4000 Year-Old Bling

Archaeologists have just found the oldest piece of "status" jewelry known in North America, dating back to about 2000 B.C. The necklace, found in the Andes, exhibits that societies far less complex than had previously thought used jewelry and precious stones as wealth and status symbols.

A problem with this: The writers point out that gold is almost universally considered a luxury item, yet their evidence only dates back to the emergence of more complex societies. To apply this same reasoning to these older societies (which, until now, they didn't even know produced/used ornamental jewelry!) seems a bit hasty. No matter how universal gold may seem as a status symbol, even in our society we can see that its exact meaning and interpretations have changes (for example, we no longer think of the "gold standard", or gold as a common form of currency, as it was long used as). The real meaning of the object also transcends its mere physical composition (as gold), and embodies unknown cultural value. I think more research should be done on this piece and others similar to it that may be found before any rash conclusions are made.

FDR on Economic Freedom

Perhaps the only thing more extraordinary than this speech's resonance and relevance to contemporary times is that the person who gave it actually was President. It is incredible both how much and how little 70 years can change things...

A Five Year Shopping Spree

It sounds like Mr Stiglitz and Ms Bilmes included alot of implicit (questionable?) costs but without actually reading their book I can't really make a statement about that. War is quite a pricey business. And it is impossible (even for an economist) to put a price on a human life. There are reviews and exerpts of the book all over the net if you wish to do some reading.

Exerpt of the book (haven't read it yet but did look at the great cartoon)
Stiglitz's website which has many reviews and interviews regarding the book

Rule of Law

This article is an interesting summary of the thoughts about "rule of law" and how it relates to economic growth. The article seems infused with a skeptical outlook on the belief that a firm rule of law translates into economic growth. I am upset by this attitude for two reasons.

1. The author seems to have an attitude that, since the rule of law is not conclusively related to economic growth; it is not an important goal to pursue. The rule of law, while perhaps not immediately improving the economy, will lead to a better quality of life (assuming these laws protect human rights, what the article terms a “thick” rule of law). The author so wisely reminds us, “There are other arguments, too: the rule of law is desirable for its own sake—to improve human rights or to increase citizens' chances of justice against predatory governments” Obviously these rights are going to benefit a nation. If there is growth without these “other arguments”, it will unsustainable because of eventual political revolts.
2. This leads me to my second point: the author seems to be looking for a quick fix, a “panacea” as he says for developing economies. Just because on strategy is not a universal remedy does not mean it should be discredited. There is not going to be one perfect way to improve a countries economy. Each economy will need its own solution because all countries differ with regards to resources, cultures etc. The economy is intertwined with all these unique human and geographical attributes which need to be addressed independently. Constructive strategies can be learned from other countries but must be adapted. Rule of law, however, must be present for a lasting economy.

I realize that the author wasn’t saying that rule of law is a bad thing; just that it was not a perfect indicator for economic progress. However I think countries cannot obtain sustainable economic growth with out it. There is never going to be a perfect model for developmental economics but rule of law will certainly help.

This Might Make Me Unpopular...

...but I am very skeptical about the benefits of the local food movement. First, I feel there is an obvious contradiction in that many (but not all, of course) supporters of the local food movement tend to also (overtly) support third world development. Many (again, not all) third world countries have agricultural export economies. Buying local equals not buying from third world farmers, and unless some magic development scheme can be instantaneously implemented to offset these lost exports, the third world will suffer.

And regarding our "carbon footprints," dubious evidence exists that connects non-local foods to higher green gas emissions. There is no doubt that non-local food has more "food miles," non-local food may actual incorporate much more energy-efficient production methods. As this Tim Harford article explains, "local" doesn't necessarily imply "natural," and many locally grown foods require temperature-controlled greenhouses (strange...that word looks incomplete without "gas" attached to it's end...) and large energy-eating storage facilities. The total carbon footprint of a pound of locally grown food may be more than one shipped from halfway around the world.

