*Ties*, by Domenico Starnone

by on March 25, 2017 at 2:45 am in Uncategorized | Permalink

This is one of the better Italian novels of the last few decades, and this year’s first fiction must-read.  It is short, easy to comprehend, utterly compelling, and the basic story line is that of a married couple and their children, to say more would spoil the plot.  The introduction and translation are by Jhumpa Lahiri, also first-rate (by the way, here is my conversation with Jhumpa, toward the end she discusses this project).

Here is the Amazon link.   This Rachel Donadio NYT review provides some very useful background knowledge.

Growers who can afford it have already begun raising worker pay well beyond minimum wage. Wages for crop production in California increased by 13% from 2010 to 2015, twice as fast as average pay in the state, according to a Los Angeles Times analysis of data from the Bureau of Labor Statistics.

Today, farmworkers in the state earn about $30,000 a year if they work full time — about half the overall average pay in California. Most work fewer hours.

Some farmers are even giving laborers benefits normally reserved for white-collar professionals, like 401(k) plans, health insurance, subsidized housing and profit-sharing bonuses. Full-timers at Silverado Farming, for example, get most of those sweeteners, plus 10 paid vacation days, eight paid holidays, and can earn their hourly rate to take English classes.

But the raises and new perks have not tempted native-born Americans to leave their day jobs for the fields. Nine in 10 agriculture workers in California are still foreign born, and more than half are undocumented, according to a federal survey.

Here is the link, including further points of interest, via Anecdotal.

But it is also a question of history and, more specifically, of how welfare states in the rest of the world developed alongside warfare. European welfare states began in Prussia at the end of the 19th century, when war with France required the mobilisation of a large number of civilians. Britain’s welfare state has its origins in the discovery that many of the men who presented themselves to recruiting offices during the Boer war were not healthy enough to fight. Before the second world war, British liberals would have seen the creation of a government-run national health service as an unwarranted intrusion of government into private life. After 1945 it seemed a just reward for a population that had suffered.

In America this relationship between warfare and health care has evolved differently. The moment when the highest proportion of men of fighting age were at war, during the civil war (when 13% of the population was mobilised), came too early to spur the creation of a national health system. Instead, the federal government broke the putative link between war and universal health care by treating ex-servicemen differently from everyone else. In 1930 the Veterans Administration was set up to care for those who had served in the first world war. It has since become a single-payer system of government-run hospitals of the kind that many Americans associate with socialised medicine in Europe. America did come close to introducing something like universal health care during the Vietnam war, when once again large numbers of men were being drafted. Richard Nixon proposed a comprehensive health-insurance plan to Congress in 1974. But for Watergate, he might have succeeded.

That is from The Economist.

Friday assorted links

by on March 24, 2017 at 11:42 am in Uncategorized | Permalink

Let’s say you believe that a flood of forthcoming warrior-entrepreneurs will create exciting new products and earn high rates of return on their capital; associated venture capitalists will benefit too.

That might sound quite optimistic, and in one regard it is.  But the high returns also indicate that the status quo ex ante is in some way deficient.  Had the earlier entrepreneurs done better, the opportunities for these new creators might have been less.  In a sense, the prediction is also an (implied) pessimistic take on the current world as it stands.  The overall state of affairs may be less positive than many others believe.

The mood states of “optimism” and “pessimism” are often misleading ways of classifying or thinking about people’s views on the economy, or indeed about other matters too.  Those descriptors do not distinguish between attitudes toward likely final outcomes, as opposed to attitudes about benchmarks and constraints.

Recently I went to a (very good) conference.  As a number of us got off the train and waited near the platform for a ride, we immediately recognized each other as belonging to the same event, even though we had not met each other before.  We were short and tall, male and female, and of varying races, but still we all had “that look”; I leave it as an exercise for the reader to consider what that means.

It occurred to me that many conferences could try to be more diverse.  No, I am not referring to gender or race or ethnicity, although that may be true as well.  I am referring to personality types and life experiences.  Perhaps each conference should have at least one or two people who are not driven to succeed, not the member of any elite group, and not assured of their standing in the world.

