Friday 18 March

Today, Mohammad presents “Nuclear Energy: Revisited”

Japan’s quake and tsunami have shaken the world. One side is the current unbelievable misery of many and the other is the unfolding nuclear crisis. The impact of the latter on other countries and the way public perceives nuclear energy is getting clearer as the news is getting out of pipeline:

Germany has already put on hold its politically tricky decision to extend the life of its nuclear plants. Recently China has announced a pause in its ambitious plans for nuclear growth (27 reactors under construction). (The Economist)

Probably these countries are asking: if even Japan—so well-organized and disciplined, so well prepared for disaster and so experienced in nuclear power—can come so close to catastrophe, what nuclear risks are their own countries running?

We all know the virtues of nuclear energy: very low co2 emissions and cheap energy. But what do we know about the costs of nuclear energy? Have Japanese disaster taught us something we didn’t know? Are we going to see a more cautious expansion of nuclear energy or this is just a bleep? After all, what are the alternative energy sources for Japan?

In a broader perspective, how do individuals take into account “low-probability but catastrophic” events? There are a few papers in Economics trying to explain asset market puzzles by incorporating rare catastrophes (e.g. Barro (2009) AER).

Some related articles on this:

http://www.economist.com/node/18395981?story_id=18395981

http://www.economist.com/node/18388874?story_id=18388874

Some statistics about nuclear dependence and also a more technical account of what happened in Fukushima: http://www.economist.com/node/18398734?story_id=18398734

Friday 11 March

This week, Prakarsh will ask us to think about the implications of the LSE’s recent “Gaddafigate” scandal.

It has been quite an eventful week for LSE and it would be great to know where we stand in today's happy hour.

Some questions to think about:

- Has LSE's reputation actually been hit by its links to the Gaddafi family?

- If yes, was Howard Davies right in stepping down to salvage it (after all, he was popular with students and staff)?

- Which of the following reasons is the most instrumental or was it their combination that led to the resignation?

1. PhD being awarded to Saif Gaddafi and accusations of it being plagiarized

2. Davies being an advisor to the Libya Sovereign Wealth Fund

3. Accepting charity from the Gaddafi foundation

- More generally, should universities not take money from dictatorial regimes (even if there are no strings attached)?

- Where do we go from here: should universities also look into sources of dubious tuition funding or if relatives of students are engaged in any wrongdoing?

- Are universities increasingly sacrificing academic independence through donations (or has it always or never happened)?

Some links:

http://www.guardian.co.uk/education/2011/mar/08/universities-donations-tyrant-lse-gaddafi

http://news.bbc.co.uk/today/hi/today/newsid_9413000/9413950.stm

http://www.guardian.co.uk/education/2011/mar/03/howard-davies-lse-resignation-letter

Friday 4 March

This Friday, Jon presents “The Great Stagnation”

This week's happy hour discussion will focus on the central thesis of the new book/essay by GMU Professor and well-known economics blogger Tyler Cowen, titled "The Great Stagnation: How America Ate All The Low-Hanging Fruit of Modern History,Got Sick, and Will (Eventually) Feel Better."

You can get it as an ebook on Amazon (or Barnes & Noble) for $4, and if you don't have a device with e-reader capabilities (Kindle, iPad, smartphone) you can read it on your computer using the Amazon Kindle application. It is only 15,000 words long. Alternatively, there are plenty of good reviews out there, try the Economist for example.

I've summarised a few thoughts on the book below, more at the end.

Highlights:

The central claim of the book is that the US, (perhaps even the "West") have been undergoing a slowing in technological progress and growth of material well-being since the early 1970s. Cowen presents anecdotal support for the slowing of "game-changer" innovation (iPhones vs telephones; cars vs better cars), as well as data on the stagnation of median income (which also applies to the UK), slowing in patent registration, R&D output and productivity. It is well established that there have been few medical breakthroughs for many years. Apparently, "a lot of our recent innovations are private goods rather than public goods."

In Cowen's own words: "One way of summing up TGS is to cite local diminishing returns and yet longer-run increasing returns, though right now we're on the diminishing segment of that curve."

Points for discussion:

1. Do we agree with the notion of a "great stagnation"?

2. What do we think is the role for the internet? Does information technology and globalisation tip the balance in favour of "superstars"?

3. Do we think that the recent shift in UK education policy will exacerbate the problems?

"Appendix"

Cowen argues that the primary cause for this slowing of progress is that we have exhausted a lot of the "low-hanging fruit" available to us. We no longer have vast amounts of unexploited land; educational enrolment is now sufficiently high that the marginal returns to just educating more people are much lower; major technological innovation is harder than it was; growing governments experience diminishing returns. Large parts of the economy are not subject to productivity-enhancing competitive pressure.

