Arrived in my pile

by on February 14, 2016 at 4:01 am in Books | Permalink

Kenneth Scheve and David Stasavage, Taxing the Rich: A History of Fiscal Fairness in the United States and Europe.

Peter Conti-Brown, The Power and Independence of the Federal Reserve.

Daniel Oppenheimer, Exit Right: The People Who Left the Left and Reshaped the American Century.

From the WSJ:

U.S. consumers showed signs of strength in January, taking advantage of low oil prices to increase their spending and offering a welcome counterpoint to the gloom that has gripped investors and roiled markets since the start of the year.

Sales at retail stores and restaurants rose 0.2% in January from the prior month, the Commerce Department said Friday. And December’s retail sales were revised to a 0.2% gain instead of a drop, showing a better end to the year than initially estimated.

While that is good news for everyone, if only because of the implied wealth effect, it ought to give Keynesians special cheer.  And from another WSJ piece:

The sharp drop this year in consumer-focused stocks is feeding fears of a recession, but those companies’ bonds are sending a more upbeat signal.

Bonds from companies such as retailers and restaurants, which are most closely tied to consumer-spending habits, have been strong performers this year, contrary to what analysts would expect if the economy were headed into a tailspin.

The disconnect is notable, because many investors view the bond markets as a more sober indicator of corporate financial health and economic conditions than stock markets.

A risk-based business cycle results when investors (and others) perceive an increase in the risk premium, and pull back their commitments accordingly.  Here are previous MR posts on risk-based business cycle theory.

From 1985 (pdf):

But still, that seemed to me a peculiar way to put it — contrasting economic affairs with human affairs as though economics is a science developed for the benefit of dogs or trees; something that has nothing to do with human beings, with their welfare aspirations, or freedoms.  That, of course, is a pernicious notion, though it represents a turn of mind that characterizes much American political thought.  It leads to the conclusion that economic rights and liberties and qualitatively distinct from, and fundamentally inferior to, other noble human values called civil rights, about which we should be more generous….On closer analysis, however, it seems to me that the difference between economic freedoms and what are generally called civil rights turns out to be a difference of degree rather than of kind.

He worries, however, that conservatives want a non-activist Court, but then want the Court to do what they want on economic issues.  Ultimately Scalia worried that if the Court gave too much credence to economic rights, it would end up with economic rights which are not sensible, and thus he wished to abide by a literally more conservative approach.  He closed his beautiful essay with this:

…the task of creating what I might call a constitutional ethos of economic liberty is no easy one.  But it is the first task.

I disagreed with him on many issues, but his presence on the Court was an important stepping stone for law and economics, and for philosophy as well I might add.

Addendum: “…justices die far more often when a member of the opposite party holds the White House.”

Beware your TV (hi, future!)

by on February 13, 2016 at 2:37 pm in Television, Web/Tech | Permalink

Samsung is warning customers about discussing personal information in front of their smart television set.

The warning applies to TV viewers who control their Samsung Smart TV using its voice activation feature.

When the feature is active, such TV sets “listen” to what is said and may share what they hear with Samsung or third parties, it said.

There is more here, via Ted Gioia.

Saturday assorted links

by on February 13, 2016 at 1:19 pm in Uncategorized | Permalink

1. Kareem responds on Dirk.

2. Good video on public key cryptography.

3. Should we have only one time zone?

4. The economics of Sci-Hub.

5. The latest on human “mini-brains.”  And mammal brain frozen and rethawed perfectly for the first time.

Geography and Economic Growth

by on February 13, 2016 at 7:25 am in Economics, Education | Permalink

A 3-minute introduction to the effect of geography on economic growth drawing on some of Jeff Sach’s classic works. Includes some surprising facts about continents and coastlines!

This video is from our Principles of Macroeconomics course. We cover the multiple ways in which geography can influence growth in more depth in two sections of our Development Economics course.

Russia fact of the day

by on February 13, 2016 at 2:44 am in Data Source, Economics, History, Law, Science | Permalink

Russian mammoth ivory exports have been increasing steadily, averaging approximately 17 tonnes per year for 1991-2000 and averaging 60 tonnes per year for 2001-2013.

