EclectEcon

The Ease of Doing Biznezz:Rankings of 155 Countries

In an interview that was podcasted back in December, Tim Harford mentions his work with a World Bank programme called "Doing Business" [I think the interview can be found here.].



The Doing Business programme at the World Bank

provides objective measures of business regulations and their enforcement. The Doing Business indicators are comparable across 155 economies. They indicate the regulatory costs of business and can be used to analyze specific regulations that enhance or constrain investment, productivity and growth.

One of the neatest things at this site is they provide their results in easy-to-use tabular form. Click on a column heading and the data are re-sorted according to how the 155 countries in the study ranked on that particular topic. In the list below, I have copied their overall summary, in alphabetical order, of the ease of doing business in each of these countries; but check out their site because they have a mass of hyperlinks that will yield a great deal of information about each country.



[update: Adrian thought the table was more informative if presented by rank order rather than alphabetically and graciously sent me the revision, which I have posted to replace the alphabetical listing. His note:

Certain things jump out, such as the Anglo-Saxon (common law) countries and the Nordics at one end, and much of Africa at the other.

For alternative arrangements of the data, visit their website and click on the head of any column.

New Zealand 1

Singapore 2

United States 3

Canada 4

Norway 5

Australia 6

Hong Kong, China 7

Denmark 8

United Kingdom 9

Japan 10

Ireland 11

Iceland 12

Finland 13

Sweden 14

Lithuania 15

Estonia 16

Switzerland 17

Belgium 18

Germany 19

Thailand 20

Malaysia 21

Puerto Rico 22

Mauritius 23

Netherlands 24

Chile 25

Latvia 26

Korea 27

South Africa 28

Israel 29

Spain 30

Maldives 31

Austria 32

Namibia 33

Fiji 34

Taiwan, China 35

Tonga 36

Slovak Republic 37

Saudi Arabia 38

Samoa 39

Botswana 40

Czech Republic 41

Portugal 42

Jamaica 43

France 44

Kiribati 45

Armenia 46

Kuwait 47

Marshall Islands 48

Vanuatu 49

Palau 50

Oman 51

Hungary 52

Solomon Islands 53

Poland 54

Nepal 55

Micronesia 56

Panama 57

Tunisia 58

Nicaragua 59

Pakistan 60

Mongolia 61

Bulgaria 62

Slovenia 63

Papua New Guinea 64

Bangladesh 65

Colombia 66

Zambia 67

Kenya 68

United Arab Emirates 69

Italy 70

Peru 71

Uganda 72

Mexico 73

Jordan 74

Sri Lanka 75

El Salvador 76

Argentina 77

Romania 78

Russian Federation 79

Greece 80

Macedonia, FYR 81

Ghana 82

Moldova 83

Kyrgyz Republic 84

Uruguay 85

Kazakhstan 86

Bosnia and Herzegovina 87

Paraguay 88

Costa Rica 89

Yemen 90

China 91

Serbia and Montenegro 92

Turkey 93

Nigeria 94

Lebanon 95

Malawi 96

Lesotho 97

Azerbaijan 98

Vietnam 99

Georgia 100

Ethiopia 101

Morocco 102

Dominican Republic 103

Bhutan 104

Guyana 105

Belarus 106

Ecuador 107

Iran 108

Guatemala 109

Mozambique 110

Bolivia 111

Honduras 112

Philippines 113

Iraq 114

Indonesia 115

India 116

Albania 117

Croatia 118

Brazil 119

Venezuela 120

Syria 121

Afghanistan 122

São Tomé and Principe 123

Ukraine 124

West Bank and Gaza 125

Zimbabwe 126

Mauritania 127

Algeria 128

Benin 129

Cameroon 130

Madagascar 131

Senegal 132

Cambodia 133

Haiti 134

Angola 135

Sierra Leone 136

Eritrea 137

Uzbekistan 138

Rwanda 139

Tanzania 140

Egypt 141

Timor-Leste 142

Burundi 143

Guinea 144

Cote d'Ivoire 145

Mali 146

Lao PDR 147

Congo, Rep. 148

Togo 149

Niger 150

Sudan 151

Chad 152

Central African Republic 153

Burkina Faso 154

Congo, Dem.Rep. 155

Update: for more on the bureaucratic costs of doing biznezz in many countries, see the latest from Ben Muse.

Auto Purchases and the Internet; Monopsony or Gains from Trade?

There is evidence that people who use information from the internet when purchasing a car pay, on average, 1.5% less than other purchasers, ceteris paribus. From NBER Working Paper 11515 via SmartEconomist:

There are three results shedding light on how the Internet affects car prices. First, the Internet does not appear to be particularly useful in discovering which dealers offer lower prices. This may be due to the fact that the actual selling price is determined through negotiation, so that information on the prices actually offered by different dealers is not immediately available. By contrast, comparing the prices of different sellers is easier for many non-car products, since the posted price is the actual price at which the sale occurs.