There are many arguments in support of this moment, and I am sympathetic to ones concerning fostering a sense of "community" and a "warm, fuzzy feeling" you might get eating that locally grown dining hall apple, but be cautious about wielding efficiency as a pro-local food argument.

A good academic article exploring this phenomena: http://www.regsw.org.uk/content/industryreports/viewitem.aspx?artID=4624

Sean

Happy Day After Pi Day

Nigeria has wasted billions of dollars awarding no-bid energy contracts to the ex-president and his buddies. See! This is the sort of corruption that hinders many African countries from developing. They should model themselves off our country which never awards no-bid contracts to energy companies...oh wait... Well at least we don't do it for military contracts!....oops...

An interesting article on philanthropy and behavioral economics.

Something Is Wrong With The Laws Of Physics

If we can't even get gravity right...

http://www.newser.com/story/20967.html

Potatoe

I am not sure what the “International Year” will entail, but the potato does seem worthy of some honor. Potatoes are so resilient and efficient (“It provides more calories, more quickly, using less land and in a wider range of climates than any other plant”), it is little wonder that the Irish became so dependent on them. Both Adam Smith and Friedrich Engels are quoted in this article, however Dan Qualye’s mishap is unmentioned.

Nicholas

The Seven Deadly Sins - Version 2.0

The Vatican has updated the original mortal sins with seven "new" sins, bringing the church up to date on a number of issues that may have been overlooked...1500 years ago.

The new seven are:

1) Environmental pollution
2) Genetic manipulation
3) Accumulating excessive wealth
4) Inflicting poverty
5) Drug trafficking and consumption
6) Morally debatable experimentation
7) Violation of fundamental rights of human nature

#'s 1-4, 6, and 7 demonstrate varying levels of ambiguity, making me question their real life applicability (what is "excessive" accumulation of wealth? does using a styrofoam cup count as environmental pollution?)

# 5 is curiously specific. Why only drug traffickers? What about human traffickers? Stolen-goods traffickers? Everything-else traffickers?

It's the Environment, Stupid

An article which shows that nothing in economics is simple, and unfortunately, corn-based ethanol is probably not going to save the planet. But I don't know if an unregulated, government intervention-less free market will be any better. An uncorrupted, uninfluenced-by-the-farm-lobby government would be a start in the right direction...

The BBC has a new programme (program) about the millions of tonnes (tons) of food waste we produce every year. Like many human qualities, this behaviour (behavior) has dire consequences for the environment.

Here are some stats from ENGLAND (with some translations by me in parenthesis), so you could probably multiply them by about 10 (an exaggeration...I hope) to get a good idea of US waste:


Waste not, want not

19% of all household waste is from food

10% of people admit they throw out food

6m tonnes of domestic food is wasted a year

30% of all supermarket purchases go straight in the bin (garbage)

15% is waste from the dinner plate or discarded leftovers from the fridge

15% is inedible waste – peelings, bones, tea bags, coffee filters

15p of every £1 spent in a supermarket is put in the bin (equivalent to about 15 cents per dollar)

70% of all fridges are too warm

1 to 5C recommended fridge temperature (I forgot how to convert to Fahrenheit)

250,000 tonnes a year of food waste from supermarkets and corner shops

1.9m tonnes a year of food waste from pubs, restaurants and food outlets

£460 a year – cost of food waste per adult in Britain (about $930)

£23bn a year – total value of food waste (about $46,381,726,857)

And, finally, an article about "a plastic graveyard the size of Texas". Really, it's about the unimaginable plastic pollution that is destroying our oceans. This scientist is pretty cynical. You know it's bad when they start out with "We are damned to a future..."

Project Syndicate...

...is full of great articles. Here are two:

#1 - a contrasting view of "decoupling"

#2 - this is why I like Dani Rodrik

Before I study for my Spanish test...

