Digitalization and the value of various tourist locales

by on January 16, 2013 at 4:21 am in Travel, Travels | Permalink

Miles, a loyal MR reader, writes to me:

I’ve spent a fair amount of time today at my desk in California looking at this, and it got me thinking about an interesting interplay between the tourism industry and the “digital revolution”:

https://s3.amazonaws.com/Gigapans/EBC_Pumori_050112_8bit_FLAT/EBC_Pumori_050112_8bit_FLAT.html

(use the +/- buttons to zoom and drag to shift the view)

After finding people and understanding the scale of those mountains, I am in awe of Everest and the Himalayas, but feel absolutely no need to travel there. A digital representation has given me an amazing experience of a place on the other side of the world, and at least for this particular occasion, has convinced me never to go there (try to find the people climbing the upper portion of the glacier and you’ll understand why). So maybe some amazing (non deadly) location would convince me that I need to visit in person, but at some point, the digital experience gets so good that it’s a better, cheaper alternative to travelling. If in a few hundred years we can create digital experiences far more immersive than physical visits to locations, what experiences/amenities/etc will induce people to travel? Where will tourism die off (Himalayas), where will it increase (Paris)? As you say, solve for the equilibrium.

Thought it might make for an interesting discussion.

I predict that bustling, interactive locations — such as Guatemala — will do fine, and it is the static nature settings which will face a bit more competition.  That said, while I have never visited the Himalayas, I suspect the trip there involves a lot of bustling interaction with local cultures and that the final destination is in part an excuse for the process.  Keep also in mind that most of us do not in fact enjoy travel but enjoy only the memories of travel, with our minds playing a fairly active role as editor.  I doubt if the memory of visiting the digital image will ever compare, even if the image itself is more beautiful and more convenient than the reality of an actual physical site.  Finally, there is marketing to consider.  The digital image may market the original, just as the rather vivid LOTR movies have boosted tourism to New Zealand rather than replacing it.  So overall I still see tourism as a continuing growth industry.

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Ryan Avent is correct about Draghi and the eurozone

by on January 16, 2013 at 1:33 am in Economics | Permalink

I find it shocking how readily we all seem to be accepting the European Central Bank’s inaction on euro-zone economic weakness. Some perspective is in order. Real euro-area output is at roughly the level of the end of 2006 and it is declining. The euro-area economy hasn’t grown since the third quarter of 2011. Total employment is below the level first attained in the second quarter of 2006 and it is declining. The unemployment rate is of course at a record high 11.8%. And inflation—both core and headline—was virtually nil in the second half of 2012.

I would stress that it is even worse than Ryan is suggesting.  Countries such as Greece, Portugal, and Spain have consumed remarkable amounts of political capital.  Britain is considering leaving the EU.  Credit channels are still either in tatters or on life support, relying on ECB guarantees.  More countries are seeing zero or negative growth.  Eurogeddon is here, as a variety of countries have situations worse, in relative terms, than the Great Depression of the 1930s.  It seems the bailout funds, especially the ESM, have given up on the notion of detaching sovereign and bank liabilities from each other.  The so-called banking union is at best a common supervisor rather than real risk-sharing for deposit liabilities.  The fact that we don’t have daily bond market crises, filling up my Twitter feed, is certainly welcome but constitutes a remarkable lowering of the bar for what success means.  Just how would one, these days, articulate why the eurozone should be considered a success and worth preserving going forward?  Is this case no better than the (possibly correct) claim that dissolution would bring economic anarchy?  In my rather (currently) unfashionable view, the eurozone crisis is still getting worse, not better.

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Adam Posen on Japanese fiscal stimulus

by on January 15, 2013 at 6:15 pm in Current Affairs, Economics | Permalink

The case for continued deficit spending in Japan ended by mid-2003.

…The additional stimulus in Japan is counterproductive because it adds to the long-term costs without addressing Japan’s real problem: a return to deflation and an overvalued exchange rate. The BoJ pursuing a higher inflation target through large-scale purchases of a wide range of assets, as Mr Abe and his economic adviser Koichi Hamada rightly advocate, would be sufficient and appropriate.

Here is much more (FT).  You will note that Posen is in general famous for being an advocate of stimulus for the UK and he is no enemy of Keynesianism or aggregate demand analysis.

2 comments

A separate vote for the debt ceiling is a bad idea

by on January 15, 2013 at 4:14 pm in Current Affairs, Economics | Permalink

A rather obvious statement that 84% of polled economists agree with:

Because all federal spending and taxes must be approved by both houses of Congress and the executive branch, a separate debt ceiling that has to be increased periodically creates unneeded uncertainty and can potentially lead to worse fiscal outcomes.

That is from Brad DeLong.

109 comments

Japan fact of the day

by on January 15, 2013 at 1:30 pm in Current Affairs, Economics | Permalink

The unemployment rate is 4.1 percent.

In recent discussions of Japanese fiscal stimulus, this point could use a little more…emphasis.

