Showing posts from January, 2010

Green Inc. at the New York Times tells us that cheaper renewable energy is a bad thing

Because it's coming from China.  To be fair, they are careful not to explicitly pass judgment on the situation.  But still. Here's the story and the money quote:   These [China's] efforts to dominate renewable energy technologies raise the prospect that the West may someday trade its dependence on oil from the Mideast for a reliance on solar panels, wind turbines and other gear manufactured in China.   Anyone over at Green Inc. see the difference between buying oil and buying capital equipment used to make energy from the wind and sun?  Actually, forget that difference.   Anyone over at Green Inc. think that we would be better off without Mideastern oil?  It would be nice if the folks over at Green Inc. would provide at least a hint that they understand the basic gains from trade and then explain that to their readers. It gets worse: “Most of the energy equipment will carry a brass plate, ‘Made in China,’ ” said K. K. Chan... President Obama , in his State of the Uni

The latest iThing

I feel I have to write something about this because I'm such a shameless mac lover.  People tease me in the halls about my iphone and I dropped a lot of cash on my macbook pro.  But I spend such an embarrassingly large amount of time on this thing--and love it thoroughly--that it was really worth it to me. So. About the iPad. I've long been a little tempted by the Kindle, especially the DX, but was obviously curious about what apple was cooking up.  I thought the Kindle would be nice for times when I want to get away from things a little and just read without distractions.  For this purpose there are two things I really like about the Kindle: (1) a very long battery life and (2) the paper-like screen that is not backlit and can be easily seen outdoors.  Free and inexpensive wireless connection to books, newspapers and magazines is nice too.  Given what I really like about the Kindle, I'm not really tempted by the iPad.  It looks very cool but if I really want to get a

The U.S. Biofuel Mandate and the Supply and Demand for Calories

I'm buried with teaching and research and travel these days, so even fewer postings than usual. Here are my slides for my talk today at Cornell.  This is stuff I've been working on for awhile with Wolfram Schlenker at Columbia.  The key conceptual contribution is showing how to use weather shocks to estimate the supply of agricultural commodities.  We also estimate demand using the weather, which isn't new in concept, but surprisingly hasn't been done on a large scale. We use our estimates to consider the effect of U.S. ethanol policy: (1) about a one-third increase in the price of calories from raw commodities: corn, soybeans, wheat and rice. (2) an annual reduction in calories used for food production equal to the annual caloric requirements of over 200 million people.(*) While we do not yet estimate where the calories in (2) are coming from, we expect most of the demand response comes from poor countries due to a larger income effect. (*) For rich people

Haiti and U.S. Sugar Policy

The tragic earthquake in Haiti has had me wondering about U.S. Sugar policy.  I should warn readers in advance that both Haiti and sugar policy are topics I know little about.  All I really know about Haiti is that it shares a history with many similarities to other struggling Caribbean islands, with roots in colonial sugar plantations, rum and slavery, only much, much worse.  And my knowledge of U.S. Sugar policy is somewhat superficial. So, here's the basics of U.S. sugar policy.  Like other agricultural policies, U.S. sugar policy got its start in 1934 during the Great Depression.  With prices of agricultural commodities (and everything else) plummeting, the government wanted to support prices in an effort to support farmers' incomes.  After all, back then, a lot more of us were farmers, and unlike today, most farmers were poor.  A lot of what the government did back then, even if it had good intentions, probably did more harm than good.  People were hungry too, and one th

Three blogs I'd like to write but don't have the time

1.   Fake Scandal Real Scandal : It is the greatest American pastime to be cynical about big bureaucracies and individuals in power.  Much of this cynicism is well justified.  A lot of it isn't.  Scandals about abuse of power, money or position sell newspapers and increase viewership and listenership.  These stories pander to an illusive human characteristic that makes us skeptical of others, especially others of a different social, racial or ethnic class--an "us vs. them" mentality.  This is why 60 Minutes, which has historically exposed some great scandals, is probably the most successful TV show in history.  But the excess demand for scandalous stories combined with strategic political gamesmanship means that many so-called scandals are fake.  Some news outlets are better at selling fake scandals than others and some people are more susceptible to falling for fake scandals than others.  Then, of course, there are the real scandals, some of which never do get reported.

Mortgage walkaways, good or bad?

We economists are indoctrinated into thinking first in positive rather than normative terms.  That is, how DO people and markets behave, not how SHOULD they behave. So.  Should you walk away from your underwater mortgage? I don't know.  All I know is that if you're a rational economic agent you WILL walk away from your mortgage if the benefits outweigh the costs. Or maybe not... You see, the mortgage business seems to be counting hard on the idea that maybe you won't walk away from your mortgage even if you're hundreds of thousands underwater and it is in your material self interest to walk away.  Not walking away saves the investment banks tons of money if you valiantly pay you mortgage even though it serves their profits over your economic interest.  These are the same banks (and mortgage-backed securities holders, including the Fed) that took huge risks in lending to you in the first place, and had assumed you would walk away if things got as ugly as they cur

Ron Lieber of the NYT says maybe the naughts weren't really naughts

But I think he takes his contrarianism too far. He writes: If you invested $100,000 on Jan. 1, 2000, in the Vanguard index fund that tracks the Standard & Poor’s 500 , you would have ended up with $89,072 by mid-December of 2009. Adjust that for inflation by putting it in January 2000 dollars and you’re left with $69,114. That's the right way to look at it.  But then he goes on: But that is not how most real people invest. They don’t pour everything they have into just one type of asset and then add nothing to it for 10 years. Instead, they buy stocks of all sorts, and bonds and perhaps other things, too. And many millions of them dutifully add more money regularly, usually into a retirement account that they won’t touch for longer than a decade. For those people, it was not a lost decade at all. Even those who started with a low six-figure balance could have doubled their total savings in the last 10 years. Wow!  How does Rob Lieber say one could have doubled their