A new study has found that expensive placebos work better than cheaper ones! If that is not irrational, I don't know what is...

Farmers are ecstatic about rising wheat prices. Hungry people in the developing world do not share their joy...

Interesting post, great picture.

The Corporate World

States and their borders, arbitrary as they are, have been the dominant institution for the past several hundred years. Nationality, along with religion, race, and gender, form the foundation for constructing our social identity. We identify with it as much as it identifies us. It provides a shared base of language, history, values, and relations that form a sense of "community" within its confines.

But in this modern, globalized world, where do we find the state? The collapse of space brought by advances in communication and transportation technology have weakened the sovereignty of the state, as borders become less meaningful and the community base expands its reach. What are the new identifying factors of the 21st century? What will be the new shared base of the world community?

In many ways the multinational corporation (MNC) is the state reborn in a global world. The concentration and conglomeration of industries has produced mega-firms that stretch across traditional boundaries. Corporate logos have become the flags, their slogans and jingles the new national anthems. We swear allegiance to brands (Coke vs. Pepsi, Nike vs. Adidas) and are willing to go to extreme ends to protect their names. With many multinational corporations holding as much economic clout as entire countries, the lines between business and state politics is becoming increasingly hazy. When government makes decisions to the benefit of business with little to no benefit (or even harm!) to the citizenry, the role of the state truly has been dissolved and business is really the driving force. As of now, the state still asserts its dominance on the world stage...but for how much longer?

Interdependence?

In Marxian, we discussed the inherent flaw of capitalism that as all markets deepen and intertwine a downturn in one will lead to a downturn in all. The Great Depression and Oil Crisis of 1973 seem evidence of this problem. However, this article suggests that due to “decoupling” the current American recession may not affect other countries as much as predicted. The article notes “The four biggest emerging economies, which accounted for two-fifths of global GDP growth last year, are the least dependent on the United States: exports to America account for just 8% of China’s GDP, 4% of India’s, 3% of Brazil’s and 1% of Russia’s”. Perhaps markets are not as interdependent as believed. Perhaps in a more developed global economy, floundering countries will go the way of floundering businesses in a market. Suggesting that if one market fails, all will fail may be too strong a statement. Capital will find a way to make more capital. As a result, perhaps the American recession will not hurt other economies as much as it will encourage those other economies to find new markets. Decoupling could result in countries becoming less dependent on America as a market for exports, instead becoming more intertwined with each other.

Watch Your Words

Jorge Buzaglo makes a good point in his article about Amartya Sen, Spinoza, and capabilities.

Before I embark in my task I would like to refer to Emmanuelle Benicourt’s orthodox/heterodox partition of economics, which I do not think is very useful. Both categories are too heterogeneous to be helpful. If we consider what I think is a more useful categorization, that between conventional and progressive economics (or similar characterizations, such as conservative/radical, bourgeois/socialist, etc.), we will find orthodox and heterodox economists in both categories. Amartya Sen, for instance, is an orthodox economist, as both he and Emmanuelle Benicourt point out (Amartya Sen says “mainstream economist”). He is an orthodox economist because he uses the conventional apparatus of ordinary neoclassical theory. But as I see it, he is a progressive orthodox economist, since he applies this conventional apparatus to the advancement of a progressive cause, namely, the cause of equality.

In any polemic, it is easy to fall into vacuous rhetoric. Buzaglo asks us to look at taxonomy of the current debate. Is the current division of “orthodox versus heterodox” useful? or even correct? It may even be dangerous to label it conventional versus progressive or conservative versus radical, as these imply certain political ideologies. Any argument is decided as much by the words as by the true facts. If we are going to embark on this discourse on economics, we should be sure we have our words right.

The rest of the article is good too. Go read it.

Immobility is Bliss

I'm really glad I don't own a car and I'm not in England anymore...

Oil up + dollar down = sad consumers, happy oil companies!