It is estimated that the mammoth ivory beneath the tundra has the potential to cover several hundred years’ worth of current elephant ivory sales.

That is from the Farah and Boyce paper cited here.

I haven’t read through this paper (pdf) yet, but it seems quite important and here is the abstract:

For decades, migration economics has stressed the effects of migration restrictions on income distribution in the host country. Recently the literature has taken a new direction by estimating the costs of migration restrictions to global economic efficiency. In contrast, a new strand of research posits that migration restrictions could be not only desirably redistributive, but in fact globally efficient. This is the new economic case for migration restrictions. The case rests on the possibility that without tight restrictions on migration, migrants from poor countries could transmit low productivity (“A” or Total Factor Productivity) to rich countries – offsetting efficiency gains from the spatial reallocation of labor from low to high-productivity places. We provide a novel assessment, proposing a simple model of dynamically efficient migration under productivity transmission and calibrating it with new macro and micro data. In this model, the case for efficiency-enhancing migration barriers rests on three parameters: transmission, the degree to which origin-country total factor productivity is embodied in migrants; assimilation, the degree to which migrants’ productivity determinants become like ‘natives’ over time in the host country; and congestion, the degree to which transmission and assimilation change at higher migrant stocks. On current evidence about the magnitudes of these parameters, dynamically efficient policy would not imply open borders but would imply relaxations on current restrictions. That is, the new efficiency case for some migration restrictions is empirically a case against the stringency of current restrictions.

If I am reading this correctly, the authors are considering moving away from their previous open borders position, simply to a “more immigration (within limits) would be better” position, much like the one I hold.

For the pointer I thank G.

Addendum: On Twitter, Michael says: “Thank you. View didn’t change: Trillion $ bills is comparative statics, need not imply ∞ adjustment speed. This paper dynamic.”

Almost a lost decade

by on February 12, 2016 at 6:12 pm in Current Affairs, Economics | Permalink

The 19-country eurozone, the core of Europe’s economy, grew at an annual rate of 1.1 percent in the last quarter of 2015. But total economic output remained just slightly lower than when the global economic crisis began, in 2008.

Here is Jack Ewing from the NYT.  Here is the blog, run by Thomas Cooley among others, European Economic Snapshot.  And from the FT:

Gross domestic product in Italy — the eurozone’s third-largest economy — rose by just 0.1 per cent in the fourth quarter, missing economists’ expectations of a 0.3 per cent increase and raising concerns that the tepid return to growth that begun in 2015 after three years of recession is already fading.

“Italy is struggling to emerge from the great recession and despite some encouraging signs in the first part of 2015, growth lost momentum in the second half,” says Lorenzo Codogno, a visiting professor at the London School of Economics.

That is why I do not understand the common view that the eurozone crisis is over.  Greece, by the way, has returned to a state of recession.

*Rich People Poor Countries*

by on February 12, 2016 at 1:36 pm in Books, Data Source, Economics | Permalink

That is the new and excellent book by Caroline Freund; the subtitle is The Rise of Emerging-market Tycoons and Their Mega Firms.  It looks at the rise of billionaires in emerging markets, offers a new data base on how they earned their wealth, and takes a generally “pro-billionaire” stance, at least relative to many other sources.

Here is a tape of yesterday’s session on the book.  The author summarizes, I give my comments a smidgen after 35:00, and then there is more.  Here is also a new and related working paper by Freund and Sarah Oliver.

Friday assorted links

by on February 12, 2016 at 11:45 am in Uncategorized | Permalink

1. Clinton welfare reform was not such a big deal, one way or the other.  And what it is like to be obsessed with mood affiliation.

2. Greg Ip on the popularity of big economics books.

3. “Neuromancer is a commissioned work.

4. MIE: the woman who makes prosthetic pinkies for former Yakuza members. “Usually one of Fukushima’s fingers costs 180,000 yen ($1490), but she provides ex-yakuza in difficult financial situations with a discount.”  She has made hundreds of such fingers, recommended.

