Michael Kevane

I am teaching Econ 3, our introduction to international economics and development here at Santa Clara University.  I had a student in office hours today. She had spent last quarter in El Salvador on Santa Clara’s Casa de la Solidaridad program.  We started talking about the international trade theory section we had just completed (models of comparative advantage and effects of a tariff).  It was all very relevant to El Salvador.  One of the points I try to make generally in the class is that protection, in the form of tariffs and quotas, is a very expensive (socially costly) way to protect the jobs and livelihoods of workers.  First, because there is often a large loss of consumer surplus, and second because many imports are inputs into other products, and so protecting one sector harms other sectors that use the imports.  Like the maize sector: tariffs on corn hurt urban consumers, in the first instance, and also tortilla makers, retailers and restaurants, in the second instance.  Quantifying these effects is hard, and is what economists do for a living.  I’d take a good economist’s  quantification over an anecdote any day of the year.

So I was pleased to find Sam Morley’s (and co-authors) assessment of the effects of CAFTA-DR to be positive but small for El Salvador.  (CAFTA doesn’t change the tariffs on corm until 2020 apparently, they stay fixed at 20%.)  This doesn’t mean that there are not income redistribution effects: consumer definitely benefit, those willing to go work in maquila jobs benefit, and owners of small, low productivity farms are probably on net hurt by CAFTA.  The job of the Salvadoran government is to ensure sufficient social safety net for those displaced.  Guess what? There is an election in El Salvador today, we’ll see who wins.  Hopefully competent and compassionate policy will triumph. Here is the abstract of Samuel Morley Eduardo Nakasone and Valeria Piñeiro’s paper The Impact of CAFTA on Poverty, Distribution, and Growth in El Salvador (from 2007):

In this paper we develop a dynamic CGE model to examine the impact of CAFTA on production, employment and poverty in El Salvador. We model four aspects of the agreement: tariff reductions, quotas, changes in the rules of origin for maquila and more generous treatment of foreign investment. The model shows that CAFTA has a small positive effect on growth, employment and poverty. Tariff reduction under CAFTA adds about .2% to the growth rate of output up to 2020. Liberalizing the rules of origin for maquila has a bigger positive effect on growth and poverty mainly because it raises the demand for exportables produced by unskilled labor. We model the foreign investment effect by assuming that capital inflows go directly to capital formation. This raises the growth rate of output by over 1% per year and lowers poverty incidence in 2020 by over 25% relative to what it would be in the baseline scenario.

Now, there is another aspect to international trade treaties, and many argue this is the more important aspect. These treaties typically involve changes in regulatory practices and policies. For example, many trade treaties now regularly prescribe policies and practices for protecting foreign investors (against so-called “regulatory takings”, e.g. the Methanex case, that actually ended up being ruled in favor of the U.S. and California!) and for protecting foreign intellectual property (extending copyright and secrecy).   There are good reasons to strongly object to these provisions of trade treaties, including the Trans Pacific Partnership agreement that President Obama touted in his Sate of the Union speech.

A mysterious plague has manifested in the world’s starfish population, quickly spreading to several regions in which starfish (also called “sea stars”) are found. Starfish afflicted with the disease tear themselves to pieces, the arms crawling in opposite directions until the animals are literally torn to pieces. Unlike healthy starfish, the affected animals are not able to regenerate after they are torn apart.

Here’s the summary of Pritchett’s book.  I’m just being snarky, natch.  via Boing Boing.

In the morning Thursday, we woke up and the wife of the house made us an “aguatia.” Ok, this does not mean a small glass of juice, tea, or water; this means an entire huge meal. So we ate first breakfast and then walked over to Maria’s house to eat second breakfast. Both of our breakfasts were chicken with yucca, beans, rice, pineapple, and lemon water. Holy crap I thought I was going to explode. Again, we were very grateful to have eaten.I headed off the do some interviews and so did Emilio. We finished our interviews and lunch at 2 pm and headed back to Maria’s to collect out things. Well, upon arrival Maria had another lunch ready for us. We had to decline. She was really upset that we didn’t eat her soup, but we had just eaten a huge meal at our last interviews and had stomachaches.We packed up and made the hour plus walk back to the main town to meet with our group! It has been quite an adventure and just something you have to experience to understand all that goes on.

via Our First Survey Experience | From Colombia to the World Cup..Maybe.

