If you are going to worry about bilateral deficits, here is one to keep you up at night:

According to South Korea’s World Institute of Kimchi, 89.9 percent of the kimchi purchased by South Korean restaurants in 2016 was imported from China.

The kimchi trade first went into deficit in 2006, triggering soul-searching and a headline-grabbing scandal…

South Korea imported more than 275,000 tonnes of kimchi last year, 99 percent of it from China, the Korea Customs Service (KCS) said, and exported just more than 24,000 tonnes.

The deficit stood at US$47.3 million by value, up 11 percent year-on-year and the largest since the KCS began tracking the data in 2000.

Price is a major factor in the trade, with imports costing just US$0.50 per kilogram in 2016, according to Korea Agro-Fisheries & Food Trade Corp, while exports — primarily destined for Japan — averaged US$3.36 per kilogram…

UNESCO inscribed South Korean kimchi on its intangible cultural heritage list in 2013, saying: “It forms an essential part of Korean meals, transcending class and regional differences.”

Here is the full article, via the excellent Mark Thorson.

Thursday assorted links

by on January 18, 2018 at 12:43 pm in Uncategorized | Permalink

Why do governments sometimes engage in mass killings? Mass killings could help governments to suppress the opposition–that seems obvious–but it’s also true that mass killings can create blowback and further stiffen the opposition’s resolve. Uzonyi and Hanania offer a simple theory and some clarification:

We argue that government mass killing during war reduces opportunities for the opposition to return to military conflict in the future. This allows for longer periods of post-conflict peace. However, government atrocities that begin after the end of a civil war create new grievances without diminishing the ability of opponents to fight. This makes a faster return to conflict more likely. Statistical analysis of all civil wars between 1946 and 2006 strongly supports our arguments, even when we account for selection effects regarding when governments are more likely to engage in mass killing. These results reveal that both during-war and post-war tactics influence civil war recurrence, but that the same tactic can produce different effects depending on the timing of its use.

Essentially the authors are arguing that civil wars sometimes end when one side decisively wins. Not surprising but how about this for an uncomfortable thought:

We stress that mass killing is a grizzly and morally appalling
tactic. But it does appear to keep a country at peace for a
longer duration once a conflict ends. If the international
community disrupts these effects of mass killing, it may be
inadvertently increasing the likelihood that civil war will recur. Thus, if the international community chooses to intervene in conflicts to protect civilians, member states must also
be willing to remain in the country over the long term to
help the government and opposition groups refrain from returning to war. Unfortunately, few states have demonstrated
an appetite for such long-term commitments
.

That is the topic of my latest Bloomberg article, here is one bit:

What is striking about immigration, and immigration policy, is the very simple but oft neglected fact that it concerns human bodies. Any exercise of immigration law thus requires some violence, either explicit or implicit, against those bodies. It will mean the rounding up and forcible restraint of bodies, the widespread use of prisons and other coercive holding chambers, and tearful scenes of airport separation. Those methods will be applied to individuals who do not enjoy the full protections of the U.S. Constitution, who are vulnerable to mistreatment during the process, and who do not always have full fluency in the English language or a full understanding of their legal rights. The resulting problems are especially high costs, not only because of the associated dollars, but also because our precious self-image as a humane country implies keeping such episodes to a minimum. Too many violent stories and images, even when they technically can be justified by laws, damage our conception of our country. Eventually that will shape our future behavior and not for the better.

A somewhat lax enforcement of immigration restrictions is in fact the friend of the future of the rule of law, not the enemy.

Do read the whole thing.

Compensation for the heads of some elite private K-12 schools in New York City is nearing $1 million.

Much in the city’s private school world can seem beyond the norm: the tuition and fees (topping $50,000 a year), the kindergarten application process (interviews for 4-year-olds), the facilities (climbing walls). And so too executive compensation that exceeds the pay of many college presidents.