What then to select for?  I wondered whether each conference ought not to invite a hitchhiker or two.  Think about hitchhikers, at least as a group on average:

1. They are mobile and not so set in their ways.  They do not evaluate everything in terms of its efficacy and productivity.

2. They are adventurous and willing to engage with strangers.

3. They have not sunk their assets into expensive homes or fancy cars.

4. They wish to see the world and have a minimum amount of restlessness, maybe more.

5. Superficially it may seem that hitchhikers are “stupider than average,” but I suspect relative to their demographics they are smarter than average.

6. They do not schedule their lives so very tightly.

7. Since the late 1970s, fewer people engage in hitchhiking, and this raises their intrinsic interest.  They are trying to resurrect a dying form of social capital, still prevalent mainly in Cuba and Eastern Europe.

8. The groups skews male, but I wonder if any more so than conference attendees more generally.

Most of all, hitchhikers probably have some time to spare.  Send out a car, and offer them a ride and a conference.  Toss in $500 if need be.  They still will be cheaper than reimbursing the travel costs for most of your guests.  Furthermore, when it comes to “getting back,” they can, um…hitch a ride.

If you wish, give them the right to shout out “You must be on drugs!’ or “I wouldn’t give you a ride!” at least once each conference, without fear of being ejected or otherwise shamed.

Again, here is a video on hitchhikers.  They are perhaps the least likely guests to complain about the conference accommodations.

That is the topic of my latest Bloomberg column, and it is assuming no major increase in supply in the megacities themselves.  Here is one bit:

We live in a special time where clustered activities are unusually important for economic growth. Some activities, such as dentistry and cement production, don’t cluster geographically very much, for obvious reasons. In contrast, finance (New York and London), information technology (the Bay Area), and entertainment (Hollywood and New York) are the most clustered. For whatever reasons, it makes sense to have many of the top decision-makers in one place.

Leading cities have become so expensive in large part because two of these clustering sectors — finance and information technology — have been ascendant. There is no particular reason to expect those trends to continue forever, and that will bind rents in affected cities.

Even tech will decentralize its gains over time:

If you think of a typical technology project, some of the gains go to the venture capitalists and the intellectual property holders, and some of the gains go to broader society, including consumers. Insofar as the gains are disproportionately reaped by the early project initiators, then yes real estate values in the Bay Area (and other tech clusters) will rise. But the most likely future for information technology is that it will spread its benefits more and more broadly into more and sectors of the economy. That scenario suggests a partial convergence of urban futures.

Another way to put the point is that intellectual property returns erode over time. In the early years of smartphones, a big part of the gain goes to Apple. As cheap imitators enter the market, prices fall and more of the gains go to consumers, or business users of the product, who are scattered across the country.

The article contains other points of interest.

Thursday assorted links

by on March 23, 2017 at 11:21 am in Uncategorized | Permalink

1. Digital prescriptions to limit opioid abuse?

2. More on violations of covered interest parity.

3. How serious a problem is crony capitalism?

4. Bethany McLean reviews Complacent Class; I would say she is too hung up on thinking this has to be a book about whom to raise and lower in status.  You can see this at the end most clearly when she thinks I must be saying that China is somehow better than the United States.

5. David Henderson reviews Complacent Class.

6. Luddite sex workers in Spain shut down robot brothel? (NB: tabloid source, plus video at the link)

7. Are companies getting worse at R&D?

…I interviewed Eric Schmidt of Google fame, who has been leading a civilian panel of technologists looking at how the Pentagon can better innovate. He said something I hadn’t heard before, which is that artificial intelligence helps the defense better than the offense. This is because AI always learns, and so constantly monitors patterns of incoming threats. This made me think that the next big war will be more like World War I (when the defense dominated) than World War II (when the offense did).

Here is the link, by Thomas E. Ricks, via Blake Baiers.

