Sign of the Times

According to a study done for the British Beer and Pub Association, 39 pubs close each week in the UK. More specifically, there were 1566 closures between June and December 2009. The good news is there are 52,000 total pubs and there were 553 pubs that opened. I personally suffered from the phenomena of pub closures on the third and fifth days of my walk along the Cotswold Way. On Day 3 (Painswick to Dursley) we arrived in Ryeford, expecting refreshment at a pub indicated on our map. As you can see in the picture on the left we arrived too late. The Ryeford Arms was boarded up. We asked a man walking through the parking lot where we could find a pub nearby. We suggested King's Stanley (which was on the way, more or less) but he said their pub had closed too. Responding to our disappointment, he put it simply as, "Sign of the times." Fortunately he told us about a pub at 3/4 miles in the wrong direction (The Woolpack in Stonehouse) that was indeed open and making good lunches. Two days later we came up the pub shown in the picture on the right just north of the town of Cold Ashton. This pub may not close I suppose if a new publican is found but I think the To-Let sign is indeed an accurate reflection of the difficult economics of pubs in England today.

So what is the problem? I suppose one simple thing is that drinking is down. Since more people have cars, they are less obliged to frequent the local pub. Land values are up, making the opportunity costs of pubs rise. One thing that would seem to go against the land story is the highest rates of pub closure (-3% per week according to the study!) are in the regions called Tyne Tees and Granada (northern England) which are probably not the areas of high housing price increases. In Central and Southern England entry is higher relative to exit (but still net exit).

Secret of Human Success? Trade

At some point after millions of years of indulging in reciprocal back-scratching of gradually increasing intensity, one species, and one alone, stumbled upon an entirely different trick. Adam gave Oz an object in exchange for a different object...The extraordinary promise of this event was that Adam potentially now had access to objects he did not know how to make or find; and so did Oz.

The claim that Ridley makes in a new book reviewed here, is that Neanderthals had comparable brains to Homo Sapiens but evidence suggests they relied on local resources whereas some 80,000 year old seashells have been found far from the nearest coast, which anthropologists infer to have been used in barter.

I like this because it shines the spotlight on my academic specialty: international trade. But now that I think on it, I'm no longer sure humans were the first species to trade one item for another. There was a BBC article a year ago about male chimps trading meat for sex!

Parasitism of the -isms

Empires bought stability at the price of creating a parasitic court; monotheistic religions bought social cohesion at the expense of a parasitic priestly class; nationalism bought power at the expense of a parasitic military; socialism bought equality at the price of a parasitic bureaucracy; capitalism bought efficiency at the price of parasitic financiers.

quoted in John Tierney's NYT review of Matt Ridley's new book, the Rational Optimist. I like this way of thinking. It helps to explain why society has not ever discovered a perfect social organization. Inherent in each approach is a tendency that undermines its performance in the long run. I would add that pro-labour policies also run the risk of parasitism by militant or obstructionist unions.

Where can we go?

A lot of Republicans today have argued that this health-care bill smacks of European socialism, or a European “nanny-state” government.

Representative Jeff Fortenberry, Republican of Nebraska, discloses that a little boy the other day asked him, “if the government gets so bad, which country should we move to?”

Umm yes, Johnny, where can we find another highly developed country which declines to provide health insurance to over ten percent of the citizens?

Oh wait...THERE AREN'T ANY!

Ok, but there must be lots of miserable citizens of "nanny states" like France. Can't we bring them over to America to testify to the horrors of life under French medical care? Errrr, no. Because the French like their system.

Ferguson's pseudo-science of Empires

My good friend from Arpoador, who knows how to push my buttons, sent me a link to this recent LA Times article by Niall Ferguson (who i have railed about in a past post). Like many social scientists before him (including Paul Krugman), he has become seduced by the science of complex systems, with their self-organized criticality, tipping points, phase transitions, etc. I find this stuff really cool too. But how much does it really help understand social science (either explaining past social events or predicting future ones)?

The sudden collapse of the Soviet Union does look like the kind event described in the complexity models. But i don't think we can overlook the personal role of Gorbachev who could have elected to resist the breakdown but opted to facilitate it.

Now think back to the Great Depression, another collapse, it would seem, of a complex system.
But Hoover and the Federal Reserve didn't resist either, they took actions that probably accelerated the collapse.

Now think of the most recent crisis: Paulson, Bernanke, Geithner, Summers, and Obama all resisted the collapse--pushing back with aggressive monetary and fiscal policy--and succeeded in preventing another great depression. Billions of people whose livelihoods were saved should breath a sigh of relief that Bernanke et al didn't consult with Ferguson, who apparently thinks easy money and stimulus will cause America's collapse, whereas the near obvious truth is that they prevented it.

Last point: in the traditional use of the word, Empires need colonies or at least a large swath of conquered territory. What is America's empire? Puerto Rico, Guam? He can't be referring to a couple small islands. Ferguson must be talking about Afghanistan and Iraq but these are not America's colonies; they are policing actions. US losses in Afghanistan are very sad, as are the associated civilian deaths but the numbers are very small relative to past conflicts that ended empires. And recently the US and Afghan army took over the Taliban's last city in Afghanistan (Marja). So how do we see echoes of the past (Soviets, English, and Greek disasters in the region) in the Afghanistan of 2010?

Ok, really last point. The suspicion that he's become a total charlatan hardens further when he starts quoting that other great charlatan about "fat tails" and "black swans".

The Lantau Grind

Today's hike reminded me of the Grouse Grind in Vancouver. The ascent from the bus-stop Pak Kung Au is pretty much all stairs and no switchbacks so I found myself pausing frequently to catch my breath. Well the Serious Hiker's Guide to HK gives it 3 boots and that is not because of length (about 2 hours from Pak Kung Au to Ngong Ping).

The bummer for us was that from the very beginning we were stuck in a cloud from which we did not emerge until we descended to Ngong Ping (where there is monastery, giant Buddha, and a good vegetarian restaurant). We got nicer views (of the airport, water and apartment estates) on the descent to Tung Chung. One interesting thing about our route was the variety of public transit: tram to Central, Ferry from Central to Mui Wo on Lantau Island, bus to Pak Kung Au, and MTR back to Wan Chai from Tung Chung. Special note: Starz Wine Bar offers pints of San Miguel (Philippine lager) for 38 HKD (about 5 USD) just outside the Tung Chung station.

Recommended hike. I will have to do it again on a sunny day!

Krugman on insurance

Krugman answered questions recently for the New Yorker. Some of the answers were so well put.

example 1:

QUESTION FROM ERIK DONNELLA: Why should (or shouldn’t) health insurance be for profit?

PAUL KRUGMAN: I think at a fundamental level the point is that what we want is broad coverage—it’s a widely shared social goal—but that’s not what private insurers are trying to achieve; from their point of view profits are maximized by not covering those who need it most. Long ago we made the decision that seniors should have guaranteed coverage via Medicare; there’s no real reason to apply different logic to those under 65.

After reading this, I was all "right on!" "how could anyone not agree with this logic?" But then I saw the flaw...If private insurance is that bad, why do we use it for our homes, possessions, our trips, dental, rental cars...

I guess my answer is that I don't. The only insurance I buy is what is mandated by law.

Example 2:

QUESTION FROM NATE: .... how am I to make sense of the constant alarm about USA’s credit rating being raised in the news?

PAUL KRUGMAN: ...for now I would disregard the deficit hawks...

...I’m especially baffled by the idea of taking insurance against a U.S. default. If America defaults, we’re talking about a chaotic world—Mad Max, more or less—in which case, who imagines that insurance claims will be honored?