So he and his colleagues set up an experiment where they laid out 36 bits of food in a pattern corresponding to cities in the Tokyo area and put a slime mold, Physarum polycephalum, at the spot corresponding to Tokyo.
As they report in Science, after 26 hours the slime mold had created a series of tubular connections that matched, to a great extent, the rail links among these cities. The researchers found that the slime mold network was as efficient as the rail network, it tolerated breaks in the connections just as well, and it was created at reasonable cost to the organism.
Tim Harford is outclassed by none when it comes to expressing important ideas simply yet forcefully:
I have been as guilty as anyone of being fascinated by behavioural economics. But the financial system did not fail because of some psychological trait, but because it was riddled with damaging incentives that were hard to spot because the system was complex and changing quickly.
In other words, let's get over evil bankers and the belief that moralizing will change the world, and let's focus on incentives.
Read the whole article, which discusses changing British thinking and practice on counter-insurgency in Afghanistan.
And yes, rightsizing is a real word, apparently.
International alarm over Greece’s debt crisis abated on Monday when investors flocked to buy the government’s first bond issue of the year, an indication that it may run into less trouble than anticipated in meeting its short-term financing needs.
Investors placed about €20bn ($28bn, £17bn) in orders for the five-year, fixed-rate bond, four times more than the government had reckoned on.
Moody's rating agency, which has downgraded Greece's debt and has a negative outlook on the rating, said the bond sale showed Greece could finance its debts in 2010 but the key for its rating was the ability to implement spending cuts.
Told you so (assuming the Greek government doesn't do anything momentously stupid, this really is a sprint, not a marathon. It's the short-term speculation that Greece needs to address so that there's no need for an EU bailout. Once the vultures move on, everything will be OK again). The reports are from the NY Times and the FT.
Greece only needs to do two things to kill the beast once and for all. Firstly, establish an independent national statistics agency (which should be happening very soon), preferably with some EU officials invited to sit on the board too. And secondly, implement an unexpected, headline shock measure that will stun the speculators: say, raise VAT by 2%, or commit to doing so if the deficit comes in higher than expected.
On a tangential point, Jacoline Vinke, the wife of the Greek finance minister, has a beautiful little website with intimate reviews (and pictures) of small hotels in Greece. UK readers can find one of her books -Around Greece in 80 Stays- on amazon.co.uk.
POST UPDATE, 14 Feb 2010: I have just - mysteriously, and after more than a week since I spoke with either Amazon or Natwest - been refunded the charge, but it's unclear whether it came from Amazon or Visa/ Natwest. Natwest kept insisting that they won't be giving me the money back, because 'it is Amazon that is at fault for routing the transactions via Luxembourg'. The Natwest people were pretty nasty and rude, time and again, in contrast to the Amazon folk which were very nice and polite (albeit equally unable to provide any help or even to respect my time and not ask me to call my bank to clarify). I'll keep shopping from Amazon (great prices too), but I'm now determined to move banks. I'm not under any illusions that the new bank is going to be better (although I can't see how it can be any worse), but I've really had it with Natwest; even the iphone app sucks. I'll also stick with Mastercard credit cards - dear Visa people, screw you too.
I'll be posting more updates if I get more info, and do leave a comment if you have been refunded (or not). There's quite a few people reaching this post via Google, so any comments with info could be quite helpful.
I bank with Natwest, and they recently switched every customer from maestro to visa debit - a card 'with many additional advantages'. Anyways, I just found out - on my statement - that they charge £1.25 for each and every transaction on amazon.co.uk. Needless to say, there's NO NOTIFICATION WHATSOEVER about this on the amazon site. £1.25 is the 'foreign transaction' charge, and from what I can gather it may apply because amazon routes the transaction via Luxembourg.
Right now, there's a couple of threads elsewhere on the web discussing the paypal charge (I couldn't find anything on the amazon charge), with some customers apparently being refunded (but not everyone), so be careful. I contacted Natwest who 'will process this and get back to me in the next 7 working days', as well as amazon who apparently have no idea about this at all. This is all the more worrying because all banks in the UK are in the process of adopting visa debit:
Since June 2009, all of the major banks in the UK have begun - or will in due course - issuing Visa Debit. Barclays, Abbey, Halifax/Bank of Scotland and Lloyds TSB have already issued the card.
