India Education Fact of the Day

World Bank asks 'Did you know that 98% of children in India now have a school within 1 km walking distance?

You call this education? A government school in Lucknow

Economic Growth Officers' Conference

Didn't know USAID had economic growth officers- I wonder what Prof. Easterly would say about it. Anyway I have collated some of the the podcasts of the sessions below- Romer's session is highly recommended.

Technology Drive Growth, Rules Drive Development
Paul Romer, Stanford University
Steve Radelet, Department of State

The Millennium Development Goals: The Road to 2015

Global Climate Change: Impact on Agriculture and Costs of Adaptation

Global Climate Change: Leveraging Investment Flows for Mitigation

Reinventing Government: Designing Programs to Enhance Public Sector Effectiveness and Performance
H.E. Minister Imad Fakhoury, Ministry of Public Sector Development, Government of the Hashemite Kingdom of Jordan
Ms. Widad Qutaishat, Results-Oriented Government Component Lead, USAID/Jordan Fiscal Reform II Project, DAI
Dr. Emil Bolongaita, Director, Management Systems International
Moderator: Dr. Mark Gallagher, Chief of Party, USAID/Jordan Fiscal Reform II Project, DAI

A Behavioral Approach to Economic Development
Sendhil Mullainathan, Poverty Action Lab and Harvard University
Michael Kremer, Harvard University

Government ICT Applications that Save Businesses Time and Money
Valentina Mintah, Crown Agents
Efrain Laureano, Chemonics International
Judy Payne, USAID/EGAT/I&E/ICT

Accelerating Job Creation and Growth
Steve Kapsos, ILO/Geneva
Mary Hobbs, USAID/Kosovo
Eduardo Tugendhat, CARANA Corporation
Lili Stern, U.S. Department of Labor

Access to Innovative Financial Services

World Bank’s Doing Business Indicators: Lessons Learned and New Directions
Svetlana Baguadinova, Doing Business Project, The World Bank
Rita Ramalho, Enterprise Analysis Unit, The World Bank
Carolin Geginat, The World Bank

Monitoring and Evaluation for Economic Growth

Shared Growth Diagnostics: Finding the Binding Constraint to Growth and Poverty Reduction

USAID Economic Growth Programming: Ultimate Impacts

Assorted

Someone Take Away Thomas Friedman's Computer Before He Types Another Sentence

Dueling forecasts

Non sequitur on democracy

A Budget Riddle

This n That

Russian Debt And The Euro

Education Is All in Your Mind

Mostly Harmless Econometrics

I just read the new book, "Mostly Harmless Econometrics: An Empiricist's Companion," by Joshua Angrist and Jorn-Steffen Pischke. It's an excellent book and, I think, well worth your $35. I recommend that all of you buy it.

Adjustments downward

The reshaping of the stimulus: public choice thoughts

Enlightened research, fuelled by the dark stuff;

From the outset, Gosset’s focus was practical – as the economist and historian Steve Ziliak has discovered through his work in the Guinness archives. To produce beer to a high standard on an industrial scale, Gosset needed to sample and experiment with hops, malt and barley. But experiments are expensive and Gosset developed his small-sample methods because he wanted to understand how many experiments were necessary to be confident of his results. That was a clear trade-off: how much confidence is “enough” depends on the costs of further research and the benefits of extra precision.

Ziliak and his co-author Deirdre McCloskey argue in a recent book, The Cult of Statistical Significance, that most academic disciplines have forgotten this trade-off. Instead, they use an artificial standard propagated not by Gosset but by the famous statistician and mathematical geneticist Ronald Fisher, who took Gosset’s calculations and turned them to his own devices. Fisher proposed ignoring any finding that failed to reach the 95 per cent confidence level. In other words, until the odds against a pattern having emerged by chance are 19 to 1 against, disregard the pattern completely.