Here is one source for the data.

27 comments

Assorted links

by on January 15, 2013 at 12:55 pm in Uncategorized | Permalink

1. Economic freedom rankings for the states of India (pdf, and revised link here).

2. My interview with Yale School of Management on cultural globalization.

3. Do chimpanzees actually care about fairness?

4. The David Brooks syllabus on humility, for his course at Yale.

5. Do guns protect us from tyrannical government?

6. Will the end of sleep push down wages?  (By the way, does sleep make it easier to save?)

44 comments

Uncovering Union Violence

by on January 15, 2013 at 7:30 am in Economics, Political Science | Permalink

Union violence against non-unionized workers and their employers is an under-reported story. Everyone knows it happens but they look the other way. It’s hard to look the other way, however, when the violence and vandalism is videotaped and put on the web–that’s what two Philadelphia developers did and the result is making waves far beyond the workplace.

Since the first videos went up in spring, the tide of public sentiment has turned, and the Pestronks won a court order restricting the picketers’ behavior. But in coming years, the Goldtex battle and the techniques employed there may be seen in grander, historical terms: as the moment that started the unraveling of Building Trades’ vast economic and political power, and perhaps of Philadelphia’s entire power structure.

The above-market wages, featherbedding and absurd work rules make low-cost development difficult:

…According to Gillen, the economics of our Trades unions hinder middle-income developments and force developers toward high-end luxury residences. Yet Building Trades flaunts its power with labyrinthine work rules and outrageous demands. Most famously, the Comcast tower was equipped with two sets of pipes—one “green” and functional, the other old-fashioned and disconnected—to feed the union beast. But the Trades are an everyday drag on the local economy. Union plumbers must call in the electricians if a single wire needs to be moved.

As is usual, in these situations, the rents do not go the workers alone but instead are partially distributed to inside developers who accede because they get monopoly power:

…The Pestronks say they’ve been told by people within the development community that certain established builders get better labor rates than they were offered. Multiple sources inside Philadelphia’s development community say that information is correct. “It isn’t like the unions ever work for market rate,” says one developer, who requested anonymity for fear of retribution from the Trades. “But instead of coming in 40 or even 50 percent over market, they’ll come in at 20 percent. Maybe throw in some government subsidy, and it’s just enough to get the deal done.”

The arrangement has dark ramifications for the city’s economy. “The issue,” says one elected official, who also asked for anonymity, “is that a younger developer or an out-of-town developer gets a vastly different price than someone who has a relationship with the unions. There is a kind of old-boy ne­twork involved. And there is an element of protectionism to it. The established developers complain about the unions. But they cut deals with them and enjoy the fact that the unions reduce any competition they might face.”

The politicians also get their share of the cut:

..Inquirer reporter Bob Warner has published a series of stories quantifying the amount of money Johnny “Doc” Dougherty donates to local politicians. Dougherty, the boss of Local 98, annually funnels $2 million into state and city races, circumventing campaign contribution limits by funding political action committees that lavish his favored candidates with cash. The Trades have it in their power to acquire huge stakes in any city politician. A review of 2011 political campaign filings shows City Council representatives Bill Green, Mark Squilla and Bobby Henon each received roughly 20 to 25 percent of their funding from Trades-related sources.

Read the whole excellent piece. Hat tip to EconJeff who notes that the article is flawed only by a bit of lazy history suggesting that the 40 hour work week and good working conditions are primarily due to unions (there is also a bit of weak economics in a suggestion that the wages of builders and city rents should be closely related). Still it’s a very astute article that connects the dots in the iron triangle.

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How to protect workers against robots

by on January 15, 2013 at 2:44 am in Economics, Law | Permalink

Noah Smith has an excellent proposal:

First of all, it should be easier for the common people to own their own capital – their own private army of robots. That will mean making “small business owner” a much more common occupation than it is today (some would argue that with the rise of freelancing, this is already happening). Small businesses should be very easy to start, and regulation should continue to favor them. It’s a bit odd to think of small businesses as a tool of wealth redistribution, but strange times require strange measures.

Read the whole thing.

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Don’t pay for all of your kids’ college education

by on January 15, 2013 at 12:39 am in Education | Permalink

…a new study…found that the more money (in total and as a share of total college costs) that parents provide for higher education, the lower the grades their children earn.

The findings — particularly grouped with other work by the researcher who made them — suggest that the students least likely to excel are those who receive essentially blank checks for college expenses.

The Inside Higher Ed piece is here.  The NYT piece is here.  Here is a summary of the research from the researcher, Laura Hamilton.  Here is the paper itself, forthcoming in the American Sociological Review, available to subscribers and university systems only I suspect.

I should note that this piece includes all of the appropriate controls, but still we do not know how good those controls are and perhaps parental paying practices are proxying for other features of the situation.