The book should not necessarily be interpreted as pessimistic. Cowen repeatedly mentions that technological plateaus are to be expected and are not likely to be permanent. The internet is one innovation that has improved the standard of living of many - the problem is it doesn't influence GDP all that much yet (Facebook only employs about 2,000, Twitter 300 and eBay about 17,000). In a low growth world we must learn to live within our means, which we've not yet managed. The financial crisis happened because "we thought we were richer than we were."

By the way, some think 3D printing may just be one of the game-changers we need.

In the Aghion and Howitt Schumpeterian framework, we can interpret the book's claims as a slowing of the expansion of the frontier, hence why China and India - currently in catch-up mode - have not yet been affected.

Friday 25 February

This evening, Dimitri presents “more news is bad news?”

Last week the Home Office launched the www.police.uk website. It has is a detailed map with monthly figures on violent crime on every street of England and Wales. The website had 18m hits within an hour.

The launch and was somewhat controversial. The Home Office sees it as a tool of empowerment, which will make policing more transparent and accountable. It gives more information to the public, it argues, and that will make police more responsive.

Criticism however comes from many sides. One argument says that this could have distributional consequences, as home owners might end up being losers. Others contest the policy, arguing that it is just a gimmick, and that it detracts people from the main issues. For example, since the general elections the police force has lost 2,000 officers. Finally, there's some concern around the quality of the information.

In a more general level, critics say that this will actually increase the fear of crime, and that this is undesirable, as such fear is commonly seen as unjustified. Indeed, the CEP published a report

(http://cep.lse.ac.uk/pubs/download/ea007.pdf) from just before the UK general elections showing that crime in the UK today is nearly half of what it was in 1997, and still people think that crime is rising.

The whole debate around the new website brings a number of questions for discussion.

The first one relates to a recurrent theme in our happy hour

discussions: Can more information hurt, and if it can, what are the possible channels? Can we think here that some cognitive constrains might people lead to misread and misuse this information? If so, should we protect voters (or, more generally, agents) of information overflow?

Or can we think that the release of such information is of a strategic nature, and therefore we shouldn't give it too much credibility? If this government's platform is tackling crime, then don't they want us to believe that crime is a problem? Should we believe them? Do we expect this policy to elucidate the fact that crime has been falling--or will it just reinforce people's beliefs that, yes, there's a lot of violent crime going on? Then the ultimate question becomes, should we protect voters from such strategic release of information, and if so, how?

And finally, don't we know that the news media over reports crime?

Shouldn't the government try to correct such biases, instead of reinforcing them?

I'm a Guardian reader, so unfortunately most of the links (appart from the police.uk website and the CEP report are from there). By the way, there's a piece by a LSE PhD student:

One of the few pieces in favour of the policy:

http://www.guardian.co.uk/commentisfree/2011/feb/10/crime-maps-policing

Simon Jenkins:

http://www.guardian.co.uk/commentisfree/2011/feb/03/crime-map-information-theresa-may

The LSE PhD:

http://www.guardian.co.uk/commentisfree/2011/feb/02/crime-maps-policing-home-office

One more:

http://www.guardian.co.uk/politics/blog/2011/feb/01/crime-maps-too-much-information

And another one:

http://www.guardian.co.uk/technology/blog/2011/feb/10/government-data-crime-maps

Friday 11 February

This evening, Can presents “Is Democracy the Fate of All Nations?”

The civil unrest in many middle eastern and north African countries is under the spotlight. Particular attention is drawn to Egypt and constant battle of the demonstrators to oust Husni Mubarak. These events could motivate one to ask 3 questions below (among many):

1) Why did the protests spread in the region?

2) Why are they happening right now but did not happen years ago?

3) What will be the outcome of these protests?

I would like to center the discussion on the following basis:

1) Is democratization fate of all nations?

One may argue that all societies inevitably converge to democratic paths, but just follow different trajectories.

Another may argue that each society has their own convergent states, so every trajectory is different from another.

2) Can we install democracy (call it top-to-bottom exercise)? Even if we could, are institutions more robust in societies where path to democracy started from bottom and worked up?

Think of evolution vs. revolution type arguments.

3) Assuming one type of democracy is best for all societies, regardless race, culture, geography etc. what happens when the very foundations of democracy create conflict of interests among nations?

West wants democracy to spread to other parts of the world. But in middle-east it implies anti-west parties being ``elected''. Would west really want democracy for the region regardless the consequences?

http://www.marketwatch.com/story/what-to-make-of-rising-food-prices-1297117508303 (Opinion piece on food prices and linkage to civil unrest)

http://www.bbc.co.uk/news/world-middle-east-12327995 (Timeline of Egypt Unrest)

http://www.independent.co.uk/opinion/commentators/fisk/robert-fisk-a-new-truth-dawns-on-the-arab-world-2194488.html (Robert Fisk on Arab World's revolt)

http://www.washingtonpost.com/wp-dyn/content/article/2011/02/06/AR2011020603699.html (Parallels between riots of Egypt now and Iran in 1979)