Tennis sentences to ponder

by on March 23, 2017 at 2:49 am in Education, History, Sports | Permalink

[Andre] Agassi pauses when asked if he and his wife [Steffi Graf] sometimes hit a few balls in Vegas – for old time’s sake? “No. It sounds a nice idea. But as soon as you hit the first couple of balls you remember you can do this. But you’re also reminded of what you can’t do. I just thank God I played the game long enough to enjoy lots of good moments. It gave a lot and it took a lot. I think me and tennis are about even now.”

Here is the full interview, interesting throughout.

If you recall, Robert D. Putnam, in his last book, expressed surprise that Chetty and Hendren, et.al. (2014) did not find evidence of a decline in intergenerational mobility.  Putnam predicted that researchers would find such evidence soon enough.  After all, it seems the returns to education have been rising, geographic mobility has been falling, market concentration is up slightly, life expectancy is behaving in funny ways, and regional disparities seem to have grown.  Chetty and Grusky, et.al. (2016) seemed to paint a more pessimistic picture than did his work from a few years ago, and now we have a new paper by Jonathan Davis and Bhashkar Mazumder:

We demonstrate that intergenerational mobility declined sharply for cohorts born between 1942 and 1953 compared to those born between 1957 and 1964. The former entered the labor market prior to the large rise in inequality that occurred around 1980 while the latter cohorts entered the labor market largely afterwards. We show that the rank-rank slope rose from 0.27 to 0.4 and the IGE rose from 0.35 to 0.51. The share of children whose income exceeds that of their parents fell by about 3 percentage points. These findings suggest that relative mobility fell by substantially more than absolute mobility.

So far this seems to be the current version of the final word.  The authors also argue, by the way, that Chetty (2016) is somewhat too pessimistic, though correct in suggesting mobility has indeed fallen.

By the way, this seems to be the best link for a download.

A new study in press at the Journal of Hand Therapy (yes, a real thing) finds that millennial men may have significantly weaker hands and arms than men the same age did 30 years ago.

Researchers measured the grip strength (how strongly you can squeeze something) and pinch strength (how strongly you can pinch something between two fingers) of 237 healthy full-time students aged 20 to 34 at universities in North Carolina. And especially among males, the reduction in strength compared to 30 years ago was striking.

This surprised me:

But today, older millennial men and women are roughly equal when it comes to grip strength.

Here is the full story, by Christopher Ingraham, via Sonal Chokshi.

Here is part of the book summary:

This book examines SEZs from a political economy perspective, both to dissect the incentives of governments, zone developers, and exporters, and to uncover both the hidden costs and untapped potential of zone policies. Costs include misallocated resources, the encouragement of rent-seeking, and distraction of policy-makers from more effective reforms. However, the zones also have several unappreciated benefits. They can change the politics of a country, by generating a transition from a system of rent-seeking to one of liberalized open markets. In revealing the hidden promise of SEZs, this book shows how the SEZ model of development can succeed in the future.

Here is my blurb:

‘What do Special Economic Zones actually accomplish? And what are there drawbacks and limitations? Lotta Moberg’s The Political Economy of Special Enterprise Zones mixes theory and empirics to offer the very best available answers to these questions.’ ― Tyler Cowen, Professor of Economics, George Mason University, USA

Here is Lotta Moberg’s home page.  Here is a related article of hers on special economic zones.  Here is the Amazon link.

Wednesday assorted links

by on March 22, 2017 at 1:12 pm in Uncategorized | Permalink

Here is one of Noah’s bits:

Smith: OK. I wanted to press you on a couple more things. First, you discuss how productivity growth has slowed down, but you also mention that people might be slacking off a lot more at work. Don’t those two contradict each other? If people are producing the same amount as before in half the time and spending the other half of their day surfing the net, doesn’t that mean true productivity has risen rapidly?

Second, you discuss how matching leads to complacency — how the Internet allows us to find jobs, mates, and consumption goods that are perfectly suited to us, and how this can make us lazy and over-satisfied. But you also talk about how people, especially working-class people, are getting stuck in high-unemployment places. Isn’t better matching part of the solution to the mobility problem?

Here is the whole exchange.