Second, the Internet benefits car buyers because it provides access to an important piece of information: the car's invoice price - the manufacturer’s initial charge to the dealer. Knowledge of the invoice price gives consumers a good idea of what the lowest price that the dealer is prepared to accept may be. In fact, it turns out that consumers who have gathered this information on average end up paying 0.61% less than other buyers.



Third, using online buying services is also an effective way to obtain lower prices. Such services are an important new institution which the Internet made possible. Consumers who submit a referral to independent online buying services obtain prices which are on average 0.72% lower. It is interesting to notice that there are online buying services set up by manufacturers as well, and that they are not effective in lowering prices. This is probably because independent services generate quotes from all the dealers which are geographically close to the consumer using the service, while manufacturers only select the closest dealer. Referrals from independent services therefore put more pressure on dealers, who fear that the online service could switch to other dealers unless they offer attractive conditions. Thus, independent online services indirectly allow consumers to exercise market power.

This analysis of the results is probably misleading at best. Car-buying services do not have and do not exercise monopsony power over car dealers; consumers who benefit from using car-buying services do not "exercise market power" of any sort.



Instead, the car-buying services exercise the use of superior information, along with more effort, time, and search to negotiate lower prices. They specialize, which means the costs per purchase of negotiating more effectively are lower per purchase. Consumers who use these services are exploiting typical division of labour, specialization, and comparative advantage.

My Plan to Become an Orthopaedic Surgeon Is on Hold

Last week, Jack sent me this link to Wikibooks. These are books that are organized and produced the same way entries to the Wikipedia internet encyclopedia are. Roughly, anyone can write material, and anyone can edit the material.



As I looked through the titles and topics of some of the books that are available, I was really impressed. It makes me wonder the extent to which instructors will, in the future, place more reliance on internet textbooks instead of published, hard-copy texts [for example, see this economics text by former colleague, Preston McAfee. Also take a look at the open courseware provided by MIT, but that material generally does not include an online textbook].



As an example, here is a list of books available just in medicine:

MEDICINE - Medicine - Radiology - Diagnostic Radiology - OsiriX Online Documentation - Emergency Medicine - Internal Medicine - Radiation Oncology - Orthopedic Surgery - Test Prep for USMLE Step 1 - Test Prep for USMLE Step 2 -

It turns out, sadly, that many of these books, including the one on orthopedic surgery, have no entries yet. Much of the material is in the proposal stage or doesn't exist yet. And even the "books" that have been published are not very thorough [see for example, the book on Game Theory and compare with this].



As a result, my home-study programme to become an orthopaedic surgeon has been put on hold for at least one more term.

Evil, Greedy, US Capitalist Buys Canadian Icon: The Bay, formerly The Hudson Bay Company

In the National Post (Jan. 28, 2006, p20) an editorial cartoon shows two people on an escalator, presumably at The Bay (once a major retailer in Canada). One person says to the other,

I just hope the Bay maintains its Canadian identity.

All around them, however, are signs for Toshiba, Calvin Klein, Maytag, Nike, Sony, Tommy Hilfiger etc.



For the background story, see this.



Addendum: I had always hoped that the U.S. Target chain would buy The Bay and bring some substantial competition to Wal-Mart in discount retailing in Canada. As it is now, Zeller's (owned by The Bay) seems to be a pretty weak competitor in that market segment.

When You're in Sales, You Work All the Time

My friend, Gord, used to be an agricultural equipment salesman. Several years ago, he told me that

When you're in sales, you're working all the time.

He explained that when you see someone at the grocery store or at church or at Wal-Mart, you're not just nice to them; you keep alert because you're always selling.



I mentioned this a few weeks ago to the people I go curling with, and one of them said,

That's right. Last week I was standing in line at a funeral, and while I was sympathizing with a guy about the death of his mother, I sold him an attachment for his tractor.

Someone else who heard this said it made sense for the customer:

... saved him a phone call and a trip.

Dave Barry Knows All about Money

Dave Barry's new book, Dave Barry's Money Secrets: Like: Why Is There a Giant Eyeball on the Dollar? will surely become a must read. I've just ordered a copy on the basis of this excerpt. Here is one very short clip from that excerpt:

If our money really is just pieces of paper, backed by nothing, why is it valuable? The answer is: Because we all believe it's valuable.



