Onde estão os catastrofistas? (6)

E mais outra dos EUA (também do blog do Prof. Perry)!

Real Disposable Income Growth Highest in 2008

 

Buried inside today’s BEA report on April Personal Income (tables available here, see Table 10) is the statistic that “Real Disposable Personal Income” grew at an annual rate of 1.82% in April 2008 compared to April 2007, the highest rate of growth since December 2007 (see chart above). This will probably not get a lot of attention from the media, but provides some additional evidence that the U.S. economy is not on the verge of recession, and might in fact actually be moderately healthy.

Onde estão os catastrofistas? (5)

Mais uma evidência dos EUA na contra-mão dos catastrofistas!

 

Real GDP Growth: Percent Change from Year Ago

 

From Greg Mankiw (Note: Greg shows real GNP growth, the chart above is real GDP growth, both on an annual percent change basis from a year ago. Both graphs tell the same story).

Onde estão os catastrofistas? (4)

Mais uma em direção contrária ao que os catastrofistas do Brasil estavam prevendo em todo este primeiro semestre de 2008 (principalmente nos grandes jornais nacionais), vinda do blog do Prof. Mark J. Perry.

Por que eles não vêm à público reconhecer que erraram?  Pois é, mas nossa imprensa tradicional ainda dá guarida a muitos deles!

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9% Real GDP Growth in QI = NO Recession

 

WASHINGTON — The U.S. economy was stronger than first thought because of a better trade balance and stronger business spending.

Gross domestic product rose at a seasonally adjusted 0.9% annual rate January through March, the Commerce Department said in the second estimate of first-quarter GDP (see chart above). Originally, in a report a month ago, Commerce said GDP increased 0.6% in the first quarter — the same, rate of growth achieved in the fourth quarter.

Bottom Line: With GDP growth of almost 1% in the first quarter, there is almost 0 probability that the NBER could determine that the U.S. economy was in recession in 2008, at least not during the first quarter.

O rico fica mais faminto

O Prof. Amartya Sen, Prêmio Nobel de Economia de 1998, e um dos maiores especialistas do mundo em desigualdade social, explora em seu artigo de hoje no New York Times, a questão da subida dos preços dos alimentos em escala mundial e suas consequências.  Ele dá uma cutucada também na questão do etanol!

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The Rich Get Hungrier

WILL the food crisis that is menacing the lives of millions ease up — or grow worse over time? The answer may be both. The recent rise in food prices has largely been caused by temporary problems like drought in Australia, Ukraine and elsewhere. Though the need for huge rescue operations is urgent, the present acute crisis will eventually end. But underlying it is a basic problem that will only intensify unless we recognize it and try to remedy it.

It is a tale of two peoples. In one version of the story, a country with a lot of poor people suddenly experiences fast economic expansion, but only half of the people share in the new prosperity. The favored ones spend a lot of their new income on food, and unless supply expands very quickly, prices shoot up. The rest of the poor now face higher food prices but no greater income, and begin to starve. Tragedies like this happen repeatedly in the world.

A stark example is the Bengal famine of 1943, during the last days of the British rule in India. The poor who lived in cities experienced rapidly rising incomes, especially in Calcutta, where huge expenditures for the war against Japan caused a boom that quadrupled food prices. The rural poor faced these skyrocketing prices with little increase in income.

Misdirected government policy worsened the division. The British rulers were determined to prevent urban discontent during the war, so the government bought food in the villages and sold it, heavily subsidized, in the cities, a move that increased rural food prices even further. Low earners in the villages starved. Two million to three million people died in that famine and its aftermath.

Much discussion is rightly devoted to the division between haves and have-nots in the global economy, but the world’s poor are themselves divided between those who are experiencing high growth and those who are not. The rapid economic expansion in countries like China, India and Vietnam tends to sharply increase the demand for food. This is, of course, an excellent thing in itself, and if these countries could manage to reduce their unequal internal sharing of growth, even those left behind there would eat much better.

But the same growth also puts pressure on global food markets — sometimes through increased imports, but also through restrictions or bans on exports to moderate the rise in food prices at home, as has happened recently in countries like India, China, Vietnam and Argentina. Those hit particularly hard have been the poor, especially in Africa.

