Assorted links

by on May 27, 2014 at 12:14 pm in Uncategorized | Permalink

1. Clever birds figure out automatic door.

2. Japanese book on how to use profanity correctly in English.  And other methods of Japanese quality improvement.

3. Entropy and inequality (speculative, possibly downright dubious).

4. Why the European left is collapsing (speculative and overblown, but also makes some good points).

5. Why restitution should be small (a 2002 essay by me).

6. “Let’s, Like, Demolish Laundry.

7. More Galbraith on PikettyNate Silver on Piketty and data.

8. And very very sadly the Mackintosh library in Glasgow has been destroyed by fire.

Ray Lopez May 27, 2014 at 12:27 pm

@#5 – uses HTTPS (secure) yet the GMU HTTPS certificate is stale. I’m not clicking on that link, my PC will be taken over as a zombie!

This Connection is Untrusted
You have asked Firefox to connect securely to http://www.gmu.edu, but we can’t confirm that your connection is secure.
http://www.gmu.edu uses an invalid security certificate. The certificate is not trusted because no issuer chain was provided. (Error code: sec_error_unknown_issuer)

Jonathan May 27, 2014 at 12:37 pm

#3: But the Wilt Chamberlain example in Nozick’s Anarchy State and Utopia can be easily rejiggered to show that the preferred income distribution, simply by a particularized allocation to particular people, is the highest entropy state. Trade upsets the functional form and carries us to lower entropy states. In that sense, Duncan Foley’s statement in the last paragraph makes sense.

That said, the rest of it is nonsense.

Z May 27, 2014 at 12:51 pm

#4: Maybe it is because I am by nature a contrarian, but the Old Right is celebrating way too soon. The march of history is toward larger and larger organizational units. There were loads of fits and starts on the way to nation states too, but eventually people figured it out. Maybe the nation state is the limit and supranational organizations will collapse in a heap, but it does not look like the bet to make.

Axa May 28, 2014 at 6:37 am

Right larger units. For now, Le Pen has only sympathy from Austria’s old right. The other right radicals from UK and Denmark have said no to cooperation with Le Pen in the Euro parliament. The very same discourse on isolationism that made them win votes at home will prevent them from forming a more organized movement.

Steven Kopits May 28, 2014 at 9:06 am

I agree with Z.

At this point, voters will keep trying different political parties until someone can deliver some GDP growth. The ultimate winner may be a matter of pure luck–the party in power when the economy starts to recover.

At the same time, I think we are beginning to see the end of the 1970s European welfare state. You can’t forever run government spending at 57% of GDP without sclerosis setting in. Combine that with an aging demographic, and you have the recipe for more market oriented reforms, unless Europeans are willing to take stagnation and declining incomes forever (which may actually be possible).

Yancey Ward May 27, 2014 at 12:55 pm

I think it very clear that income and wealth will always be distributed “inequitably”. I think that what a lot of people miss is that the march towards order of civilization (and its maintenance) is driven by only a fraction of the population. I think you can make more people equal at a higher level of absolute poverty quite easily, but even those arrangements have their elites at the top- just not quite so many as before.

rayward May 27, 2014 at 1:00 pm

7. Piketty’s critics have faced a dilemma, causing criticism of Piketty to come in phases. In the first phase, right after Piketty’s book first appeared, the critics acknowledged growing inequality but denied that inequality is a problem. But that created a dilemma for the critics because Piketty’s thesis is an accelerating inequality (the r > g function); even his critics had to acknowledge that inequality at some level is a problem. Thus came the second phase of criticism in which the critics acknowledged inequality but denied that inequality was accelerating by questioning Piketty’s thesis (i.e., that r > g); it was during this phase that the critics devoted their attention to r and g and highly theoretical discussions about r and about g and about whether one can be larger than the other and if so for how long. You will recall that phase as less than titillating, unless, of course, you were a theoretical economist. But once again that created a dilemma for the critics because of the evidence, some evidence anyway, that r is indeed greater than g and has been for some time. Now we enter the third phase in which the critics, having learned their lesson from the first two phases, don’t deny that inequality is a problem or that inequality is growing, but claim that Piketty’s data is fraught with mistakes. I predict that this third phase will be short-lived because it has the Groucho Marx problem: who are you going to believe, Piketty’s critics or your lying eyes. We will soon enter the fourth phase. What will it be?

