Brewing Updates

So there has been some activity on the beer brewing front - thought some of you might be interested...


I'm down to my last two bottles of Czech Pilsner, which I brewed two or three months ago at this point. The last time I had a bottle was about a month ago, and the flavor had really matured and melded by then, so these two bottles should be great. My brother had a bottle of it last week and seemed to think it was good as well. We're having a crock-pot BBQ farewell party to a friend who was in D.C. for a law internship this summer, and I'll serve up the last two bottles there.


I just bottled a classic American lager last week - the plastic bottles I put it in are already rock-solid, which bodes well for good carbonation and a substantial head. It looks a little darker than I would like, but that's not surprising with the homebrew ingredients I've been using. They've always turned out darker than pictured. Oh well - should be on the lighter side in terms of taste, which is the idea. I'm going to bring all two gallons of it to the Outer Banks, where I'll be lazing on the beach with my wife, sister in law, her fiance, and two other friends for the last week of August. It's my birthday week and you're allowed to bring plastic bottles on the beach, so I plan on enjoying my homebrewed American lager on the hot sand.


Last night I brewed my next batch - "Blonde Bombshell" - a honey wheat beer that my brother and his wife got me for Christmas. I have high hopes for this one. It has a wheat base to the wort, plus the recipe called for adding honey which means it will be nice and sweet. It also called for additional hops, which means it should be a moderately spicey beer. I think the spice, with the softness of the wheat and the sweetness of the sugar will make for a really great Autumn beer combination (it should be ready to drink at the end of September... I've found that four weeks of fermenting and four weeks of carbonation is ideal to get things fully fermented without any odd residual sweetness or yeastiness).


When this is done fermenting, at the end of August, I'm going to start brewing two other Autumn batches I just got from my homebrew supplier: "Dutch Apple Ale" and "Full Moon Marzen". Dutch Apple Ale is a cider, with an English Nut Brown wort. The recipe calls for brown sugar and cinnamon to be added, which should taste great. The other neat thing about this recipe is that instead of adding water to the wort, it calls for adding apple juice! The yeast will eat that in addition to the brown sugar and wort, and give it a really great apple taste. My wife loves hard cider - one of the few beers she'll drink - so we like to have cider on hand in the Fall.


Marzen is another typical Autumn beer, despite it's name. The beer is called "Marzen", because it would be the last batch of beer the German brewers would make, in the month of March. After that, it would be too warm to brew. They would brew their Marzen, and then store it in cool cellars all summer. The casks wouldn't be cracked open until September or October, making it a traditional Autumn brew with strong associations to Oktoberfest, especially.


So I'm torn on which to brew first of these - the Marzen or the cider. The wheat ale should be done at the end of September, which means one batch would be done at the end of October and one at the end of November. After both these I'll brew a darker winter/Christmas batch.

I also got equipment to bottle the beer in glass bottles with crimped caps! - none of this plastic coke bottle stuff any more (despite its convenience for drinking on the beach).

We're going off to the store soon, and I need to restock beer anyway. Now that I'm in a beer mood I think I'm going to get something good... no JW Dundees, despite the fact that its a really tastey value-buy.

Misleading Washington Times Article

The Washington Times published an article this morning by Stephen Dinan discussing how the campaign has turned nasty - with both candidates trading insults...

What's telling is that in every McCain example, he actually accuses Obama of "playing the race card", and being a lightweight celebrity like Paris Hilton.

And what is the Washington Times' Obama example? "Obama ridiculed McCain for depicting him as a lightweight celebrity". Ridiculed him indeed... what Obama said was:

"So far, all we've been hearing about is Paris Hilton and Britney Spears. I mean, I do, I do have to ask my opponent, is that the best you can come up with? Is that really what this election's about? Is that what is worthy of the American people?"

... not really ridiculing John McCain here, is he? Certainly not in a way that could be construed as an "insult".

The worst thing Obama is catalogued as saying is:

"Nobody really thinks that Bush or McCain have a real answer for the challenges we face, so what they're going to try to do is make you scared of me: You know, he's not patriotic enough. He's got a funny name. You know, he doesn't look like all those other presidents on those dollar bills, you know. He's risky. That's essentially the argument they're making."

But that's not really accusing McCain of anything! He's not saying "you're a racist, McCain", as the McCain campaign suggests he is.

So basically we have a situation where McCain has been running some strange - and I would argue uncharacteristic - negative ads that are heaping insult and name-calling on Obama. Obama is responding and saying they are ridiculous without accusing McCain of anything. When Obama speaks the worst he does is say "McCain called me [blank], and that's wrong". He never says anything like "McCain is [blank]". And yet the Washington Times and lots of other media sources are saying that insults are coming from both sides!

Strange...

I've been amazed at Obama's restraint. I really hope he doesn't go negative.

Jobs and China

The Economic Policy Institute released a policy brief yesterday which claimed that 2.3 million American jobs were lost between 2001 and 2007 as a result of the trade deficit with China.