There is also a high-tech version of the tale of two peoples. Agricultural crops like corn and soybeans can be used for making ethanol for motor fuel. So the stomachs of the hungry must also compete with fuel tanks.

Misdirected government policy plays a part here, too. In 2005, the United States Congress began to require widespread use of ethanol in motor fuels. This law combined with a subsidy for this use has created a flourishing corn market in the United States, but has also diverted agricultural resources from food to fuel. This makes it even harder for the hungry stomachs to compete.

Ethanol use does little to prevent global warming and environmental deterioration, and clear-headed policy reforms could be urgently carried out, if American politics would permit it. Ethanol use could be curtailed, rather than being subsidized and enforced.

The global food problem is not being caused by a falling trend in world production, or for that matter in food output per person (this is often asserted without much evidence). It is the result of accelerating demand. However, a demand-induced problem also calls for rapid expansion in food production, which can be done through more global cooperation.

While population growth accounts for only a modest part of the growing demand for food, it can contribute to global warming, and long-term climate change can threaten agriculture. Happily, population growth is already slowing and there is overwhelming evidence that women’s empowerment (including expansion of schooling for girls) can rapidly reduce it even further.

What is most challenging is to find effective policies to deal with the consequences of extremely asymmetric expansion of the global economy. Domestic economic reforms are badly needed in many slow-growth countries, but there is also a big need for more global cooperation and assistance. The first task is to understand the nature of the problem.

 

Amartya Sen, who teaches economics and philosophy at Harvard, received the Nobel Prize in economics in 1998 and is the author, most recently, of “Identity and Violence: The Illusion of Destiny.”

 

O Ornitorrinco está em metamorfose ambulante!

“(Encontrados em rios no leste e sul da Austrália, os ornitorrincos (Ornithorhynchus anatinus) são conhecidos por suas características bastante peculiares. São mamíferos, pois têm o corpo coberto por pêlos e amamentam seus filhotes. Contudo, colocam ovos semelhantes aos dos répteis e possuem nadadeiras e um bico, como o de um pato (foto: Wikimedia Commons).

Caro leitor: não estou aqui hoje para falar sobre Biologia, tema que me agrada muito! Mas sim para recordar algo que surgiu no ano de 2003, logo no início do Governo Lula. Estou me referindo ao livro “Crítica à Razão Dualista: O Ornitorrinco” (Boitempo Editorial), do sociólogo Francisco de Oliveira, um dos fundadores do PT, mas que, com o lançamento deste livro (em 2003), marcou seu rompimento com este partido.

E por que tratar disto agora? Primeiro, porque este é um ano eleitoral e será difícil não tratarmos, aqui acolá, de Política (com P maiúsculo!). Mas, em segundo lugar, porque estou observando que neste blog está se iniciando algo que pode parecer interessante (a discussão sobre nomes, e suas articulações para cargos públicos), mas que na minha humilde opinião, pode colocar em segundo plano uma discussão associada, porém mais aprofundada, que é aquela sobre quais são os interesses em jogo!”

Esta é a introdução ao meu artigo desta semana no blog Acerto de Contas, que você pode acessar aqui!

Política de Desenvolvimento Produtivo (2)

 

“Indicamos na semana passada que o Governo Federal lançou a “Política de Desenvolvimento Produtivo- PDP”, cujo conjunto de slides (com 235 slides) tenta expressar o principal motivo de sua existência que veio incorporado ao seu sub-título: “Inovar e Investir para Sustentar o Crescimento”.

Antes de expressarmos comentários sobre esta segunda política industrial do Governo Federal, seria oportuno recuperar aspectos da primeira política, a Política Industrial, Tecnológica e de Comércio Exterior- PITCE. A PITCE tinha como eixo principal 1) a modernização industrial e, 2) a inovação e o desenvolvimento tecnológico  focando  no  crescimento  econômico  e  no aumento da eficiência e da competitividade de nossa economia. Para tanto foram eleitos como opções estratégicas quatro setores: semicondutores, software, bens de capital, fármacos e medicamentos. Além disto, foram eleitos outros três setores como portadores de futuro, a saber: biotecnologia, nanotecnologia, e biomassa.”

 

Esta é a introdução da newsletter da Creativante desta semana, que você pode acessar aqui!