Pay packages often include deferred compensation and perks like housing, housekeeping, social club dues and free tuition for heads’ children. Chiefs of New York City schools earn far more than the national average, due to the high cost of living, ambitious fundraising duties, competition for talent, relatively large enrollments and other factors, according to the National Association of Independent Schools.

The median base salary for heads of the city’s private schools is $493,478 this academic year among 44 city schools in a survey by the association. That compares to $275,000 nationwide. The group says the city’s pay for heads grew faster as well: Its median salary jumped 70% in a decade, compared with 45% nationwide.

At least nine heads of private K-12 schools in New York City earned total yearly packages topping $800,000, according to 2015 federal tax forms, the most recent year available.

Here is the WSJ piece, via the excellent Samir Varma.

Wednesday assorted links

by on January 17, 2018 at 2:40 pm in Uncategorized | Permalink

I think Ross, along with Steven Pinker, received the hardest (though never hostile) questions from me, but of course that is a measure of respect.  Plus serious questions about God are difficult by their nature.  Here is how the summarizers described the ground covered:

…Douthat’s views on religion and theology, but then moves on to more earth-bound concerns, such as his stance on cats, The Wire vs The Sopranos, why Watership Down is the best modern novel for understanding politics, eating tofu before it was cool, journalism as a trade, why he’s open to weird ideas, the importance of Sam’s Club Republicans, the specter of a Buterlian Jihad, and more.

Not to mention Reformicons, CRISPR, Thiel/Girard, Godwin’s Law, euthanasia, what Ross learned his mother, and the dangers of too much smart phone use.  Ross responded in fine form, here is the audio and transcript.  Here is one excerpt:

DOUTHAT: I suppose that I’m drawn to the idea that the truth about human existence lies in what can seem like paradoxical formulations, and this is of course very Catholic in certain ways. Certainly a G. K. Chestertonian idea, so I’m just stealing it from other people. But the idea that various heresies of Christianity, Calvinism included — with apologies to my Calvinist friends — tend to take one particular element of you that’s supposed to be in synthesis and possibly in tension, and run with it. And therefore the truth about things lies in a place that may seem slightly contradictory.

And I think this is borne out in many ways in everyday experience. This both-and experience of human existence. The idea that you can’t split up grace and works in any kind of meaningful way. It’s connected to larger facts about the nature of human existence. The tension between determinism and free will that persists in any philosophical system. You can get rid of God and stop having these Jansenist Jesuit arguments about predestination and so on, but you’re still stuck with the free will–determinism debate. That debate doesn’t go away.

So, yeah, there’s a point at the intersection of different ideas that is as close to the truth as our limited minds can get and in Christian thought, we call that point orthodoxy. Now, how that is connected to my political views is a really good question.

And:

COWEN: We all know the Marcionite heresy: the view, from early Christianity, that the Old Testament should be abandoned. At times, even Paul seems to subscribe to what later was called the Marcionite heresy. Why is it a heresy? Why is it wrong?

DOUTHAT: It’s wrong because it takes the form . . . It’s wrong for any number of reasons, but in the context of the conversation we’re having, it’s wrong because it tries to basically take one of the things that Christianity is trying to hold in synthesis and run with it to the exclusion of everything else, and essentially to solve problems by cutting things away.

The Marcionite thesis is, basically, if you read the New Testament, Jesus offers you a portrait of God that seems different from the portrait of God offered in Deuteronomy; therefore, these things are in contradiction. Therefore, if you believe that Jesus’s portrait of God is correct, then the Deuteronomic portrait of God must be false; therefore, the God of the Old Testament must be a wicked demiurge, etc., etc. And the next thing you know, you’re ascribing to, again, a kind of . . . What is the Aryan Christianity of the Nazis, if not the Marcionite heresy given form in the 1930s and 1940s?

