New School Economic Review

Forget the Big Mac index, try penguin books instead

Wandering about New Delhi I am always struck by the way that the markets are organised. Special areas are set aside in each residential quarter (or ‘colony’ in the vernacular) and people know what markets are good for what. So off we went to get some books at Aurobindo Market, and if you want price disparities, forget about the Big Mac index and have a look at the price of books. Books are homogenous products, they are easy to replicate (so piracy is usually easy) and global publishers sell the same good in all markets under the same rules (unlike McDonalds who will need to consider rent prices, franchise costs, hygiene regulation and local tastes).

I ended up buying a very large Penguin Classic, Kautilya’s The Arthashastra - think Macchiavelli meets Adam Smith but anno 300 BC in India, preceding and influencing Greek writers such as Xenophon. The total price was 599 rupees, or $13.36 US. That seemed a bit steep to me, but turns out that the same Penguin edition is $42.95 in the US. Of course $14 buys  you a lot more here than at Barnes & Noble on Union Square, but a quick check on the PPP rates suggested that what I paid for The Arthashastra was about $33 in PPP terms. It seems that Penguin is pricing this very academic book a little below par value for the world. But academic special interest books can be very expensive so I had a look at Stieg Larson’s The Girl with the Dragon Tattoo on the next shelf. 499 rupees, so $11.19, and how much for the same book on Amazon? $14.95 RRP, but yours on-line for $8.25… The nominal price on Union Square is lower than the price in Delhi??  The PPP price of this fiction work is around $27.

That only seems really mad if you consider that the average wage of well-paid, albeit low to medium skilled, labour in Delhi (lets take a driver) is around 10,000 rupees a month: So a paperback would constitute  5% of the monthly wage.  That is almost a full days wage to buy a book. Most New Yorkers can earn the price of a book in an hour or two. So where does that leave the market? Targetting a very small niche group for educational texts – with a global price point – and an even smaller niche for fiction and general reading material, which costs more than the global price. I am told similar patterns emerge for CDs, DVDs and other entertainment material. I wonder what the founder of Penguin Books would make of this, given that:

The first Penguin paperbacks appeared in the summer of 1935 and included works by Ernest Hemingway, André Maurois and Agatha Christie. They were colour coded (orange for fiction, blue for biography, green for crime) and cost just sixpence, the same price as a packet of cigarettes. The way the public thought about books changed forever – the paperback revolution had begun.

A pack of smokes costs above $11 in New York and 100 rupees in Delhi (although the local rolled variety are much less). Book prices have a long way to go in one of these locations, if Mr. Allens intentions are to be realised.

What is Economics: Friday Column (5)

In light of the NSER’s next edition, I will be hosting a regular Friday column searching for answers to the same question: what is economics?

Human Rights and Economics

Recently I’ve become more aware of the role of “rights” in economics.  As a relevant example, what is “free-market ideology” beyond a respect for capital/property rights?

Specifically, I’ve started to read more and more from Human Rights Organizations, in their news sections and regional reports.  For someone who is yearning for morality in their worldview, these publications quickly put life back into perspective.

But as I read over these reports, and the often incredible destruction they document, I asked myself: where does economics stand with human rights?  It seems only natural that our field, which has so readily embraced research on the family, corruption, etc. would also consider the devastation of democratic rights around the globe.

After a simplistic search that only a graduate student could consider meaningful, I found these results/people:

1. Many discussions of globalization or: economics vs human rights
2. A few legit papers
3. The names: Sean Archer (U Cape Town), Charles Villa-Vicencio (a theologian), and Otaviano Canuto (World Bank: Poverty Reduction)
4. And of course, a (two volume) Noam Chomsky book

Beyond that, one could hardly call the “economics of human rights” a sub-sub-field of the discipline.  It’s beyond marginal or heterodox, it’s notadox.

And maybe I’m being naive, but why?  Why aren’t these concerns, which Eli Wiesel called “the worldwide secular religion”, on the fore of at least heterodox thinking?  Ought we, the concerned scholars, see economic development as a means (or sub-field) to human rights?  Shouldn’t economics and our productive society exist to promote better living and less suffering first?

Or am I entirely mistaken.

Naturally, the final question is: what does this say about economics?