The New Age of Innovation

Gostei muito do argumento deste novo livro, que foi comentado pelo blog Innovation Watch.

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The New Age of Innovation: Driving Co-Created Value Through Global Networks

by C.K. Pralahad and M.S. Krishnan

New York: McGraw-Hill, 2008

From the greatest minds in business today comes a groundbreaking blueprint for executing the next stage of customer-created value. C.K. Prahalad, the world’s premier business thinker, and technology expert M.S. Krishnan unveil the missing link in connecting strategy to execution — building organizational capabilities that allow companies to achieve and sustain continuous change and innovation.

The New age of Innovation reveals that the key to creating value and the future growth of every business depends on accessing a global network of resources to co-create unique experiences with customers, one at a time. To achieve this, CEOs, executives, and managers at every level must transform their business processes, technical systems, and supply chain management, implementing key social and technological architecture requirements to create an ongoing innovation advantage.

In this landmark work, Prahalad and Krishnan explain how to accomplish this shift — one where IT and the management architecture form the corporation’s fundamental foundation.

This book provides strategies for

• Redesigning systems to co-create value with customers and connect all parts of a firm to this process
• Measuring individual behavior through smart analytics
• Ceaselessly improving the flexibility and efficiency in all customer-facing and back-end processes
• Treating all involved individuals — customers, employees, investors, and suppliers — as unique
• Working across cultures and time zones in a seamless global network
• Building teams that are capable of providing high-quality, low-cost solutions rapidly

To successfully compete on the battlefields of 21st-century business, companies must reinvent their processes and culture in order to sustain innovative solutions.  The New Age of Innovation is a strategic plan for achieving this transformation to meet the needs of the customer of the future.

C.K. Pralahad is the international bestselling co-author of The Future of Competition and Competing for the Future and author of The Fortune at the Bottom of the Pyramid. He is the Paul and Ruth McCracken Distinguished University Professor of Strategy, Ross School of Business, University of Michigan. Pralahad was named “The World’s Most Influential Management Thinker” in 2007 by the Times of London and “the most influential thinker on business strategy today” by BusinessWeek.

M.S. Krishnan is a Hallman Fellow and Professor of Business Information and Technology, Ross School of Business University of Michigan.

Por que livros no Brasil são tão ultrajantemente caros?

Eis aqui algo super-interessante sendo comentado por americanos (do blog Marginal Revolution, que é produzido pelo Tyler Cowen).  Uma discussão econômica hoje sobre as razões pelas quais os livros são tão caros no Brasil!

Surgiram 22 comentários até o momento deste post (com alguns brasileiros no meio)!

Se os brasileiros não lêem livros, que dirá de acompanharem blogs?  Não é por outra razão que o Prof. Greg Mankiw está completando 5 milhões de visitas no seu blog (em pouco mais de 2 anos) e o Prof. José Carlos Cavalcanti um pouco menos de 100 mil, em um pouco mais que um ano!

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Why are books so outrageously expensive in Brazil?

That’s from a reader request.  I’m no expert on Brazil, but here are a few possibilities:

1. Most Brazilians do not read.  I don’t mean they can’t read, I mean they don’t read for leisure so much.  I was stuck at the Sao Paulo airport for seven hours and did not see a single person reading a book, not once.

Taking that as given, low demand means high prices.  That’s why Stephen King paperbacks are cheap and Edward Elgar (the name of an academic publisher) tomes go for $100 and up.

2. Brazilian retailing is not in every way efficient.  Efficient retailing in the traditional sense is, by the way, bad for the quality of your food because it means it is easy to serve large numbers.  And Brazil has some of the world’s best food, and so inefficient retailing for its books.

3. No other supply source is right nearby and the Portuguese language does not produce an extremely thick market.  Note that the Portuguese of Portugal is very different from the Portuguese of Brazil.

4. The Brazilian currency may be overvalued at the moment, at least in purchasing power parity terms, due to Brazil’s commodity exports.

Posted by Tyler Cowen on May 22, 2008 at 05:03 AM in Books | Permalink

Comments

“low demand means high prices”
hmmmm, not the standard micro argument. Though I get the example I cannot see the reason. Or might it be that Elgar is sold in low volumes because the price is so high?

