Depressions follow wars

Seeing dsquared giving Felix Salmon a hard time about hot money flowing into emerging markets reminded me of Paul Davidson's international money clearing unit proposal. I googled imcu and came across an article from Davidson that included this interesting historical note:

While exchange rates were fixed under the Bretton Woods Agreement, in the early years after the second world war the United States avoided amassing surplus international reserves by providing grants to the war torn nations, initially via the Marshall Plan and then via other foreign aid programs. In essence, the United States accepted the Keynes Plan suggestion that it is in the best interest of all nations if the major creditor nation bear the major burden of reducing trade imbalances and international payments adjustments. As a result of the Marshall Plan, for the first time in modern history, a post war depression was avoided. The U.S. and its major trading partners experienced unprecedented long run rates of real economic growth from the end of the second World War until the early 1970s.

I hadn't made that connection before. So I googled "depressions follow wars". Only one hit:

In 1945, Wood, by then chairman of Sears, did it again. He saw pentup consumer demands from the war years fueling a post-war economic boom. He wanted Sears to benefit and began an aggressive, nationwide store-building campaign. Sears sales grew exponentially as a result.

Where was Montgomery Ward during all this? Largely out of the game: its top leadership had a different theory of the post-war situation. As Montgomery Ward CEO Sewell Avery saw it, depressions follow wars. Avery had studied history, and had charts in his office tracing commodity prices from the time of Napoleon. The smart thing to do, Avery believed, was to keep Montgomery Ward’s cash in the bank to weather the inevitable economic downturn. He refused to expand the company and enjoyed thinking about his competitors spending themselves into bankruptcy. But the depression never came, and Montgomery Ward sat out one of the largest consumer spending sprees in modern history.

Can't really blame the guy. How was he supposed to know what Marshall was up to?

Coincidentally, David Brin posted about America's counter-mercantilist policy just an hour ago:

there has been only one top-nation that ever avoided the addiction to imperial mercantilism, and that was the United States of America. Upon finding itself the overwhelmingly dominant power, at the end of World War II, the U.S. had ample opportunity to impose its own vision upon the system of international trade. And it did. Only, at this crucial moment, something special happened.

At the behest of Marshall and his advisors. America became the first pax-power in history to deliberately establish counter-mercantilist commerce flows. A trade regime that favored the manufactures of many foreign/poor countries over those in the homeland. Nations crippled by war, or by millennia of mismanagement, were allowed to maintain high tariffs, keeping out American manufactures, while sending shiploads from their own factories to the U.S., almost duty free.

Let's hope it doesn't take another world war to sort out international monetary issues.

All About the 60

A Senate Democratic Chief of Staff chimes in ...

There is a lot of misplaced anger coming from many of our fellow progressives about Senate Democrats (which often is just shortened to "The Democrats") inability to pass a robust healthcare reform bill, climate change, etc.

However, I believe it's worth reminding folks that--as long as the Republican Senators hold together--we have to hold EVERY single Democratic Senator, including folks like Joe Lieberman and Ben Nelson, which is usually impossible unless the legislation in question gets substantially watered down.

So, what we might end up with is a Senate Democratic Caucus that holds 98% of its members but still fails to pass healthcare reform, AND a mob of angry progressives who are screaming for the heads of "the Democrats." This isn't fair, but more importantly, it's self-defeating. If progressives REALLY want to transform America, they'll make an issue of the anti-democratic rules of the Senate which make real change virtually impossible. Blasting their elected Democratic officials, the vast majority of whom will vote for the Senate bill (and would also support a more robust public option if we didn't need 60 votes to achieve cloture), may make folks feel good, but is both short-sighted and stupid.

You know guys, don't complain about us complaining about your problems with procedure. Fix your fucking problems with procedure, enact your fucking platform, and we'll stop complaining.

Blogs that should be more popular: Gordon's Notes

I can't remember how I can across one of my favorite blogs, Gordon's Notes. Probably a link from Brad DeLong, or maybe I was searching for some complexity/emergence stuff. I've only been reading it since this spring. It moved into my A-list folder in Google Reader in no time. The author, John Gordon, writes about almost all of my favorite topics: politics, economics, science, technology, and emergence. He's easy to like because I agree with everything he writes! I especially enjoy his tech writing. (His affection for Macs is receding and ardor for the Google cloud is increasing. Same as me.)

But agreement is shallow basis for praise. It's his keen insight that counts. For example, great posts on the declining quality of toasters, the hidden inflation of declining quality, emergent fraud, and why we need crummy health care. He was onto Google's "Chromestellation" strategy way back in 2005. His posts on politics and economics are sharp. All that and he's a real-life M.D. with a big heart.

Oh who am I kidding, I like anybody who makes fun of libertarians.

Cliff Mass on Seattle biking and weather

Good stuff on bikes and weather in Seattle from Cliff Mass.

Bike helmets versus euro snottiness

This is going too far:

Cycle helmets are the most visible and potent symbol of all that’s wrong with Britain’s (anti-) cycling culture. Cycle helmets say we cannot cycle without the right precautions, the right equipment, the right infrastructure, the right training. Cycle helmets say there must be more to cycling than a person, two wheels and the surface of the Earth. Cycle helmets say that cycling is more dangerous than not cycling. Let’s ban them now before it’s too late. Let’s lock up all the people who buy them, who sell them, who use them. Let’s drag them off to jail in handcuffs, in tears.

Copenhagen and just about everywhere in Holland have worked hard to become bike paradises. I think you probably can bike safely without a helmet in those places. Stylish European cyclists (as Copenhagen Cycle Chic will tell you ad nauseum) hardly ever work up a sweat. They're ambling along at 8 mph. However, even if there were no cars at all, in a city with hills I really think you're better off with a helmet. It's not hard to go 15-25 mph if you're going down a hill. With Seattle's monster hills it's hard not to go that fast. If you go off your bike at 8 mph you're probably falling over sideways, maybe bumping your knee on the frame and looking silly. At 15-25 mph you're going headfirst over the handlebars. In Seattle unless you're just riding your bike from one end of 15th Ave E to the other you need a helmet.