The subject of comic-related-films or film-related-comics had understandably arisen and, when asked, I had ventured my honest opinion that I found something worrying about the fact that the superhero film audience was now almost entirely composed of adults, men and women in their thirties, forties and fifties who were eagerly lining up to watch characters and situations that had been expressly created to entertain the twelve year-old boys of fifty years ago. I not only feel this is a valid point, I also believe it to be fairly self-evident to any disinterested observer. To my mind, this embracing of what were unambiguously children’s characters at their mid-20th century inception seems to indicate a retreat from the admittedly overwhelming complexities of modern existence. It looks to me very much like a significant section of the public, having given up on attempting to understand the reality they are actually living in, have instead reasoned that they might at least be able to comprehend the sprawling, meaningless, but at-least-still-finite ‘universes’ presented by DC or Marvel Comics. I would also observe that it is, potentially, culturally catastrophic to have the ephemera of a previous century squatting possessively on the cultural stage and refusing to allow this surely unprecedented era to develop a culture of its own, relevant and sufficient to its times. These, anyway, were my thoughts on the subject, and I remember that Lance said he wanted to ask me a question on the issue during our interview later, in order to give me an opportunity to clarify my remarks, to which I agreed. I hadn’t yet realised that the somewhat belated date on which the Guardian had finally published the interview was, perhaps coincidentally, the date of the much-publicised Dr. Who anniversary – another phenomenon that had passed me by completely – during which a number of people in their thirties, forties and fifties would be enjoying characters and situations that had been created to entertain, well, the twelve year-old boys of fifty years ago. I hadn’t been thinking about Dr. Who when I made my original comment, but I suppose the timing of the interview may very well have made that appear to be the case, and anyway my opinions are probably as applicable to Dr. Who as they are to the Avengers movie that I was actually discussing. They would also probably be as unpopular and unwelcome in either instance.

via Last Alan Moore Interview? | Pádraig Ó Méalóid AKA Slovobooks.

We were talking about this at dinner last night, so I just went online to do 5 minutes of research.  My position was confirmed: for the typical non-finance person (like an ordinary university professor), there is no low-information cost product to simply spend $250 a year, without big transactions costs or risk, to insure against significant downside housing price risk.

This story (from December 2009… the problem may have been that prices only went in one direction for the duration of the product?) is about a paired financial product that would have enabled investors to bet on short-term price movements in housing.  I t seems there are reasons also for why these are not good long-term strategies, but I am unsure exactly why.

The death of an ETF is generally viewed as a failure or as an ill omen for other related ETF’s. Today that is not the case despite the death of two exchange traded products. Today was supposed to be the final trading day of the MacroShares Major Metro Housing Up Trust NYSE: UMM and MacroShares Major Metro Housing Down Trust NYSE: DMM. These are, ergo were, the two ETF products geared toward tracking home prices in the United States.

Most will agree that these ETF products were not at all useful and not at all successful. The “Housing UP” or UMM ETF traded very low volume and even managed to go three consecutive days this month with no shares traded at all. There were only three days in the last 90 days where this traded over 10,000 shares in one day and the initial momentum of the ETF launch in late June was never sustained. The “Housing Down” of the “DMM” also only had three days in the last 90 with volume over 10,000 shares in a day. This volume here also never really took off or kept its early momentum.

via Case-Shiller ETFs Bite The Dust UMM, DMM.  Here is a critique of the investment products.

Santa Clara County, once known as Valley of Heart\’s delight due to its abundant fruit and vegetable production, has lost almost half of its farmland, much of it to sprawling urban development with little access to healthy foods.This pattern of urbanization has disproportionately affected low-income communities where convenience stores and fast-food restaurants, rather than supermarkets, dominate the food landscape.Large health disparities by income and race mean that low-income communities of color bear the brunt of our unhealthy food system; 14 percent of our county\’s population was \”food insecure\” in 2010, unable to reliably meet their daily food needs with their own or public resources.Moreover, issues of access to healthy food resources affect many residents of Santa Clara County who consume fewer fruits and vegetables than recommended, with diet-related diseases such as obesity and diabetes reaching epidemic levels.The Santa Clara County Food System Alliance believes that solving these problems turns on a robust, sustainable local food system that provides all of our residents with access to culturally appropriate, healthy food at affordable prices. In our recently released Food Systems Assessment, we put forward several solutions.

via Hunger in Silicon Valley: Bringing healthy food to poor communities is a challenge – San Jose Mercury News.

Read “A Mistake” by Akhil Sharma in The New Yorker.  After the last sentence (of a 30 minute read), take a test on generalized empathy for strangers, neighbors, co-ethnics, misanthropes, bullies and snarks.  You’ll be more empathetic than your “self that did not read.”  Now the interesting part: how long until the effect wears off?  I would guess about 3-4 minutes after returning to normal activities (brushing teeth, scooping cat litter, hopefully not at the same time…).

In March 1957, Martin Luther King, Jr., and his wife Coretta Scott King traveled to West Africa to attend Ghana’s independence ceremony. King’s voyage was symbolic of a growing global alliance of oppressed peoples and was strategically well timed; his attendance represented an attempt to broaden the scope of the civil rights struggle in the United States on the heels of the successful Montgomery bus boycott. King identified with Ghana’s struggle; furthermore, he recognized a strong parallel between resistance against European colonialism in Africa and the struggle against racism in the United States.