Posted by: Chris at May 22, 2008 7:17:27 AM

do Brazilians not read because the people around them are so good looking and therefore it is much more pleasant to watch other people than to read?

Posted by: chug at May 22, 2008 7:44:16 AM

Maybe Brazilians don’t read because books are so expensive?

Posted by: brian at May 22, 2008 7:47:13 AM

Here are some additional reasons:

Transport costs are high. Either you fly books in from the publishers (which is expensive) or you ship them via boat (which slows down the delivery time due to port congestion.) If delivery times slow down, stores don’t order high volumes of books because they can’t predict that far down the timeline and can’t get volume discounts.

Lack of discount stores. B&N, Amazon, etc aren’t prevalent in Brasil.

Tyler’s first point is also correct. Brazilians in the lower income/wealth deciles have other things to spend their money on than books. Also, as they are usually less educated, their reading consumption doesn’t extend to books.

Taxes have something to do with it. Imported goods have a higher duty which is evidenced in the cost of electronics in Brazil, but I always thought there was a higher tax on books, magazines, etc.

I lived in Brazil in 2007 for 8 months and noticed the high costs on books.

Posted by: Scott at May 22, 2008 8:17:27 AM

>> “Note that the Portuguese of Portugal is very different from the Portuguese of Brazil.”
Interesting, I wasn’t aware of that.

Posted by: Chris Meisenzahl at May 22, 2008 8:20:39 AM

As a Brazilian I want to share my two cents: in terms of minimum wage the median book price is equivalent to a couple of full days of work, so most people here have a though time between buying books and food/paying the rent. This would explain why poor people don’t read, but rich and educated people don’t read much too: this is more related to the history and culture of Brazil, we traditionally value knowledge less than social skills and networking, it’s much more important who you know than what you know, so reading isn’t as competitive as socializing when it comes to improving your income.

Posted by: Daniel Yokomizo at May 22, 2008 9:00:42 AM

I was the reader who asked the question. Thank you for covering it.
1. I know that Brazilians do not read much; it is basically an oral culture. Nevertheless, my own country has roughly 20 times fewer inhabitants than Brazil, and our economic level is quite similar to that of the luckier part of Brazil. So I thought that if you disregard the poor and people who never read, the Brazilian book market should add up to something that is not “smaller” than what I know from my country, where books are some 50% cheaper.
2. Yes, services in general are a bit underdeveloped, in particular in the online sector.
3. I don’t think that the language versions are different enough to prevent Brazilians from reading Portuguese books and vice versa. That said, I know next to nothing about the Portuguese book market.
4. As far as I know, books have “always” been expensive here. It is not a recent phenomenon.

Posted by: J. at May 22, 2008 9:17:44 AM

I live in Brasil, and since I love to read (and better my Portuguese by doing do), I suffer with high book prices. To echo Daniel, Brasilans would rather have a conversation than read a book. Also, I have noticed that even my wealthier friends complain about the high price of books. Over the last 4 years, book prices have not risen considerably, though the real has not been as strong.

Posted by: Jennifer at May 22, 2008 9:20:47 AM

Never having been to Brazil, but having spent time in Peru where there is a similarly high cost to books, I need to ask if you are not missing a sizable black market book economy.
In the upscale neighborhoods of Lima there are a number of mainstream booksellers that cater to tourists and those who don’t mind paying the premium, and a district in a decaying section of the center city that sells to everyone else. The quality is fairly high (meaning that the photocopies are legible and bound tightly), the bootleg version of a text appears there long before it appears in the legitimate bookstores, and the cost is minimal.

Posted by: Jason Jindrich at May 22, 2008 9:23:17 AM

“Low demand means high prices,” says Tyler. That no doubt explains why China’s increased demand for oil has driven the price of oil so low.

Re Elgar, I talked to him about this in London in 2003 and told him it was obvious that he was using a skim-price strategy so that libraries would pay him a lot. He agreed and said it was obvious.

Posted by: David R. Henderson at May 22, 2008 9:24:35 AM

The written standard of Portuguese in Brazil tends to be closer to the Portuguese of Portugal, and thus rather different than the way people actually talk. Perhaps that makes written text seem a bit constrained and unnatural and old-fashioned, not the sort of thing you’d turn to for entertainment. If all of our novels and non-fiction in English were written in a florid 19th century style (say, like Moby Dick), the average person might read less.