Yancey Ward May 27, 2014 at 1:08 pm

No, a lot of the critics questioned even the assumption that inequality was really increasing and. Some of the problems in the data being found now suggest they were right to do so. It has been Piketty’s defenders that are all over the place trying to defend the book and its methods.

Look, Piketty needs to actually answer Giles’ critique.

The Other Jim May 27, 2014 at 1:53 pm

The first phase of Piketty’s defenders is the one in which they assert that anyone who would criticize Piketty’s data, analysis or conclusions is precisely the kind of person who would make such criticisms, and can therefore be ignored.

This phase never ends.

Cliff May 27, 2014 at 5:02 pm

+1

Ray Lopez May 27, 2014 at 2:11 pm

@rayward–nice synthesis, I love it when people do this or attempt to.

Question for you all: has anybody read the Piketty book? I have it and have not. But I will read it now, in a few minutes (speed read) and attempt to support my thesis that Piketty is talking mostly about what “might happen” with inequality if there is no war (a great leveler, meaning it decreases inequality). Let me speed read Piketty’s magnum opus… hold on please… 2:05AM PH time…

Piketty’s is clear talking about the “stead state” (long run): “The distribution of wealth is one of today’s most widely discussed and controversial issues. But what do we really know about its evolution over the long term? Do the dynamics of private capital accumulation inevitably lead to the concentration of wealth in ever fewer hands, as Karl Marx believed in the nineteenth century? Or do the balancing forces of growth, competition, and technological progress lead in later stages of development to reduced inequality and greater harmony among the classes, as Simon Kuznets thought in the twentieth century? What do we really know about how wealth and income have evolved since the eighteenth century, and what lessons can we derive from that knowledge for the century now under way?” (Introduction) and “When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.” (Id). And in Chapter 11: “If the twenty-first century turns out to be a time of low (demographic and economic) growth and high return on capital (in a context of heightened international competition for capital resources), or at any rate in countries where these conditions hold true, inheritance will therefore probably again be as important as it was in the nineteenth century.”

Done, four minutes later, 2:09AM My thesis is true: Piketty is talking about the future, using past data, and not the present. He is not saying we have really bad inequality right now (though the 0.1% has gotten much richer since the Reagan debt expansion of the early 1980s) but rather, the rich will get richer, for the reasons stated in the book.

Urstoff May 27, 2014 at 3:25 pm

Framing a narrative about critics without ever engaging them in argument is pretty lazy.

Memnon May 27, 2014 at 1:19 pm

Re number 4, the rise of a chauvinist/populist right in Europe has been observed and lamented for decades. The FN is the foremost example, but its strength has little to do with the euro. Or was it the EMU crisis that caused the 2002 presidential election results (Chirac 20%, Le Pen 17%, Jospin 16%)?
EU and the EMU are centrist projects – to be broadly acceptable they are built as a system of compromises, giving a little here to market liberals, a little there to social democrats / moderate leftists and never anything that would be too threatening to christian democrats / moderate traditionalists.
Of course, when times are bad consensus is hard to maintain, opinions polarize and centrist policies are questioned from both ends of the spectrum. If things get bad enough it might not be possible to hold the political framework of cooperation together.
But Europeans have bad experiences of radical alternatives, and as long as most voters experience a modicum of normality in their individual situations, it will take a lot to make them forget the twentieth century.

Sam May 27, 2014 at 1:35 pm

5. Very good paper. It reminded me of Tabarrok’s recent post on how inheritance dissipates quickly over several generations. With counter-factual inheritance small to non-existent, all that’s left to connect contemporary people with their oppressed ancestors is the fraying thread of personal, ethnic and national identity. And I don’t see how claiming an identity gives you any rights or benefits in restitution to the original collective.