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Update: the antihelmet activists tell me that helmets don't work at speeds over 12 mph. So I guess you should never ride down hills, helmets or not. So no bikes in Seattle. Oh well!

Name that country

Why is health care so bad?

The reasons are a mix of (1) a lack of public support for a strong publicly-provided health care system (such a lack of support is often the case in highly unequal societies where the middle class prefer to have recourse to the private sector rather that subsidizing a publicly-provided system) and, to a lesser extent (2) the presence of strong private lobbies whose personal interests lies in a weak public health system.

Answer.

Burgerville: Bikes now welcome in all drive-thrus

Burgerville: Bikes now welcome in all drive-thrus: "Burgerville: Bikes now welcome in all drive-thrus"

The 39 location Burgerville chain announced today that people on bicycles are now allowed to order and pick up food through the drive-thru (which they now also refer to as a “cycle-thru”!). The company — whose major marketing hook is its earth-friendly practices — is billing this as their “latest sustainability innovation”.

Portland continues to impress.

Is Ezra Klein turning into the William Saletan of food?

Is Ezra Klein turning into the William Saletan of food? No, that's crazy talk, but he has had two bad posts in two days. Yesterday it was on the recent organic vs non-organic food report:

Philpott has a couple of problems with this. He notes that the Organic Center -- an outlet funded by organic food companies -- has published studies coming to a different result. He also notes that they published a critique of the British survey. Among their criticisms was that "the [British] team did not include total antioxidant capacity among the nutrients studied," which makes me pretty suspicious, given the wealth of studies showing that antioxidants do not appear to reduce the risk of cancer or heart disease or anything else.

Obviously, neither Philpott nor I are epidemiologists. We're not nutritional scientists. I won't pretend to be able to fully evaluate the worth of competing studies on these matters. Philpott also makes a circumstantial argument about nitrates that is plausible, but hasn't been studied. I'm skeptical, as a lot of these connections fall apart when studied. But you should check it out for yourself and decide.

That first antioxidant study EK linked to was about supplements. Supplements aren't food. The FSA didn't find that organic and non-organic were exactly the same, they just decided that organic wasn't significantly better. That depends on your definition of significant. They reported the organics on average had more of the following nutrients:

Protein 12.7%
Beta-carotene 53.6%
Flavonoids 38.4%
Copper 8.3%
Magnesium 7.1%
Phosphorous 6%
Potassium 2.5%
Sodium 8.7%
Sulphur 10.5%
Zinc 11.3%
Phenolic compounds 13.2%

That looks better to me! This sounds like one of those deals where the government agency can present all the facts but is too scared to draw the difficult conclusions, like how the FDA is afraid to tell you to lay off the meat and dairy and eat more veggies. But the big picture here is that reducing our view of food to a handful of macronutrients and micronutrients, what Michael Pollan and others call nutritionism, might not be the right way to think about our health and what to eat. The FSA report also sets aside pesticides and phytochemicals, which again aren't absolutely 100% proved to be relevant to how to eat, but considering that none of these issues even existed 100 years ago the burden of proof has got to be on the non-organics.

Today's not-so-great post is on heirlooms. Ezra and the writer he linked don't mention that the great thing about heirloom varieties is that they predate our modern varieties that have been bred for high yield/high response to synthetic nitrogen fertilizer. Modern varieties have more carbs and less of everything else that probably are what makes veggies good for you. This is called the dilution effect. From "Declining Fruit and Vegetable Nutrient
Composition: What Is the Evidence?:

Recent studies of historical nutrient content data for fruits and vegetables spanning 50 to 70 years show apparent median declines of 5% to 40% or more in minerals, vitamins, and protein in groups of foods, especially in vegetables. ...

In fruits, vegetables, and grains, usually 80% to 90% of the dry weight yield is carbohydrate. Thus, when breeders select for high yield, they are, in effect, selecting mostly for high carbohydrate with no assurance that dozens of other nutrients and thousands of phytochemicals will all increase in proportion to yield. Thus, genetic dilution effects seem unsurprising.

Contested Exchange

Mike Konczal asks:

What happens if poor credit is no longer a negotiation strategy between a creditor and a lender, but instead a more general form of social control?

Bowles and Gintis have a generalized approach they call “contested exchange” that works like the labor discipline deal. The basic idea is to introduce the concept of power into economic exchange. The power comes from one side’s power to stop trading (contingent renewal). You only get that power by overpaying (enforcement rent). You need that power to enforce contracts when enforcement isn’t costless (and it rarely is). That also means markets don’t clear (take that, Walras). One nice feature of the contested exchange approach is that if you dial down the enforcement costs to zero you get the regular general equilibrium model back. Anyway, the model applies all kinds of contracts: laborer/employer, borrower/lender, consumer/producer, etc. And to come back around, the ubiquitous power dynamics across all markets in shapes the preferences and norms of individuals and society.

They’ve written it up in a dozen different places. This isn’t the best version, but it’s free: The Revenge of Homo Economicus: Contested Exchange and the Revival of Political Economy

As for applying that to the original question, beats me. I’m not that smart. I think I'm in the ballpark though.

Altruistic punishment in action

Elderly man in Lanzhou vandalizes 30 cars that run through red lights

“You look - the 6 people who died on zebra crossings in Lanzhou in the past half year didn’t make major news. Yet when I smash cars, it becomes huge news. Is this because the lives of those six people are not as significant as me smashing cars?”