Pater Familias » Economics

PLOWS AND GPS.

Philip — Sun, 20 May 2012 00:30:40 +0000

PLOWS AND GPS. When I was in graduate school fifty years ago, a friend I admired was both a graduate student and responsible for the family farm. He said that a third party could be hired to do most jobs around the farm, but that he always flew back to do the plowing because it was so important to get right. Robert Samuelson had an article in the Washington Post which describes some of the remarkable things that tractors can do nowadays (link via Realclearpolitics). Samuelson describes a $350,000 John Deere tractor pulling a $150,000 Deere corn planter. The tractor is guided by GPS, which makes for straighter rows. (I could never have imagined fifty years ago that the rows in a field could be guided by satellite.) The planter plants 24 rows of seeds, and the flow of the seeds is adjusted for each soil type. I note that Samuelson describes the farmer as operating the tractor. I wonder if there are still some tasks that a farmer will prefer to do himself.

5% TO 20%—THE BAD NEWS ABOUT “OBSERVATIONAL STUDIES”.

Philip — Thu, 17 May 2012 00:21:37 +0000

5% TO 20%—THE BAD NEWS ABOUT “OBSERVATIONAL STUDIES”. Gautam Naik had an article in the Wall Street Journal (May 3) headlined “Analytical Trend Troubles Scientists”. The troubling trend is that “observational studies often use different methodologies and arrive at different conclusions.” (“Observational studies” are one ones in which “scientists often use fast computers, statistical software and large medical data sets to analyze information previously collected by others”. I think of them as multiple regression studies.) Estimates are that there were almost 80,000 observational studies published across all scientific fields from 1990 to 2000 and over 260,000 published from 2001 to 2011. The article cites Dr. John Ioannidis as estimating that observational studies in general can be replicated only 20% of the time versus 80% of the time for controlled random trials. Another expert estimates the replication rate for observational studies at 5% to 10%.

ARGUING THAT THE DARK AGES WEREN’T SO DARK.

Philip — Sun, 13 May 2012 01:53:06 +0000

ARGUING THAT THE DARK AGES WEREN’T SO DARK. Nick, knowing that I am interested in the transition between the Roman Empire and the Middle Ages, gave me last Christmas BARBARIANS TO ANGELS: The Dark Ages Reconsidered by Peter S. Wells. It seems to me that the chief reason why the Dark Ages are considered dark is that there was not much literacy. The chief texts for the period relate to the church so that there is not much written information about how people lived. Wells is an archaeologist, and he argues that there is an increasing amount of archaeological information which suggests that people in the Dark Ages lived better than is usually portrayed. Measurements on skeletal remains are evidence that people in this period lived well. For example, measurements in southwestern Germany and in Denmark show average heights of 5 feet eight inches or 5 feet nine inches for men and five feet four inches for women. Wells notes that these average heights were not reached again until the twentieth century. Wells stresses the importance of technological improvements during this period and by this he means the moldboard plow: “Of fundamental importance was the development of new technology of agriculture—the moldboard plow—which vastly increased the efficiency of food production beyond anything in Roman times.”

How you evaluate the Dark Ages may depend on the weight you give the material standard of living of the ordinary man against things like literacy.

DAMIEN HIRST—AN ART MARKET BUBBLE?.

Philip — Sat, 12 May 2012 00:15:56 +0000

DAMIEN HIRST AND THE ART MARKET. Damien Hirst is the world’s richest artist. Hari Kunzru in the Guardian (March 16) had an article about the market for Hirst’s art, raising the possibility that current prices could represent a bubble. Kunzru’s article reads like a stock market analyst’s report. He says that the artist’s future reputation “is not as secure as it might appear.”

I posted here about Hirst’s January exhibit worldwide of 331 of his spot paintings. (There are about 1400 of them, following the rules that they consist of enamel dots on a white background arranged in a grid at intervals equal to the diameter of the dots and that no color can be repeated). Kunzru says: “Investor confidence is the key to understanding the unprecedented Gagosian show of Hirst’s spot paintings.” He asks about the Hirst spot paintings: “Do they have a future as anything more than wallpaper?” The question is whether the spot paintings are desired for themselves or as speculative investments bought in hopes of continuing price increases.

Kunzru notes that at the moment contemporary art is doing well compared with alternative investments and that Hirst’s work is doing better as a financial investment than contemporary art in general. And Hirst is still investing in the manufacture by employees of ambitious art works. Kunzru concludes his report: “[Hirst] recently announced that he has enlisted two assistants to paint 2m tiny spots on a canvas. He estimates that it will take them nine years to complete.”

THE FLY IN THE URINAL.

Philip — Tue, 24 Apr 2012 23:57:31 +0000

THE FLY IN THE URINAL. Ralph Gardner had an article in his always interesting column in the Wall Street Journal (April 23) about the flies on the urinal walls in the terminals at JFK Airport. He tells about how he had trouble figuring out the purpose of the flies and had to do research to find out. The purpose is to provide a target and thereby reduce spillage; the flies are estimated to reduce spillage by about 80%. Ironically, I think the Wall Street Journal archives could have given him the answer. I recall an article in the Journal from a few years ago that told how JFK was following Schiphol airport in the Netherlands in adopting the flies. Schiphol is usually credited with pioneering the use of the flies, and I recall seeing them there some 20 years ago. Apparently there are those who think that photographs of the flies are a hoax. This post in the Urban Legends section of the about.com site gives some background.

