Thursday, January 26, 2012

Thursday Roundup (1/26/2012)

New feature, y'all! I've decided to join the ranks of the aggregators, and post a weekly roundup of interesting posts from around the econ blogosphere that I didn't see get discussed very much. Here's this week's list:

1. Paul Krugman reminds us that debt bubbles are much, much worse than equity bubbles. This is relevant for my own research, since debt bubbles are often housing bubbles, and housing investors are often unsophisticated, liquidity-constrained, and prone to various behavioral biases.

2. Matt Yglesias basically reprises my "Great Relocation" idea - economic activity is moving to Asia because Asia has the densest populations. Of course, we both got the idea from Paul Krugman. Update: Ryan Avent, too.

3. Mike Konczal interviews Josh Kosman, who explains how the private equity tax arbitrage scam works.

4. Brad DeLong offers some helpful tips on the difference between behavioral relationships, equilibrium conditions, and accounting identities in economic modeling. Yay Principle #4!

5. Frances Woolley gives an excellent explanation of what econ blogs contribute to the academic discussion. Basically, assumptions are crucial to econ models, and blogs can examine the plausibility of assumptions.

6. Tyler Cowen explains the asymmetric nature of financial bets on volatility, and how a little moral hazard can go a long way.

7. My sources indicate that this email in Tyler Cowen's inbox, complaining about rude bloggers, is about me. Really? Am I really that rude? I guess it's easy to sound harsher on a blog than one intends to be (an effect that is noted in the immediately prior Tyler Cowen post).

8. Tim Duy uses Japan's experience in the 1990s to illustrate how fiscal policy can turn into fiscal capture...

9. Ryan Avent discusses how land use policies hold down real wages in Silicon Valley and transfer wealth from engineers to landholders.


  1. "My sources indicate that this email in Tyler Cowen's inbox, complaining about rude bloggers, is about me. Really? Am I really that rude? "

    When 'rude' is defined as pointing out the Emperors' lack of clothing, then yes, your are 'rude'

  2. I have cautioned you about your tone in the past. I think that there are times when you are gratuitously critical of senior economists. You can disagree but lay off the personal stuff. You should not call a man an idiot but it is perfectly acceptable to demonstrate that he is an idiot and leave the reader to their own conclusions.

  3. And another thing -
    I think that Krugman and Delong both go to far sometimes - but you are not them. They have twenty or thirty years on you and tenure.

  4. @Absalon:

    I have never called anyone an "idiot". In fact, I can't think of a single senior economist whom I think is an idiot.

    To my knowledge, the only person that I've ever deliberately personally insulted on this blog is Niall Ferguson...

  5. Noah

    I know I have previously urged caution in your language but I don't know if I did it as Absalon or as Anonymous. It is possible to deeply insult someone without explicitly calling them an idiot.

    I agree that Niall Ferguson is an idiot.

  6. I don't think Ferguson is an idiot, I just think he does not realize how racist his ideas are, and it really really pisses me off. I have my buttons just like anyone, and one of them is when people say or imply that nonwhite Americans aren't "real Americans."

    I occasionally tease people on this blog, like Steve Williamson or Steve Landsburg, but I try to do it in a way that makes it clear that I am teasing (and I try to contact them personally to make sure they aren't offended).

    I also occasionally do "fisks" or "takedowns" of other people's posts or papers, but I don't make it personal. Even if my criticisms are right, everyone makes mistakes and everyone overstates their case sometimes. I think we all understand that.

  7. I occasionally tease people on this blog, like Steve Williamson or Steve Landsburg

    If you think that what you were doing was "teasing" then you need a serious judgment reset. "Teasing" does not work in print.

    With respect to Niall - I stand corrected. You think he is a racist, I think he is a jumped up idiot.

  8. You do come across like a Krugman tribute act at times, so yeah. I like your posts, but I feel like I'd probably despise you in person.

  9. @Absalon: You may be right...

    @El Rob: LULZ @ "Krugman tribute act". Not sure if you'd like me in person, not everyone does, but I'd say there's a good probability you would! ;-)

  10. Yesterday was Robbie Burns day so I propose to let the Bard have his say:

    O wad some Power the giftie gie us
    To see oursels as ithers see us!

