EC101: Links for 13th June, 2019

  1. “A September 2018 article from Eater tells us that Miguel Gonzalez delivers directly to 120 New York restaurants. As an avocado supplier, he works with farms in Mexico’s Michoacán state. To maintain consistency and minimize bruising, he monitors truck temperatures and how the boxes are stacked during their 2600 (or so) mile journey.”
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    What happens when you raise the tariff on a commodity? Who do you think will (ultimately) pay? Econ texts give you the answer – this article provides an example.
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  2. “Across the United States, a similar cocktail seems to be keeping inflation at bay: Employers are reluctant to charge more, unsure how consumers will react, and they’ve found an untapped supply of workers. It’s partly great news. More Americans are getting jobs than policymakers once thought possible, and wages and prices aren’t spinning out of control the way history would predict.”
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    Think you know macroeconomics? Short answer: you never really do. The NYT provides an example of a conundrum that is keeping the Federal Reserve up at night: full employment, low inflation. A nice problem to have, right? You’d have thought so…
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  3. “Economists have written about topics that we would now classify under the headings of “microeocnomics” or “macroeconomics” for centuries. But the terms themselves are much more recent, emerging only in the early 1940s. For background, I turn to the entry on “Microeconomics” by Hal R. Varian published in The New Palgrave: A Dictionary of Economics, dating back to the first edition in 1987.”
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    On the etymology of micro and macroeconomics.
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  4. “Belloy’s misfortune stemmed from more than bad luck. He was the victim of unscrupulous traders known simply as operators, who might sell fake elevator receipts, or move prices in their favor by spreading false news. Or they might pull off an especially cunning manipulation known as a corner, in which they would buy future wheat while simultaneously buying all physical wheat.Later, when it came time for the operator to take delivery of his future wheat, the other trader had to first go buy some. But there was none. The operator owned it all. Thus trapped, or cornered, the victim had no choice but to pay whatever price the operator demanded. Cornering was the ruin of many a trader, like our Belloy, to whom the only apparent recourse was to find the nearest saloon and shoot himself in the head.”
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    Rarely are classes in financial economics so very entertaining. A lovely history (maybe apocryphal, who knows) about the early days of the CBOT in Chicago.
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  5. “There is no simple remedy for the curse of knowledge, but let me offer a suggestion. Keep a particular person in mind as you teach. That person should be someone you know well—a parent, a spouse, or a best friend (as long as that person is not an economist). Pretend you are explaining the material to them. Are they getting it, or are they lost? If you know this person well, you may be able to more easily empathize with their learning challenges. You might prevent
    yourself from going overboard.”
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    N. Gregory Mankiw comes up with a short six point guideline about how to teach economics better. It is worth going over this list, irrespective of whether you are learning economics or teaching it. Also, taken a look at Eli5?

Links for 18th March, 2019

  1. “So although the leaders of Bangladesh and India have similar goals, the difference in the country’s development models is making for an interesting experiment. Countries in Africa hoping to follow these two South Asian giants’ growth trajectories should be watching keenly. If Bangladesh grows faster, it will suggest that manufacturing, starting with textiles, is still the ticket to industrialization; but if Bangladesh falters and India sustains its growth, it will imply that poor countries should look to services first.”
    Noah Smith compares and contrasts India’s developmental trajectory with that of Bangaldesh’s. This is a topic with great relevance for anybody who is a student of India’s recent economic history.
  2. “The phenomenon of the modern economic crisis, however, consists of the world abruptly discovering that the surpluses we thought we had — and in many cases pre-emptively consumed — don’t really exist. And the reason they don’t exist is because the new modes of industry or technology we deployed (and convinced ourselves were economic) were in fact not economic after all.”
    Izabella Kaminska traces the etymology of the word “economy”, and highlights how the word has meant different things over time – and reaches a less than pleasant conclusion about the digital economy.
  3. “Born in 1845, Nobin was always prone to experimentation. A failed attempt saw him being kicked out of work with a local confectioner. He set up his own shop to attempt the rosogolla, but was soon mired in debt as the sweet would keep crumbling. In 1868, he figured that the trick lay in the right consistency of sugar syrup—not too thick—to hold it together. But commerce was the last thing on his mind and he would distribute the rosogolla at local addas. Till a Marwari timber merchant who was driving by stopped at his shop for his son to have water, and the father and son were given the sweet to taste. They loved it and, almost fortuitously, rosogolla was extricated out of a neighbourhood and introduced to the community at large. “It may sound ironical but the popularisation and commercialisation of the rosogolla came through a non-Bengali,” says Dhiman.”
    If a tree falls in a forest… Put another way, did a Marwari invent the rosogulla? In a lovely article in Forbes magazine, a loving biography of the rosogulla.
  4. “In sum, the structure of the economy—and the key driver of structural change and growth—has moved from the agricultural sector to the service sector for both Haryana and all India. For Jats, who have been historically associated with land and agriculture, this shift has profound significance.”
    Markets and Mandals is a useful way to think of the issue that Christophe Jaffrelot highlights in this paper in the EPW – the article may be paywalled for some of you. But it worth trying to dig out the issue and read it – a good introduction to the subject.
  5. “Dubai, on the other hand, is a surreal alternate universe version of Las Vegas if Nevada were a Muslim country, right down to the desolate desert setting. The Dubai fountains, a giant choreographed-to-music attraction in front of the Burj Khalifa, was even designed by the same person who did the Bellagio fountains. Instead of casinos there are uber-fancy malls, and instead of prostitutes there are Victoria’s Secrets with no softly-pornographic ads or any lingerie on display at all, but in either place you will be blinded by opulence and easily parted with your money.”
    Travel notes from a visit to the UAE – a useful way to think about the UAE, and Dubai in particular. My own sense is that it is certainly worth a visit, but probably not more than that.