Thursday assorted links

by on June 22, 2017 at 12:04 pm in Uncategorized | Permalink

That is the topic of my latest Bloomberg column, here is part of the argument:

More generally, the U.S. is an environment where new products — and here I mean of the non-political sort — get started relatively easily. People are willing to take more chances with their consumption, and so this is a fertile environment for startups, which then spread to the broader world.

As for Britain, the traditional aristocracy is remarkably weakened, voting along class lines has disappeared and, most observers agree, if it were really up to the House of Lords, Brexit wouldn’t be happening.

On top of these factors is English, by far the world’s leading language for scientific and philosophic and political discourse, for blogs, for Twitter, and for many other kinds of dialogue. We shouldn’t be surprised if new ideas are more likely to surface and take hold in the English-speaking world.

Here is another bit:

To be sure, some evidence suggests the influence of President Trump is actually causing Western Europe to become more liberal. But don’t confuse style and substance. Another five to 10 years of deindustrialization, terrorist attacks and migrant crises might lead to a “home brew” version of Trumpian ideas in continental Europe, albeit cloaked in a more intellectual and more aristocratic garb. There is a running joke going around along the lines of “If fascist ideas come to [Country X], they will come in the form of anti-fascism.” Once the properly European version of the product comes to the fore, it might do very well indeed.

There is much more at the link.

C. inquires:

Why do we live in the golden age of economic history? Was there something identifiable that caused the subfield to grow in esteem? Some new technology that changed the costs of research (not that I can see)? Something else?

Mark Koyama should write a Medium essay on this, but in the meantime here are my thoughts:

1. We now know much, much more about the earlier economic histories of China, India, and some other locales.  The rise of more and better graduate students from the emerging economies, or for that matter from Europe, has been essential here.

2. Some of the turn toward economic history came with the financial crisis, and the search for longer-term parallels, which meant looking back in history, most of all to the Great Depression.

3. Although the advance of cliometrics started a long time ago, we are now finally at intergenerational margins where economic historians are as quantitatively well-equipped as most parts of the applied micro spectrum.

4. The stranger the time period, the more people will have to look to broader stretches of history for understanding.  Yes, this one is an uh-oh.

5. Some applied micro fields have become a little more boring, so that has helped a partial shift of status to economic history.  Public data sets have been exhausted, and a lot of economic history data sets are “weird or idiosyncratic” data sets, which now are “in” and I predict will stay “in” for a long while to come because they offer the possibilities of both new discoveries and moats.

6. An academic trend that hasn’t yet been exploited usually ends up exploited, sooner or later, once the right nudge comes along.

5b, 6b. In chess, the top players are opting for the Giuoco Piano once again.

7. Competing economic models are more “allowed” in the subfield — not everything must be neoclassical — which has opened economic historians to more wide-ranging questions.  Economic history remains a good place to pursue the questions about economics that initially interested many people as undergraduates.

8. Academic attention is more media-driven these days, and good economic history papers usually have a story of some kind, and perhaps also a historical personage, event, or institution of broader interest.

I am of course excited about this, as his 1491 and 1493 are two of my favorite books:

The Wizard and the Prophet: Two Remarkable Scientists and Their Dueling Visions to Shape Tomorrow’s World

Here is the Amazon summary:

In forty years, Earth’s population will reach ten billion. Can our world support that? What kind of world will it be? Those answering these questions generally fall into two deeply divided groups–Wizards and Prophets, as Charles Mann calls them in this balanced, authoritative, nonpolemical new book. The Prophets, he explains, follow William Vogt, a founding environmentalist who believed that in using more than our planet has to give, our prosperity will lead us to ruin. Cut back! was his mantra. Otherwise everyone will lose! The Wizards are the heirs of Norman Borlaug, whose research, in effect, wrangled the world in service to our species to produce modern high-yield crops that then saved millions from starvation. Innovate! was Borlaug’s cry. Only in that way can everyone win! Mann delves into these diverging viewpoints to assess the four great challenges humanity faces–food, water, energy, climate change–grounding each in historical context and weighing the options for the future. With our civilization on the line, the author’s insightful analysis is an essential addition to the urgent conversation about how our children will fare on an increasingly crowded Earth.

I pre-ordered mine but a moment ago.

Wednesday assorted links

by on June 21, 2017 at 1:47 pm in Uncategorized | Permalink

1. 7 year olds solve coordination problems over 80% of time, 5 year olds less than 20% of time -finds Grueneisen

2. Claims about wages in southern Brazil.  (Better link here)

3. “”Socialists who think charter school success can’t be scaled” occupy an interesting ideological space” — Adam Ozimek.

4. NYT profile of CBO head Keith Hall.

5. WeChat vs. Apple, bet on WeChat.

Beijing notes

by on June 21, 2017 at 1:12 pm in Uncategorized | Permalink

To consider the delta, for all the talk of lactose intolerance, dairy products are booming.  Taxi drivers seem to have lost their reluctance to pick up Westerners.  More and more hutongs have been removed from downtown (duh).  There is a street with three different outlets selling Mexican-style churros.  Overall it feels nicer and more normal.