The paradox of thrift

Unstimulating stimulus group think

- An overall concern about the groupthink that has gripped Washington on this. Go anywhere in town, ask anyone at any table at any restaurant and they will tell you two things they know to be true. One, that the only way out of this is a really big stimulus package and two, that it is perfectly okay for the United States to incur trillion-dollar-plus deficits for several years as a "way out" of our problems. These sound roughly as well thought out as the ideas produced with DC's last bout of panicked groupthink, post-9/11, when we all agreed that terrorism should be the new central focus of all our national security policy and that wherever the president saw a threat, we should go quash it, no questions asked.

-There was a time when I thought being stimulated was a good thing

Think About for the Day

It's time to redefine "pro-Israel";

Did U.S. policy reflect the people's will, even a little? Hardly. "Pro-Israel" groups went into overdrive, targeting any politicians or human rights organizations that dared to question what Israel was doing to the civilian population in Lebanon. The Bush administration backed Israel to the hilt and delayed a ceasefire resolution -- just as they are doing now -- in a futile attempt to give Israel time to eke out a military victory. Not to be outdone, Congress passed a resolution of support by a vote of 410-8, after deleting a clause from the initial draft that called for both sides to minimize harm to civilians. The result of all this "support" was a major setback for Israel, however, as the ill-conceived war undermined Lebanon’s fragile democracy and left Hezbollah stronger and more popular than before. Delaying the ceasefire also cost more Israeli and Lebanese lives.

And here's the real tragedy: giving Israel unconditional support wasn't a true act of friendship then and isn't a genuine act of friendship now; on the contrary, it's positively harmful to the long-term interests of the Jewish state. Those congressmen, senators, and other government officials who are falling over themselves to defend Israel's behavior, along with the usual apologists like Marty Peretz and Alan Dershowitz, are no friends of Israel, though they undoubtedly think they are. Their support helped Israel shoot itself in the foot in 2006, and they are helping it do the same thing today.

Pundits like Walter Russell Mead are fond of claiming that the U.S.-Israel "special relationship" reflects shared religious traditions and the will of the American people. The evidence suggests otherwise: although most Americans support Israel’s existence and have more sympathy for them than they have for the Palestinians, they are not demanding that U.S. leaders back Israel no matter what it does. But that's what American politicians reflexively do, even though it encourages Israel to continue immoral and self-destructive policies (including the continued expansion of settlements) and contributes to Arab and Islamic anger at the United States.

Why is Africa poor and what (if anything) can the West do about it?

Want to know more, follow this course.

Exam question of the Day

Peter Boettke writes;

Joseph Schumpeter claimed that capitalism would give way to socialism largely for ideological reasons. This does not seem to have happened, at least directly. But might it be happening indirectly? Consider, for instance, a significant change that has occurred in the economic organization of debtor-creditor contracts. Not too long ago, lenders held their loans in their portfolios. They would lose if the borrower defaulted, which gave the lender a strong incentive to monitor the borrower, particularly for large loans. Now, lenders split their loans into numerous small pieces and disperse them throughout the economy. (For instance, many people who hold mutual funds and retirement accounts will find that they are holding small pieces of large loans made by commercial banks.) The burden of non-performing loans is thus dispersed throughout the economy rather than residing with the original lender. Does this development weaken the incentive offenders to monitor borrowers and thereby weaken overall economic performance? That is, can market transactions generate institutional arrangements that impair the market economy? However you address this topic, do so clearly and cogently.

Related;
A Remarkable Question
Information Transformation
Capitalist Fools

The Hayek Fallacy

Quote the Day

Wil Wilkinson writes;

Larissa MacFarquhar appears to have limited critical capacity when it comes to political or economic ideas, but her profile of Naomi Klein is nevertheless insightful. Klein comes off as an incoherent bundle of reflexes. She has passions, prejudices, animosities, an appealing streak of punk nihilism, a cynical and savvy strategic sense, and no ideas. Klein and her husband, Avi Lewis, come off as so saturated in familial left-wing politics that their ideology, such as it is, seems less a set of propositions that might be true or false than an ethnic identity or tribal commitment that can neither be chosen nor forsaken. Bred-in-the-bone cultural assumptions rarely cohere when articulated; their logic is emotional. Which explains how Klein can bounce so blithely and unintelligibly from a milquetoast Canadian faith in government to a petulant, anarchic distrust of large institutions.