And so the orthodox Christian says, “No, any seeming tension between the Old Testament and the New, any seeming contradiction, is actually suggesting that we need to look for a kind of synthesis between them, and for a sense in which there is not contradiction, but fulfillment in some way, which —

COWEN: Bringing us back to Hegelian Douthat.

DOUTHAT: Yes, yes.

And:

I think it’s probably fair to say that Chesterton’s Father Brown stories had as much influence on my worldview as his more sort of polemical and argumentative writings. And, again, I think therein lies some important insight that I haven’t thought through, but I think you’re correctly gesturing at, about a particular way of thinking about God and theology that isn’t unique to Christianity, but that is strongly suggested by just the structure of the revelation that we have. Marilynne Robinson has a line, I think in Gilead, about — one of the characters is imagining that this life is like the epic of heaven. That we’re living in the Iliad or the Odyssey of heaven. This is the story that will be told in the streets.

And:

COWEN: When you see how much behavior Islam or some forms of Islam motivate, do you envy it? Do you think, “Well, gee, what is it that they have that we don’t? What do we need to learn from them?” What’s your gut emotional reaction?

On another topic:

I’ve been always disappointed that there hasn’t been a kind of sustained Watership Down revival because it’s such a great book and it’s a book about — essentially, it’s about a founding.

It’s connected, in a sense, to the kind of things that the Straussians are always arguing about and so on. What does the founding mean, and so on? But you have a group of rabbits who go forth and encounter different models of political order, different ways of relating to humankind, that shadow over rabbit-kind at any point.

You have a warren that has essentially surrendered itself to humanity and exists as a kind of breeding farm, and you have a warren that’s run as a fascist dictatorship essentially. And then you have this attempt to form a political community that is somewhere in between the two, getting back to the Hegelian synthesis and so on. And you have sort of this primal narrative where the problem is of course that they don’t have any females, and so there’s this competition, this competition for reproductive power that’s carried out between these different warrens where the rabbits from the good warren have to literally — not kidnap, because the does come willingly — but steal women from the fascist dictatorship, which maintains a ruthless control over reproduction.

So there’s just a lot of fascinating stuff there, and then it’s all interspersed with storytelling. There’s the sort of rabbit folktales that Richard —

COWEN: So, narrative again.

DOUTHAT: Narrative again.

Strongly recommended, and I do thank Ross for putting up with me.  Do read or listen to the whole thing.

And I very much enjoyed reading Ross’s forthcoming book To Change the Church: Pope Francis and the Future of Catholicism, which I found totally engrossing.

The United States has been called the OPEC of blood plasma because it exports hundreds of millions of dollars worth to other countries. Why does the US dominate the blood plasma industry? Because in the U.S. it’s legal to pay donors which increases supply. Some provinces in Canada have also allowed paid donors but 80% of the blood plasma given to Canadians is imported from the United States and, to make matters worse, some provinces have banned or are considering banning paid donation. A very good letter opposes the ban:

We are professional ethicists in the fields of medical ethics, business ethics, and/or normative ethics, and academic economists who study how incentives and other mechanisms affect individual behaviour. We all share the goal of improving social welfare.

We have strong reservations regarding any Act or legislation (hereafter: “Acts”) that would prohibit compensation for blood plasma donations…….Both the ethical and the economic arguments against a compensatory model for blood plasma for further manufacture into PDMPs are weak. Moreover, significant ethical considerations speak in favour of the compensatory model, and therefore against the Acts.

The letter carefully discusses many of the objections such as that paid donations will drive out unpaid:

The compensatory model leaves open the possibility of donors’ opting out of compensation, or the operation of a parallel non-compensatory model. The United States does just this, and has an approximately 50% higher voluntary, unpaid, per capita blood donation rate than Canada. Germany, Austria, and the Czech Republic, where plasma donors can be compensated, likewise all have higher rates of voluntary, unpaid per capita blood donation than Canada.

Is paid blood plasma less safe?