Really, that's pretty much it. Remember the part in Peter Pan where we clap to prove that we believe in fairies, and we save Tinker Bell? That's our monetary system! It's the Tinker Bell System! We see everybody else running around after these pieces of paper, and we figure, Hey, these pieces of paper must be valuable. That's why if you exchanged your house for, say, a pile of acorns, everybody would think you're insane; whereas if you exchange your house for a pile of dollars, everybody thinks you're rational, because you get... pieces of paper!

He really does understand, doesn't he: Something serves as money only because it is generally accepted in payment for goods and services.



[h/t to King Banaian at SCSU Scholars]



. .

The Laffer Curve and Italian Bureaucracy

Jason at the Iraqnow blog has a sad tale to tell about how, due to the tonnes of bureaucratic restrictions, one is unlikely to find much amateur music being performed in bars in Italy. Here is his summary, but, really, read his whole list. Unless you've had to deal with Italian bureaucracy before, you may find it hard to believe.

To sum up:



- spontaneous sessions are ILLEGAL.



- if you want to play at a session, you must fork out money and put up with a lot of hassle and paperwork.



The consequence of this state of affairs is that in Italy you hardly ever hear music played in bars, and bands are rare. But since the SIAE rules don't apply in churches, there are lots of amateur choirs around - and they regularly perform in churches.

[h/t to Adrian for the pointer]

Four Things

From Ted Frank:

Four Jobs:

  (Besides having been an economist for the past plenty-five years)

Windowman at McDonalds (when it was strictly take-out)

Sportscaster

Actor

Orchestra Conductor



Four Movies You Could Watch Over and Over:

Three Days of the Condor

On Golden Pond

The Sound of Music

National Lampoon's Animal House



Four Places You Have Lived:

   (in chronological order before moving to Canada)

Muskegon, Michigan

Northfield, Minnesota

Chicago, Illinois

Ames, Iowa



Four TV Shows You Like to Watch:

CSI (Las Vegas. The Miami CSI is so bad, I laugh at it)

Law & Order

Curling

Baseball



Four Places You Have Been on Vacation:

Jasper and Lake Louise

Kuala Lumpur

Tampa Bay/St. Petersburg

Dominican Republic



Four Websites You Visit Daily:

These are just four (see my list in the right sidebar):

Newmark's Door

Marginal Revolution

Market Power

The Emirates Economist



Four of My Favorite Foods

Pizza. Just about any kind that doesn't have anchovies or black olives; grease is good.

Taco Bell. Pretty much anything they sell.

Double Quarter Pounders with Cheese.

Giant-sized milk chocolate bars (or Cadbury eggs).

   (now you see why I have to think about dieting now and then)



Four Places I'd Rather Be

  I like small-town life, but here are some possibilities:

Houston, where my younger son lives

Sunway, Malaysia or Singapore

Hilo, Hawaii

Crow's Nest Pass, Alberta



Four Albums I Can't Live Without

  Hah. With Winamp, I just listen to music over the internet even though I have a sizeable CD collection. I can live without these, but I like them a lot.

Dvorak's New World by Paul Paray and the Detroit Symphony

Mozart's Four Horn Concertos by Jamie Sommerville

Vivaldi's Four Seasons by Stokowski

Miles Davis, Sketches of Spain

Dave Brubeck, Time Out

This isn't tag, but other bloggers are encouraged to post their own responses in these categories.

Mozart

Wolfgang Amadeus Mozart was born 250 years ago Friday. While musicologists might debate the power and importance of Mozart's music and his contribution to the history, growth, and popularity of music , I just plain like it [see here for some discussion; it was at Tyler Cowen's suggestion there that I decided to post this piece].



Over the past nearly 60 years, I have played French horn off and on. [My motto: I'm not good, but I make up for that by being loud.] Not surprisingly, Mozart's four horn concertos have always been among my favourite pieces of music. The recording by Dennis Brain was by far the best when I first started listening to horn concerti, and it is still regarded by many as the best.



For awhile, many people raved about the recording by Barry Tuckwell, but I always found it just a bit overwhelming — maybe too powerful? — and not as lyrical as others.



Nowadays, I tend to prefer the recording by Canadian Jamie Sommerville:



More on Mozart:

For several years recently, I conducted The Blyth Festival Orchestra, a small community orchestra with some really excellent musicians. The orchestra had mostly strings, along with two of the best flautists in the universe. I think we played something by Mozart in every concert I conducted, including his rarely performed Symphony #1. His music is nice, not outrageously challenging, and pleasing for the audiences, all of which help explain why it has stood the test of time. One of the first pieces I conducted was an arrangement of one of Mozart's Divertimenti [the first three tracks on this CD are a good recording of the piece].



This year is also the 100th anniversary of the birth of Dmitri Shostakovitch, whose music I also absolutely love [I'm frosty over Shosty]. The Blyth Orchestra tried one of his pieces [Opus 110, arranged for string orchestra], but it didn't work out for us.



