Saturday assorted links

by on August 12, 2017 at 12:45 pm in Uncategorized | Permalink

1. Does cutting the corporate income tax boost the demand for labor?

2. “By threatening to sabotage their own interests but hurt the impatient state even more, citizens can compel the state to deliver broader policy benefits. We illustrate this logic with the case of polio vaccination in northern Nigeria, where entire communities have resisted the vaccine as a strategy to bargain for more desired services.”  Link here.

3. Germans who swim to work.  And Bill Kristol will interview me Sept.13 in Chicago.  And apply to become new host of NPR’s Planet Money.

4. The quickest and slowest economics journals.

5. When the government (Venezuela) loots checked luggage.

6. Why democracy is safe in America.  And are we overrating those North Korean ICBMs?

7. Ray Dalio’s succession plan.

1 derek August 12, 2017 at 12:54 pm

6 because everyone ignores Chelsea Handler when she calls for a military coup.

The long standing US nuclear agreement with Japan is that a nuclear attack on Japan will be responded to as if the US was attacked directly. Same with Europe and many other places. There is no question that they could lob one over into Japan. They might hit Guam. The odds of a successful launch and delivery drops for continental US.

The only deterrent to them trying is to guarantee nuclear annihilation. Can you deter a madman? We will find out. If not then the past three presidents will have blood on their hands for ignoring this issue.

2 Todd Kreider August 12, 2017 at 3:43 pm

“The long standing US nuclear agreement with Japan is that a nuclear attack on Japan will be responded to as if the US was attacked directly. Same with Europe and many other places.”

NATO’s Article V states that but the US – Japan Security Treaty’s Article V does not:

“Each Party recognizes that an armed attack against either Party in the territories under the administration of Japan would be dangerous to its own peace and safety and declares that it would act to meet the common danger in accordance with its constitutional provisions and processes. Any such armed attack and all measures taken as a result thereof shall be immediately reported to the Security Council of the United Nations in accordance with the provisions of Article 51 of the Charter.”

I showed this to a Japanese friend (Japanese language version) and she freaked. “I always thought you had to defend us!” I said the US is committed to act (somehow) and showed her NATO’s Article V’s language. She blurted: “It’s not the same! We want that one!”

3 Thiago Ribeiro August 12, 2017 at 4:05 pm

The Fascist Japanese – in defiance to their own Constitution – are promoting war. They have no right to demand anyone to die for their Fascist regime. American colaboration with the Japanese regime is an unaceptable provokation to ALL peace-loving nations of the world and will go down in history as something as outrageous as American support of the Pakistanis, who butchered innocent Indians and Bangladeshis, and the mujahideen. I hope Americans are made to pay for that even if it is the Red Chinese regime that will make them pay for that.
If the Japanese racists want peace, they must dismantle their military bases, turn over to UN all their offensive systems and honestly apologize for all their war crimes against China, Korea, The Philippines, Brazil, Taiwan, Singapore, Russia, Mongolia, the United States, Thailand, India, etc.

4 derek August 12, 2017 at 4:59 pm

Thanks. It isn’t as clear cut but I suspect in fact it is understood by those involved to mean the same thing. A couple years ago Japan was openly considering expanding their military as a result of some things Obama had done, including nuking up and there was some meeting where the issue was put to rest.

These things always end up being the decision of the person in the White House. The Ukraine assurances come to mind.

5 Todd Kreider August 12, 2017 at 7:05 pm

You might be right, but I’d say the NATO statement is clearly stronger and would likely lead to a near automatic severe military response upon attack whereas there would be more latitude in the case of an attack on Japan. The US – South Korean Article III says the same thing as Article V the US-Japan Treaty (but shorter). At the time, the US sent a message by its wording to Rhee that he couldn’t necessarily count on the US to back any provocations to North Korea.

6 Hunter S. Thompson August 12, 2017 at 6:50 pm

On the Aleutian Islands, I entered into a poi bar, and upon my eyes a soft parade flashed — swigs and tepid swishes and swallows, small chinks and hopeful cheers, cast in a dim glow of cigarette smoke.

7 mulp August 12, 2017 at 1:16 pm

1. Rewarding not paying workers with low tax rates increases labor costs, which is the result of more workers and higher pay???

Don’t higher labor costs mean lower profits, and lower profits mean less to tax.

An efficient economy with perfect competition and maximum factor utilization will have zero profit, and thus no profits to tax.

Profit is possible only when economic inefficiency exists.

8 Ray Lopez August 12, 2017 at 1:23 pm

#1 – No mulp. The key passage is this: “A reduction in the corporate income tax burden encourages adoption of the C corporation legal form, which reduces capital constraints on firms”. I am curious to hear from finance people why a C corporation is superior to a S-chapter corporation (which is what I got), the latter of course being a pass-through, for reducing capital constraints. The only thing I can think of is with a C-chapter you can retain earnings and not pay tax on them, and this somehow much reduce capital constraints in the short term.