A lesson in Management

"I assembled this team because I am a strong believer in strong personalities and strong opinions. I believe that's how the best decisions are made," Obama said. "One of the dangers in a White House, based on my reading of history, is that you get wrapped up in group-think and everybody agrees with everything and there's no discussion and there are no dissenting views. So I am going to be welcoming a vigorous debate inside the White House.

"But understand, I will be setting policy as president. I will be responsible for the vision that this team carries out, and I will expect them to implement that vision once decisions are made . . . The buck will stop with me."...

The caution: "Obama's favored approach as a senator -- bringing as many smart people as possible into the room and letting them hash out issues -- could prove less workable when urgent executive decisions must be made."

But they quote James P. Pfiffner, a George Mason University professor and author of "The Strategic Presidency," saying Obama might manage such a team more skillfully than Bush would have because he is a better listener. "It's important for the president to have a broad range of alternative perspectives, but he has to be strong enough not to be threatened by people that he doesn't agree with," Pfiffner said.

-The Return of Debate?

Best Economics books

Stephen Kinsella thinks Heilbroner's Worldly Philosophers, is a great introductory book on economics.

Thomas Sowell thinks otherwise;

“..its whole way of thinking leads the student away from economic analysis and away from intellectual development generally.” (p. 142, A Personal Odyssey ).

IMF Seminar on Financial Turmoil

An interesting and timely seminar from IMF;

Do the unprecedented events in financial markets and the policy responses seen recently signal a turning point towards restoring global financial stability? If not, what would be appropriate responses? Are more joint effort efforts the international level required?

How long will the growth slowdown persist and will it worsen as a consequence of recent events in financial markets? What policies or forces will drive the recovery, and what form will it take? Will commodity prices escalate as soon as a recovery begins?

Emerging markets have been affected by the transmission of financial market turmoil in the U.S. and have also faced increased inflation pressures. What additional steps might be required to minimize additional spillover effects?

Looking ahead, how is the global financial services industry likely to be re-shaped? Is the era of financial engineering and disintermediation of banks over? What should be the future objectives of financial regulation and how should regulatory frameworks change? Should the concept of national versus multilateral regulation be rethought given financial globalization? If so, how?

The Advisors Debate

Austan Golsbee vs Ike Brannon

The First Presidential Debate

NYT Check Point's the first debate;

Earmarks:
Senator John McCain plunged into the debate with a strong attack based on one of his signature issues, the requests by members of Congress for funding for pet projects that would benefit their home districts or states, also known as earmarks.

Mr. McCain charged that Mr. Obama “has asked for $932 million of earmark pork-barrel spending, nearly a million dollars for every day that he’s been in the United States Senate.” Parts of that statement are true, but others are not, and other remarks Mr. McCain made about the subject Friday night were also incorrect.

According to the calculations of fiscal watchdog groups, Mr. Obama has indeed requested that amount of funding since entering the Senate in 2005. But some of the same groups make a distinction between “pork-barrel” projects that they deem inherently wasteful, such as the now-famous “Bridge to Nowhere” in Alaska, and those projects that may have a useful purpose but which are obtained through legislative guile.

In addition, Mr. McCain erred when he said that earmarks have “tripled in the last five years.” Earmarks tripled in size over the decade between 1996 and 2005. But since then, they have actually declined, from nearly 14,000 projects worth $18.9 billion in fiscal 2005 to just over 11,500 projects valued at $16.5 billion for the fiscal year ending next week.