Vivian Darkbloom May 27, 2014 at 1:36 pm

That was a very wise and sensible post by Nate Silver. He raises very good points about process. In particular, I was impressed by his honesty regarding his potential biases and academic lacunae and also the advice that study and debate should never be over, particularly regarding issues involving complicated data sets. How often does one hear such humility from economists? Or climate scientists? Silver also seems to understand the difference between skepticism and disbelief. Refreshing and useful.

Bob May 27, 2014 at 1:44 pm

#4 : It’s not really the ‘left’ that is collapsing, but whoever is blamed for austerity on any given country. Look at Spain’s results, for instance: The blame goes to both major parties, but since the one in office is on the right, most of the vote flight went towards left leaning populists, instead of right leaning populists. They claim the Euro is not that good of an idea without a fiscal union, and that the country is way too corrupt as it is.

They might be populists, but I think they are right, and with over 50% of the vote going to small parties, instead of the big two, the country seems to agree. They had over 80% of the vote in the last EU elections. Ouch

chuck martel May 27, 2014 at 6:03 pm

So neither the left nor the right has a prescription that they’re able to implement in the present circumstances. It turns out that whatever the problem might be, government of any shade doesn’t have the answer. Austerity, as Evans-Pritchard has been whining about for months, hasn’t even taken place. http://www.forbes.com/sites/jeffreydorfman/2013/08/01/austerity-in-europe-it-will-work-if-its-ever-tried/

Thor May 28, 2014 at 12:29 am

He does beat that drum…

ummm May 27, 2014 at 1:51 pm

#7 so in other words, no one knows anything . That’s one of the prolems with economics is that there is so much speculative stuff out there

CM May 27, 2014 at 2:14 pm

What is the context for #5? It seems like an early draft that suggests some of the issues involved in restitution but does not take the time to fully investigate them. Maybe a discussion starter but hardly a demonstration of why restitution should be “small”.

agm May 27, 2014 at 4:19 pm

Perhaps it has to do with the cover story in this month’s Atlantic.

CM May 27, 2014 at 8:45 pm

I presumed that’s why he dug it up but I was more interested in why he wrote it in the first place, if it’s a work-in-progress, etc. I thought it was a shoddy piece of work and thought it might be an early draft that he lost interest in completing.

agm May 27, 2014 at 4:34 pm

I skimmed it, mostly the first 15 pages, at which point I decided it’s not worth any more time. In summary, the document says, “If we cannot easily put a monetary value on it, then no liability can exist as a basis for reparations.” Per this document, Cowen thinks no reparations are owed or should be paid but wants to dress up the argument in pretty clothes.

Tracy W May 30, 2014 at 6:10 am

You’re not very good at skimming it, are you?

From the conclusion: “I do not mean, however, to oppose restitution per se. This paper arguably can be read as a defense of restitution, provided that the sums in question are relatively small. “

Michael May 27, 2014 at 10:33 pm

And why is the kerning so bad?

CM May 28, 2014 at 11:58 am

Off the top of my head, the article is bad because:

-It lumps together very different injustices – from the seizure of Native American land to the Holocaust to New World slavery – without bothering to explain why these injustices are comparable, why the particular reparations that might be called for are comparable, or why the legal regimes that might govern any plan or demand for reparations are comparable.

-There are broad allusions to legal standards and norms as limiting factors without any discussion of the particular laws and norms that might apply.

-There is no analysis of particular schemes for reparations, and, consequently, no analysis of the potential benefits of reparations.

If it was worth the time to go through it in depth, I’m sure we could find many other shortcomings.

Tracy W May 30, 2014 at 6:09 am

- Every author assumes some knowledge on the part of their readers. I think that Cowan is fairly safe in assuming that his readers know that all the things listed were terrible for their victims. And of course, people can compare whatever they like, so I hardly think that Cowan needed to spell out that people could compare reparations, legal regimes, etc. This criticism of yours would, if generally regarded as valid, lead to every single essay being a book that starts off with spelling out that yes, people do need to breath, and eat, and pain and hunger are bad and so forth for umpteen pages before getting to anything new. That would be very boring.

– Discussion of particular laws and norms seems out of place in a paper that covers such a wide range of international issues.