King was invited to the independence ceremony by Ghana’s new Prime Minister, Kwame Nkrumah. King’s friend Bayard Rustin coordinated the invitation with the help of Bill Sutherland, a civil rights activist and pacifist who was then working for Nkrumah’s finance minister, K. A. Gbedemah. King’s trip was funded by the Montgomery Improvement Association and the Dexter Avenue Baptist Church, his congregation.

King arrived in Accra, the Gold Coast (soon to be Ghana), on 4 March and attended a reception where he met Vice President Richard Nixon. King told Nixon, “I want you to come visit us down in Alabama where we are seeking the same kind of freedom the Gold Coast is celebrating” (”M.L. King Meets”). The next day, King attended the ceremonial closing of the old British Parliament. At the ceremony, the recently incarcerated Nkrumah and his ministers wore their prison caps, symbolizing their struggle to win Ghana’s freedom. King wrote “When I looked out and saw the prime minister there with his prison cap on that night, that reminded me of that fact, that freedom never comes easy. It comes through hard labor and it comes through toil” (Papers 4:163).

At midnight on 6 March, King attended the official ceremony in which the British Union Jack was lowered and the new flag of Ghana was raised and the British colony of the Gold Coast became the independent nation of Ghana. King later recalled,“As we walked out, we noticed all over the polo grounds almost a half a million people. They had waited for this hour and this moment for years” (Papers 4:159). King’s reaction to the Ghanaians’ triumph was outwardly emotional. “Before I knew it, I started weeping. I was crying for joy. And I knew about all of the struggles, and all of the pain, and all of the agony that these people had gone through for this moment” (Papers 4:160).

via Ghana Trip (1957).

It’s not at all clear, for starters, that the fetus has a good chance of surviving inside the womb or of flourishing outside of it. In a study of a few dozen cases of continued pregnancies inside brain-dead women, only one of the five fetuses that were between 13 and 15 weeks at the time of the mother’s brain death was successfully delivered — by cesarean section — and kept alive, though the study tracked the boy only until 11 months after his birth.

I talked last week with two prominent obstetricians, both of whom said that it was impossible, until relatively late in a pregnancy, to get any real sense of how much neurological damage a fetus may have already suffered as a result of a maternal embolism and of any oxygen deprivation that occurred. They also said that a pregnancy dependent on artificial organ maintenance entails an array of dangers to the fetus beyond ordinary ones, including the mother’s susceptibility to infections.

via The Cruelest Pregnancy – NYTimes.com.

La rumeur avait annoncé le Larlé Naaba Tigré, Victor Tiendrébéogo à l’état civil, démissionnaire du CDP. Il a avait été le seul des 70 députés du groupe parlementaire CDP a n’avoir pas signé la déclaration de soutien au Président du Faso publié le 10 janvier. Ce ministre du Mogho Naaba vient d’officialiser la rupture avec le parti au pouvoir en démissionnant de la FEDAP/BC, du CDP et aussi de l’Assemblée comme le notifient ces différentes lettres.

via CDP : Le Larlé Naaba Tigré démissionne de la FEDAP/BC, du CDP et de l’Assemblée nationale – leFaso.net, l’actualité au Burkina Faso.

So my classroom was very warm… and I mentioned David Johansen….

OMFG this novel is so friggin great!  As a set, The Concubine, The Slave and The Great Ponds should have gotten Amadi the Nobel Prize for literature.  These are perfect novels.  The dialogue is amazing.  The Concubine starts off with the death of Emenike, after a fight in the bush.  His widow is coveted by Madume.  Bad things happen.  Madume is dead too.  Now the pace slows down.  Characters are given time to develop.  Ihuoma, the widow, is at the center.  She’s a good person.  But she has her flaws, and the situation is difficult.  As the situation spirals in and out of control, decisions, and chance, affect people’s lives.  They are constantly aware of the tension between predictability and sudden change.  It is the real world of a village in precolonial times.  The number of people is small… a couple hundred.  It takes a day to walk to a neighboring village, where some people are known but most are strangers.  The gods too are a mix of capriciousness and predictable interventions.  The medicine men are aware, and also unconscious.  Amadi delights in bringing out nuance and ambiguity. At one point a character struggles with what to say, and gives up… observing to himself that there was no proverb at hand to convey the nuance he felt was needed.

As in Amadi’s other novels, the title is never really made clear until the very end.  And the ending itself is poignant and shocking, completely unexpected.  Masterful writing.

What happened was, I started singing “slip away” to myself, and I couldn’t place it, and I knew it was one of the saddest things I had ever heard sung and then of course I remembered it was Lou Reed. Lyrics are here.  Springsteen makes a sly cameo.