Exponential Economist Meets Finite Physicist | Do the Math

Exponential Economist Meets Finite Physicist | Do the Math:

Interesting piece, but not very mindful of history. The Malthusians have been proven wrong time and again. Physical limits exist, but 400 years is a long time. Plus, geoengineering is already here. A trumped up straw-man "debate" written from one side of the issue does not much convince me.

STEM or LAS?

This article seems to lament the low rankings the US brings in on STEM education. At first blush this seems serious. But, is STEM really the future? Is STEM a comparative advantage worth pursuing (assuming we don't already posess it)? It seems like it would be, but it may only be part of the story. The other part of the story is here (Alex Tabarok, Marginal Revolution) and here (Catherine Rampell, Economix). From Tabarrok:

Law #1: People will get jobs doing things that computers can’t do.

As Tabarrok points out, a lot of jobs in STEM sectors may eventually be replacable by computers. As Rampell Some Liberal Arts disciplines (and certain disciplines in Business) that emphasize problem solving and people skills may be better-positioned for high value-added jobs 20 years from now than purely quantitative disciplines. I think this partially bodes well for economics majors (except maybe for the people skills part).

Genomes and Medicine

Patients can pay $200 to get a portion of their genome sequenced to identify certain behaviors, aptitudes, and susceptibilities. Better things coming down the line:

Today, it costs just $16,000; in a few years, it will cost less than $1,000–a 100,000-factor decrease in costs in less than two decades!

The FDA and Personalized Medicine

Playing by the real rules of Monopoly. (Game Night)

Cocktail Party Economics.

Emission trading begins to go international. (Economist) For any "cap and trade" scheme to be effectively binding, it must be globalized; else I still prefer a tax, for that and other reasons.

Gender bias and agricultural technology. (Economist)

Media - back to coffee houses? (Economist)

How much is a "Hella"?

Apparently, it's possibly going to be 10^27 (a billion billion billion). (The Economist) The current highest named number is a "yotta" or 10^24.

Some Links: "Get to the point!"

Macroeconomics textbooks will need to be revamped;
War impedes trade;
Shadow bank regulation;
The "Nixon Shock";
Recycling carbon credits;
Cell penetration: 2001, 2004, and now;
Get to the point:

If your paper is more than 30 pages (double-spaced), hurry up and get to the point. If your paper is approaching 40 pages, it will not be accepted (you might get a recommendation for a revision that says "Get to the point." If your paper is over 50 pages, you've pissed me off. Your paper will be rejected.

Dueling Fallacies

This Free Exchange piece does a good job of confronting the "Broken Window Fallacy" anti-stimulus argument. To be sure, some of the "shovel-ready" projects funded by the stimulus are a case of solutions in desperate search of a problem (i.e. there's nothing wrong but we'll fix it anyway). But some of the things are things that need fixing anyway and are things that are will only be fixed with help from a little 'nudge'. In other words, the current owners of some buildings might have installed better windows, but for the fact that the crappy window they have is already there and paid for - it's the "Sunk Cost Fallacy" and I'm starting to feel like I'm trapped in it with my current car, but that's another story.
As RA puts it:

can we really say, in a world in which the sunk cost fallacy has power, that the
broken windows fallacy is a fallacy? Let's say my old window is a cruddy window,
and I would derive net benefits from replacing it, but I am reluctant to because
I've already paid for the original window and throwing it out would seem like a
waste. If some delinquent then throws a rock through my window, I'm made better
off.

Trust me, I've hoped more than once on my drive home the last few weeks, "boy, wouldn't it be nice if some redneck rearended me just enough to total my car?" Or, since I'm theoretically gonna save tons with compact flourescent bulbs, why haven't I replaced my incandescents?

More Cowbell! (Lower Price!)

Don't have a cowbell to cheer at the winter olympics? Have an iPhone? Don't worry! There's an app for that!

(link here)
Ain't technology great? Now you can cheer on the olympians for less, and not have some useless piece of crap sitting around your attic until 2014.
Cheapest price I saw for a real cowbell: 2.45
Cowbell app: Free! (if you own an iPhone - I don't)

What?