I had recently read this article on visa's 'interesting' practices, but charging people without any warning is on a whole new level. Boo Visa, and boo banks. Shame on you.
I'll give this another try, demand I get refunded for the principle of it (charging me without telling me?), and if this is not rectified in the future I'll switch banks and cards to make sure this doesn't happen again.
I'll be updating this post with new information as it arrives. If you had the same experience of have any additional information, comments are open and welcome.
Conan O'Brien ends 17 year success story with NBC
A universal testimony of the word of Man in 13 Billion Others
Second highest grossing film of all time in just 20 days 6 weeks
Update (25.01.2010): "Titanic" just hit an iceberg named "Avatar."
Regulation of economic activity is ubiquitous around the world, yet standard theories predict it should be rather uncommon. I argue that the ubiquity of regulation is explained not so much by the failure of markets, or by asymmetric information, as by the failure of courts to solve contract and tort disputes cheaply, predictably, and impartially.
The case against regulation relies on well-functioning courts. Courts are needed both to enforce contracts and to provide remedy for torts, and hence are central to the basic private mechanisms for curing market failures. In so far as courts resolve disputes cheaply, predictably, and impartially, the efficiency case for regulation is difficult to make in most areas. Efficient regulation would be an exception, not the rule. But when litigation is expensive, unpredictable, or biased, the efficiency case for regulation opens up. Contracts accomplish less when their interpretation is unpredictable and their enforcement is expensive. Liability rules would not cure market failures if compensation of the victims is vulnerable to the vagaries of courts. In short, the case for efficient regulation rests on the failures of courts.
This is Andrei Shleifer, from a new NBER working paper. He makes a number of persuasive points backing his case:
- Regulation is more pervasive when it comes to complicated activities, where generalist judges have particular difficulty arbitrating predictably
- Regulation has grown over time, which might have to do with the growing complexity of activities
- Societies that exhibit high level of trust have less regulation
- Common law countries tend to rely less on regulation than civil law countries
- With the rise of corporations, inequality between the injured plaintiffs and the injurer is too vast to allow for fair arbitatration in courts
Of course, just because expensive courts could explain regulation doesn't mean they do so fully; yet this is a deep and important insight which, as they say, changes everything. This is a very important paper.
Additional extracts, including killer arguments, under the fold.
I've been meaning to write about Greece's fiscal situation for a while, and still intend to publish a comprehensive post on the matter soon.
But since this might be a while, I thought I'd post the forecasts from Greece's hot-off-the-oven Stability plan anyways together with some random, and - in the grand tradition of macroeconomics - not necessarily terribly well thought-through opinions:
1. Thinking mostly about 2011 onwards, I think the growth forecast might be a bit on the conservative side.
2. The unemployment forecast is definitely on the optimistic side; that said, it's worth noting that they have reasonably forecasted unemployment not falling until 2013.
3. Who on earth knows what the deficit or debt are as a percent of GDP. They are OK ball-park figures though, and in any case they are not very relevant at these levels.
4. The probability Greece will be defaulting is extremely low. Buying Greek debt now (if you are willing to hold to maturity) offers juicy returns with very little risk. Btw, this is not investment advice, the value of your portfolio can go up as well as down, you invest your money at your own risk, etc. (isn't there a law that requires me to say this?)
And a question to everyone out there: If Japan - which at the end of the day can always inflate the debt away (yes, they really can!) - comfortably holds debt at 170%-200% of GDP, why can't Greece?
I loved these images of species recently discovered in Ecuador, with more at the Guardian website - thanks Al.
The Earth Book: A symbiosis of Google Maps and Flickr
Paul Krugman's AEA lecture contains this little gem:
Back in 1976, a group of MIT graduate students was working at the Bank, thanks to a personal connection between the governor and Dick Eckaus. Portugal at the time was a bit of a crazy place, still suffering from the mild chaos that followed the overthrow of the dictatorship the year before. The economy had stabilized after an initial slump, but the currency was under pressure, with reserves rapidly dwindling. It turned out later that most of the reserve loss was due to foreign exchange hoarding by commercial banks – which was kind of funny, since at the time those banks were state–owned.