HOW DO YOU PRINT IN 3 DIMENSIONS?

Philip — Mon, 23 Apr 2012 15:54:24 +0000

HOW DO YOU PRINT IN 3 DIMENSIONS? Mary Jane had the same reaction that I had to the idea of 3D printing: You’ve got to be kidding. Printing is two-dimensional and it seem implausible to create solid objects by using it. The Economist explains how it is done here. The solid object is made by accumulating thin layers (or slices) until the three-dimensional object has been created. Precision is possible because each two-dimensional slice is specified digitally by software (think of a series of blueprints being piled up). The solid object is made up of the “ink”, which can be a metal powder or a ceramic or a liquid which will harden into a plastic. The process is referred to as additive manufacturing. There is often less of the waste that comes from machining a part by cutting away excess material. The process also can permit the production of things that are too intricate to be machined.

MAKING A GEARBOX WITH A 3D PRINTER.

Philip — Sun, 22 Apr 2012 15:55:25 +0000

MAKING A GEARBOX WITH A 3D PRINTER. The Economist (April 21) has an article on the revolutionary possibilities of 3D printing. To give an idea of the importance of 3D printing, it seems that it will considered for use in the manufacturing of any solid object. It is already being used in making products ranging from jewelry to car dashboards. The technology is well-suited to customized products: “Millions of dental crowns and shells for hearing aids are already being made individually with 3D printers.” The article describes a gearbox that was printed for a racing car. The gearbox had smoother internal pathways than if they had been drilled with right-angle bends, and it was 30% lighter. One potential use of 3D printing is to “teleport” spare parts to remote areas. The “blueprints” for the part can be sent digitally to the remote area, where it can be printed.

You can buy your own personal 3D printer. A chart with the article shows that over 20,000 personal 3D printers were sold in 2011.

WHO GOT THE MF GLOBAL $1.2 BILLION?

Philip — Fri, 13 Apr 2012 16:23:47 +0000

WHO GOT THE MF GLOBAL $1.2 BILLION? It has been months since MF Global filed for bankruptcy with an apparent $1.2 billion shortfall in customer funds that were supposed to kept separate from the company’s own funds. (James Giddens, the trustee for the company, has recently estimated that the shortfall is actually $1.6 billion.) One mystery that has been bothering me. Who got the windfall? Somebody—or a number of somebodies—must have come in to work on the Monday after the MF Global collapse and had a whole lot more money than they had expected. And by now the extra money must have been noticed. I recognize that there is a temptation to keep a windfall, but there are accounting and tax consequences….

THE STANDUP ECONOMIST ON MACROECONOMICS.

Philip — Mon, 09 Apr 2012 20:24:43 +0000

THE STANDUP ECONOMIST ON MACROECONOMICS. Yoram Barzel, the standup economist, explained macroeconomics at a session of the American Economics Association annual meeting this year in Chicago. Here is a Youtube of it. There are a lot of in jokes for the economists in the audience. He summarizes Keynesian thinking as being about “animal spirits”—the animal spirits of those who make investments (which does not include the kind of “investment” that is made by somebody who buys a security). As a Keynesian, I acknowledge that that is a fair summary if you are only going to use two words.

THE STANDUP ECONOMIST ON POLITICS AND THE BUDGET.

Philip — Mon, 09 Apr 2012 02:54:30 +0000

THE STANDUP ECONOMIST ON POLITICS AND THE BUDGET. I have posted here and here on Yoram Bauman, the Standup Economist. Here is his recent explanation of the budget deficit. The routine is more politics than economics. One of his points is that there are libertarians on both the right wing and the left wing.

STEALING USED GREASE.

Philip — Thu, 05 Apr 2012 00:08:31 +0000

STEALING USED GREASE. I have posted here about the theft of the first cast iron building in New York City to resell the cast iron as scrap and here about the burning down of buildings in Saint Louis, Cleveland and Detroit in order to steal the bricks and resell them. The Wall Street Journal (April 2) had an article by Ben Worthen about organized grease-poaching gangs. The prices for used cooking oil (the price varies with quality) have doubled in recent years. Recently, restaurants used to pay to have grease hauled away. The increase in prices has come from the increased use of biodiesel. The article describes foot soldiers that gangs use to steal from restaurants and surveillance videos that used to foil the thieves. A smell of French fries can be a clue. It’s good to see that this market for recycling has developed.

AN AGE OF BANK RUNS?

Philip — Wed, 28 Mar 2012 23:15:30 +0000

AN AGE OF BANK RUNS? Tyler Cowen at the Marginal Revolution economics site has a post on an article he wrote in the New York Times. He begins by saying that he asked some colleagues: “to identify the single most important development to emerge from America’s financial crisis. Most of us had a common answer: The age of the bank run has returned.” In my lifetime, it was thought that runs on commercial banks would not happen because of Federal Deposit Insurance. Now, there have been runs on nonbank financial institutions (Lehman). The common thread in runs is the urgency of getting your money out first. The risks are compounded because you can’t know whether an institution will be brought down by another institution’s failure. The MF Global failure makes it seem all the more urgent to get your money out early. It’s been 5 months since MF Global failed, and they still don’t know where the customer money went. Cowen says: “It now seems that the 21st century will resemble the 19th and early 20th centuries, with periodic panics and runs on financial institutions….”