Granted, the report is really talking about gross job loss, not net job loss. They don't talk about how many jobs were created by trade with China. Still, the story is pretty clear cut. With trade deficits as massive as the ones we're running with the Middle Kingdom, jobs and money go over there and products come over here - there's not much arguing with that.

We can't slip into mercantilism, as I've warned before - we can't cut off trade out of fear, because we do indeed benefit from cheap products and a more efficient use of the global labor supply... but...

Let's not hollow out the American economy in a free-trade frenzy. You can be a patriotic free trader that prefers to buy American and invest in American economic infrastructure - there's nothing anti-market about that.

Breaux Vineyard 2003 Cabernet Sauvignon

Quite simply, one of the best wines I've had in a long time.

Aged 30 months in oak barrels, unusually long contact maintained with the grapes skins - this is what they mean when you hear people talk about "tannins". Still, eminently drinkable. This was our only bottle - now I want to go back up to Leesburg and buy one or two more to save.

Breaux Vineyards itself is really a gem. Everything we had there was great - easily one of our favorites.

We also recently had a Sterling Vineyards Chardonnay - its a California winery that you can find in most grocery stores. Very good as well - it has that buttery/vanilla character to it that chardonnays aged in oak get (wines aged in stainless steel don't get the same contact with oxygen, giving it a "crisper" taste... I like to think of it in beer terms: "oak aged wine : ales :: stainless steel aged wine : lagers").

In terms of beer... haven't had anything new lately, but I have bottled my beach lager, and the bottles are already rock hard - which means the carbonation has begun! Soon I'll brew the "blonde bombshell" wheat ale that Evan and Tricia got me.

Principles, Agents, and Bacon's Rebellion

OK - so my recent post on Tim Kaine and Obama got me feeling like I should re-emerse myself in Virginia state politics after somewhat of a hiatus, so I looked up some Virginia policy blogs and added one - "Bacon's Rebellion" - to my list...

... and I'm already frustrated with one of the posts.

James Bowden had a post on a court decision on public prayer. It's a pretty mundane argument on his part - standard church/state stuff - except for the principle/agent dimension of the court decision that I think he's ignoring. Plus he's doing this and trying to hold himself up as a "strict constructionist" at the same time. He promotes strict constructionism in a way that distorts what most constructionists actually believe. Anyway - weel free to read my comments. I come away from this experience with two insights:

1. Every intelligent person should have an understanding of contracts and the concept of principles and agents, and

2. So-called "strict constructionists" need to understand that just because you don't come up with a phrase in your keyword search of the Constitution doesn't mean that it's unconstitutional or inconsistent with the intent of the founders. Even a restrictive, Jeffersonian interpretation of the Constitution is viable without assuming that.

Obama-Kaine

So the Washington Post is reporting today that Kaine is on Obama's short list... and Bill Kristol is suggesting it as well. As readers may know, I was strongly behind Mark Warner as a potential VP, but I think Kaine would do good as well. Kaine, like Warner, is a centrist Democrat from Virginia with a strong focus on bread and butter issues: balancing the budget, improving transportation, and investing in education. Neither are afraid to stand up to the Republican rank and file who cannot countenance any taxes (I say "rank and file" because the Republican leadership actually agreed with the Warner administration when they raised taxes). But neither pursue "pie in the sky" Democratic platforms like universal health care or same-sex marriage either. And that's not to say that I like taxes, or that I oppose same sex marriage - it's just to say that Warner and Kaine (and Webb, for that matter) take a "first thing's first" approach that is very refreshing.

As most of you probably know, Warner is set to destroy former Republican Governor Jim Gilmore in the race for John Warner's Senate seat. I eventually came around to the logic that a sure-thing Webb-Warner Senate delegation was probably better for Virginians than a toss-up VP bid. Since I've resigned myself to that logic, I'm like this Kaine idea more and more. I honestly don't think Kaine is the "strongest" VP. In many ways someone like Biden would probably be more appropriate. But he is a good leader who brings an "outside the Beltway" perspective. Moreover, I think he could be a much more forceful, charismatic leader like Warner or Webb if he had the chance - and this may be that chance. The excitment around an all-Democratic Virginia Senate delegation and a Virginian working in the White House would be overwhelming. Virginia is already leaning towards Obama in a way that they haven't for any Democratic presidential candidate for decades. I think an Obama-Kaine ticket would push it over the top.

Kaine also appeared at the Brookings Institution's "Hamilton Project" last Friday, at an event I really wanted to attend, but couldn't. The forum was on investment in infrastructure, from "bridges to broadband". I haven't listened to the recording of Kaine's talk yet, but it's encouraging to see him on a national stage with such luminaries as Larry Summers and Robert Rubin.

So who knows - we may see another Virginia Triumvirate in Washington again! I have no illusions that Kaine would have been as strong of a match as Warner or Webb in electoral terms, but I think he would be a brilliant addition to the Obama administration nonetheless. And if the Democrats take Congress this Fall (which they oughta), I can assure you that Warner and Webb will be front and center, pushing Obama's agenda through the Senate.

