Wednesday, November 30, 2011

Criticism of Jane Jacobs or big city approach of Jane Jacobs?

From an interview with Catherine Thumber:

You’re quite critical of some of the urban theorists and economists who’ve conceived of ways of revitalizing cities after the 1960s. Why?

They’ve made the metropolis the ideal urban form, when that had not always been the case. I lay much of the blame for that on Jane Jacobs—as much as I admire her—who framed the intellectual response to widespread urban decline, ignoring what she called “little cities and dull factory towns,” and arguing that urbanism thrives only in large and growing cities. She influenced the next two generations of urban theorists—people like Richard Florida and Ed Glaeser—who, while they don’t ignore smaller cities, advise them to do things like develop a creative class of artists, try to attract knowledge industries, and develop a tourist trade. These are not necessarily economic strategies that will work in smaller cities. As much as Scranton is a nice small city, it’s probably never going to have a substantial tourist trade. In the 1960s, there had been a debate between Jacobs and the social critic Lewis Mumford about different visions of urbanism. In the 1920s and 30s, Mumford argued against concentrating all of our wealth and cultural riches in large cities, and for valuing smaller cities as well, including the farmland and the ecological region in which they’re set. Jacobs basically won the debate, which is why we don’t really hear about Mumford’s vision.

A summary of her arguments are here.

Tuesday, November 29, 2011

There are no shovel ready jobs

Not even in the government. In a recession when it seems that data gathering is more important than usual to gauge the extent and depth of the crisis, even the government statistical agencies are unable to take on these tasks that could add jobs in the way that a census year usually adds temporary jobs to the census workforce:

From Remapping Debate (emphasis mine):
In the last several months, the U.S. economy has added several hundred thousand jobs, sparking optimism among some observers that the labor market has finally started to recover in earnest. There is substantial debate, however, over whether the jobs being added are “good jobs” — those that pay a high-wage and offer job security and benefits to workers — or “bad jobs,” which don’t. There is some, mostly anecdotal, data suggesting that the jobs being created in certain industries pay less than the pre-recession jobs, but, oddly, the federal government simply does not collect sufficiently robust information to determine how the wages and benefits of new hires differ from the wages of existing employees in the same occupation.

That basic lack of data has perplexed some labor economists and policy advocates, who see such information as a crucial part of understanding the current labor market. It is true that the information would not be definitive: the existence of a newly hired employee does not necessarily mean that a new job has been created, because “new hires” would show up regardless of whether the position was actually new (if an employer fires one employee and hires another for the same job — a process known as “churn” — the new employee is a new hire, but the job is not new). Nevertheless, being able to track the wages of new hires relative to existing workers would be a valuable contribution to an understanding of the pressures facing workers and the state of the labor market as a whole, several labor economists said.

If the data on the wages of new hires existed and were easily accessible, many labor economists said that there were a wide variety of useful applications for it, which could end up influencing policy decisions for the better.

John Schmitt, a senior economist at the Center for Economic and Policy Research, a beltway think tank, agreed. “In the best of all possible worlds our policy decisions would be informed by the data,” he said. “When we don’t have the data, we’re forced to make decisions on incomplete information, which often encourages decisions to be made based on political connections and in backroom deals.”

There are some practical obstacles to obtaining data on the wages of new hires at the occupational level, but economists agree that the BLS could collect that information in several different ways. The most practical vehicle, according to Kosanovich, would likely be the Current Population Survey (CPS), which is a monthly survey of households on a range of topics.

The CPS currently asks about job tenure in a biennial supplemental survey usually conducted in January. And though some industry-wide information on the wages of new hires can be gleaned from these data, Kosanovich explained that the survey size is too small to provide accurate information at the level of detailed occupations. To address that problem, questions about job tenure would need to be asked more often, or asked of more households, or both.

And according to George Long, a BLS economist with the National Compensation Survey, the obstacles to collecting the data are “more institutional than practical.”

