Bluematter.

I met this guy who was creating software where you could watch Mad Men and you could chat with your friend while you're watching it, and things would pop up, and facts would pop up, and I said, "You're a human battery. Turn the fucking thing off! You're not allowed to watch the show anymore. You're missing the idea of sitting in a dark place and having an experience."

He is Tyler Cowen's nemesis - Tyler walks out of almost every movie and leaves most books unfinished. A small part of me wants to be more like that, but in the end I can't really bring myself to disagree with Matthew Weiner.

And by the way, here's an (unrelated) excellent interview at Vulture (it starts getting interesting 4-5 paragraphs in).

Picture taken at Technorati today about 30 seconds before posting (1:44am UK time).


I'm sure they'll fix it shortly, but I really want to say: Thanks Technorati, you made my day.

Milgram redux, and I'm not at all surprised by the results. I observe this trait every day, everywhere, and it scares me to bits. I have never personally witnessed it culminate to brutal violence, but no violence is needed; I have seen much evil come of it at my workplace, in public debate, and even amongst my friends. All that is needed is blind loyalty to authority, to prevailing moods and cliches. A willingness to take a mental shortcut even though someone's welfare or dignity is on the line.

There are too many Hanna Schmitz; and the thought I may unwittingly become one myself - even in a much smaller way - horrifies me.

I think about Milgram's experiment almost every day. My desire to be someone who refuses to continue may define who I am, or would like to be, more than anything else.

Cranberry harvest in Wisconsin and more fall 2009 scenes from around the world

Dave sent those via email - I've seen some of them before, but they are still hilarious (note: there's more graphs under the fold).

First, disable any filters (moderate safe search and the like) you may have on google search - I think these should be off by default anyways.  If no kids have access to your computer and yet you prefer to self-censor google search results, I suggest you take a long, hard look inside your soul and ask whether you really want to be one of those sorry people who think it makes sense to expend energy in avoiding accidentally reading the word 'fuck' or seeing an uncovered breast or two. In other words, get a life.

Now type 'my girlfriend' on google and check out the search suggestions it gives you. As of writing, these include 'cheated on me', 'is fat', 'hates me' (most search results by far), and 'is a virgin'. A martian trying to understand human nature in a hurry would be wise to use google search suggestions over any treatise on the subject I can think of.

And if you thought that was revealing, try typing 'my girlfriend won't', for suggestions such as 'shave'. Absolutely brilliant, absolutely spot on.

The city of Baltimore has given writer Edgar Allan Poe, the master of macabre, a funeral service 160 years after his death; only seven people attended his funeral in 1849.

If it was ever fitting for anyone to have multiple funerals, it would be for Edgar Allan Poe. People can say what they want, but he still is one of my favourites.

Emma Maersk - Among the largest container ship in the world

The art of making footballs

What do they think when they see ads like this on their blog? 

Do they think that editorial control of ads (beyond sex and vulgarity) is not a suitable thing for a blogger to do? Does it bother them but they think the money is worth it? Are they of the same mind or is one more inclined than the other to reject it? Have they even thought about it, or do they feel that ad space is not a real or integral part of MR? I am not being critical, I am honestly curious. I find this question particularly intriguing, because I think I can predict pretty accurately what their stance would be on almost every other issue I can think of.

In any case, I would love to know. Marginal Revolution readers out there, what do you think?

UPDATE: Thanks to Justin Wehr, we now have a (disappointing and predictable) answer from Alex Tabarrok:

        Markets in Everything!  :)

By the way, for context see for example here, here and here.

1. Reduce the period for which patents for drugs and medical equipment are granted. There will then be fewer expensive treatments coming to market, and their price will be falling quicker. This is much neater than regulation or voluntary agreements, and it more or less leads to the same outcome. The crucial difference is that it involves less 'government' and more 'freedom', so people on the right shouldn't have any objections.

2. Do what Milton Friedman advocated and abolish occupational licensing for medical personnel. If you can't stand that much less government, relax rather than completely abolish.

3. Use the savings generated to publicly fund 100% insurance for the poor, and taper that off as you go up the income/wealth scale. On top of that, create a fund to provide public co-funding of treatment in 'catastrophic' cases, defining catastrophic as treatment that a patient can't possibly afford by a mile. Insurers then don't have to worry about extreme cases and premia can come down, while those that rationally choose to utility-maximize by not insuring will now face a somewhat lower-stakes gamble: if they fall ill they will suffer a massive blow to their finances, but no-one will be dying in the streets. (if you don't see the relevance of protecting insurers from catastrophic scenarios, remember how Kenneth Arrow back in the day couldn't find any insurer who would assume unlimited liability - he wrote about this in his classic paper on healthcare)

There, I solved US healthcare in a blog post written on my mobile phone.

And for those of you philosophically inclined, note how point 1 in particular demonstates how utterly silly it is to bring in 'freedom' and 'markets v government' ideology to a debate involving reform at the margin.