One of the last pieces I conducted was an arrangement I did of "Louie, Louie" for two flutes and string orchestra [for a pretty bad synthesizer midi version of the arrangement, click here].



For more on my musical tastes and experiences, including a SkyDome performance (!, well....), click here.

Here are some links to the albums mentioned above:



....



Tyler Cowen has several links about Mozart and economics; e.g. here, here, and here. For his favourites, see here.

Drugs, Risk, and Return

The capital-asset pricing model (CAPM) generally postulates that there is a risk-return trade-off in financial assets: the assets with a low risk offer a low rate of return, but assets with more risk must offer a higher rate of return to be attractive to investors.



This model is exemplified by returns in the pharmaceutical industry. It is costly and risky to develop and market prescription drugs; it is considerably less risky to bring over-the-counter drugs to market. Hence, this result is not surprising:

In general, analysts say, drug makers make more profit off their prescription products than on over-the-counter medications.

This sentence was just a little throw-away in an article quoting a panel of experts who say modern cough medicines don't work. But Ms. Eclectic has a better remedy. Scotch therapy.

...

Biz Podcasts

OCRIRadio.com has some business-oriented podcasts available at its site, including one with Steve Ballmer.



For other biz and econ podcasts, check these:

• Interviews on TCS Daily
  
  
• Financial Sense
  
  
• Ludwig von Mises Institute

[thanks to Hispanic Pundit for the last two links]



And, of course, there are the RadioEconomics.com podcasts, as well as the podcasts of my intro lectures.

If Wal-Mart Is Such a Bad Place to Work,Why Are So Many People Applying for Jobs There?

Tomorrow (Thursday), Wal-Mart will announce that its new Evergreen Park, IL store received more than 25,000 applications for 325 positions – a majority of which are full-time. That’s a 1.3% acceptance rate. [courtesy of Marshall Manson]

I sure am glad academic journals don't have such low acceptance rates.

Anti-Semitism: the New Early Warning System for Evil

Did you ever notice that most people who preach anti-Semitism, who deny that the Holocaust occurred, who promoted boycotts of Israel and Israeli scholars, etc., also tend to favour other evil plans? From an op-ed column in last week's LATimes [h/t to Jack; also cited yesterday by Craig Newmark]:

Whatever the reason, true, virulent anti-Semitism is such a good indicator of the presence of evil that I'm tempted to believe that when God made the Jews his chosen people, this is what he chose them for: to be a sort of Villainy Early Detection System for everyone else.



Unfortunately, in his infinite love for his creation, I suspect the Big Guy may have overestimated our intelligence. Maybe he thought that after Hitler we'd just, you know, like, get it. Instead, we still see apparently intelligent people appeasing, making excuses for and even embracing the sorts of stinkers who ought to set off the Big Alarm. ...



So here's a plan. The next time you express an opinion on what's wrong with the world, take a look around to see who's nodding in agreement. If it's some clown who thinks the Jewish state should be pushed into the sea, or that the Jews killed Christ or are conspiring to subvert the world economy or the government or the media, I beg you to consider that you might be wrong. There is no shame in changing your opinion. Falling into step with wicked fools — that's shameful, and it's dangerous too. God gave you an early detection system. Use it.

As BenS says, "The old canary in the mine routine..."

The Effects of Setting a Price Ceiling on Water:the Bolivian Experience

Water is a necessity, right?



And so its price must be kept low, right?



Not necessarily.



While we need water to live, we don't need it (to live) in the amounts that most people use it. And so keeping the price of water artificially low is not necessary to preserve life. But doing so will have many undesired effects. Larry White reports these effects at Division of Labour:

Five years ago in Cochabamba, Bolivia, the New York Times reports, local leftists ran an American monopoly franchise (Bechtel) out of town for trying to raise water rates. A victory for the people!

One small catch: today, because the local public utility has kept the old low rates, they can’t cover the cost of keeping the pipes filled, let alone extending them. Half the population still has no piped water service (they rely on wells and freelance water trucks), while even for the lucky households the taps run only a few hours of the day. Maybe not such a victory for all of the people.

For more about Bolivia's misguided utopianism, see this [link via Newmark's Door]

The Devil Made Me Do It;It's not my fault

Kip Esquire and Rebekah K have both written, recently, about the attempt by a special interest group to control junk food ads on television. Kip says,

[S]how me a fat kid and I'll show you fat parents. Either that, or at the very least lazy or incompetent parents. Ms. Carlson can easily control her kids' caloric intake (not to mention which channels her family watches). And even if for some unnamed reason she can't — too bad so sad. That is not my problem, or yours, or Kellogg's or Nickelodeon's....



