The Filter^

More on GMU

I've previously demonstrated my grad school pride by linking to Walter William's piece: "A dynamite economics department", and also the Slate article by Boettke and Tabarrok. Next up is "The Virginia School" in Doublethink:

Northern Virginia’s GMU was once known mainly as a commuter school, but its economics department has risen to national prominence in part because of the two Nobels awarded to faculty members in the past 20 years*, and also because of its brand of “interesting economics,” which has helped make it one of the most-quoted economics departments in the world.

It even comes with photos.

*Shouldn't that be 22 years?

Russian Textbooks

The problem with such an ideological construct, says Andrei Zorin, a professor of Russian culture at Britain's Oxford University, is that its sole purpose is to preserve the status quo and keep Mr Putin in power. “But a conservative ideology demands respect for institutions, while an ideology of a charismatic leader requires a grand vision. They have neither."

That's from a fascinating article in the Economist. I recommend the whole thing.

Sautet on inflation

Take a look at Fred Sautet's latest on inflation: The Disastrous Effects of Central Banking: Let’s Get the Story about Inflation in New Zealand Straight. I've always struggled with the exact point at which Keynesian's feel the Quantity Theory breaks down, and Fred acknowledges a tricky issue:

It is surprising to read that both the current governor, Alan Bollard, and the ex-governor, Don Brash, believe that inflationary pressures are, to some extent, outside the control of the RBNZ... Don Brash has recently published an article on petrol tax as a means to control inflationary pressures (see here). The idea is that the tax would reduce the general level of spending in the economy without the central bank having to change its monetary policy. For Brash, taxation is a means to control inflation.

Considering that Don Brash is one of the heroes of late Milton Friedman (see here) and that he presided over the establishment of one of the best monetary policies in the world, his view is really surprising to say the least!

Read the whole piece for a sharp, succinct overview of the credibility issues, wavering targets, quasi-independence, the "D" word... but most importantly the "optical least sqaures" record of c20th Central Banking

Julian Simon and the Ultimate Resource

Don Boudreaux on Julian Simon:

Simon's most important contribution was to crystallize and explain an insight that even the best economists before him only glimpsed -- namely, that human beings in free societies are "the ultimate resource." Nothing -- not oil, not land, not gold, not microchips, nothing -- is as valuable to the material well-being of people as is human creativity and effort. 

Petroleum didn't become a resource until human beings creatively figured out how to use it to satisfy some human desires and other human beings figured out how to extract it cost-effectively from the ground.

An important implication of this realization that humans are "the ultimate resource" is that high and growing population -- in societies with sufficient freedom to allow individuals to experiment and create -- is desirable. If human creativity and effort are not only resources, but also the ultimate resource, surely it's foolish to lament large and growing supplies of it.

Quick roundup...

...from various sources:

• What can Einstein tell us about management?
• Does Ronald MacDonald work for ther Bank of England?
• What book should I recommend?
• What does the Detroit public schools book depository look like?
• What should I do on March 12th?

Virgin on the Ridiculous

I bet you're wondering where my posts from Finland have gone - including the review of Helena Juntenen in La Boheme. The answer is they haven't gone anywhere - they're sitting on my computer, but thanks to Virgin Media I still can't post them as I don't have an internet connection (I can only grab the odd minute here and there, hence this...).

Hopefully they'll be available soon - six weeks and counting since Virgin drilled a large hole in my wall and fed a cable through it, so hopefully not too long to wait now...

Finland and Estonia

I've been racking my brains trying to think of something interesting to say about the Finnish economy for our ongoing Finnlter^ series, and have finally realised: Finland is interesting, not necessarily for what it is, but also for what it is not. Curiously, the relative moribund nature of Finland is a powerful reminder of the effect of comparative economic systems. According to Mart Laar*:

In 1939, it was hard to find two more similar countries as Finland and Estonia. We were very similar in language, culture, and living standards. Our economies were more or less the same. Then in 1940, Estonia was occupied by the Soviet Union and Finland successfully protected its independence. Look at what happened in this context during these fifty years and then you can understand how terrible the communist system really is. And it’s not only in the economy. This is in all fields of life—the social structure, cultural standards, education, healthcare, or whatever. When you compare those two countries, which were exactly the same in 1939[,] in 1989, then you will find what communism really means, and how bad it is. Our economy, our nature, and our environment was [sic] destroyed

The use of Finland and Estonia as a natural experiment has also been made by Robert Higgs, in his series of "Experiments in Political Economy" for the Independent Review. His conclusion**:

The conclusion:

their economic and social differences grew so large that no informed person could honestly dispute the pernicious effect that communist rule had on occupied Estonia.

