By some mysterious mechanism, people fail to realize that the principal thing you can learn from a professor is how to be a professor…

And:

…the deep message of this book is the danger of universalism taken two or three steps too far — conflating the micro and the macro.

This is Taleb’s deepest and most Straussian book, quickly you will notice that the Levant and the antique world haunt the pages.  It may mystify some of his more casual fans, but I am happy to recommend it — it is the manly book Taleb wanted to write and it is full of ideas.  After all, he had skin in the game.

His closing advice is this:

  1. Never engage in virtue signaling;
  2. Never engage in rent-seeking;
  3. You must start a business. Put yourself on the line, start a business.

You can pre-order it here.

Somehow I missed this 2014 paper when it came out:

This paper explores the hypothesis that the rise in intangible capital is a fundamental driver of the secular trend in US corporate cash holdings over the last decades. Using a new measure, we show that intangible capital is the most important firm-level determinant of corporate cash holdings. Our measure accounts for almost as much of the secular increase in cash since the 1980s as all other determinants together. We then develop a new dynamic dynamic model of corporate cash holdings with two types of productive assets, tangible and intangible capital. Since only tangible capital can be pledged as collateral, a shift toward greater reliance on intangible capital shrinks the debt capacity of firms and leads them to optimally hold more cash in order to preserve financial flexibility.

That is from Antonio Falato, Dalida Kadyrzhanova, and Jae W. Sim.  Once again, it seems that intangible capital is one of the biggest underrated ideas in economics.

Monday assorted links

by on February 19, 2018 at 2:43 pm in Uncategorized | Permalink

I offer my take at the bottom of this Bloomberg column, but here are some reasons for the ones I reject:

To approach such an investigation, you might ask how much you believe improbable testimonies from witnesses who give every indication of being normal people. If you find sane witnesses persuasive, you might think there is some chance of UFO accounts being true (perhaps with a conspiracy-based coverup). There have been a variety of sober accounts of UFO visitations, most notably the story of Betty and Barney Hill.

Unfortunately for this nomination, psychological research on self-deception and the literature on the unreliability of witness testimony suggest that our minds can talk us into believing all sorts of things happened that actually didn’t. So witnesses don’t sway me much. I notice also that UFO claims have plummeted since the advent of mobile phones with cameras (“Oh, did you get a photo of them?”). And so I must look elsewhere for the most plausible conspiracy theory. The Bigfoot and Yeti tales take a tumble for similar reasons, and I don’t think anyone actually saw Elvis or Jim Morrison walking around in the 1990s.

Another way to search for true conspiracies is to scour history for deathbed confessions. Did any Cuban or Soviet agents, shortly before dying, blurt out that they knew the true story of President John Kennedy’s assassination? As far as I know, these admissions are hard to come by. That’s another reason for not believing in most conspiracy theories.

There is much more at the link., including on Malaysian Airlines Flight 370 and the Trilateral Commission, not to mention sports betting.

That is a new and important paper by Gharad Bryan, James J. Choi, and Dean Karlan, and here are the results:

To test the causal impact of religiosity, we conducted a randomized evaluation of an evangelical Protestant Christian values and theology education program that consisted of 15 weekly half-hour sessions. We analyze outcomes for 6,276 ultra-poor Filipino house holds six months after the program ended. We find significant increases in religiosity and income, no significant changes in total labor supply, assets, consumption, food security, or life satisfaction, and a significant decrease in perceived relative economic status. Exploratory analysis suggests the program may have improved hygienic practices and increased household discord, and that the income treatment effect may operate through increasing grit.

File under “increased household discord”…

Abstract

In various cultural and behavioral respects, emerging market consumers differ significantly from their counterparts of developed markets. They may thus derive consumption utility from different aspects of product meaning and functionality. Based on this premise, we investigate whether the economic rise of emerging markets may have begun to impact the typical “one-size-fits-all” design of many international product categories. Focusing on Hollywood films, and exploiting a recent relaxation of China’s foreign film importation policy, we provide evidence suggesting that these impacts may exist and be non-negligible. In particular, we show that the Chinese society’s aesthetic preference for lighter skin can be linked to the more frequent casting of pale-skinned stars in films targeting the Chinese market. Implications for the design of international products are drawn.

That is from a new paper by Manuel Hermosilla, Fernanda Gutierrez-Navratil, and Juan Prieto-Rodriguez.

Tulip mania wasn’t

by on February 19, 2018 at 12:54 am in Economics, History | Permalink

Tulip mania wasn’t irrational. Tulips were a newish luxury product in a country rapidly expanding its wealth and trade networks. Many more people could afford luxuries – and tulips were seen as beautiful, exotic, and redolent of the good taste and learning displayed by well-educated members of the merchant class. Many of those who bought tulips also bought paintings or collected rarities like shells.

Prices rose, because tulips were hard to cultivate in a way that brought out the popular striped or speckled petals, and they were still rare. But it wasn’t irrational to pay a high price for something that was generally considered valuable, and for which the next person might pay even more.

Tulip mania wasn’t a frenzy, either. In fact, for much of the period trading was relatively calm, located in taverns and neighbourhoods rather than on the stock exchange. It also became increasingly organised, with companies set up in various towns to grow, buy, and sell, and committees of experts emerged to oversee the trade. Far from bulbs being traded hundreds of times, I never found a chain of buyers longer than five, and most were far shorter.

And what of the much-vaunted effect of the plague on tulip mania, supposedly making people with nothing to lose gamble their all? Again, this seems not to have existed.

That is from Anne Goldgar, there is much more at the link, including an explanation of how the myths about Tulip Mania spread, fake news basically.  Here is her earlier book on the topic, here is an earlier Peter Garber piece.