If you are are looking for a simple, jargon-free explanation of Keynesian economics and the debate on what government should do about the recession, you've come to the right place. It will still be hard work if you haven't studied this stuff (it's not the easiest concept in the world), but you certainly don't need an economics degree or advanced training to understand any of it.

The central Keynesian insight is this: when you decide to hoard some extra cash rather than spend it, income in the rest of the economy goes down by the exact same amount, which then has a knock-on effect on your income. A recession ensues: a period when we work and produce less than we would like, and as a result get paid less too.

To illustrate the point while keeping things simple, let's say there are just two people in the world - me and you. This is an unrealistically small economy, but as we will see, the basic lesson applies to economies of any size.

In this make believe world, I make £100 a week by selling bread to you at £1 a loaf, and you make £100 a week by selling chocolate to me at £1 a bar.  The total income in this economy (its Gross Domestic Product or GDP) is £200, which corresponds to 100 loaves of bread and 100 bars of chocolate.

Now, let's say that one fine day you decide to save £20 out of your £100 and keep it in cash. As a result, my income falls to £80, and the total income in the economy is now £180 - with the economy producing 20 chocolate bars fewer than before. In the following week, I only have £80 to spend, which means that your income also falls to £80, and you end up buying fewer of my loaves. 

In the end, both our incomes are lower, and we produce and consume less than our potential. Our economy is in recession.


How does this carry forward to the real, larger, economy? Just think of me and you as blocks of people: essentially, when too many individuals decide to increase their cash holdings simultaneously - perhaps because they turn pessimistic about the future - a recession ensues.  As Paul Krugman puts it beautifully (in mild economese):

The key to Keynes’s contribution was his realization that liquidity preference — the desire of individuals to hold liquid monetary assets — can lead to situations in which effective demand isn’t enough to employ all the economy’s resources.

So, this is how a recession starts; the question is, how can we climb back out of it?

Our first option is to do nothing. If you paid close attention to the story above, you will have noticed that despite the slump in demand (you now only demand 80 loaves of bread rather than 100), I kept my price fixed at £1 per loaf. But I would really like to sell more bread to you because I can then have more income. Eventually I will start lowering my prices so that I can go back to selling all 100 loaves I can produce.

By exactly the same logic, you will do the same and we will be back where we started - producing at our full potential of 100 loaves of bread and 100 bars of chocolate. Recession kaput.

And here's where the difference between neoclassical and Keynesian economics lies.

The former school of thought assumes that the adjustment process is instantaneous: if you decide to hold £20 extra in cash, neoclassical economics assumes that we both immediately lower our prices to £0.80 so that nothing real changes: the economy keeps producing (and consuming) 100 loaves and 100 bars of chocolate, and there's never any recession.

(This is not strictly true. Neoclassical economics doesn't say GDP can never fall - to stick with our example, you might fall sick and not be able to work, or decide to work less because you want to spend time with the kids, leading to less chocolate, bread and incomes all round. What you can't have with neoclassical economics, however, is a demand-driven recession: a fall in economic activity simply because too many people decide to increase their cash holdings and consume less at a point in time)



Recessions, then, are generally self-correcting: prices will eventually adjust, and the economy will go back to producing at potential. And while this offers some consolation, we would still like to lessen the pain by either avoiding or speeding up the process of adjustment.

In our simple example, there is an obvious solution. Let's say that when you first made your decision to hold £20 in cash rather than spend it to buy my loaves, the government printed an extra £20 and used it to buy my unsold produce. My income at the end of that week would be £100 just as it was before, and because my income is your income (remember, I spend my income on your chocolate bars and you spend yours on my loaves) the economy doesn't go through a period of under-producing at all. There is no recession, there is no need for a lengthy period when prices adjust, and we happily keep producing at our potential.

This is as far as our simple story will take us. Recessions can ensue for as silly a reason as people wanting to hold more cash, and the government can in principle take action to correct the situation.




If you found this post worthwhile, let me know and I will build on this basic story to cover the action government can take (fiscal and monetary policy), the complications that arise in practice, and the role of banks and financial markets.

Machine learning department members from Carnegie Mellon protest at the recent G20. Hat tip (and more pics) Social Science Statistics blog. 

This is amazing: RedLaser on the iphone will instantly scan any barcode and look up the product on amazon and google product search, showing you where you can get the best price. The entire process takes less than 2 seconds, and it works flawlessly. This is not simply a must-have app; it's a reason to buy an iphone.

And of course finding the lowest price is just one of the things you can do: you can check for book and dvd reviews, put together a shopping list by scanning stuff in your fridge - the possibilities are endless. The developer has even made the SDK available to other application developers, which means that this is just the beginning.

Take me to the next level.

50 People questioned and responses filmed:

1) Where would you wish to wake up tomorrow? Answers from Brooklyn.

2) At the end of the day, what would you wish to happen? Answers from New York or New Orleans

Please leave your own responses as a Bluematter comment. Thanks!