Ms. Carlson... may have the right to be the benevolent dictator of her minor children. But she does not have the right to be the benevolent dictator of the rest of us.

Rebekah says,

Apparently, these people think that, once a television enters the house, the parent has no control over what the kid sees on it. Fancy that. Parents don't control the on/off switch, parents don't control the channel selector, and parents have no control over what is purchased for kids' breakfasts, lunches, or suppers. It's all the fault of those svengalis who broadcast from Disney's bunkers, waging war on the Young American Ass, making it soft and larded, so that it will come out more tender from the wicked witch's gingerbread Easy-Bake oven....



So, now the folks are blaming tv stations for the lard-ass kids we have. How about blaming national prosperity, where the kids don't have to help out with finances by getting jobs mowing lawns or delivering newspapers or whatever? How about blaming eight hours of sitting in classrooms, where the kids are numbed to all sensory input except that from a droning instructor or a computer monitor? Or, better still, how about taking a little PERSONAL RESPONSIBILITY for what you make your kids into, by letting the television babysit them?

In Canada, we'd blame the gubmnt.



As Kip said earlier, a good solution to the problem of obesity for most people is his version of the food triangle:

eat less, exercise more, avoid the garbage

Phil Miller and Market Power

A couple of different articles appeared yesterday in the Mankato, Minnesota, media about Phil Miller's blog, Market Power. [actually they are similar versions of the same article; see here and here.]

Miller avoids political discussions, but he hits economics from a variety of perspectives — some serious, some lighthearted. Miller’s blog provides thoughts on Venezuela’s leftist president trying to jack up coffee prices paid to farmers, the New York City transit strike, the demise of the Vikings Training Camp LLC, and Elmo learning about the complexities and unintended consequences of central direction of an economy in the video “Elmo Saves Christmas.”



Miller compares blogs by academics to a nationwide or worldwide faculty lounge.

Over the past couple of years, I have met some really interesting people in this "faculty lounge", including Phil.



Isn't the internet wonderful? I'm so glad Al Gore invented it.

Greenbacks and Ham

From AlexK, who doesn't know who wrote this, but it's too good not to pass on:

That Abramoff!

That Abramoff!

I do not like that Abramoff!



"Would you like to play some golf?"



I do not want to play some golf.

I do not want to, Abramoff.



" We could fly you there for free.

Off to Scotland, by the sea."



I do not want to fly for free.

I don't like Scotland by the sea.

I do not want to play some golf.

I do not want to, Abramoff.



"Would you, could you, take this bribe?

Could you, would you, for the tribe?"



I would not, could not, take this bribe.

I could not, would not, for the tribe.



"If we strong armed corporations

Into giving you donations?

They'd be funnelled to your PAC.

Would you then cut us some slack?"



I would not, could not, cut you slack.

I do not care about my PAC.

I do not want to play some golf.

I do not want to, Abramoff.



"A plane! A plane! A plane! A plane!

Would you, could you, for a plane?"



I could not, would not, for a plane.

Not for a bribe, not for the tribe.

Not for donations from corporations.

Not for my PAC, not for some slack.

Not from any schmoe named Jack.



"Would you help us buy some ships

Perfect for quick gambling trips?

Talk to people in the know

For a little quid pro quo?

Oh come now, don't be a snob.

Let us give your wife a job."



I will not help you buy some ships.

I do not wish for gambling trips.

My wife does not need a job

Even if she is a snob.

We do not like bribes, can't you see?

Why won't you just let me be?



"You do not like bribes, so you say.

Try them, try them, and you may.

Try them and you may, I say."



Jack. If you will let me be

I will try them, then you'll see.



Say.... I do like playing golf!

I like it, I do, Abramoff!

I do like Scotland by the sea.

It's such a thrilling place to be!

And I will take this bribe.

And I will help the tribe.

And I will take donations

From big corporations.

And I will help you buy some ships.

And I will take quick gambling trips.

Say, I'll give anyone the shaft

As long as it involves some graft!



I do so like playing golf!

Thank you! Thank you,

Abramoff!

Auschwitz: Inside the Nazi State

Beginning on Wednesday, January 25th, The History Channel in Canada will air a six-part series on the Holocaust:

AUSCHWITZ: INSIDE THE NAZI STATE

This six-part series tells the story of the Auschwitz Death Camp, site of the largest mass murder in history. Writer Laurence Rees and his team interviewed over 100 eyewitnesses, including former Nazi perpetrators who speak on the record for the first time. Their story is brought to life through the use of archived footage, recreations of key moments, computer reconstructions based on recently discovered plans of the camp, and their testimony.



Auschwitz: Inside The Nazi State will air on the UN-designated International Day of Commemoration in Memory of the Victims of the Holocaust - January 27.