* Laar, Mart. 2006. Exporting Hope: An Interview with Mart Laar. Religion and Liberty: A Journal of
** Higgs,Robert "Results of Still Another Experiment in Political Economy" The Independent Review Volume 12 Number 1 Summer 2007) Religion, Economics, and Culture 16 (fall):3,12–13. p.12

Prosperity and Child Mortality

According to a BBC report, "wealth 'may not lead to health'". It's based on a report by Save the Children, but doesn't provide any link so it's hard to tell whether my criticisms should be levied at the BBC or both. However the claim seems to be that:

UNDP statisticians calculate that more than half of the babies who die in Angola could be saved were the country to spread its wealth more fairly.

Which is interesting, given that the report confirms that:

• Wealthier countries have lower rates of child mortality than poorer countries
• Within poor countries, wealthy people have lower rates of child mortality than poorer people

...and yet the conclusion is that:

wealth 'may not lead to health'

This is shockingly poor research/reporting - emphasising the opposite conclusion than the evidence suggests. For those of us who put infant mortality before ideological dogma, here's the bottom line:

Bubbles refer to countries, colours show continent, size of bubble is the population. Note the ridiculously strong negative correlation: prosperity = low child mortality

Source: http://www.gapminder.org/world

Grad School Tips

I've just put a link to Fabio Rojas' "Grad Skool Rules" on my resources page, and have also seen Matthew Pearson’s (UC Davis) guide to Surviving the First-Year of grad school.pdf (via Gabriel). A nice quote:

Thriving during your first year is highly correlated with passing your prelims. And as such, the sage advice herein is designed to help you become the best grad student you can be, to get the most out of your classes, to develop your intuition, to master the core theory, and most of all, to pass your prelims, all the while maintaining a loose grip on your sanity.

My advice for grad students is more straightforward:

1. Study
2. Sleep
3. Social life

Pick two

I'm still not sure how I managed to complete my PhD in 4 years and get married in that time, but it must come down to:

• Pick the right school - I was immensely fortunate to go to the dynamite George Mason (that dares to be different), and it meant that I was surrounded by knowledgeable people who shared my passions. If you study in an environment like that, you can't go wrong
• Preparing well - find out the textbooks for the core subjects and read them before you start
• Find/create a good study group and stick with it - I find that learning is a social process and therefore a stable group of close colleagues is gold dust
• Have realistic expectations - for me the first year was about survival. I'm consistently told that ambition and aspiration should exceed merely "survival" but for me it works
• Drink productively^
• Love what you do - my PhD mattered to me. I was willing to sacrifice a great deal. If it's a chore then it's a struggle, but I never grew tired of my subject and still want to discuss and develop the ideas I pursued.
• Change the title at the last minute - without trying to contradict the previous advice, in the final few months of intense writing/rewriting of my dissertation I changed the title. As the formatting requirements began to take priority over the content, you begin to question everything. At about 4am I had a revelation and rewrote the abstract and changed the title. It was a good decision - not only was it a more accurate title, but it reinvigorated me and breathed new life into the project
• Endure - it is a test of stamina. Pete Boettke likes to recite James Buchanan's advice of keeping your arse in the chair. I believe that most academics are lazy, and if you work hard you will succeed. All writing is work and all work is work in progress. Just get it down and keep moving forward. If you go straight to grad school from undergrad you'll realise that you're open all hours. You can have a healthy work/life balance by realising that:
  • your life is your work and your work is your life
  • you're not working 9-5. whenever you're awake, you're working.

Bottom line is that ideas matter.

Open question: does advertising regulation prevent free speech?

Advocation of free speech is intellectually incompatible with government intervention in the goods market

That comes from a previous post on the (under appreciated) epistemic wisdom of Ronald Coase, and the answer still bugs me. Consider the Everton match this evening, where we had to remove our sponsor (Chang Beer) from our shirts since this breaks Norwegian laws on alcohol advertising. For me this is simply a violation of free speech - Chang are willing to pay my football club a few million pounds a year to inform me about their product. It means that when I'm in a curry house in London and realise they serve Change I get dead excited and ask to keep one of the glasses. It's win-win.

I appreciate that some people find it distasteful that this same information is being sent to children, but at the end of the day I believe that the right to communicate, and share information should outweigh people's sensibilities. I find The Sun immensely distasteful, and think that their adverts are far more harmful to children than that of Chang Beer. But I wouldn't seek to make it a criminal offense for them to advertise and don't expect my sensibilities to matter. At the end of the day there's no objective means to determine whether somethings tasteful or not, so legislation on these grounds will always result in sheer snobbery.

So I'm under the impression that any reasonable person thinks it's a little silly to force Everton to remove their sponsor from their shirts, but I also appreciate that many people advocate government intervention in the goods market. Popular support for regulations such as occupational licensing and health & safety laws are widespread, so clearly - for some of you - there's a line between banning alcoholic beverages on football shirts, and, say, forcing insurance companies to reel through their terms and conditions on a radio advert. Many people support the imposition of limitations on how non-violent companies communicate with potential customers.

So my simple question is this: if you believe in free speech, but are in favour of advertising regulation... are you a hypocrite? a moron? or what??