“If we don’t provide certain information,” Long said, “it is because Congress has decided that it does not need that information on a regular basis.” Moreover, Long explained, every change that the BLS makes to its surveys must first be cleared with the Office of Management and Budget (OMB) as part of a 1980 law called the Paperwork Reduction Act. “The OMB is particularly concerned with ‘respondent burden,’” Long said. “They really don’t want us to ask more questions than we are required to by law.”

Monday, November 28, 2011

Technology stagnation or not

1. Broke down and bought a 10-inch Samsung Galaxy Tab. Compared to the Coby Kyros that I used to have which had a resistive screen I thought that the experience was much better. But wait a minute - the Kyros had HDMI output and microSD slot - both of which are not available on the higher price tablet?

Was never impressed with Android as an operating system and this current experience hasn't changed my opinion. There is too much sand boxing of apps and relying on the app to find a folder. Copying files from a flash drive is tedious. I never know where to put the books or music.

2. Converted an old desktop running Pentium 4 into a Linux. Compared to my previous experience loading Linux about 10 years ago this was an incredible experience. Gone are the days where I had to type in the screen resolution and type of graphics card. Phew!

3. Computer with TV tuner. Set up next to TV. Both receive over the air signal via rabbit ears antenna. TV receives more channels than computer. Swapped antenna. Same thing. What's the deal?

Sunday, November 27, 2011

Are college classes a normal good

I remember the days when I was in college when a professor (usually of economics) would remark that classes is a good that students enjoy most when there’s less of it (or something in a similar vein). Would they enjoy it more if they were go get none of it? From the WaPo:

George Washington University students who received “A” grades in two courses that were never taught will be refunded their money and allowed to keep their class credits, according to a university statement released Wednesday afternoon.

In October, the GWU School of Medicine and Health Sciences Office of the Provost received three letters from students who said they were enrolled in physician assistant classes in 2010 but never received instruction. The students still received “A” grades from Venetia Orcutt, department chair of the physician assistant program, according to the statement.

Orcutt had been assigned to teach a sequence of evidence-based medicine courses over three semesters in 2010 — one in-person class and two online ones. Each course was worth one credit. Orcutt taught the in-person course, but not the two online ones.

Saturday, November 26, 2011

Some crisis and economics readings

Crisis Economics by Nouriel Roubini and Stephen Mihm. The NYT review is here and here and another one is here. I was hoping for a radical new economic approach to thinking about crisis but this is not what the book is about. It gives a nice summary of the events and ideas that led to the crisis although it did not shed any new light. I was hoping for something radical on the part about reforms. Unfortunately this was not the place for any radical departure from the current debate.

The only proposal that sounded radical was to break up the big banks but this has already been put forth by different parties, among them Mark Thoma. All in all, I was disappointed by the book but some may find it a good place to start.

The Origins of Financial Crises by George Cooper was where I found the “radical proposal” that  I was looking for which I had hoped that Roubini would be brave and daring enough to espouse. This proposal is that central banks should actively seek to pop bubbles, i.e. take the punch bowl away from the party when the fun is just beginning. Some reviews are here, here and here. The argument that the origins of all financial crises is excess liquidity (or his preferred measure is credit creation or some broad definition of money supply) is nothing new. However, he manages to craft his arguments very simply in terms of the Minsky’s financial instability hypothesis.

These were the best parts of the book but like many economists, Cooper suffers from the same physics envy that brought the financial profession into the brink of self destruction not unlike the current crisis, dot-com valuation, and LTCM. His proposal that central banks can work to pop bubbles and in fact to manage the economy by creating smaller waves of small booms and busts rather than allowing a bubble to expand to such an extent as to create a systemic risk is very well argued. In fact it is too simply argued using as an analogy (I think) James Clerk Maxwell’s paper “On Governors” which is included as an appendix. Not surprisingly, Maxwell’s paper which is a predecessor to control theory and systems and deals with controlling the steam engine is filled with differential equations again not unlike much of finance theory and macroeconomics.

