Month: February 2011

The countercyclical asset, a continuing series, white women’s hair products edition

Bridget J. Crawford, of the Pace University School of Law, serves up an entry:

This short essay is a reflection on the relationship between the economy and women’s hair. I suggest that examining women’s spending on hair care products during uncertain financial conditions provides insight into the gendered aspects of the economy. As the economy has declined, sales of home hair-care products targeted toward white women have increased. Major news outlets report on salon customers trying to stretch out the time between their regular $250 hair salon treatments. Certain women turn to home hair dyes to maintain conforming appearances. In popular culture, to have white skin and gray hair is to be old (unemployable and unattractive) or menopausal (unproductive and unsexual). An attempt to retain their hair color (natural or chosen) is, for certain women, an attempt to retain a currency of employability, utility and desirability.

The hair-care spending of African-American women (of all socio-economic classes), in contrast, appears to be less susceptible to economic cycles.

The next two sentences of the abstract shift the nature of the paper considerably:

African-American legal scholars have given voice to the complex role that hair can play in the personal, professional, social and legal lives of black women. I argue that only in a down economy do some white women grapple with their hair’s complex signaling function, including its link to race and privilege.

Hat tip goes to the always-excellent  Here are previous installments in the series.

Andrew Sullivan is moving to *The Daily Beast*


Assorted links

1. Robert Barro on unions and right to work laws.

2. Arbitrage the nickel.

3. National Review interview with Tyler Cowen, with a segment on Austrian economics.

4. The Gaddafi International Charity and Development Foundation.

5. Remind me again: is Medicaid expanding…or contracting?  Why do I keep forgetting?  (p.s. this is the real danger to ACA, not the Supreme Court)

6. The marginal product of health care in Canada.

Who will still be famous in 10,000 years?

Sam Hammond, a loyal MR reader, asks me:

Who do you think will still be famous in 10,000 years? People from history or now. Shakespeare? Socrates? Hawking? 

This requires a theory of 10,000 years from now, but let's say we're a lot richer, not computer uploads (if so, I know the answer to the question), and not in a collapsed dystopia.  We still look like human beings and inhabit physical space.  If you wish, postulate that not all of those 10,000 years involved strongly positive economic growth.

In that case, I'll go with the major religious leaders (Jesus, Buddha, etc.), Einstein, Turing, Watson and Crick, Hitler, the major classical music composers, Adam Smith, and Neil Armstrong.  (Addendum: Oops!  I forgot Darwin and Euclid.)

My thinking is this.  The major religions last for a long time and leave a real mark on history.  Path-dependence is critical in that area. 

Otherwise, an individual, to stay famous, will have to securely symbolize an entire area, and an area "with legs" at that.  The theory of relativity still will be true and it may well become more important.  The computer and DNA will not be irrelevant.  Hitler will remain a stand-in symbol for pure evil; if he is topped we may not have a future at all.  Beethoven and Mozart still will be splendid, but Shakespeare and other wordsmiths will require translation and thus will fade somewhat.  The propensity to truck and barter will remain and Smith will keep his role as the symbol of economics.  Keynesian economics may someday be less true, as superior biofeedback, combined with markets in self-improvement, ushers in an era of flexible wages, while market-based expected nominal gdp targeting prevents a downward deflationary spiral.

The fame of those individuals will not perish, in part, because the more distant future will produce fewer lasting mega-famous people.  Achievement will be more decentralized and more connected to teams.  The dominance of Edison and Tesla, in their breakthroughs, will not be repeated.  There won't be a mega-Einstein eighty years from now, to make everyone forget the current Einstein, even if (especially if) science goes very well.

*Things to Come* (spoilers for an old movie in this post)

This Alexander Korda adaption of H.G. Wells was in 1936 perhaps the most visually spectacular movie of its time.  It looks like the first thirty, black and white minutes of Sky Captain and the World of Tomorrow, yet few people watch the movie today, in part because the actors shout at each other.

A world war starts in 1940 and lasts through the 1970s, fought with barbed wire and Art Deco tanks.  A pandemic wipes out half the human race.  Technology shuts down and for a while airplanes are a rarity.  Afterwards, a highly productive reign of science is established, enforced by air power ("Wings Over the World").  It is centered in Basra, Iraq and we see bombers and drones from Iraq take over England, enforcing a "brotherhood of efficiency, and a freemasonry of science."  There is no talk of ethics.  Eventually the world comes to resemble a Westin atrium and lobby.  Life expectancy goes up, but for hairstylists a cost disease still operates.  In 2036 they are facing not a Medicare cost crisis but rather preparing the first trip to the moon.