5. How small is the world really?, how networked are you anyway?, and why it matters.

6. Are Chinese-American students turning to Christianity?

That is a question from a very smart person, over thirty years of age, who claims not to have read very much (I don’t know how much).

So which book should I recommend?

Conditional on the person knowing me, the idea of simply introducing economics is not going to win, even if that would be the correct recommendation for many others.  And “Collected Works” are not allowed.

How about a broadly philosophical novel, such as Don Quixote or Homer’s Odyssey or In Search of Lost TimeMoby-Dick?  A play of Shakespeare?  A current favorite, such as Ferrante or Knausgaard?

How about a perfectly constructed travel book, touting the virtues of a new and magical place?  But most travel books I find dull, unsatisfying, and too scattered with wasteful, overly subjective sentences about sunsets and train trips.

A didactic, moralizing book, perhaps on charity or Effective Altruism?

For many people music may be more powerful than the written word, so perhaps the recent Jan Swafford biography of Beethoven, or John Eliot Gardiner’s book on Bach, or any number of good books on Mozart.  A critical guidebook to some of the best movies available?  Almost everyone can glean new ideas for their Netflix queue, even if they already have seen lots of films.

I don’t know of a biography which is inspirational for everyone or even most people, and I figure an intelligent person older than thirty already has been exposed to the world’s major religions.

How about a book which is a compendium for a hobby, such as a bird watcher’s guide, a Sotheby’s auction catalog, or a Fuchsia Dunlop cookbook?

I keep finding myself drawn to recommend a book which leads the advice recipient away from books, rather than toward them.  Is that a strength or weakness of the book medium?

And eurozone banks down 41% since ECB introduced negative interest rates, notes

That is from @RobinWigg.  The Japanese market has not responded positively either.

Of course negative interest rates, while intended as a form of stimulus, or currency depreciation, are also a tax on financial intermediation.  Negative interest rates, even if you agree with them in principle, are also a sign that more straightforward measures are politically impossible.

Here is Landon Thomas Jr. on negative rates in Sweden (NYT): “…many investors saw the rate cut as smacking of desperation and the latest sign that global central bankers are moving toward a round of competitive devaluations — also known as currency wars — as a way to stimulate their economies.”

Miles Kimball has written much in favor of negative rates, Izabella Kaminska against, if you wish to survey further opinions.  Here is Matt Rognlie.

I don’t see negative rates as the main problem today, but it’s getting harder to see them as a potential remedy.  They’re a sign that economies are trying to solve their core problems on the cheap.

Addendum: Here is Neil Irwin at NYT.

We propose the savanna theory of happiness, which suggests that it is not only the current consequences of a given situation but also its ancestral consequences that affect individuals’ life satisfaction and explains why such influences of ancestral consequences might interact with intelligence. We choose two varied factors that characterize basic differences between ancestral and modern life – population density and frequency of socialization with friends – as empirical test cases. As predicted by the theory, population density is negatively, and frequency of socialization with friends is positively, associated with life satisfaction. More importantly, the main associations of life satisfaction with population density and socialization with friends significantly interact with intelligence, and, in the latter case, the main association is reversed among the extremely intelligent. More intelligent individuals experience lower life satisfaction with more frequent socialization with friends. This study highlights the utility of incorporating evolutionary perspectives in the study of subjective well-being.

That is from Li and Kanazawa, via Neuroskeptic, file under speculative.

Can Finnish education be copied?

by on February 11, 2016 at 1:44 pm in Books, Education | Permalink

The access to teacher training is highly competitive; there are ten applicants for every training place to become a primary schoolteacher.  It does not seem  to dawn upon those in Britain and the United States who want to implement the Finnish system that it would mean firing something like three-quarters of the current teachers.

That is from new and interesting Education Unchained: What It Takes to Restore Schools and Learning, by Erik Lidström, mostly from a Hayekian perspective.  The author claims, by the way, that the Finnish model has been declining since it has been made more student-centered and less teacher-centered.