Call for Papers

IZA (Instituts zur Zukunft der Arbeit - Institute for the Study of Labor), one of the most important labor research groups in the world, issued a call for papers for its first annual meeting on the economics of risky behaviors, which will be held in Washington, D.C., in the spring of 2009!

I'll hopefully be submitting (pending approval from the Department of Health and Human Services) the Vulnerable Youth project we've been working on at the Urban Institute.

This is really great because most of IZA's activities go on in Bonn, Germany.

Samuelson, etc.

Robert Samuelson is always fantastic for providing big-picture perspective on all matters economic. In some cases, like today's column, he's highlighting the fact that the 2008-2009 recession is not going to be a doomsday depression... he provides a moderating influence. In other cases - such as when he talks about the aging of the baby boom generation and it's effect on entitlements - his big-picture perspective is a call to action from the complacency that grips the country. Either way, he always has something good to say (even if I don't agree with it 100% of the time), and I thought I'd share today's article.

One thing he highlights that is important - the fundamentals of the American economy are strong. We have strong financial institutions (despite the credit crisis), strong housing markets (despite the subprime crisis), and strong labor markets (despite recent job loss). I think if anything is going to unleash a system-level crisis like the Great Depression, it will have to be external. Particularly it might be:

1. Depressions in other major economies (ie, China) that cannot deal with shocks like fuel price increases spreading to the U.S. The series of financial crises that wracked Mexico, Brazil, Russia, Indonesia, Thailand, and South Korea in 1997-98 demonstrated that as economies get more integrated, it's easier for them to spread ailments.

2. A loss of faith in the U.S. dollar, leading to massive dumping of dollar reserves by central banks around the world.

The scary thing is that (1.) both of these scenarios would come up on us fast, and (2.) they both will emerge outside the U.S. economy. BUT - we can do things to prevent both of them as well, and that's where policy should be directed.


In other news, this is a new Urban Institute Tax Policy Center report on the candidates tax plans. It projects that both candidates plans will continue fiscal deficits, but that McCain's will be substantially greater than Obama's. I was just at a release event for the report where the senior economic policy advisors for both campaigns commented on it - the Obama guy disputed the baselines that the TPC report compared their plans to, but came out with the same basic point - even if you use a more reasonable baseline, the difference between the McCain and Obama plans are maintained. I'm a little slow when it comes to tax policy, so I can't comment much more on that - but I've gotta say I was impressed with a lot that both sides had to offer. As Urban analyst Len Burman said at the event - both sides could benefit from borrowing a few policies from the other.

Some fun...

OK - I admit it's childish - but the "George W. Bush Sewage Plant" is pretty funny and very clever.

Nice tribute, 'Frisco!

Empire and Liberty

So I'm reading a book called "The Pentagon's New Map" by a guy that's worked in the Center for Naval Analysis and the Office of the Secretary of Defense... it's a very poorly written book but it has an interesting thesis that both intrigues and infuriates me. Basically, the author argues that the world is divided between "the Core" and "the Gap" - and that the primary difference between these two worlds is that acceptance of a certain "rule set". Most of the rule sets he talks about are security rule sets - rules of war and peace, etc. - but economic rule sets ultimately play a role as well. "The Gap" includes all the usual suspects - the Middle East, Africa, Southeast Asia excluding India and China, South America excluding Mexico, Argentina, Chile, and Brazil, etc. The author advocates an active and preemptive military policy in "the Gap" with the explicit goal of bringing them into the Core's rule set on security, the economy, good governance, etc. At times, he seems to advocate a loosely confederated global empire operating on the same basic principles. He makes this very explicit in one point, where he suggests that the U.N. operates very much like the world's legislative branch, and the United States federal government operates like it's executive branch. We use our military to execute the law of the land (in this case, the law of the planet), and put bad guys away.

At first glance, that's obviously scary - and it seems like a blank check for the military. But at some point, we will have a global polity - I'm convinced of that as well. We've seen tribes and city states organize from bands of hunters. These far flung groups have organized into clans and then nations, and now we're starting to see national confederacies emerge. I don't think its unreasonable to assume that we will have a single, sovereign, planetary government in fifty years or so. It may not happen - but its certainly conceivable. And if it did - how would that work? Probably in a way that's very similar to how "The Pentagon's New Map" is laying it out - with international bodies like the WTO, the ICC, and the UN laying out the rules of the game and the U.S. bringing belligerents into the fold.

With that in mind I'm going to offer two quotes from a Founding Father:

In 1780: "We shall divert through our own Country a branch of commerce which the European States have thought worthy of the most important struggles and sacrifices, and in the event of peace on terms which have been contemplated by some powers we shall form to the American union a barrier against the dangerous extension of the British Province of Canada and add to the Empire of liberty an extensive and fertile Country thereby converting dangerous Enemies into valuable friends."