It is noted that man is "conquering nature" and creating a "white world" and no one seems to flinch; Wells favored eugenics.  Everyone becomes increasingly bug-eyed and a Luddite rebellion arises, although it seems to be barked down at the end of the movie.

The distinction between "a good movie" and "a movie which is good to watch" has never been more salient.

Things to Come is on Amazon here and on Wikipedia here.  Some stills and commentary are here.  Here is an NYT review from 1936: "probably as solid a prophecy as any."


Western intellectuals and Gadhafi

Robert Putnam was once called to a meeting with Gadhafi.  Here is an excerpt from his account:



Was this a serious conversation or an elaborate farce? Naturally, I came away thinking–hoping–that I had managed to sway Col. Gadhafi in some small way, but my wife was skeptical. Two months later I was invited back to a public roundtable in Libya, but by then I had concluded that the whole exercise was a public-relations stunt, and I declined.

Hat tip goes to Monkey Cage and ultimately, the fabled Daniel Lippman.  But that's not all — Benjamin Barber also had some visits to meet with the Libyan leader, here is his account:

Written off not long ago as an implacable despot, Gaddafi is a complex and adaptive thinker as well as an efficient, if laid-back, autocrat. Unlike almost any other Arab ruler, he has exhibited an extraordinary capacity to rethink his country's role in a changed and changing world.


Surprisingly flexible and pragmatic, Gaddafi was once an ardent socialist who now acknowledges private property and capital as sometimes appropriate elements in developing societies. Once an opponent of representative central government, he is wrestling with the need to delegate substantial authority to competent public officials if Libya is to join the global system. Once fearful of outside media, he has permitted satellite dishes throughout his country, and he himself surfs the Internet.


Here is Barber's piece on Libya from 2011.  It starts like this:

I offer my views about Libya here not just as a democratic theorist and HuffPost regular, but as a member of the International Board of the Gaddafi International Charity and Development Foundation until this morning, when I resigned.

Externalities across monozygotic twins

Suppose you have a right to genetic privacy. You might believe you do. Suppose you have an identical twin. Suppose the identical twin decides to publish his (or her) genetic sequence on the web. Do you have the right to stop this?

That is from Randall Parker.  More generally, how much do identical twins impose Pareto-relevant externalities on each other?

One model is that each twin benefits the other by finding an appropriate niche and pursuing some degree of differentiation.  In this view, too much "sameness" is bad for each twin.  I believe that is the common intuition, and it suggests that twins will in effect pay each other to be more different.  It also suggests that the resulting behavior of each twin is not quite at that twin's ideal point; if not for the deal each twin would prefer to be less different.

An alternative model is that a "doubled" person is more than twice as productive as a singleton.  For instance, positive reputation earned by one twin rebounds to the benefit of the other.  Just as companies and brands and families carry and spread reputations across collectives, so might signals of a common zygote.  If twins can signal that they are quite similar, perhaps more overall trust (or mistrust?) will be produced.  On these grounds, might twins implicitly subsidize each other's transportation into public spaces, to parties, and so on?

How much more easily can identical twins trade with each other?

Katja has a related post on women and swimsuits.

The historical roots of yoga


In turn, the physical aspects of yoga were hybridised with drills, gymnastics and body-building techniques borrowed from Sweden, Denmark, England, the United States and other Western countries. These innovations were creatively grafted on the Yoga Sutras–which has been correctly described by Agehananda Bharati, the Austria-born Hindu monk-mystic, as ‘the yoga canon for people who have accepted Brahmin theology’–to create an impression of 5,000 years worth of continuity where none really exists. The HAF’s current insistence is thus part of a false advertising campaign about yoga’s ancient Brahminical lineage.

The full story is here, and hat tip goes to The Browser.

The simple macroeconomics of labor unions

From Nick Rowe, via Scott Sumner:

If all prices are sticky, then an expansionary monetary policy, which increases aggregate demand, increases output and makes everyone better off. That's why booms are good, because it brings the economy closer to the competitive equilibrium. And why recessions are bad, because they take the economy further away from the competitive equilibrium.

And cartels, like labour unions, just make the problem worse. Because by joining together with similar sellers into a group, the demand curve facing the group is  steeper than the demand curve facing the individual, since members of the group no longer compete against each other for buyers. So there is an even bigger difference between the downward-sloping trade-off facing the group of sellers and the horizontal trade-off facing us all.

Unions are bad for the very same reason that recessions are bad.

All New Keynesian macroeconomists have understood the above for the last 20 years. Which is why all New Keynesian macroeconomists are fundamentally opposed to cartels, labour unions, minimum wage laws, etc.. OK. It's why they should be opposed to such things.

