Friday Special 5

Quotes to make your day at the touch of a button

Sweden opens embassy in cyberspace

What to do in case of a terrorism emergency

The 10 fastest cars of Spring 2007

Kissing customs in Argentina

Calvin & Hobbes are the real stars of Fight Club

Steve Jobs and Bill Gates

Friday Special comes early and in two parts this week - it's not every day that you get the richest guy in the world interviewed alongside the best manager of creative talent in the world. Yes, the former is an evil monopolist and the latter tries his best to become one, but I still think that as a society we got a pretty good deal out of both of them.

With thanks to the Big Picture for the pointer, here are the fathers of the personal computer revolution, Steve Jobs and Bill Gates:



For what it's worth, I'm writing this blog on a sleek-looking, consistently reliable, much loved 20'' imac, reverting to Windows (hey, didn't you know macs can do that?) only to run Stata.

You can catch the whole interview at All Things Digital:

Steve Jobs and Bill Gates Prologue
Steve Jobs and Bill Gates Part 1
Steve Jobs and Bill Gates Part 2
Steve Jobs and Bill Gates Part 3
Steve Jobs and Bill Gates Part 4
Steve Jobs and Bill Gates Part 5
Steve Jobs and Bill Gates Part 6
Steve Jobs and Bill Gates Part 7

Attitudes to international trade, boys v girls edition

Michael Hiscox, via Tyler Cowen, has a paper on 'The Mysterious Case of Female Protectionism':

The available survey evidence indicates that women in the United States, and in advanced economies more generally, are significantly more likely than men to support new restrictions on trade. Measures of the particular labor-market risks and costs associated with maternity do not appear to be related at all to the gender gap in trade preferences. We also do not find any strong evidence that gender differences in non-material values or along ideological dimensions have any affect on attitudes toward trade.

The data do clearly reveal that the gender gap exists only among college-educated respondents and is larger among older cohorts. We argue that differences in educational experience – specifically, exposure to economic ideas at the college level – appear to be most plausible explanation for gender differences in attitudes toward trade.

While I am not entirely convinced that the variables Hiscox uses to control for 'other factors' are adequate for the job at hand, the explanation he offers could potentially be part of the answer. However, I doubt either gender is blessed with an overall level of 'economic literacy' worth speaking of - thus, differences in economic education seem unlikely to be the main driving force behind the pattern we observe.

Tyler's explanation, that women tend to adopt a self-identity as a 'caring person', seems more plausible - although my hunch remains that more traditional 'economic' factors (current job insecurity and expected lifetime job insecurity, preference for risk, share in the gains from international trade) will eventually reveal themselves as the main culprits.

Hiscox also highlights a point readers of this blog will be familiar with:

The findings suggest the possibilities of a renewed theoretical and empirical focus on the role played by ideas, not just among policymakers but also among the broader electorate.

This seems to me to be one of the least researched areas in the wider field of economics. As a result, we are left trying to explain the pros and cons of different policies to a public whose concerns and biases we simply do not understand. By not knowing where the points of resistance to economic logic lie, we are unable to provide satisfactory answers to the concerns of the electorate - and because of this, the lessons of economics are often discarded as being irrelevant.

Economics is, more than anything else, the misunderstood science. And it's about time we did something about it.

The Global Peace Index

...was published today.

121 countries have been ranked by their ‘absence of violence’, using metrics that combine both internal and external factors. Most people understand the absence of violence as an indicator of peace. This definition also allows for the measuring of peacefulness within, as well as between, nations.

Developed in conjunction with the Economist Intelligence Unit and the Centre for Peace and Conflict Studies at the University of Sydney, the GPI boasts an impressive list of endorsers, including our own Joseph Stiglitz.

Personally, given the difficulties involved in defining the term 'peace', I doubt the index is going to be of much use to researchers - but who knows?

A different look at world income inequality and health

This is a fascinating presentation by Hans Rosling, Professor of International Health at Sweden's Karolinska Institute and founder of Gapminder, a groundbreaking project with the aim to 'bring data to life'. The Trendalyzer free online software, as seen on the presentation, is here.

And to add an interactive element to this, before playing the video have a stab at beating the proverbial monkey and guess which country has the highest child mortality rate of each pair:

1. Sri Lanka or Turkey
2. Poland or South Korea
3. Malaysia or Russia
4. Pakistan or Vietnam
5. Thailand or South Africa

Increasing returns to education, single parent edition

It's a well known story: increasing returns to education have been a major driver of rising income inequality in the US. And this graph from the Economist is a not-so-subtle reminder that 'returns to education' do not refer to income only.

An argument against free trade

A few posts ago, starting from the fact that non-OECD countries are for the first time in history producing more CO2 than their wealthier cousins, I wondered about the implications of global warming for free trade:

I expect another reason to be important (for the rise in CO2 emissions from non-OECD countries) and that's the migration of 'dirty industries' to the countries with the least stringent environmental standards and the lowest taxes on fossil fuels.

Can global warming in a world with widely varying taxes on CO2 emissions provide an argument against free trade? Trade is beneficial when a country has a comparative advantage in producing a certain good, but what if that advantage is borne out of differences in energy taxes? Is trade in private goods as beneficial as mainstream models suggest in the presence of global externalities?

Wikipedia has a good article, accessible to everyone, on comparative advantage. The cornerstone of trade theory and one of the most fundamental insights economics has to offer, the theory of comparative advantage powerfully demonstrates that everyone can gain from trade in the presence of different relative costs of production.

Picture a world with only two counties (let's call them USA and China) where only two goods are produced and consumed: call them 'services' and 'manufactures'. Asssume that there are no barriers to trade, so that eventually we reach an equilibrium where all gains from trade are exhausted.

Enter global warming. We now know that production of 'manufactures' also involves social costs and the free market is not efficient. The US takes immediate steps to rectify the situation and imposes a pigouvian tax on the production of manufactures. If the Chinese follow suit, the problem is solved. But what if they don't?

In the presence of taxes on US production, the relative cost of producing 'manufactures' in China goes down and production shifts away from the US to reflect the change in comparative advantage.

Under this scenario, some of the gains from trade are transferred from the US to China, as China can only emerge better off from this change in US costs of production. And the planet suffers too: with production of manufactures shifting from the US to China, the effect that a tax on the US production of manufactures has on global CO2 emissions can be as low as non-existent.

In this situation, and if the US is serious about achieving a more socially efficient outcome, it has only one option: to impose an indirect pigouvian tax on Chinese production of manufactures by introducing import duties.

In other words, to the extent that CO2 emissions are taxed at a socially inefficient level in some jurisdictions, free trade means that those that tax CO2 the least will enjoy a larger share of the gains from trade than would have been the case under a global pigouvian taxation regime. Furthermore, under a plausible set of assumptions, local taxes can be next to completely ineffective in reducing CO2 emissions, and import tarrifs and duties can lead to welfare increases in a county worried about global warming.

How long until global warming starts featuring prominently in trade negotiations?