Quebec might have the same problem, both in terms of significant spoken language differences and importing books in French at Parisian prices.

How does the currency factor in though? If anything, the newly high value of the real would make imported books from Portugal considerably cheaper than before. However, this high value is a very recent development, so it would have little effect on a lifetime’s reading habits.

I suspect that ultimately the Internet and future generations of devices like the Amazon Kindle will have a big impact in making reading more affordable in many parts of the world and helping to foster a reading culture, but it might take another decade or so.

Vaguely related: Mark Andreessen had an interesting blog entry on the sheer difficulty of getting newspapers started as a medium in early America, which might give some insights into how difficult it can be to create a reading culture from scratch.

Posted by: at May 22, 2008 9:30:38 AM

Isn’t there a copyright problem with pirate books too? I vaguely recall that, at least in Spanish-speaking countries, there was something like that at one point — Gabriel Garcia Marquez saying he was going to quit writing because people kept pirating his books and selling them or something. Does Brazil have a similar problem?

Posted by: Taeyoung at May 22, 2008 10:14:22 AM

Some books sold by EE at 75$ are sold by Liberty Fund at 12$. So low demand doesnt seem to fit as explanation.They same kind of book sell by University´s Press are cheaper than EE.I paid around 20 $ for What Price Fame? or Creative Destruction that is the same kind of book yo find at EE. EG Buchannan Property as a guarantor of freedom( 15$ ee and 12 $ Liberty Fund with 10 more papers)

Posted by: karl at May 22, 2008 10:19:45 AM

Hey Tyler! Loved your analysis!

The main reason, that in part explains your first point, is in Brazilian educational system, that doesn’t encourage children to read for leisure. Reading, during the young ages in Brazil, is something that kids are forced to do to get good grades on tests, which in the opinion of someone that was exposed to that, creates a kind of trauma.

Reinforcing what the last commenter said, I also would point the Portuguese idiom as one of the responsible for that lack of reading habit down here. Even though English is not my mother language, currently most of books I’ve been reading are in English. Someone into semiotics and linguistics might explain better, but I believe the way the text is constructed in English makes it more enjoyable than in Portuguese!

Best
Flavio – Sao Paulo

Posted by: Flavio at May 22, 2008 10:23:24 AM

Number 1. is right: it is an underdeveloped market which means low volumes and high prices.

Number 2. I think book retailing is inefficient and the costs of unsold inventory is usually borne by publishers, not stores. So book stores are usually filled with books that are cheap to carry, don’t sell well, but are expensive.

Number 3. Little supply is not an issue. It is a 200 million inhabitant country, and Portugal is only 10 million. But alas, books from Portugal read awkward.

Number 4. An overvalue currency actually creates a downward price pressure. I found out that there is at least one shop in Sao Paulo that sells American pocket books for just cover price, maybe a quarter of what the Portuguese translation costs. But maybe it also reduces the size of the market for local books.

About the piracy issue of a earlier commenter: I don’t think it is a problem. I wouldn’t even have thought of that.

Taxes are not a problem at all. Books carry no taxes at all.

I think it is number 1 and number 2 in a feedback loop.

 

Posted by: Andre Uratsuka Manoel at May 22, 2008 11:05:28 AM

Ok Tyler,

What about New Zealand? The book prices I notice there last week were astronomical. There were plenty of bookstores and people reading, but mass market paperbacks cost what a hardback does here. There dollar is relatively strong so what is going on?

It seems that 1, 2 and 3 are ruled out.

Posted by: RobbL at May 22, 2008 11:43:25 AM

Jason: there is no black market. Even used books are kinda expensive.

Currency is an issue in book prices because lots of raw materials (paper, translated books) are imported. Note that the real has been gaining strength in relation to the dollar, though.

As a Brazilian an avid book buyer, I’d give the greatest weight to Tyler’s first item.