The weakest link in his argument I think is that Cooper seems to believe that the macroeconomy can respond to various central bank levers such as interest rate within some reasonable uncertainty bounds and is hence “controllable” but in reality monetary policy responds with long and variable lags. However, I am not convinced that his argument can simply be dismissed just because of this. The idea of Keynesian activism however is to smooth out the booms and busts of the economy, not to create booms and busts because of unsustainable booms. Perhaps it is time to revise the ideas of what Keynesian activism should be.

The Road from Ruin by Matthew Bishop and Michael Green was more enjoyable than I had expected. A review is available here. It is a very useful account of various things that have happened in financial history and why we need to learn (or relearn some of the lessons). Unlike Cooper, the lesson they take from history is the bubbles are a result of financial innovations rather than credit creation. For instance, if securitization is to be blamed then it should be banned or more highly regulated. The authors argue however that it was this higher degree of regulation that prolonged the great recession (p. 43). In may ways the authors cheer for free markets and the benefits that they have brought and tend to tread more lightly on the costs.

Plight of the Fortune Tellers by Riccardo Rebonato starts out with the premise that the current state of financial risk management is not working. It is too heavily dependent on measurement when measurement cannot be precise enough and when it can be precisely measured what can be measured is not relevant. A review is available here. This was what grabbed me but unfortunately, the book was not able to hold me. It goes through a discussion of Bayesian statistics and value-at-risk but what he actually wants to say essentially comes down to the fact that risk management is all judgment. We have a lot of tools that can help us make a decision but when it comes down to making some kind of decision it is all judgment and nothing else. We should not pretend that statistics, theory, data and computers are going to be able to quantify the risks and uncertainties precisely because they won’t.

And the Money Kept Rolling In (and out) by Paul Blustein was in some ways belated and in someways timely in light of the current Euro crisis. It is again a reminder of how tenuous the recovery was in Argentina and still is even today. Though the book is not as good as The Chastening it has the same characteristics of access to the cast of characters and internal IMF documents. (The phrase “abc was and still is a confidential internal IMF document” pretty much fills the end notes of the book.)

Wednesday, November 16, 2011

Bangkok floods update

Update 1: Check out #4, 11, 19, 23, 28, 41.
Update 2: Check out #11, 19, 27

Land of smiles? Or is the situation just so hopeless that we should just resign ourselves to it?

Thanks to the Atlantic magazine for compiling the pictures.

The (non) future of book retailing

In a previous post, I lamented the demise of bookstores in general and whether its future lay in positioning and locating itself in popular vacation spots and refocusing itself solely as a seasonal business as a tourism driven business model. I dismissed it as somewhat unlikely without much introspection and am returning to this as a result of the following news item:

After a beloved local bookstore closed here last December and another store was lost to the Borders bankruptcy, this city once known as the Athens of the South, rich in cultural tradition and home to Vanderbilt University, became nearly barren of bookstores.

A collective panic set in among Nashville’s reading faithful. But they have found a savior in Ann Patchett, the best-selling novelist who grew up here. On Wednesday, Ms. Patchett, the acclaimed author of “Bel Canto” and “Truth and Beauty,” will open Parnassus Books, an independent bookstore that is the product of six months of breakneck planning and a healthy infusion of cash from its owner.

“I have no interest in retail; I have no interest in opening a bookstore,” Ms. Patchett said, serenely sipping tea during a recent interview at her spacious pink brick house here. “But I also have no interest in living in a city without a bookstore.”

While I share the sentiments about living in a city without a bookstore what I’ve read of the article does not allow make me very confident about the survival of her bookstore (and the survival of book stores in general). When I think back to the times when I have actually enjoyed a book store visit I find that it is not when I was looking for a particular title. When I want to do this I go online. I know what I want and I want to get in and get out without having to wait in line.

It is not when I am with the kids or in a bookstore with kids running around. The children’s section needs to be located far away from the rest of me. The Barnes and Noble near us has its children section in the basement and to its credit it is a large section so that the kids can be contained within. The Borders that was near us had a children’s section as well but it was a corner of the bookstore which was not secluded enough. When I am with the kids in a book store the last thing I want to do is to try to contain them within a small space (especially when there are lots of other kids around). Fortunately, we are past that stage now.