And lest you think that was a slip of the tongue, in 1809 the same founding father repeated: "We should then have only to include the north [Canada] in our Confederacy, which would be of course in the first war, and we should have such an empire for liberty as she has never surveyed since the creation"... this was after his excitement about the prospect of obtaining Cuba for the United States.

Who was it? None other than the libertine Thomas Jefferson! The first was in a letter to George Rogers Clark, and the second in a letter to President Madison. This sounds pretty close to Hamilton (Jefferson's political rival) who advocated taking Spanish posessions in Mexico.

It seems so counterintuitive, but now that we're really forced to deal with the idea of empire we should think hard about what it means to be an "empire of liberty" and whether that even makes sense conceptually. Certainly we didn't have an issue with it throughout hour history, but since the closing of the frontier we've pretended that empire and America are antithetical. Are they? I don't know. Our founders consistently compared us to Rome, and at some point Rome made the leap from Republic to Empire. Interestingly enough, Rome's acquisiton of territory was not what made it an "empire" in the eyes of historians - I think we should take note of this. Rome became and empire when Julius Caesar crossed the Rubicon - when he entered the captiol and took power from the Senate.

These are dangerous times and we have an obligation to use our strength for the good. But we need to think hard about what we're doing. Where is our Rubicon? Who is our Caesar? What does the "American Empire" mean. Can we polinate the world with our "rule sets" and set the stage for a lasting, unified, powerful planet - or would this very act rob us of what makes us so unique? I don't know - and I don't think these choices will be made in the near future. But make no mistake - with the Soviets gone our generation is the first in American history to be confronted with Empire - and we're going to need to think about it and deal with it. Moreover - our generation is the first in the history of the species that is confronted with a Planetary Empire. What in the world do we do with that?

Swedenburg Rose

So several weeks back, Kate and I went to Swedenburg Estate Vineyard, and several other wineries in Middleburg, VA. We opened the first bottle from Swedenburg yesterday - a rose that I insisted on buying after we tried it. Normally I don't like roses much - they're basically like a white zinfandel for people not familiar with them. Usually not very exciting - they're not as crisp and fresh to me as a white, and they don't have the full experience of a red. This one was different, however - it had some strawberry notes (again something I usually don't like too much - strawberry flavored wine reminds me too much of "Arbor Mist"). In this case, I think the strawberry really complimented the alcohol that came out because it was so dry. That's the other problem I have with "berry notes" in wine. Usually you see it more with super-sweet wines, and its all just too much. But this wine was drier, so the strawberry went well with it. I liked it a lot.

I'm glad this happens to other people too...

Thanks to Juliet for showing me these...

This is why Chloe gets shut out of the bedroom every night.

This is what Chloe does when she is shut out of the bedroom... or bathroom... or anywhere else you close the door.

And this is how you hang out with Chloe when she is not shut out.

It's really pretty endearing - I'm not complaining. But it's amazing how universal these experiences are. Down to the exact sound of the meow...

New Safety Net

Last post of the day, I promise.

The Urban Institute opened a new website today for it's "New Safety Net" project. The website contains a series of recommendations to modernize the social safety net, along with comments by major voices in the field. I'm not familiar with everything up there, and I'm not coming out to advocate it all here, but it's a great project that has been in the works at Urban for a while.

My understanding is that it will also be updated with new installments periodically.

Take a look!

The Downturn - Part 3

So I just traced Krugman's post back through the original blog post that he cites, and I was reading some of the comments - and two, "Ex-Worker" and "dan" (not me), make the same point I do about Krugman only better.

First, they make the basic point that "just because Fannie and Freddie aren't ultimately responsible for the crisis doesn't mean that they're not at risk of experiencing what the S&L's did". That's the point I made in "The Downturn - Part 2".

The second point Ex-Worker and dan make is even better and more interesting... Fannie and Freddie basically subsidized risk taking with public money (federal government guarantees their loans), so they subsidized all the good lending that was out their to do (Fannie and Freddie are pretty responsible in their lending). By bringing down the cost of risk, though, Fannie and Freddie made it cheaper for other less scrupulous lending institutions to take on the bad risks that caused this crisis.

Moral of the story:

1. Subsidizing "good loans" isn't going to solve these problems because it will just artificially lower the cost of credit, which is just going to make it that much easier for the bad loans to be made by someone else - the solution is to regulate ALL lending to turn those bad loans into good loans... and yes, this may raise the cost of capital.

2. Just because Fannie and Freddie aren't culpable for bad loans doesn't mean they're not at risk.

BOO-YAH Paul Krugman!

The Downturn - Part 2

Not sure how it's playing in the rest of the country, but Fannie and Freddie are top-of-the-fold news in Washington right now. Not surprisingly, then, Paul Krugman - one of the world's top economists right now, and perhaps the top trade economist - is talking about it on his blog. He kind of puts a positive spin on it the way Samuelson does - and I'm similarly sorta-convinced.

