Stationary Bandit

Best Line I Read Today

At the best, the State, or the government, is an instrumentality for making peace, not for perpetuating it.

From Thorstein Veblen's "The Nature of Peace."

Ariel Rubinstein Reviews Freakonomics

Here is my favorite part. Levitt and Dubner state that

"Teachers and criminals and real estate agents may lie, and politicians, and even CIA analysts. But numbers don’t.” (17) The reader wonders: "How can … data be made to tell a reliable story?” (161) And Levitt responds: "By subjecting it to the economist’s favorite trick: regression analysis. No, regression analysis is not some forgotten form of psychiatric treatment. It is a powerful – if limited – tool that uses statistical techniques to identify otherwise elusive correlations.” (161) This is a curious statement in light of the fact that Levitt is aware of the problematic nature of statistical analysis, acknowledging: "I just don't know very much about the field of econometrics" (x) and in general thinks that "regression analysis is more art than science." (163). This is perhaps the central contradiction in the book: On one hand, a recognition of the limitations of statistics, and on the other hand, using it as a magician's box. [my boldface]

Rubinstein has hit the nail on the head.  Here is the review.

Land Reform in South Africa

The land reforms pursued in Zimbabwe have been a disaster.  Following the reforms, GDP per capita plummeted.  Fifty years of progress disappeared in only a few years.  Craig Richardson has a nice paper documenting this collapse (see here).  The government of South Africa claims that it will not follow Zimbabwe's approach.

South Africa's land minister has moved to reassure the public that a tougher stance on land reform will not lead to "Zimbabwe style" expropriations.  Minister Lulu Xingwana said recently negotiations with white farmers over the price of land bought for reform must not go on longer than six months.

Here is the whole story.  The timetable raises concerns about whether extensive takings will occur.  If six months passes with little reform, the government may simply remove the property owners.  And if that happens, economic collapse will occur.

Gunter Grass's Secret

This is a bit surprising.

It’s enough to make an old man cry. Just days before publication of his long-awaited autobiography entitled Peeling the Onion, Günter Grass, bleeding heart icon of the German left, has confessed he was once a member of the Nazi SS.

Story here. 

Chaos in Somalia

The latest attempt to form a government in Somalia appears to be failing.

The Union of Islamic Courts (UIC) has consolidated its hold on Somalia's central coastline taking another port.  Reports from the town of Hobyo say heavily armed Islamic courts militiamen moved in at dawn without any fighting.  The Islamists have taken control of most of central and southern Somalia since seizing the capital in June after defeating an alliance of warlords.

Story here.