Why Economist's Can't Agree On Anything

Economists are well-known and oft-mocked for their inability to agree on almost any economic questions. Minimum wage? Inflation? Immigration? Taxes? Ask a few economists about any of these and you are guaranteed to get several convoluted yet inconclusive and always conflicting opinions. But how can a self-professed science come up with endless contradictions? Perhaps this happens because any economic reasoning is tinged by economic ideologies. When one economists exclaims that “Taxes are bad!” while yet another snaps back, “No, taxes are good!” neither is making a strict claim based on scientific facts, but rather are reflecting certain personal values and opinions.

Because everyday economics as practiced is embedded in society, economic analysis, which takes economics out of its embedded context, overlooks the opposition of ideologies that exist in society (liberal/conservative, individual/society, etc, etc), a holistic and “objective” economics is impossible. Economic exchanges don’t take place in a black hole, devoid of time and morals. Numerous influences color individual economic analysis leading to varied – and wholly individual – interpretations of (economic) reality. Every “view” of economics, whether it is neoclassical, Marxian, feminist, or radical, favors certain aspects of economic reality in favor of others.

What is the result? Muddled public-policy and frustratingly bad economics.

Rational Chimps and Irrational Space

This article explains a set of experiments carried out on chimps modeled after the famous "Ultimatum Game".

Quantum mechanics will blow your mind: http://youtube.com/watch?v=H697Y7e_Zd8

Sean

Criminal Capitalism

A short paper I did for Ruccio's class:

Whether through minimum wages, environmental regulations, or health standards, formal laws often stand as barriers to the complete minimizing of costs (or maximizing of profits) for the capitalist firm. Laws act as deterrents, forming the “rules of the game” that all corporations are expected to play by. But sometimes there can be benefits to breaking the rules. If the cost of being caught breaking the law (fines, bad publicity) can be measured against the benefits of breaking the law (profit, profit, and more profit), then obeying the law presents itself as a simple cost-benefit analysis. If the potential costs of breaking the law are less than the benefits, the rational, self-interested, profit-seeking choice would be to break the law. The modern globalized economy presents many new opportunities for tremendous profits to be made by not following the law, through ignoring environmental standards, “softening” pharmaceuticals by using substandard ingredients, ignoring trade sanctions and embargos, or employing illegal labor. The lowering of costs by the formation of monopolies and oligopolies, (legal) exploitation of labor, stifling of innovation, branding, and price collusion are recognized as “natural” outgrowths of modern capitalism by Sackrey et al., but to this list must be added the stretching or transcending of the law in the process of accumulating profits. In this light, illegal practices are not actions apart from or in defiance of the capitalist system, but are rather the logical product of a system with unrelenting downward pressure on costs with simultaneous upward pressure on profits.

It seems that multinational corporations will condone illegal behavior in the face of substantial profit opportunities. The various scandals of the past decade, including Enron, Worldcom, Blackwater, Halliburton, and more recently, Société Générales, all point to some general acquiescent involvement at the tops of these organizations. Through explicit encouragement or by simply “looking the other way,” corporations reap large profits through deception and disregard of laws. Many analysts were rightfully skeptical that Jerome Kerviel, a mid-level trader, would be able to bet over $70 billion without setting off any alarms. Kerviel later implicated his bosses, saying that they knew of his illegal trading but wouldn’t intervene as long as he continued to make profits. There have been many cases of corporations selling products to war-torn countries, bypassing trade restrictions and arms embargoes. All it takes are forged customs papers and mislabeled shipping containers (new label: foreign aid). The pull of profit opportunities, not just in selling arms but in the natural resource contracts often secured in return, are often worth crossing the law for. Profit-seeking and capital-accumulating behavior not only promotes the formation of oligopolies and monopolies among modern corporations, but provides incentive to actually break the law. The law, from the perspective of the corporation, simply exists as a cost to be minimized – minimized by not following it.

Sean