World Economics Association

Within hours of my (final) final exam, I received notice about a new organization: the World Economics Association.

We knew this was an intense moment for two reasons.  First, it was within hours of my last final exam.  Such a distraction hints at God’s sense of humor.  Secondly, this historical moment plays right into our examination of the economics field.

In 1885, the American Economic Association was born.  In the field, it has become the ideological power player as an association, journal publisher (AER, JEL, JEP), and award granter (John Bates Clark Medal, Elaine Bennet Research Prize).

The World Economics Association, founded by the likes of Edward Fullbrook (of Real World Economics Review fame), Peter Radford, and many others, brings a new set of values to the table.  A comparison of values between the two sheds light on the WEA’s significance:

American Economic Association
1. Encourage economic research
2. Publish economic journals
3. Perfect freedom (or objectivity) in discussion

World Economic Association
1. Worldwide membership and governance
2. Inclusiveness with respect to diverse theoretical perspectives
3. The study of the world’s diverse economies.

Though there are 8 “commitments” by the WEA (including 3 journals(!) and 2 annual conferences) these three were emphasized.

It will be interesting to see the impact of this new organization, but it appears to be off to a rather good start.  For me, I can say that I joined the organization, donated $20, and feverishly ate my lunch in less than 10 minutes.  I couldn’t spend any more time… I had more cramming to do.

OFFICIAL CALL FOR PAPERS!

The New School Economic Review (NSER) invites submissions for papers that focus on fundamental aspects of the Economics discipline. This is the official journal of The New School Economics Department that is run by and for graduate students who aim to foster interdisciplinary cooperation.

We are interested in papers that ask/answer questions relevant (but not limited to) the following subjects: what is Economics today; how has the field been affected by the 2008 financial crisis; which methodologies are respected and which are underrepresented; what are the limits of modeling; is Economics an objective science; does Economics promote diverse research; does the profession require greater accountability; how does an Economics education compare to other academic programs; is Economics realistic?

DEADLINES:

Please submit abstracts by June 15th. Final papers are due by July 15th.

CONTACT:

Email submissions and inquiries to: submit@newschooljournal.com

Re-Enlightenment?

My favorite tool provides today’s sign of the times:

Separation of church and state (Google hits: 9,870,000)

versus

Separation of business and state (Google hits: 39,900,000)

Though economists posture about what effects the 2008 financial crisis had upon the dismal science, there is little doubt that public opinion is turning.

PS should Public Economics be a more radical field?

PPS final exams are finally done.  Rejoice with me in the comments section…

Buying server space or the free cloud?

Some things should be easy to call. Either spend no money on server space and just register a domain or pay a company to maintain a computer just to host your website. Well, like any other blog that’s the choice which has been following us around for the last week or so. Our domain registration expires in a few hours, and we’ve made the decision to spend 160 odd dollars to maintain the server and pay for a private space… Why? Well, I guess security, knowing that the server will be running whatever else happens, and some form of guaranteed replies to tech problems (indeed, its a 24/7 service). It feels a little old fashioned perhaps – and I may move my personal site onto the cloud – but for something where you are responsible not just for your own jottings but other people’s ideas, papers and writings I guess there is a willingness to pay. Huh – turns out my utility curve is convex and my preferences somewhat transitive after all – at least here.

What is Economics: Friday Column (4)

In light of the NSER’s next edition, I will be hosting a regular Friday column searching for answers to the same question: what is economics?

Spell It Out: The SRPiESiMoAN

More questions about our discipline bring me to the Nobel Prize in Economics, otherwise known as “The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel” or, um, the “SRPiESiMoAN.”

For those who don’t know, Sveriges Riksbank is Sweden’s central bank (and purportedly the oldest in the world.)  Every year, alongside the other Nobel prizes, an economist is granted the award (a gold medal) as well as a diploma and 10 million Swedish Kronor (about $1.6 million).