– I am surprised that you claim that there is no analysis of particular schemes for reparations. As that’s nearly the entire article. The first section after the introduction starts off with analysing a pure rights approach and concludes that it fails. The next section discusses problems with the counter-factual method. The next section discusses inheritance of claims.

So, let me see, of your three criticisms, one would oblige Cowan to spend time spelling out what the vast majority of his readers already know perfectly well, the second is out of place given the topic matter, and in the third you criticise the article for not doing what the entire article is focused on doing.

Tracy W May 30, 2014 at 6:16 am

Which of his arguments that restitution should be small do you disagree with? I’ve read your other comments here, and you don’t identify any actual fault in his arguments.

Do you disagree with his argument that a rights-based approach implies that all of the world’s land would be redistributed and that this is impractical, and it also fails in cases of torture and less intangible injustices? And that it fails when there are not sufficient resources to pay the compensation?

Do you disagree with his arguments that it is difficult to determine which counterfactuals to use?

Do you disagree with his comments about heritability, and if so, which ones?

Matt Nolan May 27, 2014 at 3:02 pm

Regarding number 3. What the hang, do these guys not read the economics literature AT ALL. The Pareto distribution, log-normal form, and the application of entropy measures as income inequality measures (specifically the Theil and mean log deviation measures) are all old economic concepts for describing the distribution. Although this type of parametric form has some use for describing the data, as Cowell says, we’ve switched to non-parametric form nowadays for description. It is all about what makes assumptions transparent.

And no economist in their right mind ever thought any of this was a mechanism. Damnit these physicists that come in can be annoying.

Mesa May 27, 2014 at 3:06 pm

Perhaps what the physicists are reacting to is the obvious politicization of the field. It’s awfully embarrassing.

Michael A May 27, 2014 at 6:32 pm

I try to avoid overly broad generalizations, but refusing to take seriously any and all economics published in Physica A is a pretty good rule of thumb.

mkt May 28, 2014 at 2:58 am

Yeah, I recall reading an article in _Science_ in the 1980s, in the aftermath of the 1970s oil shortages, proclaiming that economics was all wrong because it failed to focus on the most important foundational building block in the universe: energy. The article invoked the Second Law of Thermodynamics (perhaps the one law of nature which is most mis-applied by people) and was basically advocating what one might call an Energy Theory of Value. It was BS economics, and a BS attempt to apply physical principles in places where they didn’t belong.

Physicists can contribute a lot to economics, bringing in mathematical tools such a Fourier transforms, Ito calculus, etc. But when they try to do economics without knowing economic principles, the results are not useful.

dearieme May 27, 2014 at 3:03 pm

Clever Canadian birds figure out automatic door.

Nathan W May 27, 2014 at 3:20 pm

Birds … For those interested in theoretical roots of discount rates… there are several studies on birds and problem solving which demonstrated that even birds have discount rates. I don’t recall the exact study(ies), but I think crows are one of the easier species to study, and they do quite OK in putting off immediate gain to get a larger prize. The rate might be more like 1% a second rather than 1% a year, but hey, they’re birds.

Jonathan May 27, 2014 at 4:00 pm

Battalio, Green and Kagel, AER Septenber 1981

Economic Choice Theory: Kagel, Battalio and Green 1995.

John Faben May 27, 2014 at 4:17 pm

#2 starts: “[the book] is a detailed guide for anyone who shit about learning the many nuances (and yes, there are many) between the four 4-letter curse words that any English speaker should know: fuck, shit, damn, and hell.”

Which seems like a totally ungrammatical use of the word “shit” to me. Did they mean “gives a shit about”?

Urso May 27, 2014 at 4:17 pm

No one is talking about #6, so I will plug for it and say it is about much more than laundry.

Cliff May 27, 2014 at 5:06 pm

That doesn’t cut it for me. If I’m going to read 6 pages I need something more specific than “more than laundry”

Urso May 27, 2014 at 5:52 pm

“If I’m going to read 6 pages”
MARGINAL revolution, grasshopper. If you get to paragraph 3 and it sucks, you can stop reading.

chuck martel May 27, 2014 at 5:58 pm

What it’s really about is turning venture capital into smoke.

