Saturday, August 30, 2008

Public opinion in the Muslim world about globalization

Bryan Caplan draws attention to a just released public opinion survey conducted in seven Muslim countries by From the WPO press release:
The poll finds that most respondents also view international trade as good for their countries and themselves. At the same time, many are concerned about trade's effects on workers and the environment. However most express interest in addressing these effects, not through protectionism but through an international, cooperative effort integrating labor and environmental standards into agreements on international trade.

Caplan nails it:
When economists look at anti-globalization protestors demanding "labor standards," they often see them as thinly-veiled attempts by First World unions to make Third World firms uncompetitive. But this self-interest story just doesn't fly. Not only do large majorities of Western citizens want labor standards; so do the people of the Third World.

Let's hope that unresponsive elites ignore these benighted supermajorities long enough to allow economic growth to raise "labor standards" the one way that really works: Making workers more productive.
As I've said before, be careful what you ask for: rights have costs for those who get them.

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Thursday, August 28, 2008

Undercover Economist gets to the bottomline

"Still, one thing is certain: since your boy has a mother who is fussing about this sort of stuff, he’s going to do fine no matter what."

That in answer to this question: "My four-year-old son has a July birthday, which would make him one of the youngest in his class at school. I am thinking of keeping him back a year so that when he does start school, he’ll be bigger and more confident. Is this a good idea?"

In a related vein, see James Heckman's essay, The Growing Polarization of American Society and it Implications for Productivity, at VOX. An extract:
Fifty percent of the variance in inequality in lifetime earnings is determined by age 18 (Cunha and Heckman, 2007). The family plays a powerful role in shaping adult outcomes that is not fully recognised by current American policies. As programs are currently configured, interventions early in the lives of disadvantaged children have substantially higher economic returns than later interventions such as reduced pupil-teacher ratios, public job training programs, convict rehabilitation programs, adult literacy programs, tuition subsidies, or expenditure on police. This is because life-cycle skill formation is dynamic in nature. Skill begets skill; motivation begets motivation. Motivation cross-fosters skill, and skill cross-fosters motivation. If a child is not motivated to learn and engage early on in life, the more likely it is that when the child becomes an adult, he or she will fail in social and economic life.
Read it all, it's good throughout.


Wednesday, August 27, 2008

Yes, minister

In the Emirates, the bulk of schooling is privatized -- the exception being the government schools for Emiratis. Emirati parents often put their children in private schools where expats predominate. Why? They want them to get a good education.

Here's a clip that explains the logic of school choice.

Thanks to Hispanic Pundit for the pointer.


Tuesday, August 26, 2008

Blogroll favorite is hot

Carpe Diem written by Martin J. Perry is a relatively recent addition to my economics blogroll. To make my blogroll you have to be one of my favorites, something a I check daily because I enjoy it. The exceptions are and Wiki - Economics Blogs which both have the purpose of being comprehensive.

Perry is definitely on a roll today. Go to Carpe Diem and just keep scrolling. Or check out these posts:


Cows beat Dubai

Cow Compass visible from space:
Despite thousands of years of coexistence, exploitation and cheese, humanity seems to have missed an intriguing fact about cows: they like to point north. Or possibly south.

An analysis of more than 8,000 cows claims they have a statistically significant preference to align themselves in a north-south direction. The team behind this study has also found a similar preference in deer, and believes the animals must be sensing the Earth's magnetic field.

While 'magnetoreception' has been documented in insects, birds and some mammals, the idea that such a prominent example of it could have gone unrecognised for years comes as a surprise. What evolutionary advantage, if any, the cattle might accrue is unclear.
Has it really been unnoticed? If you've ever paid much attention when passing a field of cows you'll have noticed a majority are facing one way. I'd always conjectured the reason had to do with the direction of the wind. Evidently, not.

The researcher originally wanted to use Google Earth to look at human campsites, but couldn't see them well. What he could see were cows. Lots of cows.

Cows in close proximity to powerlines are unable to find north.

Monday, August 25, 2008

Fish podiatrist

Didn't know that fish have feet? Few do. But this isn't about doctors who care for fish feet. This is a story about fish who care for the feet of humans.

Or, more exactly, fish who eat the dead skin on your feet for a price:
Ivy Tominack of St. Louis is visiting relatives in Maryland and "took a detour" to experience the pedicure firsthand. "I love it," she says, describing the feeling of the fish nibbles as "prickle kisses." Genie Boswell of Alexandria says she can go longer between pedicures when the fish "have me for a buffet."