Wednesday, January 25 at 8:00 PM | 9:00 PM (CC)

Thursday, January 26 at 12:00 AM | 1:00 AM | 8:00 PM | 9:00 PM (CC)

Friday, January 27 at 12:00 AM | 1:00 AM | 8:00 PM | 9:00 PM (CC)

Saturday, January 28 at 12:00 AM | 1:00 AM (CC)

For more precise details on when each episode will be shown, see this.

US Medicare: a Massive Fiscal Drain

Econbrowser points out that

[T]he passage and signing of this bill [Part D of Medicare] increased the implicit exposure of the Federal government by $8.1 trillion, in present value terms (exceeding the liability associated with future Social Security benefits of $5.2 trillion).



For perspective, 2005 U.S. GDP is around $12.5 trillion. These figures should be kept in mind when the discussion turns to claims of Administration and Congressional fiscal restraint.

Even though present value is a stock concept and GDP is a flow, a fiscal exposure of $8.1 trillion is still a huge amount. People who are concerned about fiscal exposure due to Social Security should be even more concerned about the exposure due to Medicare part D. As more people catch on, and as the US gubmnt keeps going to the markets to raise funds to cover these obligations, watch the increased demand for lendable funds put upward pressure on interest rates.



If the Fed doesn't want interest rates to rise so rapidly or so much, it will end up monetizing the increases in debt, leading to inflationary pressures [and, if the process persists, increased inflationary expectations and, via the Fisher equation, increased nominal interest rates].

Dark Matter and the U.S. Current Account

If you look at the growing deficit in the U.S. current account, you might be tempted to say "They're doomed!" [a la Roubini and Setser, work I have enjoyed considerably.]



A fairly recent piece by Hausmann and Sturzenegger challenges this view.



Their approach is not unlike that of astrophysicists trying to explain the stability of galactical systems; the physicists have had to rely on the gravitational pull of something called "dark matter" for their explanations. Hausmann and Sturzenegger argue, analogously, that the international exchange market is much more stable than one might think, based on looking at only current account deficits. They posit that there must be something else, call it dark matter, holding the system together and imparting considerable stability to the system of international exchange.



The nature of this dark matter, according to them, is trade in know-how and specific information. When goods and services are sold (and especially licensed) to foreigners by US firms, there is almost always a part of the agreement specifying that the licensee will also purchase technical know-how and implementation consulting services. These are long-term contracts, and they are assets for the firms selling them, but they don't show up in the current account as sales of assets. Including them in the data provides a different picture of the U.S. dollar situation. My reproduction of their graph below is far from clear, but the two lines show a dramatic difference over the years from 1980 - 2004 (the teal-coloured line is the cumulative current account, as measured; the brown line is the cumulative current account, including a measure of "dark matter" and showing a stable balance over the past two and a half decades).





It is enough to make me hesitate, that's for sure. To the extent this is true, foreigners are importing a lot of know-how from the U.S. and exporting a lot of promises to pay in the future, and neither of these items is showing up on the books.



Brad Setser has a lengthy analysis of their argument; summary: it's the result of corporate tax arbitrage.



I don't think it is wise to downplay the role of licensing know-how in technology transfer. Numerous folks at UWO's Ivey Bizskool have done research on this topic and, as I recall, thought it was pretty important.



I'm afraid it may be too late to submit a paper on this topic to this conference.

Stephen Harper's Favourite Sport

According to Rondi Adamson's secret source, Stephen Harper's favourite sport is curling.

Paul Martin: Dissembler Extraordinaire?

A Queen's University professor has analyzed the speeches of the party leaders:

According to a new computer algorithm, Prime Minister Paul Martin, of the Liberal Party, spins the subject matter of his speeches dramatically more than Conservative Party leader, Stephen Harper, and the New Democratic Party leader, Jack Layton.



Spin, in this case, is defined as “text or speech where the apparent meaning is not the true belief of the person saying or writing it”, says the algorithm’s developer, David Skillicorn at Queen’s University in Ontario, Canada.



He and his team analysed the usage patterns of 88 deception-linked words within the text of recent campaign speeches from the political leaders. They then determined the frequency of these patterns in each speech, and averaged that number over all of that candidate’s speeches. Martin received a ranking of 124, while Harper and Layton scored 73 and 88, respectively.

[h/t to BenS]

Ward Churchill and Moral Relativism

Alan Adamson poses a quiz designed to help us discern our views on moral relativism by setting out numerous hypotheticals and asking in which ones we think persons should be punished. Not surprisingly my views are orthogonal to those of Ward Churchill. Nice quiz.

My New Agnosticism;Should I call it "Meta-Agnosticism"?