Krugman cites another guy who suggests that Fannie and Freddie essentially took the place of S&L's over the 1990s... this is theoretically bad because S&L's crashed in the late 1980's in a very bad banking crisis. His argument is "yes - they grew, but they were crowded out by other, riskier lenders who are the real risk now". Essentially he's saying that Fannie and Freddie won't follow in the footsteps of the S&L debacle because they aren't at the heart of the REALLY bad lending that's going on.

Fair enough - they're not at the heart of it - but their stock price is still in the dumps and they exist in the context of a very bad credit market! They may not be the source of the problem this time, in the way that the S&L's were in the 80's - but so what? Who do you think is more vulnerable - a large bank with no involvement in the mortgage market that has done some moderately risky lending, or Freddie and Fannie who may also be only moderately risk in their lending but live and breathe the mortgage market! They may not have started the fire, but I don't see how they're not going to get burned! And the problem with that is that Freddie and Fannie are household names - trouble there is a much bigger deal than trouble at some random local lending institution down the street. Krugman is right that they're not the center of the story here in the sense that they're not going to spark anything major... but that doesn't reassure me that much.

The Downturn

OK, so I don't usually feel like posting on the "state of the economy" except as it relates to specific interests of mine (competitiveness, etc.), but it seems necessary to at least provide news updates. If you haven't been paying attention, the economy is looking increasingly bad with every passing day. Now the hopes that this recession may not even happen or that it may be relatively painless are pretty much restricted to the President during his press conference , and the absolutely repugnant comments of McCain's economic advisor, Phil Graham, who provides the obvious solution - "we're a nation of whiners"!

1 - Mortgage lending giants Freddie Mac and Fannie Mae are in trouble. According to Bloomberg.com, they've lost 80% of their stock value in the last year, and Washington is panicking (Freddie and Fannie are pseudo-public corporations... I'm not sure what the deal is specifically, but the federal government has a big hand in what they do). Bernanke assures us they have enough capital that they won't fail, but that doesn't do much for consumer and investor confidence right now.

2 - Banks are starting to fail across the country - in addition to the massive collapse of Bear Stearns that cost a good friend of mine his job - IndyMac, a California based bank, has recently collapsed. And to provide a little bit of perspective, IndyMac is the second larges bank failure since the Great Depression - and technically speaking this recession hasn't even started yet!

3 - Bernanke is justifiably pessimistic in his Congressional testimony this week, and his statements are causing a slump in the dollar. However, most of his pessimism revolves around high inflation , something that economists do not like to see doing a duet with a slowing economy. I heard part of his testimony on NPR, and I think it's sensible - he said that he's not concerned about the solvency of the vast majority of banks... we're not going to see wave after wave of bank failures like we did in 1932 in response to the 1929 crash and subsequent economic contraction. Bernanke said he's more afraid of the possibility that banks won't be able to or won't want to provide the capital that the economy needs to keep growing. The sub-prime crisis made bankers extremely skiddish about risk. If bankers don't take risks, they won't extend credit, and if they won't extend credit the economy won't grow.

4 - Summer isn't nearly up, so oil price relief shouldn't come any time soon (although it shouldn't go too much higher, either... unless we get into another dumbass war).

5 - Robert Samuelson - an excellent columnist for the Post - puts a positive spin on all this, by pointing out that consumer confidence isn't at all in line with our relatively mild unemployment rate (a more technical and diplomatic version of Graham's "we're a nation of whiner's" argument) - but this rubs me the wrong way because the low consumer confidence is the whole point! Low consumer confidence signals weak demand, and if demand is weak you can expect that unemployment rate to tick up in the near future. Samuelson does raise very scary points about international confidence in their investments in the U.S.. If you know me well, you already know my fears about that.

Are we crashing? No. Is this going to be a cake-walk? That's a definite no as well. This recession will be a memorable one - it's not going to be the easy, two-quarter slump that a lot of people thought it might be. But it doesn't have to be a crisis. It will become a crisis if it gets compounded by:

- A war in Iran that drives up the price of oil
- International investors withdrawing their investment from the U.S. economy in response to (1.) the weak dollar, (2.) poor performance of U.S. assets, (3.) continuing budget deficits.
- Continuing inflation

I think all bets are off if we get into a war with Iran or if inflation hits near double-digits. This could get really bad. Hopefully we pull out of this. We may - I'm not macroeconomist, so I can't assign probabilities to any of these things. We just need to tread carefully for a while.

Interesting Science, Technology, and Innovation Research Resources

So "skilled labor" is a pretty firm part of my fluctuating list of research interests now, and I've been collecting a bunch of research resources - mostly data - that I'd like to use one day for some work on it. Some is on the high skill labor market, some on innovation in general (patents, R&D spending, etc.)

