The Washington Post has a heartening story on a way to measure security in Baghdad: taxi odometers. Taxi driving has been a deadly business recently - but the number of miles are going up as things appear to be improving. One driver is quoted:

"To tell you the truth, I thought I had just traded my life for 5,000 dinars," or $4, said Abbas, who was shocked when he arrived in the traffic-jammed streets of Adhamiyah [a notoriously dangerous neighbourhood] to see shops open and people strolling in the road. "Then I suddenly realized that security really is returning to Baghdad."

Three little economics stories this morning:

The Washington Post finds economics at the root of the Iraqi insurgency:"I was out of work and needed the money. How else could I support my family?" As Iraq solidifies into a gangsterish set of well-armed fiefdoms, one Major tells his troops:"A good way to prepare for operations in Iraq is to watch the sixth season of 'The Sopranos.' " A case study in what happens when you destroy a country's economy and infrastructure, sack its standing army and accidentally mislay just short of 200,000 brand new AK-47s.

If there could be such a thing as socialism combined with personal liberty I would be a socialist still. For nothing could be better than living a modest, simple and free life in an egalitarian society. It took some time before I realised this was no more than a beautiful dream.

Popper, quoted in Gamble, Hayek: the Iron Cage of Liberty

I'm off to the Wirral for a few days, so this incessant blogging should stop for a bit, thank God. Anyhoo, only two stories for today:

Samuelson at the Washington Post has been reading Gregory Clark's A Farewell to Alms:

Clark suggests that much of the world's remaining poverty is semi-permanent. Modern technology and management are widely available, but many societies can't take advantage because their values and social organization are antagonistic. Prescribing economically sensible policies (open markets, secure property rights, sound money) can't overcome this bedrock resistance.

My e-mails end with a signature quote from R. Buckminster Fuller: 'you never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.' It's a little absolutist; there are definitely situations where fighting the existing reality is the way to go. But I still think its a very powerful, useful idea.

Why? Here are some situations where building a new model would be a challenging prospect. There's Russia under Putin, where the FSB, successors to the KGB, 'control the Kremlin, the government, the media and large parts of the economy—as well as the military and security forces.' Many ex-Russian states have similar oligarchies. There's Iran's Revolutionary Guard - again a huge conglomeration of international military and economic power under the banner of 'IRGC business enterprises' (and now a designated terrorist group according to the US.) There's, of course, the Mafia in Italy: the piles of rubbish building up in Naples over the summer made clear just how tight their hold is on local services. I'd like to see their local council service tender process. The UK has the occasional little protection racket, but we're not really in the same league.

Back to Three Toed Sloth again, this time to question it's applauding of this Abstract Factory post by Cog about 'the wisdom of crowds'. Not the book itself, mind you. Both think that:

"The wisdom of crowds" is a phrase precisely calibrated to mystify the thing it denotes. Consider the diction: "crowds", suggesting spontaneous, informal, natural gatherings; and "wisdom", suggesting a folksy knowledge born of experience, as opposed to, say, "intelligence", "cleverness", or "expertise". The phrase "wisdom of crowds" carries within it the seeds of the message that gosh darn it, if you just got those elitist social engineers out of the way, and let everybody alone to act on their common sense, everything would be just peachy. In fact, if you read the blurbs from the publisher's page, this is exactly the message that's being pushed --- if not by Surowiecki himself, then by his promoters, with his tacit assent.

Slashdot links to this story about company that has made a 'dynamic pricing model' for selling MP3s over the internet. (Amazon is hiring their services.) It's a demand-based system: the price goes up as more people buy.

This kind of dynamic, human-free system is fascinating: like Dell's method of managing component bottlenecks in laptop sales by automatically discounting, say, 80 gig drives if the 40 gig model is going to take longer to arrive.

...

1. Those who believes that markets always work, except for when they don't.
2. Those who believe that markets never work, except when they do.

A comment on a recent Dani Rodrik post - which is really worth a read, by the way.

This story on Boeing's new plane, the 787 'dreamliner', caught my eye - initially because my brother is on the team designing its engines. But then I read the story: Boeing are boasting about the green credentials of the new plane. But, of course (as the article points out) more efficient planes doesn't equal less greenhouse gases. It equals cheaper flights - so more people will fly.

I don't know what percentage of the overall cost of flying is accounted for by fuel, mind. It might be miniscule. It would certainly seem unlikely it's the prime economic driving force for its expansion. But its nevertheless sobering to think that any gains in efficiency will merely contribute to increased demand.

The Australian today reports that Defence Minister Brendan Nelson has admitted Australia's motivation for keeping troops in Iraq is securing future oil supplies:

The defence update we're releasing today sets out many priorities for Australia's defence and security, and resource security is one of them. The entire (Middle East) region is an important supplier of energy, oil in particular, to the rest of the world. Australians and all of us need to think, well, what would happen if there were a premature withdrawal from Iraq? ... For all of those reasons, one of which is energy security, it's extremely important that Australia take the view that it's in our interests ... to make sure we leave the Middle East and leave Iraq in particular in a position of sustainable security.