From MR:
"A Shanghai hospital cultivated and reintroduced human brain tissue in 2002 after taking a sample from the end of a chopstick implanted in a patient's frontal lobe following a disagreement at a restaurant."
Article here. So, I don't know if I'm more flabbergasted at the "cultivated and reintroduced human brain tissue" part or the "from the end of a chopstick implanted in a patient's frontal lobe" part.

Columbus, Trade, and the Moon

Today commemorates the 40th anniversary of the Apollo 11 moon mission. What's got me thinking about it is the invokations of how it compares with the "exploration spirit" of Christopher Columbus... or something. As an American who was brought up memorizing the "explorers" of the "New World" I want to say "hell yeah" and crack open a can of cheap beer. As a trade economist, I remember that many of these "explorers" never gave a hoot about finding anything new, or necessarily advancing knowledge. They wanted to find cheaper trade routes to Asia. So, really those things were mostly based on economic motives.

The moon missions were not motivated by economics or trade. As far as I know, no one believed there were little green men on the moon that we would want to trade with, or any strategic economic resources there that we could control. But, there were strategic reasons - we wanted to tout our technological superiority in order to taunt the Soviets and make them fear us.

Buzz Aldrin wants us on the Mars by 2035 so this generation can prove it's spirit for exploration. Why? What economic or strategic advantage would it serve, and at what cost would it be worth the trouble?

Hmmm

Charging your cell out of thin air?

Google

This was interesting. Google may be getting a little out of hand. On the other hand, if you just want information about something, this is an interesting new question-answering tool from Wolfram.

Trucks and Trade

Anyone know that there is a 25% tariff on "motor vehicles for the transport of goods" and the tariff on regular autos is just 2.5%? Check this out. Maybe that's also keeping us from showing much real innovation in the auto industry generally. Can't make a better hybrid? Make more gas-guzzling trucks with the complements of tariff protection.

It also makes me more frustrated about trucks. I've always wanted some sort of fuel-inefficiency tax (instead of binding restrictions) on gas-guzzlers, especially trucks. The response I get is that well, we can't tax commercial trucks more than passenger cars because farmers and other workin folks use them - it's not "fair!" Well, now it turns out we ALREADY have a higher tax on pickemup trucks than cars, so all we'd really have to do to apply the appropriate "incentives" (in this case sticks) to nudge production is: (1) make the tax nondiscriminating (apply equally to foreign and domestic producers instead of a tariff); (2) progressively tax inefficient cars at higher rates up in reverse proportion to their mpg rating and emissions.

Making more Ethanol from Less Corn

Another example of technological innovation around the margins (and the institutions that support it) working to keep us from falling into the Malthusian trap. I'm not a big ethanol fan, but things that can be done to make waste byproducts more useful (e.g. the building of the first cellulose ethanol plant) to help in the short run, might just help us get closer to a long-run solution with wind, solar, geothermal, etc.

I know I've said THIS before...

Check THIS out. I've said it for several years, citing a mid-nineties Foreign Affairs Article by Krugman (The Myth of the East Asian Miracle...):

China can grow at a rapid rate with a collectivist spirit because it
has so many resources (ie, so much labour) to put towards fuelling
its growth. We saw in previous decades other Asian economies quickly
accumulate capital and labour, and it also resulted in impressive
growth rates. However, long-term growth can only be achieved through
innovation and entrepreneurship.

Pure capital accumulation peters out once relative returns start to even out across sectors and across countries, and pure labor mobilization peters out when the marginal return for "collective" labor is matches that in the market sector. So, kudos to China, but don't be shocked when they hit a "wall" with their ability to grow: Property rights don't incentivize innovation or entrepreneurship, and markets aren't fully in place to weed out those entrepreneurs who take bad risks.

