Monthly Archive for March, 2011

The Washing Machine

Hans Rosling’s Ted Talk about the Washing Machine revolution and what it means to environmentalists:

Quote Of The Day

“Not only is Smith not endorsing a progressive income tax, he isn’t endorsing any sort of income tax. Reading further into the passage, he successively rejects taxes on income from capital, taxes on wages, and taxes on the income of professionals. The only income he approves of taxing is the income of government officials. What he is arguing for is a system of taxation whose effect is proportional to income, not a tax on income.” — David Friedman, rebutting the claim that Adam Smith endorsed a progressive income tax

Quote Of The Day

“The point is that there’s something a bit head in the sand about proclaiming this a simple “humanitarian” undertaking. Showing up with bags of rice in a famine zone is a humanitarian undertaking. Sending in some Marines to help guard the trucks full of bags of rice is a plausible military element of a humanitarian undertaking. What we’re doing is providing tactical air support to one faction in a civil war in order to help them prevail against a rival faction that has much more heavy military equipment. This may or may not produce some net humanitarian benefits in the end, but it’s hard for me to know how you’d make an accurate forecast about that one way or another.” — Matthew Yglesias

If You Were Bill Gates, How Would You Solve Poverty?

If you were Bill Gates and had ten billion dollars to spend to solve poverty, what would you do? David Henderson, an economist at the Naval Postgraduate School, posed precisely that question to various economists at his school and those of us that read his blog. This is what I wrote:

I’ve actually been thinking about this a lot lately. What is the best form of charity? Clearly, just giving a bum on the streets money is a waste. He’ll probably just spend it on alcohol and is he really reformable? Clearly you want the money to go to something that is an investment – that grows, like paying for a poor persons college. Not only do you give them money, but its money that actually solves their problems – long term. But even that has its flaws. After all, they are living in the United States – our “poor”, are richer than 90% of the world.
So then the answer has to do with the worlds poor – not USA’s poor. India, Africa, China, places like that. But you dont want to just give it away either – it robs them of the dignity that comes with “earning”. One thing that I thought about is that when you visit poor countries, and someone offers you a service – say wash your windows, or clean your tires – you tip BIG. Not only are you hitting the target group, but you are rewarding them for a service, and having people participate in the economy makes us all better.

But now were at three qualities of efficient charity: a) targets the clearly truly poor, b) an investment that grows and solves their poverty long term and c) one that gives dividends to the rest of us.

As contrarian as it sounds, I am convinced that the best form of charity is giving jobs and education to the worlds poorest countries – like China’s new growth and capitalist turn. As Tyler Cowen mentioned in his book Economic Stagnation, you get alot of immediate growth and return when a poor population is brought into the world economy – through education, jobs and industrialization. China is at the same stage that the United States was say 100 years ago. And we can expect the same returns – as more and more people are given the opportunity to advance through higher education and innovation. Not only does this make the poorest people better off, but the rest of the world gets alot of the dividends (think of all the added medical innovations, technological innovations, and general increase in standard of living we will experience because of China’s 1 billion+ citizens increased standard of living).

So in the end: what would I do? Probably spend it on whatever makes businesses MORE likely to invest in China, India and other poor countries that bring them further into the economic fold and pull them and their people out of poverty. Maybe invite Intel to open up a training center and design center in a growing country – if the decision ends up losing money, you promise to refund them their losses. If not, you entice another company.

Something like a company insurance policy with the goal of targeting especially poor countries. That is what I would do.

Chicago Bloggers?

I have a trip planned for Chicago in mid July. Any bloggers live in that area that would like to meet up? Send me an email.