Dr. Graham Sher, the CEO of Canadian Blood Services, has said, “It is categorically untrue to say, in 2015 or 2016, that plasma-protein products from paid donors are less safe or unsafe. They are not. They are as safe as the products that are manufactured from our unremunerated or unpaid donors.”

The letter is signed by two Nobel Prize winners in economics, Alvin Roth and Vernon Smith, by philosophers like Peter Jaworski, who did most of the heavy lifting, and by experts who have studied incentives and blood donation closely like Nicola Lacetera and Mario Macis. I am also a signatory.

In 2016, the island nation’s police reported 135 total days without any crimes including snatch-theft, house break-ins and robbery. That low crime rate means many small businesses enjoy little concern about shoplifting.

In fact, as CNBC recently observed, many local businesses take few precautions when closing shop at night.

For instance, in the ground floor lobby of a mixed-use building in the downtown business district, many shops don’t have windows, locks — or even doors.

Here is the full story.

Perhaps you know that both mainstream bananas and chocolate are threatened by blights.  There is even talk of “bananas as we know them” going under, although I believe the hardier (and tastier) Brazilian bananas are in much less danger.  They are also harder to grow, stack, and transport to the United States.

More generally, to the extent societies opt for monocultures, disease can threaten an entire crop.  So when breeding and choosing genetic strains, do markets get this problem right?  Or can we identify a systematic market failure?  Will farmers produce too many kinds of corn of the same kind, or too few?  For background, you might wish to read this Charles C. Mann article.  Here are a few points:

1. In old line Chamberlain-style monopolistic competition theory, producers selected too many product varieties because product differentiation boosted their market power and thus their profits.  Appropriately, people accused him of excessively differentiating his theory from that of Joan Robinson.

2. In the A. Michael Spence product quality papers from 1976-1980, producers with market power choose too little product variety, because they don’t sufficiently count the inframarginal gains from bringing new products to market.

3. There is now a risk/insurance argument.  If you breed and grow a different strain or corn, or simply invest in keeping an old strain around, no single blight can wipe out all the corn.  This is a kind of substitute for corn insurance markets.  I have seen Taleb make a version of these arguments on Twitter, in an anti-GMO context.

4. Is crop insurance that imperfect?  A corn blight won’t succeed right away, and in the meantime the price of corn is going up.  If I am worried about this, I can go long corn.  Admittedly, this is not a hedge for society as a whole against the loss of corn, though it is a hedge for individual investors or farmers.  The biggest losers can purchase some protection.

5. Maybe you just love corn diversity, as I do.  But sticking within an economics context, corn is a pretty small part of most people’s budgets in the United States, but not in rural Mexico.  It is therefore a major potential problem in Mexico but not for most consumers in the United States.  In the U.S., I suspect many corn producers are non-diversified and reap producer surplus, but I don’t have hard data behind those judgments.  Rural Mexicans also find it harder to diversify through asset markets, though they diversify by painting amates and taking up other alternative occupations.

6. You will note that diversity of corn strains persist in rural Mexico, and to a great degree.  It is the United States that has moved much more toward the monoculture.  Of course there may be transitional problems, as part of Mexican agriculture modernizes, but some farmers are left behind with older strains and methods.

7. We can admit that not all gdp is created equally, but then which are the foodstuffs we really could not afford to lose?

7b. Chocolate.

7c. Rice.

7d. Water, a drink.

Yikes!  But mainstream corn and bananas I can do without.

8. Does the Chamberlain mechanism in #1 outweigh the Spence argument in #2?  In today’s food markets, I certainly think so.  So given the risk of extinction, a market structure of monopolistic competition may in fact be better than perfect competition.

How do these arguments apply to the breeding of other living beings?

