Comments on economics, mystery fiction, drama, and art.

Friday, January 31, 2014

Quote without comment

I have nothing to add (here):

felix salmon         @felixsalmon
Today's irregular verb:
I disrupt
You disintermediate
He's engaged in regulatory arbitrage

Sunday, January 26, 2014

Home turnover and home values

There's an article in the New York Times today, chronicling the ups and downs of the price of a single home in Bowie, Maryland. I guess this is supposed to be somehow emblematic of the housing bubble, collapse, and recovery, but it's odd. According to the story, the home is on its fifth or sixth owner (which is not so odd), but it was built in 1990. So in 24 years, it's had 6 owners, or an average of one owner every 4 years. Which is odd. That kind of turnover is quite high; according to a National Association of Homebuilders study, the median duration of homeownership is between 10 and 14 years (depending on how it's measured); the homes sold in four years or less account for less than 25% of all homes, about the same as the percentage of home in which the owner has lived for 18+ years. Perhaps the moral is that homes that are often flipped have unstable values...

Saturday, January 18, 2014

It's nice when theory and reality coincide

One of the things I have always found useful in teaching microeconomics (and particularly the intro course) is to find examples of the world mirroring the theory.  Consider, for example, the theory of demand.  One aspect of it tells us that if two goods (say beef and pork) are substitutes, then a rise in the relative price of pork should lead to an increase in the relative consumption of beef.  In the chart here I show, over time, what has happened to the relative price of pork (the average price of a pound of pork divided by the average price of a pound of beef) and to the relative consumption of beef (per capita consumption of beef divided by per capita consumption of pork).  (The correlation between relative price and relative consumption is 0.504; considering that other factors affect consumption, this is a fairly remarkable result.)

(Click to enlarge)

Monday, January 06, 2014

The U.S. Inter-Bank Payment System

An interesting discussion, about which I know next to nothing.  My immediate reaction is to think that speeding up the payment system, securely, would be a very good idea.

Sunday, January 05, 2014

The Problem of the Glorification of War

There's a fair amount of internet discussion (you can begin here) of William Kristol's hymn to the virtues of war ("Pro Patria") and of the Secretary of Education in the UK (Michael Grove) arguing that the "left" has spread a series of myths about the First World War ("Michael Grove blasts Blackadder for spreading 'left-wing myths' on war").  The problem is to disentangle the glorification of war in general from the question of whether any particular war is necessary.  Kristol in particular seems to be preaching the glorification of war in general, whereas Grove's position is somewhat less clear.

The glorification of war as a general political position is, to me, morally abhorrent.  What is the rationale for asking people to view "war" as a noble adventure, as spiritually uplifting?  Is it because of a belief that one cannot truly love one's country without being willing to fight any war, with any excuse?  That seems to me the implication of what Kristol is saying.  I can see no morally acceptable justification for a belief in the virtue of "war" in general.

But specific wars may have--and only may have--justification.  I would start with the default position that war is not an acceptable policy, and require justification before changing my mind.

Looking at the 20th century, I can see reasonable arguments, for example, that World War I was a result of German aggression, Austrian stupidity, and Tsarist Russia being Tsarist Russia--the world would have been a better place had it never happened.  But once Germany invaded Poland, Belgium, and France, what were France and England to do?  Acquiesce?  Or resist? 

World War II comes as close as I think it's possible for any war can come to being a "just war," once again on the side of Germany's (and Italy's) enemies.

Korea for me is more difficult, and I vacillate.

Viet Nam, on the other hand, was just wrong.  The U.S. got involved as one colonial power replacing another (France), and the result was the devastation of Viet Nam, the collapse of a reasonably stable society in Cambodia, and turmoil in Laos.  Way to go.  And both the bay of Pigs invasion of Cuba and the subsequent decades-long embargoes never made sense--and almost led to a very, very nasty confrontation between the U.S. and the USSR.

Most of the small-scale military actions by the U.S. in the 20th century, from the Philippines to El Salvador, Nicaragua to Grenada have always seemed to me to be errors of judgment, with predictable awful consequences.

My response to the first U.S.-led intervention in Iraq was "Oh, god, here we go again."  But at least GHWB had the sense to pursue a limited objective and to stop once it was achieved.  The facts (a) that Iraq clearly was the aggressor and (b) that Kuwait requested help in defending itself seem, however, important here, and does (c) that the U.S. put together a clearly international coalition.

Both the second Iraq war and the Afghanistan intervention were neither justified nor pursued wisely, with the consequence that neither country has any political stability after more than a decade.

The various Arab-Israel military actions have also struck me as having had no particular hope of an outcome that was good for anyone, and, after more than 60 years, they continue in one form or another, with consequent destructive effects on civil society in all the countries involved.

Ultimately, I would side with Edwin Starr:  "War.  What is it good for?  Absolutely nothing."   But sometimes, and rarely, it may be unavoidable.  Then our task is to minimize the evils that result, not to glorify it.