John says he has already made back his initial investment. If the current trend of roughly 50 pedicure customers a day continues, he says, he could clear $500,000 annually on the fish. He has also received hundreds of calls from people who want to open franchises.
Read it all in the Washington Post Magazine.

I don't think this service is available in Dubai, but I bet there's a market for it.

UPDATE: Pictures.


eBay style lending

What eBay has done for peer-to-peer selling, others are doing for peer-to-peer lending:
Steve Lubs was looking to get rid of his $8,000 in credit card debt, but his high interest rate had him bogged down. He tried getting a loan through a bank to pay off the balance but couldn't find one with an interest rate lower than 12 percent.

That's when he turned to Prosper, one of several peer-to-peer lending networks that connect people who need a cash infusion with those who have money to lend. About 70 people have pitched in with $100 to $300, totaling the sum he needs to get out of debt, at a rate of 8 percent.


Prosper lets people borrow or lend up to $25,000, typically by piecing together 50 to 100 small loans. The process is similar to the way an eBay auction works: Borrowers set the maximum interest rate they're willing to pay, and lenders compete to make the best offer. Users looking to borrow money can share how they plan to spend it, whether it's to buy a house or to pay for a wedding.

They can also invite friends to join. "If you get a friend to bid on you, it increases other people's trust in you," Larsen said. "That's where the social capital comes in."

Prosper oversees the process. It checks credit scores for both borrowers and lenders, verifies bank accounts, and then sets the repayment terms.

At first, about 30 percent of the users had blemished credit records that prevented them from qualifying for more traditional loans. But a wider variety of borrowers have joined the network in the past year, Larsen said.

"People looked at peer-to-peer networks as a place you go when you couldn't go anywhere else," he said. "Now it's become one of the new alternatives that's still open."

Lubs has also used Prosper as an investment by loaning small amounts of money -- typically $200 to $1,000 -- to people looking to borrow funds. He has 37 outstanding loans to network borrowers, totaling about $9,000. He said he's been earning an average annual return of 19 percent on the total amount, which is better than what he gets on his investments in the stock market and real estate.

"This is my primary method of investing," he said. "It's the best opportunity I have to increase my rate of return."
Here's the story.

Neither a borrower nor a lender be? Lubs is both. He has a credit card debt of $8,000 and couldn't find a loan to refinance it for less than 12 percent until he tried Prosper where he was able to do so at a rate of 8 percent. Now he's lent $9,000 to Prosper borrowers at an average rate of 19 percent. That's odd enough. But there are many of us who do the opposite: hold large saving or checking account balances at low rates of return while at the same time we have credit card debt at high rates.


Friday, August 22, 2008

Best selling economics textbook

And it's my favorite principles book.

Does sell the 4th edition international student edition? If so, net of shipping, is it a cheaper way to get the same book?

Gadling talks to Chris Blattman

Check it out. An excerpt:
I think we should recognize that the short volunteering vacation probably does more for us than the recipient. Development tourism has value, most of all because it expands a visitor's appreciation for life in a poor country. But we should not fool ourselves into believing that we can have much "impact" in just a few days or weeks. Neither should we convince ourselves this is the best use of charitable funds; the cost of the travel alone could find better uses. Plus, it's not as though there is a shortage of semi-skilled labor in poor countries ready to dig wells and build homes (more cheaply too).

I say, let's call these what they are: experiential vacations-- better than splurges in tropical resorts, but not quite impactful. The distance from development tourist to the true do-gooder is not that far, however. To make the leap, I usually recommend four options: go for weeks (or months) rather than days; go with the intent to learn, not to "save" anyone; don't displace the local private sector with your work; and identify a local community organization and continue to raise money for them when home. Sending children to school is a fine idea. But helping families or community organizations to set up income-generating activities (a small poultry or piggery operation, a grinding mill, a brick-baking outfit) is inexpensive yet can generate a stream of income for years of school fees.

Investigation into graft in Dubai

Financial Times:
Clouds in the form of a series of corruption investigations in Dubai became a storm last week with the news that a senior board member of a state investment fund had been detained. Adel Shirawi, vice-chairman of Istithmar and former chief executive of the home-finance company Tamweel, was detained on allegations of embezzlement.

