Ishmael Abroad: October 2006

Back to life...

Just got back from Huancavelica (via Lima). Out there, the campesinos don't know what a Jew is, but they do know Mel Gibson hates 'em. Strange world, eh?

Some good news from Libya

Although I find it very hard to say anything nice about American foreign policy during the Bush years, one of the few bright spots has been Libya.

Today, the ever rotating cast at PSDBlog point us to this story of One laptop per Libyan child. This is a great victory for Nicholas Negroponte's One Laptop Per Child project. The former MIT Prof has been actively pushing this laptop as a way for developing nations to put technology in the hands of all their youth. Hopefully Mr. Gaddafi is serious about using his oil revenues to help Chad, Niger and Rwanda purchase the $100 laptop as none of those countries have the same resources as Libya.

That Libya can now be seen as almost the anti-Venezuela -- building up infrastructure, compensating victims of the Pan Am 103/Lockerbie bombing, and slowly re-opening a closed society -- should serve as a signal to our leaders (and Tom Friedman) that diplomacy can and often does work better than coercion and violence!

For more on the "Real Libya Model" and what it means for American Policy in North Korea and Iran, check out this recent
Michael Hirsh article from Newsweek International.

Market failures

Over at Enviornmental and Urban Economics, Matt Kahn wonders if there are Too few prizes in academic economics?

I am by no means a fee market fundamentalist. There are many externalities that need to be corrected and quite a few products that are undervalued relative to the market. Neverthless, Matt completely loses me with this statement:

In other academic areas such as biological research, one can become a billionare if one discovers something valuable. Academic economists don't have such possibilities.

First of all, I don't remember seeing many billionaire biologists on my last trip to St Tropez. Maybe they just have their yachts anchored offshore, but somehow I doubt it.

Second, if Matt wants to criticize economists for declining marginal production, then wouldn't eliminating tenure be a better place to start?

Finally, if the problem is more specifically the lack of "big breakthroughs" then I would argue that the market is particularly well suited to allocate this outcome. The problem is lack of rigor for most economic "proofs". Black-Scholes pricing has been accepted because it works, but not many other Nobel Prize winning ideas have had the same consensus or staying power. The market, in comparison, is great at recognizing new value. So we see Billy Beane arbitraging away the value of statistical analysis in baseball, Wal-Mart leading the way to more efficient retail supply chains, and Google proving the value of the Long Tail. Even for non-business oriented fields of economics we see governments (on a local and int'l level) competing to improve environmental management, labor market regulation, ideal levels of taxation, etc. Race to the bottom or race to the top depends on your perspective, but being able to actually apply insights from academic economics is rewarded. Same as biology.

How Western Union stays in business

Ever wondered how immigrants in Western nations send money to their families in poor and often rural parts of the world? Western Union is traditionally "the fastest way to send money worldwide", but also one of the most expensive, charging anywhere from 5 to 20% transaction fees.

ICICI Bank says they have some ideas in the pipeline, but no real specifics in this Hindu News Update. In any case, it's good to see this market getting more competition. Cutting international person to person transfer costs is one of the quickest ways to put money in the hands of the poor:

While not revealing the finer details about the proposed products, Misra said the products will be market-specific and possess a plethora of innovative features, which will make the modes of disbursing and accepting funds very easy.

"The new products will focus on end-beneficiaries who do not have an account with us as also on the hitherto unbanked segments," he informed.

ICICI Bank currently enjoys an over 20 per cent marketshare in the $ 24 billion Indian remittances market.

Just a comma?

Matthew Yglesias responds with an appropriate degree of outrage:

It's not as funny as Foley-gate, but the ongoing war in Iraq is, obviously, more significant. The president is running around the country slandering Democrats and lying about their stand on his administration's illegal surveillance initiative, while telling people the violence in Iraq will be "just a comma" in the history books. Not, obviously, to the 2,700 and growing dead American soldiers. Not to their wives, husbands, and children. Nor to the thousands more maimed or wounded or their families. Nor to the tens of thousands of dead Iraqis and their families and friends. Or, indeed, to those inspired by the war to join radical terrorist groups, or to those who will be the victims of their future crimes.

According to Woodward's book, Bush says he'll continue the war in Iraq even if the only ones left supporting him are Laura and their dog. And, presumably, he means it. Loose talk of winning or losing the war is, at this point, irrelevant. The president has defined our war aims in Iraq purely in terms of continuing the war indefinitely. For him, keeping all of these troops over there and handing the whole shitpile off to his successor is success. Nobody else should find that very comforting.