I am the odd bird who prefers Beijing to Shanghai.  The food is more representative of China as a whole, the faces show more drama, you are more likely to see “weird random ****” driving around in a cab, and the core culture is less chi-chi.  It’s the most important city in the world.  Let’s hope Washington does nothing to reclaim that mantle, New York never will.

It was a forty-minute chat (podcast, no transcript), most of all about the decline of liberalism, based around Ed’s new and very well-received book The Retreat of Western Liberalism.  We also covered what a future liberalism will look like, to what extent current populism is an Anglo-American phenomenon, Modi’s India, whether Kubrick, Hitchcock, and John Lennon are overrated or underrated, and what it is like to be a speechwriter for Larry Summers, among other topics.  Here is the opening bit:

COWEN: Having a taste for the esoteric, I’d like to start with a question. If we go back to the 1680s and James II takes the throne, then, William of Orange comes over from what we now call the Netherlands and pushes him out — was that a liberal development or an illiberal development?

LUCE: At the time, it was very much a liberal development. Of course, we then get the bill of rights. We then get a further restriction of the power of the monarchy that comes with this new Dutch co-monarchy, William and Mary.

In retrospect, given the fact that this is very much the Protestant fundamentalist, the Battle of the Boyne, the victory of the Orange forces, William of Orange. In retrospect, I think it’s being celebrated in a pretty illiberal manner.

Of course, that’s very germane right now in Britain, given that Theresa May is trying to form a government in which the DUP, the Ulster Unionist Party are going to make up the difference between being a minority government and majority government.

It depends which bit of history you’re looking at it from is my answer.

And then I toss him this question:

COWEN: Let’s say we take the British election that was just held. So many people are calling it a mess, chaos, no-good results but, say, I offered you a revisionist view, how would you respond?

I would say it’s the first real election where voting by class has essentially fallen away. You even have Kensington in London going Labour for the first time since 1974.

Voting is now much more by age. You’ve more female representatives than ever before. You’ve 15 Muslims elected, 7 of those being female. More LGBT individuals. Maybe the new liberalism is reflected by that kind of elevation.

Then on top of that, the election definitely thwarted Scottish independence. It probably helped a soft border for Ireland. We hope it’s helping a soft Brexit.

No Corbyn, no UKIP. Wasn’t it exactly the vote we needed and the most liberal outcome you could have imagined, at least relative to all the initial constraints? Or not?

Ed is extremely interesting and articulate throughout.

Again, you can subscribe to the whole series here, we will be doing more bonus offerings of this nature.

Mr Costa explained that long-duration bonds are the best way for real money investors to place bets on Argentina, given that they are unable to leverage themselves like a more nimble hedge fund. “If you are an investor with a constructive view on Argentina, what you want is duration,” he said.

Argentina sold $2.75bn of the debt with a coupon of 7.125 per cent, equating to an annual yield of 7.9 per cent, according to a statement from the Argentine finance ministry late on Monday. The bond attracted $9.75bn in orders from investors.

But don’t focus on the 100 years:

Given the bond was sold at a yield of almost 8 per cent an investor would recoup their initial investment in around 12 years.

Yields could fall by at least 150 basis points, moving more in line with other major economies in the region such as Brazil — implying capital gains on such bonds in the double digits. “Those are pretty good returns. At a rate of 8 per cent or higher, it’s a buy,” Mr Costa said.

The bad news is what you must endure to have a crack at the 8 percent:

Argentina has defaulted on its sovereign debt eight times since independence in 1816, spectacularly so in 2001 on $100bn of bonds — at the time the world’s largest default — and most recently in 2014 after clashing with Elliott Management, an aggressive hedge fund.

But Mr Macri’s government “cured” the latest default in 2016, and times have changed, said Joe Harper, a partner at Explorador Capital Management, an investment fund focused on Latin America. “The policy pendulum in Argentina has shifted to the centre, and the country’s next 100 years will be very different than the last century.”

Here is the full FT story, by Benedict Mander and Robin Wigglesworth.

That is the topic of my latest Bloomberg column, here is just one excerpt:

I see Trump as not a ruler but rather akin to the various fools, jesters or, in the case of Lear, the character of Edgar, who appears before the king in disguise and warns him of his enemies. Don’t interpret the word “fool” too literally here. The most common features of these characters is that they speak between the cracks in the action and utter sentiments that no one else dares  to voice. That’s Trump on Twitter. Would the word “covfefe” be so out of place in one of those poetic rants?

And:

And looking forward, what might a study of Shakespeare tell us to watch for in the evolution of the Trump administration? How’s this for a start?:

  • Blood may be thicker than water, but nonetheless power struggles can break family bonds rather easily.
  • Power cannot be given away and still retained.
  • Don’t overweight legitimacy and birth order in determining succession.
  • Love is a wild card.
  • There is no maximum limit to chaos.

Do read the whole thing.