The times when I enjoyed being in a bookstore was the indulgence of serendipity - when a knowledgeable bookseller talks to me and makes a recommendation that would never have occurred to me.  Or when talking to strangers who introduce me to a new genre. Sadly, this no longer happens as much perhaps due to our hectic schedules or changes in our lifestyles. Or perhaps the failure of bookstores is evidence of a decline in our sense of community. It would have been a place where like minded come and share ideas and recommendations and enjoy a sense of belonging.


What I did not know about equilibrium:

1. From SciAm (gated):

From the preamble:
… a sad fact of life quantified by the famous second law of thermodynamics …  if the world is steadily becoming more disordered, how do you explain the self-organization that often occurs in nature? At root, the trouble is that classical thermodynamics assumes systems are in equilibrium, a placid condition seldom truly achieved in the real world.

The Achilles' heel of thermodynamics is that, strictly speaking, it applies only when the system under study is in a quiescent state called equilibrium. In this state the system's parameters, such as mass, energy and shape, have ceased to change. Putting two objects together at different temperatures makes heat flow from the hotter object to the colder. This process stops when both reach the same temperature — that is, when the two are in thermal equilibrium. From that point on, nothing changes.

… Thermodynamics therefore deals only with situations of stillness. Time plays no role in it. … In introductory physics classes, students apply thermodynamics to dynamic systems such as car engines to calculate quantities such as efficiency. But these applications make an implicit assumption: that we can approximate a dynamic process as an idealized succession of equilibrium states. That is, we imagine that the system is always in equilibrium, even if the equilibrium shifts from moment to moment.

Describes the current state of macroeconomic dynamics very well.

2. Beer in equilibrium. From Fat Tire (on its label rather than website):

Fat Tire Amber Ale’s appeal is in its feat of balance: toasty, biscuit-like malt flavors coasting in equilibrium with hoppy freshness.

I expected the brewer to be an economist (after all who would use equilibrium to describe beer?)  but he turned out to be an engineer.

Friday, November 4, 2011

Counting people

We’re trying to count people but we’re not coming up with numbers that make much sense - or differences that are troubling. Let’s back up. We’re trying to count people by educational attainment. The following is for those 25 years and over:

Based on the 2010  American Community Survey:
Estimate Margin of Error
Some college, less than 1 year12,846,799+/-80,342
Some college, 1 or more years, no degree30,622,369+/-89,558
Associate's degree15,553,106+/-65,380
Bachelor's degree 36,244,474+/-119,630

From the 2010 Digest of Education Statistics (based on the Current Population Survey):
Estimate Margin of Error
Some college33,662,000+/-186,900
Associate's degree18,259,000+/-142,700
Bachelor's degree 38,784,000+/-198,100

These differences cannot be accounted for by sampling error - the margin of error is smaller than the differences between the two surveys in most cases. 

Presumably, the larger margin of error in the CPS March supplement data is due to its smaller sample size. Also the March Supplement is a monthly sample (actually collected over 3 months) versus the ACS which is collected over the course of the year. The ACS website states:

The strength of the ACS is in estimating characteristic distributions. We recommend users compare derived measures such as percents, means, medians, and rates rather than estimates of population totals.

The ACS seems to be a more complete sample in terms of its coverage (both in geography and time frame) yet defers to the CPS when totals are being reported (based on above statement). Moreover, the CPS continues to be the official source for poverty estimates. A guidance and fact sheet are available as well as some differences between CPS and ACS.

As far as I can tell Census has not made any attempt to reconcile the differences and I don’t really know if they can. I would assume the ACS numbers to be superior in terms of educational attainment and anywhere where I would think of numbers on an annualized basis. The deference to the CPS in terms of poverty seems from the outside to be a bureaucratic wrangle between two divisions and/or a desire to preserve continuity in time series.