1. SESTAT is a collection of datasets maintained by the National Science Foundation, and I believe the surveys themselves are done by Mathematica. SESTAT focuses on college graduates in science, technology, engineering, and math fields (STEM). The most interesting dataset in SESTAT to me is the survey of recent college graduates. This survey has detailed employment information on recent STEM graduates - including job search variables and information on how much they use what they learned in school on the job. I could think of some great "human capital utilization" variables that could be constructed from this that would be comparable to the "capital utilization" data collected on manufacturing plants by the federal reserve banks. There is also a survey of all college graduates that surveys a sample drawn from the decennial census. The advantage of this data is that it provides a cross section of the skilled laborforce. The disadvantage is that since these aren't recent graduates it doesn't give a good picture of recent changes to skilled labor supply, or what to expect in the future.

2. NSF provides lots of other data as well - the most interesting to me being a long time-series on R&D funding by source. It would be interesting to track how federal vs. state R&D funding has changed over time, and where they've been spending it.

3. Just yesterday I discovered the National Bureau of Economic Research's (NBER's) Science and Engineering Workforce Project. It's just a general forum and resource for relevant research - the usual suspects are here: George Borjas, Richard Freeman, etc. It also has a link to an intriguing project called the “Nanobank". This is how the Nanobank describes it's work:

This project uses econometric methods to estimate the impact of nanoscale science and technology (nano S&T) research, and associated interdisciplinary research, directly on firms' entry and success and hence on U.S. economic growth, standard of living, and competitiveness. The research team also performs scientometric and institutional analyses of diffusion and networks in nano S&T and converging fields, and the reciprocal effects of institutions on nano S&T and of academic scientists' involvement in commercialization on their scientific productivity and teaching.

It also has some beta test data available for download on patents, patent citations, NSF grants, and NIH grants. I assume it is all nano-specific patents and grants here. The patent data interest me most. Another NBER source for patent data is Hall, Jaffe, and Tratjenberg's (2001) file. It looks like these patents are from 1963 to 1999 - roughly 3 million of them, with data on 16 million citations. I get the impression these are only specific industries, though - much like the nano-data. That's not a major constraint for me with the "innovation diffusion" modeling I have in mind, but if you need more than that you can always go to the Patent Office website. It's REALLY obnoxious to get data from here - you have to do it a page at a time so extracting millions of patents right from the website is not an option - but you do have access to information on every single patent ever issued since the beginning of the republic... that's pretty freaking cool.

4. The Integrated Postsecondary Education Data System (IPEDS), produced by the National Center for Education Statistics in the Department of Education has detailed graduate data for every postsecondary institution in the country - including graduations by field, race, and gender. It also has lots of finance information at the school level, although unfortunately not at the degree program level (i.e. - you can track federal grants going to the school, but not federal grants going to the school's physics department). I used this data in a report by Hal Salzman on the STEM workforce , but I think there is a LOT more that could have been done with it. I still need to read the final product, but I think I would take issue with some of the intepretations that Hal applied (more related to the labor demand side of the skilled labor market, which I didn't not help him with or even read yet - rather than the labor supply side which I'm more familiar with).

More resources to come, potentially... maybe I should put up some international resources for potential research on comparing the U.S. to other countries.

The Terrorist Threat

I don't have much to say about this Post article now, but it's an interesting assessment of how threatening global terrorism really is. The author argues that it's not really as bad as a lot of people think. Al Qaeda is the only organization that is truly global and is interested in and capable of attacking the U.S. on it's own soil - and that capability is severely weakened. Most other groups we (rightly) label as "jihadists" have regional focuses and wouldn't think twice about striking our interests where they find them - but don't really pose a threat to U.S. soil.

I'd challenge the author on two points - first, while the threat of a nuclear attack by Al Qaeda using "loose nukes" from one of the former Soviet republics may be small, it would be so devastating that we can't dismiss it as easily as he does. I don't even mean devastating in terms of the loss of life or the cost - it would most likely be a "dirty bomb" attack that wouldn't have too catastrophic a casualty roster - I mean devastating in terms of what it would do to the American psyche. So I think he could have elaborated more about how serious a threat that really is.

I also wish he would take the next step... these terrorists don't just come out of nowhere. Although I hate the "blame America first" style rhetoric, I can still acknowledge that our actions sometimes contribute to the problem. For example - more Middle Eastern muslims can probably be legitimately labeled "terrorists" today because the U.S. invaded Iraq. In other words - the terrorist threat would be smaller today if we had not invaded Iraq. The same threat is looming for us if we invade Iran. We aren't responsible for terrorism or anything - that's not what I'm saying. These jihadists bear full responsibility for what they're doing. But we have to understand what makes sense strategically and how our actions influence the conditions that give rise to terrorism.

Still - it's refreshing for someone to say this. And I think the comparison the author makes to 19th century anarchists is apt. Terrorism is a real threat - the biggest security threat in the world right now. But long-term it will eventually be erradicated. We may have one failed state turn theocratic over the ordeal, and we'll have some bad national scars that will take a long time to heal - but terrorism will be erradicated. The trick is not to create more problems as we work to erradicate it over the next couple decades.