34 comments

Richard McKenzie writes a tribute to James Buchanan

by on January 14, 2013 at 4:33 pm in Uncategorized | Permalink

You will find it under the fold… Read More →

6 comments

What should we be afraid of?

by on January 14, 2013 at 12:33 pm in Science | Permalink

That is the topic of the new Edge symposium and many of the answers are interesting.  Here is the take from Bruce Sterling, who fears that when it comes to the Singularity there is “no there there”:

Since it’s 2013, ten years have passed since Vernor Vinge wrote his remarkably interesting essay about “the Singularity.”

This aging sci-fi notion has lost its conceptual teeth. Plus, its chief evangelist, visionary Ray Kurzweil, just got a straight engineering job with Google. Despite its weird fondness for AR goggles and self-driving cars, Google is not going to finance any eschatological cataclysm in which superhuman intelligence abruptly ends the human era. Google is a firmly commercial enterprise.

It’s just not happening. All the symptoms are absent. Computer hardware is not accelerating on any exponential runway beyond all hope of control. We’re no closer to “self-aware” machines than we were in the remote 1960s. Modern wireless devices in a modern Cloud are an entirely different cyber-paradigm than imaginary 1990s “minds on nonbiological substrates” that might allegedly have the “computational power of a human brain.” A Singularity has no business model, no major power group in our society is interested in provoking one, nobody who matters sees any reason to create one, there’s no there there.

So, as a Pope once remarked, “Be not afraid.” We’re getting what Vinge predicted would happen without a Singularity, which is “a glut of technical riches never properly absorbed.” There’s all kinds of mayhem in that junkyard, but the AI Rapture isn’t lurking in there. It’s no more to be fretted about than a landing of Martian tripods.

For the pointer I thank Michelle Dawson.

71 comments

Assorted links

by on January 14, 2013 at 12:09 pm in Uncategorized | Permalink

1. Is sleep reduction the new low-hanging fruit?

2. Appreciation of Julio Cortázar.

3. What constitutes evidence of cheating?  And more here.

4. What do the numbers from Japan show?

28 comments

Points I made about charter cities and free cities

by on January 14, 2013 at 6:26 am in Economics, History, Law, Political Science | Permalink

I do favor experimentation in these directions, but often at Liberty Fund conferences, and indeed more generally, I play the role of contrarian.  I am not supposed to report the comments of others, but here are a few of the points I made in the discussions over the weekend:

1. It is striking that charter cities — a partial unpacking of nation-states — are proposed for a region, namely Central America, where Central American unification has been an ongoing proposal for hundreds of years.  Could it be that Central American nation-states were not optimally carved up in the first place?  Are cross-national unification and charter “unpacking” really polar opposites as proposals, or do they have more in common than it might at first appear?

2. Under what conditions would, in equilibrium, landowners capture most of the value created by a charter or free city?  Well-governed land would seem to be very scarce.

3. To what extent do charter cities require the active support or at least implicit support of a major hegemon?  Great Britain and then the U.S. backed Hong Kong and Singapore.  The U.S. took over Puerto Rico.  Yet Portuguese Goa and French Pondicherry are no longer real entities in part because no powerful government stood behind them.

4. To what extent are landlocked charter cities viable, or will their rents get swallowed up by larger and adjacent neighbors, much as India gives Nepal somewhat of a raw deal on transport?  Are successful charter and free cities more likely to be on the water?

5. Are the most likely countries to approve charter cities those which plan to use them as “special purpose vehicles” to keep offshore oil and gas revenues out of the hands of the legislature or other domestic “interest groups”?

6. More generally, what kind of selection process will rule which charter cities are approved and which wither on the vine?  How much will this selection process make the original idea worse (or better)?

7. When it comes to local land rights and the like, to what extent can the new legal authority of a charter or free city operate independently of the original legal system?  Or must the new legal authority defer to the documents, maps, and other decisions of the previous authority?  How many of the new legal decisions can in fact be disembedded from the previous legal authority?

8. Are charter and free cities likely to work better or worse with free or restricted immigration?  Which are they likely to evolve?

43 comments

Assorted links

by on January 13, 2013 at 4:34 pm in Uncategorized | Permalink

1. The culture that is Sweden (a screaming video).

2. Iranian markets in everything, Ayatollah air freshener edition.

3. The Japanese Kobe beef pizza for $66, by Domino’s by the way.

4. Kevin Drum responds to Jim Manzi on lead and crime.

5. Trudie’s advice to would-be economists (old MR post).

6. Is this for real?  Does WalMart really carry this?

26 comments

*Catastrophic Care*

by on January 13, 2013 at 12:47 pm in Books, Medicine | Permalink

That is the new book by David Goldhill and the subtitle is How American Health Care Killed My Father — and How We Can Fix It.  I don’t actually like that subtitle, but still this is the best popular health care book from recent times.  It has a crystal clear account of what has gone wrong and how to fix it, with the author settling upon a version of the Singaporean system.  I would describe Goldhill as a market-friendly Democrat who is skeptical about ACA and for the right reasons.

Recommended.

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