After just the slightest amount of research, there seems to be at least enough controversy surrounding the prize to ask what it means for the field itself.  To list a few idiosyncrasies:

• Only 1 woman has won the prize (Eleanor Ostrom, in 2009)
• 60% of prize winners were American citizens and only 4 have been from outside the US and Western Europe
• By institution, the top winning-est schools include: 1. U of Chicago (10 awards) 2. UC Berkeley (5) 3. Columbia U, Harvard, MIT, Princeton (all with 4)
• Since 1969, the Prize has changed its name no less than 11 times
• Today, Sveriges Riksbank awards the Nobel Foundation about $1 million per year for name rights and “administrative fees”
• The Sveriges Riksbank also donated approximately $315 thousand to have the prize listed with the traditional Nobel prizes on the Nobel Foundation’s website
• Critics of the award are diverse and well-known (including several laureates and descendants of Alfred Nobel)

Conclusions?  Clearly, we have an identity conflict as well as a selection bias.  An association with the original Nobel prizes, which was created by Alfred Nobel in his last will for those who confer “the greatest benefit onto mankind”, is obviously desired.

Ultimately, this prize is highly lucrative and relatively prestigious.  What role does it play as an institution, among people, using behavioral reinforcement within economics?

Economics of the Right and Left, in poetry

I just got turned on to the daily poetry of Dr. Goose (of AEA 2011 conference fame) who comes out with a short limerick of the day’s economic news, theories or his observations. This one, called ‘fighting words‘ from a few days ago I thought was too good not to share:

A woman who loved a good fight
Would demand, as she argued all night,
Philosophical heft
From those on the left
And empirical proof from the right.

Inspired by the good doctors observation that:

A recent walk through the economic blogosphere left the impression that liberals (of the progressive variety, as in this randomly selected post by Paul Krugman) like to base their arguments on data, history and “whatever works;” while conservatives (particularly of the supply side or libertarian variety) seem to prefer philosophy, game theory, analogies or even the US constitution – anything but empirical studies.

And yes, I now need to check out Economists do it with models .com which I just found … It’s nice to procrastinate around midnight on Friday when I should be writing an abstract.

A new economic analysis of human evolution

Nobel laureate economist Robert W. Fogel is about to publish a book entitled “The Changing Body: Health, Nutrition, and Human Development in the Western World Since 1700″ (Cambridge UP, 2011) in which he and his co-authors Roderick Floud, Bernard Harris, and Sok Chul Hong argue that human evolution has developed more rapidly in the last three centuries than at any previous time in the existence of Homo Sapiens Sapiens.

This “technophysio evolution,” powered by advances in food production and public health, has so outpaced traditional evolution, the authors argue, that people today stand apart not just from every other species, but from all previous generations of Homo sapiens as well.

The march of Progress and Science has made us taller, stronger, smarter, and more well dressed than our rickety cousins from the pre-eighteenth century world; though Mr. Fogel does worry that “overnutrition” might derail our gene-train to Utopia. Obesity, hyper-tension, diabetes, stroke, and cancer have been observed to somewhat shorten the average life expectancy of our species.

But Mr. Fogel remains an “optimist at heart,” opining that “the trend of larger bodies and longer lives will continue into the future.” If these trends hold, what might we expect from the future of human-biological super-evolution? 1) Average hight will reach three meters by 2050; average lifespans will converge with those of the Patriarchs (e.g. Methuselah); and Olympic athletes will develop gills to help them outperform in aquatic competitions.

What is Economics: Friday Column (3)

In light of the NSER’s next edition, I will be hosting a regular Friday column searching for answers to the same question: what is economics?

The Invisible Hand

I recently watched a talk online which pointed out an interesting fact:

In Adam Smith’s defense, it should be added that he recognized what would happen if Britain followed the rules of sound economics — now called “neoliberalism.” He warned that if British manufacturers, merchants, and investors turned abroad, they might profit but England would suffer. But he felt that they would be guided by a home bias, so as if by an invisible hand England would be spared the ravages of economic rationality. The passage is hard to miss. It is the one occurrence of the famous phrase “invisible hand” in Wealth of Nations.
–Noam Chomsky, 3.13.2011

Being that I had to read The Wealth of Nations in the (in)famous Anwar Shaikh’s introductory course, I was curious in what I may have missed.

Looking up the passage Chomsky refers to, I found this:

By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.

The passage does seem to measure up.  One might claim that (the origin of) the term “invisible hand” speaks to the merits of nationalism.  Something that large economic institutions (the IMF for example) would hardly agree with.

If this is true, then what does it say about the Economics discipline versus the Economics profession?

[For another example, an American comparison is made within the same talk]