here knows that two weeks doesn't really mean two weeks. It means two months, or two years, or however long it takes. Whatever. Recently, they started cutting power to our area more frequently again. But there is an additional problem: instead of cutting power outright, as they should be doing, the voltage first drops, then rises again, then drops further, then rises. It takes about a minute, maybe two, for the power to really go. Mean

A question for Ron Paul (on Freakonomics)

Freakonomics has published the first part of Ron Paul's answers to their readers' questions. The guy strikes me as probably the most reasonable, clear-headed politician I've encountered. He seems almost like a Warren Buffett of politics, except that in politics, dishonesty is what's rewarded, so Ron Paul isn't doing very well. (He's doing well with about 10% of people who actually have a clue, but that will never include most voters . I wonder how many supporters he has in Detroit .) That having been said, though, I sincerely hope (but do not really expect) that - at least in the second part - he might get around to answering my question . Essentially, what I'm wondering about is this: Q: Do you believe that it is possible to make positive incremental changes to our monetary policy, entitlements, taxes, etc. within the system, or is it just a matter of waiting for failure and then coming in with a solution? A: Yes, I do believe we can make successful

The Bomb prevented a yet greater tragedy

Not to advocate the triggering of mass annihilation in anger, but it looks like the bombs that exploded over Japan in WWII - and caused it to surrender - might have saved more than they destroyed. By Joseph Coates in a comment to Hiroshima: The lost photographs : The use of atomic weapons for the first time on Earth by the U.S. against the Japanese Empire and its civilian cities has always been a frustrating horror for me. I am alive because of it. My father was an 18 year old kid (on a "great adventure") and unaware of the potential fate that would await him as he sailed with thousands of other soldiers in late October on a troop ship steaming across the South Pacific to invade Japan in Operation Olympic for "X-Day", as it was called. Instead of probably being wounded or more likely killed while landing on the heavily defended mountains and beaches of Ōsumi Province or Satsuma on the island of Kyūshū in a massive invasion that was to make D-Day look like a skirm

The economics of religion

I think a great issue to pursue, for a person of the kind that might have written Freakonomics, would be the economics of religion. We know that many religious leaders do not actually believe what they preach, but they preach what’s going to be well received by their audience. In this sense, religions are a bit like mainstream media. We don’t hear about “Oprah’s Mystery Man” because Murdoch thinks that everyone should know, we hear about it because they think it drives ratings. In a similar parallel, it would be interesting to investigate how much religious policies are ratings-driven. How well would a Pope be received if he told everyone “I reconsidered, it is okay to use condoms”? Or if he said that “a regulated market in human organs would be okay”? Already, the Catholic Church is more tolerant and more science-friendly in its views than many Christians in the U.S. If the purpose of a religion is to maximize its number of followers, what happens if a religious leader endorses vi

The Pope doesn't want you to be able to sell your kidney

The Pope - all-knowing and all-wise, and as his followers expect from him, the authority on all topics remotely having to do with ethics - spoke about organ donation: "Any logic of buying and selling of organs, or the adoption of discriminatory or utilitarian criteria ... is morally unacceptable," he stressed. To translate: the Pope would rather see a million people die, than have another million people voluntarily sell their spare kidney. Because, you see, not being able to sell your kidney is much more important than saving a million people from dying. According to the Pope, apparently, selling your kidney is an abomination. But a million people dying, prevented by people like the Pope from getting the kidneys that they desperately need, that's just "unfortunate". Death, you see, is the natural course of things. You must accept it. If your kidneys are about to fail, surely God sees fit that you die now. It is God's will. Could it be God's will th

A single, controlling majority shareholder in finance

Tim Bray publishes his opinions on what the coming changes in financial sector regulation should be like. Some make sense, but I don't agree with all of them. I think a big part of the problem is the agency conflict of interest, and the ineffectiveness of shareholder democracy. This is not such a big deal when a company in the "real" economy goes astray. In that case, shareholders suffer, and there are some externalities, but they are limited. The problem is greater, though, when any of the cornerstone companies of finance go astray. Perhaps it would not be a bad idea to require that finance businesses must have a single, controlling majority shareholder. This would limit their size, which helps in the sense that too big to fail is too big to exist , and it would provide for better corporate oversight, as a single, controlling majority shareholder is more likely to steer the company on the right path than an ineffective democracy of smaller shareholders which manag