Finally, earmarks are, as Mr. Obama indicated, a tiny part of the federal government’s overall budget and deficit. For fiscal year 2008, President Bush asked Congress to authorize $2.9 trillion in spending, which meant a total deficit of about $240 billion. That means that even if all earmarks were eliminated, it would reduce the federal deficit for the year by less than seven percent.

Fannie and Freddie:
Senator John McCain said tonight that he “warned about Fannie Mae and Freddie Mac,” echoing some of his recent comments in which he portrayed himself as sounding the alarm about the impending financial crisis.

Mr. McCain was referring to his decision in 2006 to sign on as a co-sponsor of a Senate bill that would have overhauled regulations governing Fannie Mae and Freddie Mac. But the legislation was introduced more than 16 months earlier, and the debate over the issue had been going on for some time. He also only added his name to the measure after an oversight agency issued a long report condemning practices at Fannie Mae.

Tax Hikes:
Senator John McCain charged that Senator Obama voted “to increase taxes on people who make as low as $42,000 a year.”

Mr. Obama interjected, “That’s not true, John. That’ s not true.” Mr. McCain’s claim has been called “simply false” by the nonpartisan FactCheck.org.

It is based on Mr. Obama’s vote for Senate Democrats’ nonbinding budget resolution for fiscal 2009 that assumed all of President Bush’s 2001 tax cuts would expire as scheduled in 2010. But Mr. Obama has promised that he would retain all Bush tax cuts for families making less than $250,000 a year. Mr. Obama has proposed other tax breaks for the middle class as well. The nonpartisan Tax Policy Center has concluded that 95 percent of families with children would get a tax break under Mr. Obama’s plan, significantly more than under Mr. McCain.

Here's the transcript

What is the Real Fiscal Challenge?

Busting the Budget: Healthcare Costs or Entitlement Programs

On Monday, September 15th, six experts in fiscal policy and healthcare policy debated the nature of the nation’s pending fiscal crisis at the National Press Club. Moderated by TaxVox editor Howard Gleckman, the event featured Henry Aaron and Alice Rivlin of the Brookings Institution, Julie Barnes and Maya MacGuineas of the New America Foundation, Robert Greenstein of the Center for Budget and Policy Priorities, and Eugene Steuerle of the Peterson Foundation.

Henry Aaron warned that long-term deficit projections would be unsustainable, but argued that two questions must be answered: what causes these deficits and what should the solution be? Although the answers need not be the same, Aaron explained that healthcare cost growth is both the primary driver, and should be the primary solution. He offered 5 conclusions:

* Projected deficits are large and unsustainable.
* Spending cuts and Social Security reform can help reduce them a little bit, and should be undertaken.
* Healthcare spending, and the taxes needed to pay for them, should continue to grow faster than GDP.
* Healthcare cost growth can be slowed considerably, greatly reducing the projected deficit.
* The problem of future deficits is not an entitlement problem, but a problem of large and growing costs in the overall healthcare system.

Alice Rivlin then suggested that the panelists were in fact debating the wrong question. Rather than arguing over whether closing the fiscal gap should focus on entitlements reform or healthcare reform or tax reform, they should recognize that all three are important. Rivlin explained the there are really two problems driving entitlement growth – demographics and healthcare cost growth. Because of demographics, Social Security costs will rise rapidly over the next two decades and then begin to level off. Medicare and Medicaid, on the other hand, will rise steadily indefinitely. This means that Social Security is important in the short-term, while healthcare entitlements drive the deficit further into the future. Rivlin suggested five main solutions to the looming fiscal crisis:

* Encourage people to work longer by both reforming Social Security and changing rules and incentives in private pensions.
* Encourage more efficient distribution of medical care, using Medicare and Medicaid to lead payment system reform.
* Move toward universal healthcare coverage with spending controls.
* Shift healthcare expenses to the private sector where possible.
* Reform the tax code to make it more equitable and efficient so that it can bring in the needed revenue without being overly burdensome to the economy.

Hurricanes and Global Warming- what's the link?

Is Global Warming Worsening Hurricanes?