Sunday assorted links

by on February 18, 2018 at 3:28 pm in Uncategorized | Permalink

Kinshasa is the centre of Congolese cultural life and politics. Its glitzy hotels and restaurants are where the money looted from the rest of the country is spent. It boasts grandiose architecture (including an enormous Chinese-built parliament) and some of the best-dressed people in the world (known as sapeurs, or members of the Society for the Advancement of Elegant People). It is also filthy and lawless. The buses are known as “spirits of death”. The potholes are the size of buses. Traffic is regulated by gun-toting cops who will happily pull a motorist out of his car and beat him up in broad daylight.

The city is one of the least connected in the world. The airport on the English channel island of Guernsey, with a population of 63,000, handles more passengers than Kinshasa’s. Perhaps one in 20 Kinois has a formal job. Nonetheless they pay dearly to live in the metropolis. A room in a slum, without dependable electricity or clean water, can go for $100 a month.

That is from The Economist, the whole article is superb, one of the best I have read this year, with virtually every paragraph full of interesting points.  Don’t forget that the Congo War(s) of 1998-2003 were the bloodiest since the Second World War.

Spock’s Brain

by on February 18, 2018 at 7:32 am in Economics | Permalink

I take an inordinate amount of pleasure in this note from the Wikipedia entry on Spock’s Brain under Reception and Influence:

“The episode was referenced in Modern Principles: Microeconomics by Tyler Cowen and Alex Tabarrok of George Mason University as an example of how it is virtually impossible to have a command economy; in that not even Spock’s brain could run an economy.”

At left is the picture from Modern Principles; we also snuck in an oblique Simpson’s reference.

From Wikipedia I also learned that Phish has a song called Spock’s Brain, alas it is not about the difficulties of running a command economy.

She referred to herself as a “hothead,” but in fact was a model of grace under fire.  She had to be, view 17:00 to 20:00:

As a besotted worshiper of Sun Ra, Octavia Butler, and Afro-Futurism more generally, I have been anticipating this one for many months.  Since I wish that one-fifth of all movies had an Afro-Futurist background, and so few do, I suppose I shouldn’t complain.  Still, I was disappointed by just about everything except some of the visuals.

The male characters were weak and most of the scenes dull, and worst of all most of the humor is mediocre.  Furthermore, I found the movie uncomfortably prejudiced.  There is such a thing as racism directed mainly at Africans (as opposed to blacks), and it seems to me this was it.

So many spears and wild animals?  How about holding a referendum every now and then?  And there were so many “Africanist” tropes.  De facto, I thought the actual message was strongly pro-segregation, although wimpiness on that finally kicks in.  The visual references to Narnia and to various Star Wars installments were fine, but was it necessary to cite the colonialist Zulu?  The contrast with the resource-poor city of Busan, South Korea was almost Straussian in intent.  Is wealth based on human capital so impossible in Africa?

I would say the more you know about actual African cinema, the less you will appreciate this one.

Christopher Lebron in Boston Review has written the best review (via Hollis Robbins).

A significant part of a St. Louis block is devoted to the world of chess.  There is the Hall of Fame, the St. Louis Chess Club, and also a chess-themed restaurant, Kingside Diner, with a King on the men’s room door and a Queen on the women’s room.  The facilities are world class and very welcoming for the visitor; I am honored to have been given a personal tour (and to have eaten fish and chips there).

If you see a Slavic-looking face walking down this street, you simply assume it is a chess player.  In general, I am very interested in the idea of creating extreme mini-universes, a’la Robert Nozick’s concept of utopia.  This is what the chess utopia looks like, and it is in St. Louis.  In this world, rating matters more than race or gender or age.

Many of America’s best chess players now live in or near St. Louis, and the two best college teams — Webster and SLU — are both in or near St. Louis.

One lesson is the power of philanthropy in an otherwise under-supported domain.  I am instead used to seeing donations in “crowded” areas, such as economics or politics.  Rex Sinquefield, a former finance economist, and the developer of index investing, has been the major force behind the rise of St. Louis in chess.  The game is now played in more than one hundred of the local schools.

The strangest moment for me was reading through the plaques in the Hall.  I had known many of those individuals during the ages 13-16, but for the most part have not had contact with them since, or heard word of them.  All at once, I learned when each had died, and which of the few remained alive.

Saturday assorted links

by on February 17, 2018 at 11:04 am in Uncategorized | Permalink

1. He is more likely right than wrong on the major points of optimism and progress and science.

2. The book is very clearly written, and it would do most of the world good to read it.

3. Contrary to Pinker, inframarginally I see the Enlightenment as a strong complement to Christianity/faith, even though the two at the margin often will clash.  The same is true for nationalism.

4. The Counterenlightenment, as Pinker calls it, is intellectually much stronger than he gives it credit for.  It’s time for yet another reread of Gulliver’s Travels.

5. I am uncomfortable with statements such as “Intellectuals hate progress.”  That sentence opens chapter four.  I know that he explains and qualifies it, but it is not how I like to organize concepts.

6. It is not a good book for understanding the Enlightenment.

7. Overall my main difference with Pinker might be this: I believe there is a certain amount of irreducible “irrationality” (not my preferred term, but borrowing his schema for a moment) in people, and it has to be “put somewhere,” into some doctrine or belief system.  That is what makes the whole bundle sustainable.  It also means that a move toward greater “Enlightenment” is never without its problematic side, and that a “Counterenlightenment” can be more progressive than it might at first appear.  In contrast, I read Pinker as believing that Enlightenment simply can beat ignorance more and more over time.

The book’s subtitle is The Case for Reason, Science, Humanism, and Progress.  And here is my earlier discussion with Pinker, video, podcast, and transcript.