In other security news, this Union for the Mediterranean announced in Paris this weekend sounds interesting. It would be a shame, though, if the EU came out on top diplomatically in the Middle East because of it's willingness to be... well... more diplomatic than us.

Wine Party Insights

Clearly, this one had a little too much wine...

So my wife and I had a wine tasting party last night as a belated housewarming and birthday party that also turned into a job celebration party when we found out that morning that she got a job offer!!!


The idea of the party was that we would provide lots of food that would pair well with different kinds of wine, and the guests would bring a bottle of wine. Tempting as it was to fill my glass, I tried to stick to about half an inch of wine every time I refilled so that I could try several of the wines that came through the door. Here are some reflections:


1. Agiorgitiko Red Wine: Two of our good friends came over early to have dinner with us (mmm... venison from western Maryland) and help set up. They brought us a Greek red table wine to have with the dinner, and it was really tasty. It wasn't very sweet - quite dry, but still very fruity. It was heavier as well which helped it stand up to the red meat. I'm reading the label of the bottle now and it says that it's aged in oak which really came across to me as I drank it - the flavors are soft, not crisp like you would get in stainless steel.


2. Riesling: We also had a Riesling - a traditional German white wine that is crisp and refreshing. It usually has undertones of green apples, and tastes great chilled. The guests that brought the Riesling also brought food of their own to go with it - sliced green apples with a slice of parmesan cheese on top, and crackers with salmon. The apple - cheese combination was awesome! The tartness of the apples and the sharpness of the cheese really canceled each other out and blended well - and of course the apples went well with the Riesling.


3. Rappahannock Cellars Cabernet Franc: A Virginia wine, this was brought by another Virginia winery aficionado friend. I probably kept going back to this bottle more than any other. The Cab Franc is a lot like the Cabernet Sauvingnon - it's a light bodied wine, but has a peppery taste to it almost. However, the fact that I'm still a little green in my wine knowledge came through last night over this wine. Another guest asked me if the Cab Franc was peppery, and honestly I didn't know. I knew I always liked Cab Franc, and I had just had some of this one maybe half an hour before, but I didn't know. So I told him - "no not really"... oh well. One day I'll be better about communicating these characteristics off the top of my head. A good wine nonetheless.

4. Some staples: We also had friends bring two staples that are regulars on the grocery store shelves - the Three Blind Moose Merlot, and The Red Bicyclette Syrah. I made sure I tried both of them - both soft and light - with a little bit of cherry. Nothing unexpected but very good. I actually found myself going back to the Syrah a couple times. I was musing about the Three Blind Moose Merlot with another guest, and we figured that being blind should heighten the other senses of the mooses, so they must know what they're talking about when it comes to wine.

5. The other good wine I had was an unpronounceable French wine - "Domaine Andre Brunel, Cotes du Rhone". It was a red - fairly gentle and light, like a merlot. I'm guessing it was a Bordeaux of some sort but I really just don't know!

A final tip from one of our guests (the one who brought the Rappahannock Cab Franc): If you didn't already know, 2007 was a good year for Virginia wine - perhaps one of the best since Prohibition. It was drier, which was bad for other crops but great for wine because the sugars in the grapes are more concentrated. We've already seen and grabbed one or two 2007 whites that have come out, but the reds typically come out later than the whites. Well, our friend told us that she heard that a lot of 2007 reds from Virginia will be going reserve immediately - so the wineries will hang on to them to age them in their own cellars. So if you see a 2007 Virginia red - go ahead and grab it. They may be hard to come by for awhile. And look forward to seeing some amazing reserves a little while down the road.

"Folk Economics"

So I started reading... and someday will finish reading... this article in the Southern Economic Journal called "Folk Economics", by Paul Rubin. It was highlighting "folk economics" - what Rubin suggested were "inaccurate" understandings of how the economy works that were contrary to basic economic theory. As Rubin explained it, most folk economics revolves around the idea of wealth distribution, rather than wealth creation (which economic theory is primarily based on). For example, when a "folk economist" sees a price increase they only interpret it as a decrease in their piece of the pie. They don't understand that a price increase is a market signal that reallocates goods and services in an optimal way. In other words, "folk economists" don't understand how price increases can actually increase their wealth by increasing the productive efficiency of the economy - they only consider how it decreases their wealth by eliminating purchasing power.


Fair enough. I, like most economists, have always been uncomfortable with the knee-jerk aversion to free trade or immigration. This is the zero-sum game mentality that argues that if a job goes to an immigrant it is denied to a native, or that if we import our steel we are automatically losers. Of course I don't buy into that silliness. But I also don't buy into the knee-jerk reaction of economists (we'll call these guys "trained economists" as opposed to the aforementioned "folk economists") - that free trade or open immigration is always desired.