Executives at state-linked companies have been increasingly nervous in the past few months since the authorities launched another investigation into financial irregularities at Dubai Islamic Bank and Deyaar, its real estate unit.

In the person of Mr Shirawi, the dragnet has brought in the most senior official to date and a fraud investigation has mutated into an audit of government-wide graft. The indications are that Sheikh Mohammed bin Rashid Al Maktoum, Dubai’s ruler, plans to leave no stone unturned and to give investigators considerable freedom to to build cases against suspects.
Some observers warn, however, that a backroom deal is being hatched. In Dubai many cases of embezzlement and corruption have not got to trial. Businessmen accused of fraud are detained by the state security service, but more often than not a deal is reached.

The last major graft case was that of Obaid Busit, Dubai’s customs chief, who was tried and sentenced in 2001. Government supporters refer to the case as an indication of the ruler’s intolerance of official corruption, but Mr Busit served only a fraction of his sentence.


Thursday, August 21, 2008

What I did on my hiatus

It's been noticed that I took a break from posting from July 21 to August 11.

Here's what I was up to. I was a temporary member of Zephyrus during its week as choir in residence at Durham Cathedral. More important, our daughter was the organist in residence.

Wednesday, August 20, 2008

Krugman throws tantrums?

Surely you jest. Krugman has a long memory and keeps a grudge. At least that's my perception.

That link comes from Free Exchange which has several interesting recent items including:
The great London smog of 1952
MIT professor Robert Pindyck cuts through energy policy bull

40 million percent inflation

Tuesday, August 19, 2008

Federal universities criticized over salaries

The Nation:
Meagre pay rise angers academics
Daniel Bardsley

Last Updated: August 18. 2008 11:53PM UAE / August 18. 2008 7:53PM GMT A

cademics at Zayed University have dismissed a five per cent pay increase for non-Emirati staff as “a slap in the face”.

Faculty members say the increase, revealed in an e-mail to staff from the central administration office, means that pay is failing to keep pace with rising costs in the UAE, where the inflation rate last year was 11.1 per cent.

Emiratis, however, are to receive an increase of 28 per cent of basic salary, or a minimum of Dh2,000 per month.

Zayed University (ZU), which was founded in 1998 and has campuses in Dubai, Abu Dhabi and Sweihan, recently became the first federal institution to gain accreditation from the US Middle States Commission on Higher Accreditation.

A female ZU academic, who asked not to be named, said the pay increases for non-Emirati staff were “ridiculous, absolutely ridiculous”.

“It’s absolutely a slap in the face. These increases are after the university has been accredited. This is not good. The credit should go to the faculty,” she said.

“I think they will not be able to recruit good faculty. Faculty will leave, there’s no doubt about it. Morale has been very low.”
The American University of Sharjah was the first institution in the UAE to receive an American accreditation (by Middle States as it happens) and is in the process of its first Middle States reaccreditation review. Several months ago AUS announced an increase in the salary pool of 15 percent effective September.


Monday, August 18, 2008

The Blattman beat

I continue to enjoy Chris Blattman's blog. He's a development economist who digs up items I wouldn't otherwise find. But he also writes posts that are more like original and insightful journalism. He's in Africa again and noticed two things.

1. You get what you pay for
"So why did you start a communal farm?" I asked James. The young man, aged about 30, lived in a village of no more than 200 households cut out of the surrounding jungle and swamp. He'd organized about forty friends and neighbors into a collective to farm rice and cassava.
What kind of man is James? A clever one. "The thing about these NGOs," he said, referring to the dozens of relief agencies that have swarmed northern Liberia to rebuild, "they really seem to like groups. If you try to ask them for something, they cannot give it to you. But if you form a group, then they can come to you and bring you assistance."

2. Benchmarking government performance
Riots erupted in a few urban centers across West Africa early this year, the bulk linked to the rising price of food. Liberia's own political instability was catalyzed three decades ago by a steep increase in the (state-controlled) cost of rice.

What I have now heard twice in Liberia, however, is that we should not expect a repeat performance. "At first people were very angry" said one grassroots trainer and organizer, "but since then we have heard on the radio how the price of rice is high everywhere. What can our government do? What use would be rioting?"


Sunday, August 17, 2008

Dubai and transshipment

Transshipment -- the ship of goods to an intermediate location and then on to a final destination -- may be legitimate or illegitimate.