The state of Cuba

My friend Maša has recently visited Cuba. Here is my translation of part of her blog post where she describes some of her impressions: The first surprises began soon after landing. When one drives onto Autopisto Nacional - the only and the largest highway on the island - one begins to seriously question how many accidents they have. The road has enooormous holes and if you don't know the road, it can probably straight out destroy your tires rather than just puncture them. Left and right there's no safety fence, there's no centerline, no roadsigns or signposts, while on the road there are ox wagons, groups of cyclists training, cyclists and roadside vendors selling various things, trying to attract a driver's attention. Despite all of the above, we did not see a single accident in three weeks, and we traveled almost 2000 km. [ denis: Cuba apparently had 1,000 fatalities in 2001 and about 172,500 cars in 1998 , for about 0.5% fatalities per year per car. The U.S. has

Democracy may be beneficial economically after all

Elias Papaioannou and Gregorios Siourounis: Cross-country comparisons have produced little evidence that democracy improves economic growth. This column summarises research using within-country comparisons over time to show that democratising countries realise higher long-run growth after the volatile transition period. Democracy’s value may lie in its dynamic aspects. [...] While there is significant heterogeneity across countries (Persson and Tabellini, 2007), our results suggest that, if anything, the average effect of successful democratic transitions on growth is positive. Our “within” evidence shows that the experience of the past four decades suggests that even moderate political reforms can also bring sizable economic gains. Most importantly, our dynamic analysis suggests that growth is usually volatile and negative during the transition period. Yet after the consolidation of democracy, growth stabilises at a higher rate. This J-shaped pattern accords with F.A. Hayek’s (1960)

Pensions and fertility

An interesting article by Francesco Billari and Vincenzo Galasso describes their research into fertility of those Italians who were affected by reduced pensions, compared to those who were not. Their data shows that fertility increased by 13% even after controlling for factors such as age. If children are seen as investment goods (might help you in old age) as well as consumption goods (can be a source of satisfaction), then their findings indicate that the investment view can dominate: apparently, couples tend to have more children when the adequacy of their pensions is in question. This points out a useful policy for countries that have low fertility combined with an aging population: reduce the expectation of pension benefits immediately for people young enough to have more kids as a result. This helps make the long-run pension budget viable both by reducing the expected outlays (less benefits) and by increasing the expected income (more workers in the future). Such a reduction w

The demerits of DST

Stephen J. Dubner opened a debate on Freakonomics with an article about DST . Whatever the ostensible benefits of DST, they are overwhelmed by the hassle of hundreds of millions of people who have to adapt, many of whom have serious problems with it - e.g. parents with children. Furthermore, the silly time changes affect not only the communities who adopt them, but also communities that do not: businesses in Arizona shift schedules because of DST elsewhere, viewers in non-DST communities shift their sleep patterns because their favorite shows come on later, etc. DST is a preposterous charade in an attempt to pursue minuscule or illusory savings. It is not only social engineering on a grand scale, it is useless feel-good social engineering on a grand scale. I know how difficult it is to adapt systems to different DST rules. That's why I think the U.S. politicians who voted to change the DST schedule recently, instead of abolishing it altogether, should be sent to a no-happy plac

The monkeys came to power

Foreign media refer to Slovenia as having performed a good transition from a centrally planned single-party state to a modern market democracy. But for all the praise it receives, Slovenia is populated disproportionately by leftist zealots who, after four years of centrist government by Janez Janša, recently won major elections. Letting no time go to waste, they are already coming up with stunts like these. Borut Pahor - president of the Social Democrats, the party that got the most votes - promised today that the coming government would focus on "economic democracy", by which he apparently means a combination of employee shareholdership, employee participation in management, and employee participation in profits. The way I understand it, the newly elected leftists plan to make these things into law. If you speak Slovenian, read Marko's excellent article on how silly the idea is of legally mandating employee participation in profits. Giving employees profit shares is

Iceland's mistake

Willem Buiter and Anne Sibert publish this brief but insightful article summarizing their findings when Icelanders asked them to look at their banking sector in early 2008: The collapse of Iceland’s banks: The predictable end of a non-viable business model Briefly, they state that Iceland's problem was being (1) a small country, with (2) a large, internationally exposed banking sector, having (3) their own currency, and (4) limited ability to provide their banks with backup financing in difficult times, relative to their banks' obligations. Even if their banks were solvent and profitable, which they very well might have been, they were prone to collapse during a liquidity crisis, because they did not have a large enough economy to back them. Buiter and Sibert suggest that Switzerland, Denmark, Sweden, and even perhaps the UK may be in a similar predicament.