Gustav and Hanna bring friends: More major hurricanes predicted for September

Climatology: Tempests in time;

The frequency of severe hurricanes in the North Atlantic has increased during the past decade. Scrutiny of the prehistoric record left by such storms helps to assess the factors contributing to hurricane activity.

A hurricane is a product of its environment: a warm ocean provides sustenance; calm atmospheric conditions nurture an infant storm; and a high-pressure cell in the subtropical atmosphere drives it in a given direction. Increases in oceanic heat from global warming will raise a hurricane's potential intensity, all else being equal.

The inevitable hurricane/global warming story;

This reminds me of a common conversation at my house:

Child 1: It's his fault!

Child 2: Nu-uh, it's her fault!

Me: It's both your fault! Now shut-up and somebody get me a beer.

Never ending debate-The Question of Global Warming

'The Question of Global Warming': An Exchange"
By William D. Nordhaus, Leigh Sullivan, Dimitri Zenghelis
, Reply by Freeman Dyson

Related;

Global Warming: Looking Beyond Kyoto
by Ernesto Zedillo

A Question of Balance- Weighing the Options on Global Warming Policies

Podcast of the Day- Dueling Tax Plans

Dueling Tax Plans: What Would McCain and Obama Do?
A conversation with the candidates' top economic advisers

Featured Speakers

* Austin Goolsbee, senior economic policy adviser, Obama ’08
* Douglas Holtz-Eakin, senior economic policy adviser, John McCain 2008

Analysis of the Candidates’ Tax Plans

* Len Burman, director, Tax Policy Center, and senior fellow, Urban Institute

Related;
On Dividend Taxes, It’s a Post-Partisan Race -Mankiw

BARACK OBAMA is often described as a post-partisan politician who transcends traditional ideological divides. Is it true? At least when it comes to one small but important aspect of tax policy — the treatment of corporate dividends — the answer appears to be yes. Without much fanfare or public notice, Senator Obama has embraced a central element of the Republican agenda.

Obama Economic Advisor Goes on Offense Against McCain

Report from the RNC Tax Policy Forum with Austan Goolsbee and John Taylor;

In Joel Slemrod's presentation, he asked how a non-economist could evaluate the potential effects of the candidates' proposals on the economy. (By the way, Joel's book Taxing Ourselves, A Citizen's Guide to the Debate over Taxes is by far the best popular guide to the topic.) He said that an imperfect but plausible approach is just to compare the records of the Clinton and Bush presidencies.

If McCain’s Tax Cuts Will Create Jobs, Why Haven’t Bush’s?

Will Trickle Down Policies Help "All Americans"?

My Deficit is Smaller than Yours Dept.

Goolsbee, Furman Say McCain's Plan Would Expand Deficit

Holtz-Eakin Says Obama Will Lead to Larger Deficit

Holtz-Eakin vs Furman

Why are PFM experts not talking about Climate Change?

Scientists Sunday said they could no longer rule out a fast-track melting of the Greenland icesheet -- a prospect, once the preserve of doomsayers, that would see much of the world's coastline drowned by rising seas.

The researchers found that the great Laurentide icesheet which smothered much of North America during the last Ice Age melted far swifter than realised, dumping billions of tonnes of water into the ocean.

-Past evidence boosts concern for Greenland icesheet: scientists

Sea level rises may accelerate due to melting ice sheet;

The most recent report from the UN's Intergovernmental Panel on Climate Change predicts that sea levels will have risen by around 10cm at most by 2100, but according to Carlson's analysis, rapid melting of the Greenland ice sheet could cause much greater rises.

"For planning purposes, we should see the IPCC projections as conservative," he said. "We think this is a very low estimate of what the Greenland ice sheet will contribute to sea level."

In an accompanying article, Mark Sidall at Bristol University describes how a 1 metre rise in sea level would submerge an estimated 2.2m square kilometres of land, largely in Asia, and displace around 145 million people at a global cost of $944 billion.