But alas, we do not quite find consistency on these issues…

The Big Society, from England

Here is Wikipedia on The Big Society.  Here are my impressions:

1. It is nice to have a conservative movement which is pro gay rights and reasonably socially liberal, while still fiscally conservative.

2. Their person in charge of naming should be fired and sent to study Orwell.  The words "Big" and "Society" make each other sound much worse.  I would have preferred "The Small Non-Society," "The Small Society," or "The Big Non-Society," or "The Medium-Sized Hook-Up," among other options.

The only worse name I can think of is Big Society Bank.

3. From a distance, it seems that almost everyone in the UK hates the program.   

4. Most of the important market liberalizations in the Britain have come through expressions of centralized political power, but for market liberal ends.  Margaret Thatcher is the classic example, but you could go back to the repeal of the Corn Laws or for that matter the abolition of slavery.  The Big Society pretends to have found a new formula for British liberalization and I suspect they are simply misguided.

5. John Kay put it well: "The Big Society might in the end mean no more in practice than the encouragement of volunteers to supervise public libraries, just as stakeholding ended up only as the name for new tax breaks for private pensions. If an emphasis on hybrids is to make the transitions from sound bite to political philosophy to practical policy, the largest group of questions that need to be answered concerns the closely related issues of hybrid capital structure and governance. Faced with opportunities to review these issues in the establishment of new regimes for hospitals, schools or railways, the Treasury resisted giving answers, because to do so would make the transfer of autonomy to the newly established bodies real."

6. The Big Society may create lots of decentralized power structures with the worst aspects of the private and public sectors, and those structures may in the longer run thwart true liberalizing reforms.

7. Admittedly this is from a critical source, but I don't think it is a terribly biased article.  Doesn't this make it sound…lame?: "The initiatives being championed include a local buy-out of a rural pub, efforts to recruit volunteers to keep museums open, support to speed up broadband supply, and giving residents more power over council spending."  

8. Since they presumably have read both Bryan Caplan and Matt Yglesias, why would they push for direct election of police chiefs?  Is there any good argument for that practice?

9. I hate local councils.  Might the disproportionate reasonableness of the British population be partially related to the fact that they don't spend so much time in local politics?

10. The cutting and consolidating of benefits is the best part of the whole scheme.  It is long overdue.

11. The real UK economy is in any case badly ailing, and for reasons which have nothing to do with the current government.  Finance is a far iffier venture than in times past, the tax haven gains for London will persist but may not be a source of future growth, British manufacturing has long been weak, their fossil fuels have not so bright a future, and British pharmaceuticals seem to have hit a dry spell.  What do they make?  The economy is in for a tough time no matter what, and the policies done in the meantime will receive a bad name, whether they deserve it or not.

12. England probably has the worst health care policy in Western Europe.  Still, whatever payoff will come from the proposed NIH reforms probably will take quite a few years, even if all goes as planned.  It is difficult to drag a health care system out of its established pathologies.  In the meantime the system will cost more and make the preexisting faults of the British health care system, including its inequities, more visible.

13. Unlike David Leonhardt and some other commentators, I don't blame fiscal austerity for their output and adjustment problems; their monetary policy has been fairly expansionary and they are not in a liquidity trap.  Scott Sumner is the best commentator here.

As it stands, I don't see the whole thing ending well.  It's not targeting what are actually their biggest micro problems, which are increasingly polarized labor market outcomes, a paucity of competitive export sectors, and some deteriorating educational institutions, at multiple levels.  I don't much care whether a citizens group shows up and feigns a Tocquevillian approach to running the local library.

School Report Cards Work

Simon Burgess, Deborah Wilson and Jack Worth look at what happened after school report card were abolished in Wales.

We test the hypothesis that the publication of school performance tables raises school effectiveness. Our data allow us to implement a classic difference-in-difference analysis comparing outcomes in England and Wales, before and after the abolition of the tables in Wales. We find significant and robust evidence that this reform markedly reduced school effectiveness in Wales. There is significant heterogeneity across schools: schools in the top quartile of the league tables show no effect. We also test whether the reform reduced school segregation in Wales, and find no systematic significant impact on either sorting by ability or by socioeconomic status.

Hat tip: Economic Logician who also notes this study on report cards in the Netherlands.

State tax revenue fact of the day, or “the new normal”

GDP has now recovered to pre-crash levels, but how about state revenue?

On average it has returned to 89% of peak levels.  In Louisiana it is about 72 percent of peak levels, the lowest figure in the group.  In North Dakota it is over 110 percent.  Only New Hampshire and North Dakota are above 100 percent of peak levels.

I take these numbers to be one measure (not the only measure) of how much we had been overvaluing our actual wealth, pre-crisis.

Here is the on-line version of the WSJ article, it does not reproduce all of the information in the paper edition, pp.A6-7.