Recycling is Still Garbage...For Now

I've always kinda liked this old article, entitled "Recycling is Garbage" from the NYTIMES on recycling. There's plenty to dispute in such cocktail-napkin calculations of such important stuff, but it hits it head-on (apply directly to the forehead): Recycling is no free lunch. In fact taking into account land prices, alternative uses of resources, and energy burned in recycling, it is usually more costly (even in environmental terms) to recycle than it is to pitch things like glass and plastic. Paper and aluminum usually do better in terms of cost-effectivness and energy use. In fact, given the higher energy use and carbon footprint of recycling we might be shooting ourselves in the proverbial foot.
But, in a long-run sense, maybe doing all that recycling earlier is beginning to pay off. Technologies for actually doing the job are improving and the NYTIMES now touts: "In Economic Terms, Recycling Almost Pays" (keyword: almost). Anyway, it teaches us to: 1. be sceptical of the "free lunch", and; 2. think dynamically and long-run, not short run. (Similar arguments can be made for ethanol, by the way: Initially we were burning more energy to make ethanol than we were getting out of it, now we've tipped that, and it's beginning to pay for itself. However, in the case of ethanol, who are we really kidding to think that it is a best long-run solution?)

Cool It!

Just when I thought I was saving the earth by taking most of my news from online sources instead of getting print subscriptions to most things, I had to see this article. I hate it when being well-informed about things makes you think carefully and comprehensively about them. There has to be some quick easy free-lunch out there like a gas holiday that will make all of our problems go away...

Free Trade and the Liberal Bourgeoisies

I blogged last week about two groups cited as opposing free trade. The first were the working class of developed countries – this group is correctly concerned about their own jobs, incomes, families, and livelihoods. Although trade is good overall, it hurts some groups because the gains are uneven, and this group is the most likely to suffer in the short run.

The second group consisted of "liberal hippies" who are sort of caricatured as English professors (no offense intended to the English professors in my own college) and their idealistic young students. Their ideas are romantic, and their ends are admirable and include: reducing global poverty, saving the environment, ending armed conflict in the globe, child labor, gender and racial discrimination (er, reducing them, that is), and so on. Their means for accomplishing them on the other hand are somewhere between self-conflicting and patently stupid because they almost always include imposing trade restrictions on countries who appear to be behaving in an unsatisfactory way or tying these issues to trade negotiations. Oh, what a tangled web they weave…

Let me start though with the empirical evidence on such issues:

Poverty: With a few exceptions, trade has been found to alleviate poverty in most countries that are "open." Viet Nam is a good example, where textile industries boomed as a result of trade, which was paired with the adoption of better technologies in the rice sector and a win-win or poor families. Here's another story from NPR on China, and a complementary piece, also from NPR. It's an interesting tale of factories in China shutting down, which seems sad at first, but digging deeper, much of the jobs lost are due to the fact that labor markets are becoming more competitive, workers are seeking jobs with other firms, and wages and labor standards are increasing.

Environment: The effect of trade on the environment is tough to pin down. The only thing that can really be said is that assuming trade leads to greater productivity, higher incomes and a "growth spurt" in developing countries, then it will also lead to increased demand for energy resources, and put greater strain on the environment. There are two problems with this proposition. First, even if it is valid, liberal hippies have to concede the point on poverty to make it true. If trade leads to growth and increases household consumption of carbon-emitting fuels, then it is probably because they are less poor. To restrict trade would be to deny poor families the opportunities that greater wealth brings and we would be inflicting poverty on 60% of the world's population in an attempt to put a band-aid on environmental harm. Second, the proposition above assumes that with growth these economies will stupidly continue to use the same harmful technologies and not adopt cleaner ones. Even China has recognized that they need to resolve this issue, with an increasing number of "zero energy/zero emissions" skyscrapers being built and carbon capture technology being better investigated.

Child Labor, Social Issues, etc.: Globalization brings these issues more to our attention than anything else. These things have always been problems, but they have been greater problems in closed countries, and in poorer countries. Even the United States and Britain, when they were first industrializing, struggled with problems of child labor and various forms of wage and employment discrimination. These problems tend to be more effectively alleviated by extending economic freedom, which is what openness to trade does, not denying it, which is what restrictions do.