Quote Of The Day

“Japanese people may well be more honest than most. But the Japanese legal structure rewards honesty more than most. In a 2003 study on Japan’s famous policy for recovering lost property, West argues that the high rates of recovery have less to do with altruism than with the system of carrots and sticks that incentivizes people to return property they find rather than keep it. For example, if you find an umbrella and turn it in to the cops, you get a finder’s fee of 5 to 20 percent of its value if the owner picks it up. If they don’t pick it up within six months, the finder gets to keep the umbrella. Japanese learn about this system from a young age, and a child’s first trip to the nearest police station after finding a small coin, say, is a rite of passage that both children and police officers take seriously. ” — Christopher Beam, writing in Slate on Japan and looting, or lack thereof

India Vs China

If you want to know why China is growing faster than India, it’s partly because of India’s labor laws like this:

As soon as a company hires more than 100 employees, it is impossible to fire anyone without government permission. Such laws have long deterred foreign investors, hampered manufacturing, and prevented the nation of more than 1 billion people from experiencing an industrial takeoff similar to China’s. Now legislators are fighting to push a law through Parliament to let a company expand its workforce without surrendering the power to lay off workers to bureaucrats. The bill faces fierce opposition from labor unions.

Of course unions have a vested interest in opposing the law but they do so at the expense of the unemployed and those hoping for wage and job growth. But then again, whoever said unions were on the side of the downtrodden and poor?

The story continues:

Companies must keep 6 attendance logs and 10 separate accounts for overtime wages, and file 5 types of annual returns. There are at least 11 definitions of the word “wage.” Other rules regulate the height of urinals in workers’ washrooms, how often a building must be lime-washed, and how many sand-filled buckets must be on hand to put out fires.

In a speech to trade unions on Nov. 23, Prime Minister Manmohan Singh wondered if these laws had hampered India’s growth. “Is it possible that our best intentions for labor are not actually met by laws that sound progressive on paper but end up hurting the very workers they are meant to protect?” he asked. India could have added 2.8 million jobs to the formal economy in the decade through 2007 had labor laws been less restrictive, the World Bank said in 2007. As few as 30 million Indians work in the formal private sector or government, according to the Central Statistical Organization, the government statistics group. (The rest work in agriculture or the underground economy.) Credit Suisse (CS) economist Robert Prior-Wandesforde calls this number “absurdly low.” China has at least 260 million workers in manufacturing, mining, and nonfarming activities, according to International Labor Organization estimates. “It’s unusual how successful India has been without any sort of industrial revolution,” says Prior-Wandesforde, head of South East Asia and India Economics at Credit Suisse.

The full story can be found here.

Quote Of The Day

“Emily Lambert’s The Futures: The Rise of the Speculator and the Origins of the World’s Biggest Markets should help convince you that financial innovation isn’t all useless. A producer of eggs, or oil, or wheat, or corn is, after all, sort of accidentally stuck in two different businesses. On the one hand, he’s running a wheat farm. On the other hand, he’s running a series of gambles on the future price of wheat. If a group of people emerge somewhere to become dedicated wheat speculators, then the wheat farmer can focus on the wheat farming and offload the speculation to the wheat speculators. The development of ideas about how to extend this idea to a larger and larger set of commodities had real benefits for people.” — Matthew Yglesias

Quote Of The Day

“The important thing about public services is the provision of services, not the provision of jobs. The right question to ask about firefighters’ pensions isn’t a moralizing one, it’s a practical one—will reducing them imperil public safety in some important way? The answer is sometimes that, yes, you really do need to stand up for the public sector. Congressional efforts to “de-fund” various regulatory agencies and/or push for staffing reductions or salary freezes is a clear effort to do an end-run around enforcement of environmental, labor, civil rights, and financial regulation. But the point of our local transit agency is to provide transportation services, not to improve the living standards of bus drivers and it’s possible for public sector personnel expenditures to be wasteful even without it being the case that the janitors at the DMV are the real fat cats of our time or any such nonsense. Over the longer run if you can make the private economy work to provide growth and jobs and income, then the public sector needs to be generous to be competitive. But the reverse strategy of building up a generous public sector as the lever for producing an income-generating economy doesn’t work.” — Matthew Yglesias

Quote Of The Day

“But here’s one failing, that neither Tyler nor Arnold mentions, of the vast majority of both left-wing and market-oriented economists: their apparently dogged determination not to analyze the role of war and an aggressive foreign policy in leading to the rise of the interventionist state. Robert Higgs has laid this out well in his 1987 book, Crisis and Leviathan, which I reviewed in Fortune. Jeff Hummel is currently completing a book showing, inter alia, how almost any domestic government intervention you can name had its origin in this or that war.” — David Henderson