Now, not all economists make this mistake - but usually those that do resist the knee-jerk "trained economist" reaction do so in an incomplete way. They'll say something like:


"Free trade will create losers, but it's still best because the economy as a whole benefits enough to compensate the losers using the gains of the winners - so it's what's called an "Edgeworth Box" problem - the only issue is how to divide the spoils between the winners and the losers".


Again, that's fair enough. I buy that completely. But trained economists haven't really addressed their underlying difference with "folk economics": in all of their models, economists maximize utility and only utility. Sometimes its expressed as an income level or a profit level, or it's expressed in terms of a nebulous unit that's actually called "utility" - but there is always, always, always the assumption that you want to maximize your personal gain and you don't really care what others get. And yes - economic theory shows us that under these assumptions "folk economists" consistently produce the wrong results.


But hold on a second - economics is the science of human decision making, production, and resource allocation. It is true that "folk economists" could be doing a really bad job of "knowing thyself" - but it's also possible that the "trained economists" should take a cue from them about what human beings actually try to maximize when they make decisions, produce, and allocate resources. We always assume that humans try to maximize utility - but what if they also try to maximize something like "status" (this would certainly be conceivable to a sociologist!). We can define an agent's "status" as the ratio of the agent's own utility to the utility of another agent. Averaging all "statuses" with respect to all other agents in the economy would then provide the agent's "status level". Let's say that agents try to maximize two things - their status level and their utility level - and that each agent has their own marginal rate of substitution between status and utility.


Now, I haven't worked this out for an international trade model or anything like that - but conceivably this could drastically change the results. Mercantilism in imperial England suddenly starts making sense if instead of comparing "England in 1775" to "England in 1875", Lord North and King George III placed more value on the comparison between "England in 1775" and "France in 1775," or even "England in 1875" and "France in 1875". This isn't a justification for mercantilism - but it does suggest that when we say mercantilism is "flawed" we must be careful to state the metric we are using to evaluate it.


Think about economic policymakers in the U.S. today. Let's say by choosing one economic policy trajectory (we'll call it the "libertarian wonderland policy") we could be flying in jet packs by 2050, and by choosing another economic policy trajectory (we'll call it the "beleaguered Keynesian pseudo-market policy") we would only have clean hydrogen fuel cell cars by 2050. Let's also say that the "libertarian wonderland policy" would result in a technologically-inclined India emerging as the dominant global power, while the "Keynesian pseudo-market policy" would keep the U.S. as top dog.


Would you really miss the jet pack you never knew you could have had? Would you really be disappointed to drive around in hydrogen powered cars? Probably not - ignorance is bliss! And national policy-makers (and I'm sure most citizens) certainly wouldn't have trouble picking where they would want to be in the global pecking order! It's no wonder, then, that economic policymakers consistently choose something akin to the beleaguered Keynesian pseudo-market policy over the libertarian wonderland policy! Wealth creation - the focus of modern economics - is important and desireable, but when wealth creation occurs in the future, it will necessarily be hazy and uncertain. Wealth distribution, however, is crystal clear and in our faces every day (think Thorstein Veblen and conspicuous consumption). How can the "trained economists" have missed wealth distribution as a primary economic motivator???


I have my suspicions as to why - since the "status level" variable I introduced earlier would be a function of the "utility" variable, the math would start to get a lot more complicated. But I think it's more than that. Ever since Adam Smith, we have had an aversion to mercantilism and the zero-sum mentality (and probably rightly so). In the modern world, we also strongly emphasize the individual.


Now I'm all for individualism, but we need to understand the context in which the individual exists. We assess value based on how we measure up to our peers. Think about a little kid with a rubber ball. It's the greatest thing in the world - a very valuable commodity that the kid would pay a steep price to keep. Then another child comes along with something even cooler - like a squirt gun! Is the first kid willing to pay the same price to maintain rights to the rubber ball? No way. The first kid wants the second kid's squirt gun! The value of the rubber ball instantly plummets to next to nothing - not because of future expectations, not because of changes in the level of supply or the number of kids who want that ball. The ball loses value because it is not as good as something else that is now available - specifically, something else that the first kid doesn't have (if the first kid has a squirt gun and a ball when the second kid walks by, the ball probably won't lose any value).


I use this children's example to illustrate my point because the reaction is so visceral and essential to the human experience! "Folk economists" definitely err on some important points... but I think they've tapped into something that mainstream economists have come up woefully short on. Behavioral economists and experimental economists are starting to take up these issues (in a nutshell, experimental economists found that subjects would actually pay to punish "defectors" in a cooperative game... something that is attributed to "rule maintenance" and institution formation. I think it goes a lot further than that, but the point is it's not predicted by mainstream theory) so hopefully more will be done soon. Maybe I'll take it up and try to run a trade model that justifies mercantilism.

We should never discount what sociologists call "local knowledge". Of course folkways have been displaced by modernization for a reason. That reason is that in a huge number of cases folkways are inadequate or just plain wrong. But that doesn't mean we can't take cues from folkways and local knowledge. This knowledge evolved over centuries - it's bound to have useful insights into the human condition.