Mar 31, 2012

Reviews of "Why Nations Fail"

Still wondering whether reading "Why nations fail" by Acemoglu and Robinson will be worth the time. Here are three good reviews:

Fukuyama in The American Interest: "A theory of development that can’t really explain the most remarkable growth story of our time [China] is not, it seems to me, much of a theory."

Easterly in the Wall Street Journal: ""Why Nations Fail" also offers this crucial insight: Experts cannot engineer prosperity with the right advice to rulers on policies and institutions. Rulers "get it wrong not by mistake or ignorance but on purpose.""

Paul Collier in The Guardian: "The foundations of prosperity are political struggle against privilege."

Mar 23, 2012

Book Review: Scorecasting by Moskowitz and Wertheim

Scorecasting is one of these books like Nudge and Freakonomics that is just pure pleasure to go through, page after page. The focus here is on sports. The academic author is professor of finance at U of Chicago, the journalist works for Sports Illustrated. What a great duo. The number crunching is brilliantly merged with anecdotes to make derangingly-convincing arguments. The longest chapter debunks the reasons behind the home-field advantage, i.e. the fact that in every sport, from basketball to international cricket, the home team wins more than 50% of the games. Most would guess this comes from players playing better at home as they have the backing of fans, they know their field, and they’re not tired from travelling. The authors rule against these explanations one by one, for example by analyzing all kinds of player-performance indicators, and finding no difference between home and away.  They then argue referee bias is actually the main reason behind the advantage. That is because referees are in essence human, and they unconsciously wanna please the crowd. Using baseball data, they show that umpires are more likely to favor the home team on tough calls, where the line between a ball and a strike is very thin. When there are no fans, such as in 21 games in Italian soccer in 2007, they show that players at home play as well as away, as usual. However, the home bias in favorable calls drops by 23%. They explain these phenomena using insights from behavioral economics, such as loss aversion, the endowment effect, or the omission bias. The latter may explain why referees often swallow the whistle so as not to decide the outcome of a game, like when a foot fault was called on Serena Williams in the last game of her semi-final at the US Open… the call was right, but fans would rather have seen an everlasting rally. Serena let the line judge understand that it was a bad idea. Squeezing the ball in her hand, she gently told her: “If I could, I would take this fucking ball and shove it down your fucking throat”.

Mar 18, 2012

Greece facts of the day

  • It costs less to transport agricultural products from Central America to Greece by ship than it costs to transport them within Greece by truck
  • Greece’s railroad company has more employees than passengers
  • you offer the printing press to this political system, it will just go back to business as usual. It is by cutting off their access to cash, by remaining in the euro, that you can force political change along with economic change

These are from a new Vox column by Miranda Xafa.    

Mar 13, 2012

Ruling Uzbekistan like in a James Bond movie

Acemoglu and Robinson just started a blog to accompany the launch of their new book, Why Nations Fail (reviewed by The Economist here). A recent post focuses on extractive institutions in Uzbekistan and stars none other than the repressive president's daughter, Gulnara (pictured below and more pics here) (Karimov has been President since 1991). Here's an anecdote:

Part of Uzbekistan is also ideal for growing tea. Interspan, a US company, invested heavily. But by 2006, Karimov’s daughter, Harvard graduate and international jet setter, Gulnara Karimova, had taken an interest in this market. Gulnara is a woman of many talents as you can see from her web page. For example she hangs out with rock stars like Sting and even duets with Julio Iglesias. Gulnara’s interest meant taking over Interspan’s assets and business. And this was not going to be by making an attractive offer. The company reports that men with machine guns, allegedly working for the Uzbek intelligence services, entered its offices and warehouses, and seized its assets and inventory. Its personnel were arrested and tortured. By August 2006, the company pulled out of Uzbekistan, and tea was now a Karimov family monopoly. The tea market is not the only one which Gulnara Karimova is said to have used coercion and expropriation to have taken control of. She has allegedly acquired shares in the Coca-Cola bottling franchise and in the oil sector through similar means, and controls the largest mobile phone operator, and has major interests in several other sectors, including cement and nightclubs. (Ironically, one of Karimov’s other daughters, Lola, is a “campaigner for the rights of children”!).
Two questions. Do people actually still wonder why Uzbekistan is poor? And second, who would've thought the line between perfection and insanity was so thin indeed?

Mar 5, 2012

Latex vs. powerpoint: Distribution across quality levels (wonkish)

In other words, all very bad presentations are powerpoint, and all very good ones are powerpoint. If you wanna signal you are not a 'very bad' candidate, using latex is a good idea.

Mar 2, 2012

A new boss for the World Bank

Given his usual lack of bold moves, it is highly unlikely that Obama will end the shameful practice of the US designating the World Bank boss in June when Zoellick steps down. So who is the US gonna pick? Here are some contenders: Larry Summers, Bill or Hilary Clinton, Susan Rice blah blah blah... Jeffrey Sachs writes in the Washington Post that he wants the job. Is this an important decision? Yes.

Clive Crook, from The Atlantic, puts it best:
If you need convincing about what's at stake, read Nancy Birdsall of the Center for Global Development. The World Bank's chief has enormous power within the institution, and the Bank needs to follow a substantially new course in future. The returns to choosing the right person to lead it would therefore be huge. Should it be an another American? Not in my view. The indefensible pact which gives this job to the US and the IMF job to Europe should be abrogated, and should be seen to be abrogated. If not now, when? If not by Obama, by whom? This requires a non-American to get the post. In a separate post, Birdsall disagrees. She thinks what matters is that the open, merit-based competitive process that's already supposed to be in place should be allowed to work. Then, if an American is chosen, fine. "Should an American end up as president, he or she would benefit tremendously from the legitimacy that only an open selection process can bestow." No doubt. But in that case how do you convince people that the process is what it claims to be? I'm willing to bet that neither of us will get our way.