Urso May 28, 2014 at 12:35 pm

Well, yes, which is extremely interesting in and of itself. The culture that is etc.

PD Shaw May 27, 2014 at 5:49 pm

From #5: “The debate over the profitability of slavery has implications for moral questions. Economic historian Robert Fogel created a stir when he argued that slavery was not especially profitable for the American South.”

I thought Fogel created a stir by asserting that “The purchase of a slave was generally a highly profitable investment which yielded rates of return that compared favorably with the most outstanding investment opportunities in manufacturing.” This was controversial in that it was widely believed that slavery was on its way out anyway.

Perhaps more to the point of restitution, Fogel argued that the slave was not greatly exploited economically: “Over the course of his lifetime, the typical slave field hand received about 90% of the income he produced.” This was controversial in that Fogel had to later clarify that his was an economic claim, not a moral claim. A 100% or greater return on income would not make slavery right.

Brian Donohue May 27, 2014 at 6:28 pm

The parallels between the Piketty data flap and the Reinhart & Rogoff data flap are not lost on me.

JWatts May 27, 2014 at 6:58 pm

I don’t think they are lost on anyone that’s not suffering from a pretty strong cognitive bias. However, judging from the comments I’ve seen, here and elsewhere, that’s far more people than I would have guessed.

Benny Lava May 27, 2014 at 7:21 pm

It is definitely a case of cognitive bias to compare Picketty to Rogoff. After all, if the FT numbers are more accurate than Picketty’s numbers the conclusions are still the same. With Rogoff… not so much.

Cliff May 27, 2014 at 9:01 pm

Actually it’s the EXACT OPPOSITE of what you said. R&R always relied on their median numbers which were not affected at all and the conclusion was the exact same. Picketty’s conclusion is completely destroyed if FT data is right.

Brian Donohue May 28, 2014 at 10:09 am

Benny and Cliff,

Classic exchange. Literally LOL’d.

Dan Weber May 28, 2014 at 11:50 am

In both cases, the technical arguments are beyond the ability of most people to process, and even those willing to process have other things to do with their times.

And so in both cases people fall to experts to explain it to them, and most people choose the experts they like already, who agrees with all their political priors.

Schumpeter May 27, 2014 at 8:13 pm

# 8. Creative destruction.

Jason May 27, 2014 at 8:44 pm
Steve Sailer May 27, 2014 at 9:32 pm

“And very very sadly the Mackintosh library in Glasgow has been destroyed by fire.”

That’s terrible news, very sad.

Robert Svärd May 27, 2014 at 10:13 pm

#6. It’s the Dot-com bubble 2.0.

genauer May 27, 2014 at 10:57 pm

For Tyler Cowen:

A while ago you had a post that “only” 8 people were shot by the police in Germany,

Very different to the US.

8 in 80 million are too much for us, and we have serious follow-up on it. Every single case is disected in detail, and some go up to our Supreme Court (Bundesverfassungsgericht)

http://www.sueddeutsche.de/panorama/tod-durch-polizeikugeln-wenn-polizisten-schiessen-statt-helfen-1.1975656

Marian Kechlibar May 28, 2014 at 2:37 am

Yeah, one fine thing about Germans is that they are more skeptical of their own government than many other countries are, and that the public does not rubber-stamp actions of officials just because they are officials.

But it took them two lost wars, two disastrous totalitarian systems, one hyperinflation and loss of 40% of the former territory to get there.

People can indeed be trusted to do the right thing – once they went through all the alternatives.

JWatts May 28, 2014 at 12:29 pm

This was posted on a different site.

“I just want to point out something… I am an American who was born and raised in Germany. There is an article on here about NYPD stop and frisk, which is essentially profiling. You should understand that Germany’s entire Police structure is built around prevention rather than response, German authorities and Police departments have a much more encompassing policy of ‘stop and frisk’ than the NYPD uses. In minority or high crime areas German police essentially does not even need a warrant to enter a persons home, stop and search a car or even detain people.”

Two distinct cultures.

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