This study compared perpetrators of seven mass killings during 2013–2017 with more than 600 celebrities over the same time period. Findings indicate that the mass killers received approximately $75 million in media coverage value, and that for extended periods following their attacks they received more coverage than professional athletes and only slightly less than television and film stars. In addition, during their attack months, some mass killers received more highly valued coverage than some of the most famous American celebrities, including Kim Kardashian, Brad Pitt, Tom Cruise, Johnny Depp, and Jennifer Aniston. Finally, most mass killers received more coverage from newspapers and broadcast/cable news than the public interest they generated through online searches and Twitter seems to warrant. Unfortunately, this media attention constitutes free advertising for mass killers that may increase the likelihood of copycats.

That is from an Adam Lankford paper, via Rolf Degen.

Modern Principles, 4th ed!

by on January 16, 2018 at 7:25 am in Books, Economics, Education | Permalink

Tyler and I are thrilled to announce the release of the 4th edition of our principles of economics textbook, Modern Principles. In the new edition we have fully integrated the microeconomics and macroeconomics videos that we have been producing for MRUniversity. No other textbook has anything like this wealth of supplementary material–putting it all together makes Modern Principles a new kind of textbook. We have also added a lot of new questions, Ask FRED questions, that use data from the FRED database, more material on health and economic welfare, more material on financial crises and fires sales and much more.

No other textbook has our super simple Solow model which for the first time makes the Solow model accessible to principles students. Modern Principles also has a balanced treatment of Keynesian and Real Business Cycle models, lots of material on modern topics like price discrimination including bundling and tying, a chapter on managing incentives (piece rates, salaries, tournaments) that’s great for MBA students and of course the best guide to understanding the marvels of the price system.

Check out the video!

From the WSJ, here is one excerpt:

“Put yourself in the shoes of a Martian sociologist,” Mr. Caplan writes in “The Case Against Education.” “Your mission: given our curriculum, make an educated guess about what our economy looks like.” You might well “leap from one erroneous inference to another.” Given the amount of time teachers spend on novels and poetry, for instance, there must be a “thriving market in literary criticism,” he writes, adding that most of the subjects that students try to master in school—from history and algebra to foreign languages—will be of little use in their salary-earning lives.

After surveying the research on the “transfer of learning,” Mr. Caplan concludes: “Students learn only the material you specifically teach them . . . if you’re lucky.” Generally, they don’t know how to transfer their reasoning from one topic to a related one. As to informal reasoning—the ability to come up with arguments for or against a particular proposition—education’s effect, he says, has been “tiny.” He similarly dispenses with the claim that schools teach common values or civic education. As college attendance has skyrocketed, he notes, voter turnout has declined.

Here is the full review, which also covers Susan Wise Bauer’s Rethinking School.  You can buy Bryan’s book here.

Tuesday assorted links

by on January 16, 2018 at 1:38 am in Uncategorized | Permalink

I submit that really every part of China is worth seeing, not just Shenzhen, Shanghai, and Beijing. Sichuan, Guizhou, and Yunnan are very different from Guangdong and Fujian, which are not at all the same as Heilongjiang, Jilin, and Liaoning, which are so distinct from the Jiangnan, and on and on, to say nothing of the far west. Each Chinese province has roughly the population of an EU country; there may not be as many differences between each province as there are between European countries, but they’re still huge.

One can’t so easily find accounts of how much fun it is to travel around China. Those who haven’t ventured far beyond Shenzhen, Shanghai, and Beijing underestimate the sheer number of totally random stuff that happens to you. In stores, traffic, restaurants, and on the streets, I regularly come across behaviors and fixtures that I had no idea were a thing. You might be driving along miles of farmland, when suddenly a massive high-tech factory with the logo of a well-known foreign company looms up on the horizon; in a restaurant, I was asked one time to help with the cooking because chefs had to go out to buy more ingredients; you never know who might come up to you and tell you an interesting story. The lack of professionalism in nearly all things is sometimes frustrating but mostly hilarious.

That is from Dan Wang’s “What I learned in 2017,” many more topics at the link, including learning and books.