A little over a year ago, I was exposed to the concept that maybe there is such a thing as a super-universe or "bulk" universe with as many as eleven dimensions. The idea that there might be dimensions whose nature we cannot imagine, and that our four-dimensional universe (as we know it) might be analogous to a membrane within this super-universe, gave me, and my smug atheism, pause for consideration. (see here)



But during the past few months, I have been reading that string theory, which provides the basis for these ideas, is being challenged increasingly because it has so many conflicting variants, because it has no tested implications, and because it most likely has no testable implications. Peter Woit has a blog with continuous updates on the topic. Here is an excerpt from just one of his recent postings.

[T]here’s a new paper out tonight reviewing the status of the string theory Landscape. It looks like landscapeologists are now ready to abandon even the idea that the number of phenomenologically viable vacua is finite, and the last part of the paper contains some impressive contortions about why this isn’t necessarily a bad thing. They also seem to have given up on Douglas’s idea of making predictions by counting vacua. They’re still counting the vacua, but now the reason given is not to make predictions, but to see if there are enough to be sure that one of them will reproduce the standard model.

Also, the Wikipedia article seems fairly well-balanced on the subject of string theory.



What does this mean for my newfound agnosticism, not knowing anything about whether those other seven dimensions exist, and, if they do, what they are?



I think I'm drifting into meta-agnosticism.

Peace-Keeping Means "not fighting"

Brian Ferguson points to an apparent inconsistency in the NDP (leftist) view of Canada's role in Afghanistan:

NDP leader Jack Layton has said that Canadian forces in Afghanistan should only be involved in peacekeeping and not in activities like hunting down Taliban and al-Qaeda terrorists.

Brian quite rightly wonders how there can be peace-keeping if there's no fighting.



For another perspective on moral free-riding, see this. It is easy for Canadians to preach peace when we are protected by the US defensive umbrella.

5 Strange/Weird/Quirky Things -- Blog Tag

In this year's version of blog-tag, I've been tagged by Rondi Adamson to list (and explain?) five strange things about me. This is difficult because most of them are not things I am willing to post on the internet. So here are five that are, perhaps, too innocuous for words.

1. I attended theological seminary but dropped out after reading Elmer Gantry and realizing that really I was an atheist and that remaining in seminary would be hypocritical.
   
   
2. At one point during the past ten years, I used to weigh a lot more than I do now; at one point during the past ten years, I also used to weigh a lot less than I do now.
   
   
3. Until ten years ago, neither my wife nor I realized that the other wanted to live in a small town.
   
   
4. I have only 17 permanent teeth; the others never came in. It's a genetic mutation. My sister and sons also each have fewer than 28 or 32 or however many teeth you're supposed to have.
   
   
5. I had cable tv outlets put in the bathrooms.
   
   

I tag some of those whose blogs I read regularly:

• John Chilton,
  
  
• Kip Esquire,
  
  
• Brian Ferguson,
  
  
• Phil Miller, and
  
  
• Tom Hanna.

Does Cruel and Unusual Punishment Deter Crime?

Some people think so:

Mohammad has worked at the sports stadium in Kandahar for nine years. Football, volleyball and basketball are played here now, but this used to be the scene of mass bloodshed.



Thousands of spectators once gathered regularly in the stands to quietly watch as men were beheaded, women got shot and thieves had their hands cut off.



Many among the crowd were forced to attend by the Taliban so they could see the fate awaiting them if they also broke the law.



“The people who were executed had done something bad to someone else, so we were happy with the executions. They stopped people from committing other crimes,” Mohammad said. ...



Mohammad said: “We don’t have democracy. They say we have democracy but there is no security here. If I want to drive a good car, I can’t. If I want to carry a lot of money with me, I can’t. So there is no democracy.” The main reason he has fond memories of life under the Taliban is not because he liked everything they did. It is because this city was a safer, simpler, place for many people in those days

[h/t to The Emirates Economist].



If it is so effective in providing a deterrent, why don't we have more scope for cruel and unusual punishment in Western societies? For some discussion of why we don't make more use of cruel and unusual punishment, click here to see my paper with John Henderson on this topic. For our followup piece on crime, punishment, and deterrence, see this.

An Economics Forecast:a Chinese Smart Car

I was talking with friends two weeks ago and offered this forecast:



Ten years from now, a major competitor in the North American auto industry will be a small car, perhaps something like the Smart car (a real one, not a remote control toy), produced in China.



Further thoughts on the North American auto industry from Forbes:

[h/t to BenS, who sent this link to me following our conversation]

Maybe it is time for the companies to stop their dividends. Maybe it is time for the union to tell its members how bad things are. And maybe it is time for the Governor of Michigan to understand why people don't want to build in her state.



Face up to it Detroit: America doesn't care. You have to save yourselves.

For more on China's auto export industry, read Mark Thoma's post, quoting an item in Time.