Arrived in my pile

by on June 20, 2017 at 2:07 pm in Books | Permalink

All look very good and very useful:

George Selgin, Money Free and Unfree

Barak D. Richman, Stateless Commerce: The Diamond Network and the Persistence of Relational Exchange

Guy Standing, Basic Income: A Guide for the Open-Minded

Eminent Domain: A Comparative Perspective, edited by Iljoong Kim, Hojun Lee, and Ilya Somin

Tuesday assorted links

by on June 20, 2017 at 12:00 pm in Uncategorized | Permalink

The Return of the Jitney

by on June 20, 2017 at 7:27 am in Economics, Travel | Permalink

Lyft’s new service, Lyft Shuttle, works on a fixed route for a fixed fee during commute hours. Salon mocks this as a “glorified city bus with fewer poor people.” In fact, Lyft Shuttle and Uber Pool, which is moving in a similar direction, are an improved form of jitney. Jitneys were very popular in the early history of the automobile because they were cheaper, safer and more flexible than public transit but the transit companies lobbied to have them made illegal or burdened with heavy costs.

In many less developed economies, however, jitneys remain a popular form of transit. In New York City, jitneys never quite went away but have continued to operate, mostly illegally, under the name jitneys or shared taxis or dollar vans. Moreover, contrary to Salon, the jitney has always been a form of transit appreciated by the poor. Here’s wikipedia on New York City’s dollar vans:

Dollar vans are typically modified passenger van, and often operate in urban neighborhoods that are under-served by public mass transit or taxis. Some of the dollar vans are licensed and regulated, while others operate illegally. Passengers may board them at designated stops along their route or hail them as share taxis….Dollar vans are often owned and used by members of inner-city communities, such as African/Caribbean American, Latino, and Asian-American populations.

The transit companies did have a legitimate beef with the jitneys. The jitneys would often free-ride on the market making of the transit companies by swooping in just before a bus’s scheduled arrival. Without passengers the transit company wasn’t profitable but without a transit company to ease coordination the jitneys weren’t as profitable or as efficient as they might be–jitneys were subject to what Al Roth calls market unraveling which led in turn to market thinness.

Klein, Moore and Reja came up with a clever solution to the unraveling problem, curb rights (see also my book Entrepreneurial Economics). Curb rights are rights to pickup passengers allocated by curb location and hour.

Will the new form of jitneys be subject to unraveling? Will curb rights be necessary? Probably not. Lyft has moved the location of coordination from the unowned streets to owned cyberspace. Thus the privatization of coordination has solved a market thinning problem that has plagued jitneys for over a hundred years.

Public transit still has useful features, especially the economies of scale available with subways. Economies of scale also make subways, as of yet, a natural monopoly for which regulation may be useful. It’s difficult to see, however, what market failure exists in the market for road transit. We might want to subsidize people but there’s little reason to subsidize buses or other forms of road transit.

*Little Soldiers*

by on June 20, 2017 at 2:24 am in Books, Education, Uncategorized | Permalink

The author is Lenora Chu and the subtitle is An American Boy, a Chinese School, and the Global Race to Achieve.  It’s about what the Shanghai public school system really is like, from an American/Chinese-American point of view.  Here is one bit:

“Self-esteem” doesn’t exist in the Chinese lexicon, at least not in the way Americans use it.  In China, a child’s regard for herself is rarely as important as a stark evaluation of performance.  Almost as if child-rearing were an Olympic sport, the Chinese rank children on everything from work ethic to Chinese character recognition and musical skill.

Comparisons can be informal and conversational.

“He’s not as smart as his brother, but he’s a better singer,” my acquaintance Ming said to me once, nodding at one of her boys, in earshot of the less-smart brother.  Sometimes the desire to rank is combined with a threat. “Does your father love your brother more?” a Chinese teacher once asked my friend Rebeca’s daughter.  The question came after the girl had a bad showing on an in-class assignment.

By the way, according to the author:

Nearly half of all children outside of China’s large cities are high school dropouts.

An interesting read.

The true Thomas Bayes

by on June 20, 2017 at 12:12 am in History, Religion, Science | Permalink

Rational or irrational?

Thomas Bayes was a Presbyterian minister.

Bayes’s first publication was a theological work, entitled Divine Benevolence ([Bayes], 1731). Since no author appears on the title page of the book, or anywhere else, it is sometimes considered to be of doubtful authorship. For example, the National Union Catalog of the United States ascribes authorship to Joshua Bayes. However, Thomas Bayes was the author of this work. Bayes’s friend, Richard Price refers to the book in his own work A Review of the Principal Questions in Morals (Price, 1948, p. 248) and says that it was written by Thomas Bayes. In Divine Benevolence Bayes was trying to answer the question of the motivating source of God’s actions in the world.

The essay dealt with how to handle the problem of evil in the world.  It is also believed that Bayes was an Arian.

That is from a D.R. Bellhouse paper (pdf), with a relevant pointer from Asher Meir.

Efficient markets?

by on June 19, 2017 at 9:25 pm in Economics | Permalink

From Morgan Housel on twitter.