A good book on the "human face" of globalization is In Defense of Globalization by Jagdish Bhagwati. It should be required reading for anyone considering opening their pieholes on the topic of trade and globalization.

It's actually going to be a fun week – I see two good articles on trade and globalization in this week's Economist, so you'll get to hear my thoughts on them.

Bang

No more Monopolies for Apple

I've often wondered why Microsoft is so villified for their downstream so-called "monopoly" over their operating system/office suite software. Or, better still why is Apple so sactified by folks when they in fact excercise considerable monopoly power in their own segment of the market. (In fact, Apple's monopoly may in fact be more insidious to competition and consumers because their protected "trade secrets" extend not only to software, but also to hardware, which is proprietarily owned by Jobs' company. PC hardware is public-knowledge and mostly reproducable.)

The latest chapter in the saga is phones. The iPhone was supposed to be revolutionary, and Apple knew it had (for the time being) a tidy little monopoly, so they priced it at $599. Sorry, Steve-O, but I can get a laptop PC with Windows pre-installed for that! Now we can all thank Microsoft and that dirty greedy Bill Gates for offering competition. Initially, the Windows Mobile Phones are retailing at around $600 as well, but the Windows be offering a mobile operating system for phones and PDAs that will rival Apple's, and will also be compatible with a wider range of devices, which should ultimately lead to a lower price for the consumer. So all you suckers for the latest technology go buy yours now while I wait for competitive pricing to begin to take hold of the market.

Green Energy

Here's a continuation of yesterday's topic. So, if you read yesterday's post it may seem that I'm not too motivated for "alternative energy." Nothing could be further from the truth-- I just want to find the most appropriate alternative. First, I feel we need to make sure our resources are focused on alternatives best address the issues of sustainability and affordability but also minimize the negative consequences of our energy use, namely global climate change. An editorial appeared in the Saturday New York Times (Energy Surge, Staff Editorial, Aug 11, 2007) that I think accurately reflects the interdependence between energy policy and climate change, and the need for energy policy that has complementarities that help address both ills simultaneously.

On this basis I cannot bring myself around to the viewpoint that coal represents a worthwhile improvement. That makes me pretty unpopular in my neck of Virginia. Coal is currently plentiful in relation to its demand, but that is due in large part to the fact that about a century ago, technological change led us to an alternative that was both more abundant and cleaner-burning. At that time, Malthusian Chicken Littles cried that the sky was falling and that Coal was both too scarce and too harmful to our air. Then came petroleum, which was plentiful and clean (in comparison), and was compatible with the fabulous new internal-combustion automobiles running off Henry Ford's assembly lines. No matter how "clean" the coal industry claims their product to be, we cannot shake the reality that coal is entirely composed of carbon, which, when burned produces carbon gasses.

In the same regard, my love for alternatives such as natural gas and ethanol is equivocal at best. Ethanol and natural gas burn cleaner than some alternatives, and ethanol is good for short-run sustainability, but, as my father-in-law (a corn and soybean farmer) puts it, "it just stretches out" petroleum products-- we don't yet have technology for using ethanol as a stand-alone alternative. These options also suffer from a lack of sufficient nation-wide distribution network. Hydrogen, you say? I'm personally still a tad skittish about the possibility of this happening on my drive to work:
So, here's what's caught my eye in the alternative energy debate: nanotubes. These little guys can be used for a lot of applications and their capabilities and limitations are pretty unknown, but the early research is promising. One of their advantages is that they can be designed to work as transistors, ultracapacitors, can be designed to have photovalic, semiconducting, or superconducting (at low temperatures) properties, and I've heard that they even do the laundry and wash windows. According to Collins and Avouris (December 2000, Scientific American), certain nanotubes can carry electrical current 1,000 times denser than copper or silver. I'm no expert on these little suckers, but I'd count them among the innovations to keep an eye on for helping solve our energy policy, cure disease, and protect our troops.