Interesting blog bits

More good mid-week reads:

1. Aaron Chatterji, Edward Glaeser and William Kerr on The origins of entrepreneurship and innovation clusters

   Contrary to received wisdom, entrepreneurial clusters in the US – like Silicon Valley – are seen as success stories. But what is the rationale behind these clusters? Do they actually work? This column reviews the evidence and discusses localised policies currently being pursued in the US. In general, our understanding of what works remains limited and economists should more thoroughly pursue researching the effects of entrepreneurial clusters

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2. John Taylor on Unforgettable Economics Lessons in Tombstone

   Last night Yang Jisheng was awarded the 2012 Hayek Prize for his book Tombstone about the Chinese famine of 1958-1962. It’s an amazing book. It starts with Yang Jisheng returning home as a teenager to find a ghost town, trees stripped of bark, roots pulled up, ponds drained, and his father dying of starvation. He thought at the time that his father’s death was an isolated incident, only later learning that tens of millions died of starvation and that government policy was the cause.

3. Sajjad Faraji Dizaji and Peter A.G. van Bergeijk ask Could Iranian sanctions work? ‘yes’ and ‘no’, but not ‘perhaps’

   Will harsh sanctions against Iran change its politics? This column models the effects of sanctions to include both economic and political factors. The impact of an oil boycott is considerable, and economic costs act as powerful incentives to move toward democracy. However, initial positive effects turn negative after around seven years because efforts to adjust to sanctions undermine their economic and political impact. Sanctions only work in the short to medium term.

4. David S. D'Amato asks How independent are central banks?

   In the wake of the financial crisis, there are growing movements in the USA and the UK to abolish the countries’ central banks, the Federal Reserve System and the Bank of England. And while such movements are often regarded as the radical domain of cranks and fanatics, their arguments deserve much more in the way of a careful consideration than they typically receive. Although the mainstream narrative has blamed the current financial crisis on ‘free markets’ and ‘cutthroat competition’, we have had nothing even remotely akin to either for a very long time. If we had, we would find ourselves in a very different position today.

5. Phil Miller asks Why Opera Subsidies and not Stadium Subsidies?

   In this TSE post a commenter asks why there is so much negativity towards sports subsidies and not towards opera subsidies, presumably at TSE.

6. Marc J. Melitz and Stephen Redding ask How do firm-level responses to trade affect industry productivity and the gains from trade?

   Trade theory is ten years into the ‘new new trade theory’ revolution. This column reviews the new thinking and how it shifted thinking from why nations trade to why firms trade. This opened the door to documenting the impact of firm-level changes on industry productivity and national welfare.

7. Daron Acelmoglu and James Robinson on Natural Resources and Political Institutions: Democracy

   Might oil or more generally natural resource wealth lead to institutional deterioration in the political sphere?

8. Tyler Cowen asks Who is the worst philosopher?

   Tyler asks and answers this question.

9. Tim Worstall on Astonishing Numbers: America's Poor Still Live Better Than Most Of The Rest Of Humanity

   There’s a lot of debate (from certain quarters it’s less debate than whining actually) about the increasing inequality in the United States. Sure, maybe it’s true that the country continues to grow but what about the poor and their incomes?