  11. Carolina7:34 PM

    Noah, if you want some empirical evidence about your idea about great relocation based in external economies of scale from less denser areas to countries with higher population densities, one thing you could do is to look at microdata at a city level and within the USA. For example, you could at changes in the rate of urbanization in some areas and at the same time the rate of economic growth for the same period of that city. It is usefull because it allows you to matain fixed several factors across the observations (public policy and institutions, technology and techonology advance, even purchasing power wouldn't differ much). If it is true that agglomeration has been playing a significant role in the share of growth in the last years, it should be seen at lower level as well (for example, cities whose population has been growing more in the last years could've done better recovering in the aftermath of the crisis). If you don't find a significant effect then you can not conclude (you could always argue that countries are not the same as cities) but if you do find something then it coud help you develop your idea further. Another possibility would be to use microdata by sector of industry, differentiate sectors which are more prone to benefit from agglomeration relative to those that do less (e.g: products whose supply chains are shorter, such as tabacco), take an aproximate date that could represent the beggining of more market oriented policies in China for example, and do a sort of diff in diff to see if agglomeration-seeking sectors have lost more jobs in US to China vis a vis the others.
    To this you should add extra extra grains of salt for two reasons: first, it probably deserves to be thought more thoroughly than what one thinks when you're commenting on a blog; second, I'm doing my M.A. in economics(in Buenos Aires), and if more years in school mean more knowledge, then you probably know more than I do

  12. @El Rob - I know Noah personally, and I bet you'd like him just fine. In addition to his strong academic and political opinions, he also likes cute animals and cool Japanese music.

  13. You'd probably also like rosebriar. She likes standing up for justice, breaking blocks with her head, writing cool books, and basically kicking ass at everything. ;-)

  14. Noah,

    You are not rude. You simply don't accept standard 'economics' as if it is truth and are not afraid of attacking senior figures (intellectually).

    The emailer denies that it is political, but of course it is. People read in a snarky tone when someone is disagreeing with them, and in a pleasant one when they are in agreement. There's nothing you can do about it.

    P.S. In identifying 'younger' bloggers the author reveals his projection bias. Sumner's posts on Krugman are among the snarkiest things I have ever read; the entirety of is horrendous and Stephen Williamson is incredibly rude.

  15. Brian G9:57 AM

    How do explain the behavior of companies such as RCA which moved production from the densely populated northeastern corridor in Camden NJ to, first, Bloomington, IN, then Memphis TN, and finally to Ciudad Juarez, Mexico? This was detailed in Jefferson Cowie's book Capital Moves and the first move to Indiana occurs in the 1940s before there was any pressures from foreign producers. Also, how does your relocation theory explain the migration of the textile industry from the Northeast, to the U.S. South, and then to Latin America. It seems to me that industry is seeking the lowest cost for labor and other factor costs than to locate near prospective customers. That is the logic to Jack Welch's infamous quote about every factory being placed on a barge.

  16. I don't think you're rude at all. In fact, one of things I really enjoy about your blog is that you seriously consider others' points and then lay out exactly why you disagree with them. I usually learn a lot reading your blog. Thanks!

    I really like Profs. Krugman and Delong, as well. However, Krugman usually doesn't take the time to lay out his thought processes as fully as you do, while Delong is the Tyler Cowen of the left: extremely smart, but often unable to translate his thoughts into clear prose.

    Finally, you should take that guy's letter with a healthy grain of salt. He almost certainly didn't write that out of the kindness of his heart to save the careers of econ grad students who blog in their spare time. Much more likely, he doesn't agree with you, and thought this way made him sound even-handed and above-the-fray. In other words, he's an asshole.

  17. @Rosebriar and Noah: If he's into Japanese music, then we'll probably be best friends.

  18. Anonymous4:27 PM

    The 'Great Relocation' idea argues that 'economic activity is relocating from rich Europe, America, and Asia to developing Asia faster than technological progress can replenish it.' In his NYT column from today, PK refers to his theory of economic geography to explain why strong agglomeration effects are key factors behind Germany's voluminous capital goods exporting activity; and, BTW, lots of those capital good exports go to Asia. But according to the 'Great Relocation' thesis, economic geography helps explain why Germany shouldn't be exporting so many capital goods to Asia. The theory of economic geography, it seems, explains why an activity does and does not take place.