[W]hile China may not be the cheapest place to build cars, it's growing more attractive. Tariffs on parts have declined lately, and logistics costs should decrease as China's transport infrastructure improves. Last year Honda became the first foreign automaker to set up a major export operation, shipping a compact to Europe... Chrysler plans to build its 300-model sedan in Beijing for domestic sale and possible export (although not to North America, where autoworkers would probably object). GM and Volkswagen export small quantities too, such as Chevy Venture minivans to the Philippines and Polo compact cars to Australia. ...



[A]lthough Chinese vehicle quality is improving, it lags Western standards by wide margins.

As Mark Thoma comments, "It's a matter of time."

Before You Vote, View These Ads

View them even if you have already voted. Even if you are not in Canada. They are spoofs/parodies of attack ads and they are pretty funny.



Subliminalparty.com

Capital-Labour Substitution in University Education

It turns out that increased use of podcasting, video-casting, and the provision of on-line lecture notes in leading to reduced attendance in classes that provide all these supplements.[registration may be required; thanks to Gabriel for the link]. In a course on the introduction to computers,

By visiting the course's websites, the 200 enrolled students could download audio recordings or watch digital videos of the lectures, as well as read the instructor's detailed lecture notes and participate in online discussions.



But there was one big problem: So many of the undergraduates relied on the technology that, at times, only 20 or so actually showed up for class.

Excuse me for saying so, but "Doh".



Of course if students can get a very good substitute for attending lectures, it shouldn't come as a surprise that some/many take advantage of it.



Consider this: you're taking a straight lecture course and you have the choice of going to class and watching the prof deliver the lecture, or you can stay home and watch a video of it at your own convenience. Even good, dedicated students will be tempted to cut more classes. And they might do just as well on the course exams:

Doug Suda, 19, ... said he skipped about three-quarters of the lectures [in that computer course], largely because he was busy with an off-campus job and was taking the course only to fulfill a business major requirement. At the end of the term, Suda crammed for the final exam by watching videos of about 15 of the lectures over three days.



"If I hadn't had that … I would have probably failed the class," said Suda, who instead received a B-plus.

So how are these profs responding? Nearly all of them are reducing the amount of material they make available via the internet. Here are some quotes:

• to curb "the absentee approach to college," [one professor] won't put her lecture notes online this term.
• To combat ditching in her own classes, [another professor] refuses to post notes online. With undergraduates, she said, "the more reasons you give them not to come to class, the less likely they are to come."
• [Another professor] said he has found that "too much technology really leads to a passive learning environment" and spurs more absenteeism. He has cut back on posting lecture materials online and now provides extensive notes only for the most complicated topics.

Others are giving more unannounced quizzes or giving marks for participation [I give marks for participation, but only in my advanced seminars, not in the course for which I provide podcasts]



There are at least three reasons that professors are bothered by the increase in stay-at-home students.

1. They honestly believe that by attending classes in person, students learn more. Of course most tests of this hypothesis suffer from simultaneity bias; the causation often runs the other way: smart students (at least this is how things used to be) are more diligent and more dedicated and hence more likely to show up in class. But that assertion compares attending class with missing it completely. The explosion of on-line offerings suggests that students who miss a live lecture but pick it up by videocast probably aren't missing all that much. In fact, they might be better off in that they can pause, rewind, etc. to make sure they follow each point. In other words, I don't accept this argument anymore; it certainly is far less compelling than it ever was (if it ever was).
2. Their egos are bruised. On the ego front, yeah, no matter how much I think students should be free to choose whether to attend class, it hurts when so few show up. I'm plagued by self-doubt, and as a performer, I like a big, receptive audience.
3. They fear being competed out of their jobs by the new technology. Typically, professors who are already making podcasts and videocasts of their lectures tend to be the better performers; they are the ones who will be benefitted by increased demand for performing skills in the provision of on-line lectures. But others who are less captivating could easily see the demand for their services decline as this trend continues. Universities will have incentives to hire professors who provide good podcasts and videocasts for larger classes; they might even provide many on-line classes for students who live in residence or in town but who would rather not attend classes. Making a videocast of a lecture presented once to 50 students available for thousands of other students sounds to me like efficient capital-labour substitution.

If technological advances make it possible for more students to treat their classes as if they are on-line courses, and if students are just as happy or happier time-shifting the lectures, why should professors restrict the students' options?



And if some students end up failing because they don't get much out of the on-line videocasts, that is probably just a form of natural selection at the university level.



Universities that grasp these points and embrace them will be successful. The others will find themselves facing increasing struggles over time.



Update 1: For more on the adaptation by universities to students' cutting classes in favour of on-line courses, see this.



Update 2 Craig Newmark has more in the same vein here.