Posted by: Cisco at May 22, 2008 12:36:38 PM

I did a research that tackled a bit this issue, available at my website in Portuguese. There is not a single reason, but some findings were:

1) Most publishing companies are run in a very amateurish way. They don’t even know how to break down the price of a book. Most of all, they do a rule of thumb: final price is 2x the price of paper used in the book. And book paper IS expensive in here.
2) Brazilian books are also more expensive because there is not a culture of cheap books (this is actually changing). So, what should be the “cheap book” in Brazil is actually a paperback with “hardcover” characteristics.
3) Brazilian books have VERY low runs. Nowadays, a first print is usually 2.000 copies.
4) It is actually very easy to find cheap books in pawn shops – the thing is: nobody buys used books in Brazil. People could easily make a small library at home for peanuts – except it wouldn’t look good in the shelves.
5) As I also mention in my dissertation, market size has dropped 50% in ten years.
6) Pocket books are just being re-introduced in Brazil. And they are very cheap by all accounts (ranging from 4 dollars to 15 dollars).

Posted by: Ricardo Amaral at May 22, 2008 12:57:13 PM

On an added note: readership in Brazil is very extreme. Those who read books for pleasure (14% of the population), read a lot (over a book per month in average). The problem is the rest of the population who doesn’t read at all.

Posted by: Ricardo Amaral at May 22, 2008 1:00:20 PM

I don’t really think you can say that Portuguese from Brazil is very different from Portuguese from Portugal or any other officially spoken version, for that matter. Anyone from Portugal able to read would have very few, if any, problems with Portuguese from Brazil. In fact, since the Portuguese market for academic books, especially in Economics, is very, very thin, most of the translations available are written in Portuguese from Brazil – and they sell incomparably more than an English version of the same text.

As someone mentioned, any communication issues would arise in spoken language,with Portuguese from Brazil having a harder time to understand Portuguese from Portugal than vice-versa, but even that is utterly irrelevant for all practical purposes.

That said, it is true that there aren’t, at least that I know of, common editions in either version of the language, except in the case of original authors (Paulo Coelho, Jorge Amado, or José Saramago and Pessoa). The only cases I know of, and there are quite a few, are of academic readings.

Posted by: Pedro at May 22, 2008 1:04:51 PM

Pedro is correct. Let’s put it this way: for Brazilians it is harder to follow Portugal-written books, especially non-academic books (I know that because I am a fan of Nina Berberova and most of her books have never seen the light in Brazil, but Portugal).
So, there is hardly economies of scale in tackling Portugal/Brazil as a single market, especially in non-academic circles.

Posted by: Ricardo Amaral at May 22, 2008 1:20:40 PM

I don´t think that the problem is price. C´mon, even poor people has expensive cell phones… Sure, I´m buying books from Amazon because they are cheaper and you have a total absence of libraries, but I think it´s more a cultural than a economic factor.

And even the Middle and Higher classes have low reading. What impresses me on Brazil is that the lack of education among the Middle Classes. Others poor countries at least have a more educated Middle Class, I guess.

Onde estão os catastrofistas? (3)

Mais uma contrariando a visão dos catastrofistas! Alguém viu algum deles nos jornais econômicos ultimamente?

Aqui vão os dados de crescimento recente dos países do G7 (retirado do blog do Prof. Mark J. Perry); nada parece lembrar uma recessão!

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G7 Goldilocks

 

Economic growth in the G7 countries (U.S., Canada, France, Germany, Italy, Japan, and UK) was 0.48% (1.92% annualy) in the first quarter of 2008, just slightly below the average growth of .50% over the last 7 years (see graph above, data from OECD).

Menos é mais

Um texto interessante para quem é blogueiro!  Se você quer ser lido por muita gente, faça posts curtos.   É a conclusão do post abaixo, que encontrei no site 26econ.com, de 08/05: http://www.26econ.com/less-is-more-2/ !

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Very loyal reader Chewxy informs me about some analysis by Jakob Nielsen of a study done by some others about web users’ habits.

The headline results for bloggers are: People spend 4.4 seconds per additional 100 words on a page. This means that readers will read about 18% of additional content.

This graph that Jakob made shows the maximum percentage of words that people could read on a page as a function of the number of words, taking account of the average amount of time that people spend on a page given the number of words that it has, at an average reading speed:

 

Conclusion: If you want to be read by the masses, keep it short.