Dubai is known as an entrepot, as Webster's defines it, an intermediary center of trade and transshipment. The question is, how much of that reputation is built on illegitimate trade. Specifically, how much is due to the embargo of Iran?

The game is making the sheikdom rich and powerful. “They’re reluctant to go too far, in part out of fear of antagonizing Iran, but mainly because of the bottom line,” says Michael Jacobson, a former Treasury Department official who is now a senior fellow at the Washington Institute’s Stein Program on Counterterrorism and Intelligence. “This is the way they are making their money, and this is how they are putting themselves on the map.”

It is difficult to separate the rise of Dubai from the fall of Iran. In 1980, not long after the emirate began opening its ports, Iran entered a war with Iraq; seven years later, the U.S.—worried about Iran’s burgeoning nuclear program and its soft spot for terrorists—leveled its first trade embargo. Dubai began to blossom. With its secure and open business environment and the U.A.E.’s impressive oil reserves, the emirate attracted tens of thousands of Iranian entrepreneurs. As legitimate trade increased, so did smuggling. Much of the U.S. merchandise that had once gone directly to Iran was suddenly being rerouted through Dubai. Iranian traders bought what they needed in the emirate and then sent it home.

Jebel Ali became the best-known terminal. Its inner basin is about two miles long, with 71 berths for cargo ships and tankers. It was probably Dubai’s first expression of its grand ambitions. After completing the terminal, the sheiks built a free-trade zone around it in the desert and dubbed it the Jebel Ali Free Zone, or Jafza; the zone was unique in the region at the time. Free-trade zones operate under special conditions meant to facilitate trade: Tariffs are waived, taxes are nonexistent, and regulatory oversight is minimal. In other words, it’s a world of exceptions that exists outside of the ordinary stream of commerce.

The arrangement was especially well suited to businesses that wanted minimal bureaucratic hassle, but it was also perfect for the growing number of shifty operators angling to transport such goods as cigarettes, hard drugs, and counterfeit pharmaceuticals without being detected. (The European Commission insists that the U.A.E. is one of the major suppliers of fake drugs being smuggled into E.U. countries.)

Read the whole thing. Thanks to Samurai Sam for the tip.


Saturday, August 16, 2008

The zipper problem

No, this is not a post about John Edwards or Bill Clinton.

It's about traffic congestion -- specifically about the most efficient way to get cars through a bottleneck created when 3 lanes, say, drop down to two. Cynthia Gorney writes:
Nearly every time I asked one of the traffic people to assume the role of the great vehicle arranger in the sky, remote-controlling each of us bottleneck drivers as if we were so many video-game characters, the reply went as follows:

FIRST, EVERYBODY REMAINS UNRUFFLED, without abrupt changes of lane or speed, as the lane-drop comes into view. Everybody takes three deep, cleansing breaths — all right, the experts didn’t say that, but they meant to — and considers both the imminent needs of everybody else and the system as a smoothly functioning whole.

Then everybody begins to slow, not too much, all in concert. All cars remain in their lanes, using all the real estate. ... People in the narrowing left lanes refrain from shooting ahead, while people in the right through lanes — this is hard to swallow, for those of us inclined toward vigilantism, but crucial — leave big spaces in front of their cars for the merging that is about to commence. We resist the freeze-out-the-sidezoomer urge. We prepare to invite them in.

Finally, at clearly marked or somehow mutually agreed upon places, everybody starts conducting beautiful “zipper merges.” That’s the technical term — one-two, one-two or one-two-three, one-two-three — as indicated by the roadway configuration. The process has now worked at its ideal efficiency/equitability ratio: if all have behaved correctly, the tunnel passage has been both benign and, relatively speaking, quick.
The last thing you want to get into is stop and go -- ah, the home drive from Dubai to Sharjah on the Emirates Highway. Slow down together and leave as little real estate unused as safely possible given your mutual speed. Easier said than done.

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Thursday, August 14, 2008

Links I liked

1. Self-inflicted barriers to economic integration across Arab economies.

2. Indicators of cultural success.

3. Gas prices, cross elasticities and the circular flow.

4. And, in a related stream, here's a thought by John "EclectEcon" Palmer, futurist.

Americans conserve on oil

Oil prices have fallen. James Hamilton at Econbrowser has the back story.


Monday, August 11, 2008

Abu Dhabi's sovereign investment funds

Brad Setser takes a look at Abu Dhabi's "proliferating" sovereign wealth funds.