Quote Of The Day

I think there’s at least an outside chance that Josh Barro is right that the next time Democrats control both chambers of the Wisconsin legislature and hold the governorship, they won’t actually restore collective-bargaining rights to Wisconsin’s public employees. “There is no clamor among Democrats in Virginia to give collective-bargaining privileges to public workers,” Barro notes, “nor have Democrats in Washington, D.C., shown much interest in empowering federal workers’ unions. This is because Democratic officeholders, quite rationally, prefer to write their budgets themselves, rather than hand over control of employee-compensation costs to unions. Once Wisconsin lawmakers get used to the new status quo, I think this is likely to be true there, too.”” — Ezra Klein

Quote Of The Day

“Not to draw an equivalence between a bad bill and a good one, but what it reminds me of is congressional Democrats after Scott Brown’s election. The early CW was that somehow Democrats “had to” back down in the face of their unpopularity. But they didn’t have to do anything. They believed as strongly in universal health care as the Wisconsin GOP believes in crushing labor unions. So they passed the damn bill.” — Matthew Yglesias

Quote Of The Day

“That’s right, and George Will isn’t Michael Moore; and a liberal blog, almost by definition, is a blog written by someone who chooses not to notice that asymmetry.  No need to read Marginal Revolution, Becker/Posner, Econlog, John Taylor, Greg Mankiw, Robin Hanson, Steven Landsburg, etc, etc.  Nothing of interest, just move right along folks.  I’m always amazed when someone so brilliant can be so clueless about life.  How someone can reach middle age and still live in a kindergartener’s world of good guys and bad guys….I find that reading good liberal blogs like Krugman, DeLong, Thoma, Yglesias, etc, sharpens my arguments.  It forces me to reconsider things I took for granted.  I’d guess that when Krugman tells people at cocktail parties that the post-1980 trend of lower tax rates, deregulation, and privatization was a plot devised by racist Republicans, they all nod their heads in agreement.  If he occasionally read a conservative blog he might learn that all those trends occurred in almost every country throughout the world after 1980, usually much more so than in the US.” — Scott Sumner, professor of economics at Bentley University commenting on Krugman’s admission that he doesn’t read any blogs that disagree with him politically

The Charter School Revolution Moves To Compton


A moving short video of the affect the “Parent Revolution” is having in Compton, California. I’m curious: to those who dislike charter schools and vouchers, what do YOU have to say to parents stuck in these failing public schools? Please support the Parent Revolution here.

Can Liberals And Libertarians Share Common Interests?

Some have even coined the term liberaltarian, in reference to a possible political alliance of shared interests between liberals and libertarians. But the latest Koch’s – big contributors of libertarian efforts – debacle shows that the possible union is all but dead:

The underlying premise of liberaltarianism was that libertarians could emphasize their policy positions that appeal to liberals but not conservatives–drug legalization, hostility to war and military spending, support for civil liberties and for gay marriage–while liberals, chastened by the Bush years, would tone down their support for big government in other areas.

The Kochs would appear to be the perfect liberaltarians–they support gay marriage, drug legalization, opposed the Iraq War, want to substantially cut military spending, and gave $20 million to the ACLU to oppose the Patriot Act (compared to a relatively piddling $43,000 to Scott Walker’s election campaign).

It’s not surprising that some demagogic “Progressives” would nevertheless choose to try to demonize the Kochs to defend the Democratic money machine that public employee unions represent (update: though note that the attack on the Kochs began last Summer). What is, if not surprising, at least a bit depressing, is how few prominent liberal commentators have spoken out against the ongoing attempted Emmanuel Goldsteinization of the Kochs.

David Bernstein, blogging at the Volokh conspiracy, has more here.

Quote Of The Day

“In my view, the real argument for private firearm ownership is a different one. The less able individuals are to protect themselves from crime, the more dependent they are on protection by government law enforcement. The more dependent they are on protection by government law enforcement, the more willing they will be to accept abuses by government law enforcement. The more willing we are to be pushed around by the police, the harder it will be to prevent a tyrannical government from arising. Indeed, in some contexts, most obviously the War on Drugs, one can argue that one has already arisen. And been tolerated.” — David Friedman