9 Danno755 August 12, 2017 at 2:01 pm

“I am curious to hear from finance people why a C corporation is superior to a S-chapter corporation”

Better access to capital markets to raise additional capital.

10 ohwilleke August 12, 2017 at 2:58 pm

The trouble is that C corporations don’t have better access to capital markets.

Realistically, what is going on is that someone is using statistics from C-corporations which are overwhelmingly large publicly held corporations and inappropriately extrapolating that to privately held firms for which the non-tax differences from publicly held corporations are far more important than the tax differences.

11 rayward August 12, 2017 at 2:52 pm

That passage struck me too. C corps tend to retain earnings for reinvestment since distributions to equity owners are potentially subject to double tax (dividend distributions are taxed to the recipients). By comparison, a pass through entity can distribute earnings to equity owners without double tax. The assumption must be that the C corp is more likely to reinvest earnings more efficiently, which is contrary to the conventional wisdom among many economists. Since C corps tend to retain earnings, they should be more stable as compared to ass through entities. Indeed, pass through entities tend to have a relatively short life because earnings are more likely to be distributed to equity owners.

12 McMike August 12, 2017 at 3:23 pm

And of course what large C crops actually do with their profits is buy back shares, to prop up the price, and thus increase manager bonuses.

13 A clockwork orange August 12, 2017 at 7:43 pm

Concierto de Aranjuez: Adagio

Cicero Ed Quentin Tarantino.

14 ohwilleke August 12, 2017 at 2:56 pm

The assumption that wider adoption of C-corporation form could reduce capital constraints, leading to economic growth, thereby significantly changing the size of the labor force, is basically absurd with no basis in reality. These folks need to get out more and see how the economy really works instead of tinkering with models that have no relationship to the real world.

15 prior_test3 August 12, 2017 at 1:50 pm

3. What an amazingly stupidly written article – unsurprisingly done by an American, it seems (if only because of the moronic attempt to transcribe German pronunciation).

Which may mean that ‘Ein Esel schimpft den anderen Langohr’ is applicable, iproviding a potential translation bonus level. The one I’ve heard the most though is ‘Da redet der Topf über den Tiegel.’.

16 Thor August 12, 2017 at 7:50 pm

You should start swimming to work, Prior. I mean, if you don’t already.

I found the article funny. I especially liked the following lines: “…Americans’ national pastimes are voting for dipshits and being “positive,” and Germans’ are being right all the time and complaining about every little tiny thing that isn’t to their precise specifications. So a German will tell you that he’s having der aller beschissenste Tag aller zeit (dayr ALL-uh buh-SHISS-un-stuh TOG ALL-uh TSITE, or “most fucked-up day ever”) because the cookies for his third daily Kaffeepause were laid out in an insufficiently festive manner, and an American will insist she’s doing “great” even though she just had to start a GoFundMe for her son’s appendectomy.”

17 prior_test3 August 13, 2017 at 5:00 am

I do my swimming before or after work, at a lake in the summertime, and various pools (including Sonnenbad in Karlsruhe) in the winter. To get back and forth from work (and the lake), I use a motorcycle.

Tastes are different, of course, but you managed to pick one of the best examples of bad transcription, from the very first attempt – ‘der’ is pronounced, more or less, like ‘dare,’ and is unlikely to be pronounced anywhere near like ‘dayr’ with a long ‘a’. Though dialects do differ, and depending on the German the author normally hears, it is not impossible she thinks ‘dayr’ more accurate – as noted in wikipedia https://en.wikipedia.org/wiki/Standard_German_phonology#Monophthongs However, ‘buh-SHISS-un-stuh’ for beschissen, the ‘buh’ is a thoroughly beschissen way to transcribe both the ‘en’ and the ‘be’ sound. It is not ‘buh-arbeitun’ nor ‘buh-endun’ in my experience, for example. Leaving aside some sort of special dialect aspect, of course – though there is a standard German (Hochdeutsch), it is mainly the way that German speakers try to meet in the middle when dealing with people from different regions, and is not actually all that common in daily use among normal German speakers.

18 Jason y August 12, 2017 at 2:44 pm

It is interesting that an AI defeating the best human at DoTA hasn’t yet warranted a mention even though it is inarguably more impressive than defeating a Go champion. Find a suitable link, Tyler!

19 Al August 12, 2017 at 6:20 pm

Quick googling suggests it was a 1:1 which is where a bot would Excel.

20 Chip August 12, 2017 at 8:17 pm

I’d been having dry, abstract talks with my son about AI and he’s like, meh. But he watched the AI destroy the top Dota player and he can’t stop talking about how scary the thing was.

21 Bob August 14, 2017 at 1:39 am

The hardest part of beating a human at DotA in 1:1 is just reading the game. I don’t know if Greg and his band were taking shortcuts or not on this, but it’s not that impressive IMO. Winning there is an issue of last hitting better, and humans are far worse than the crappiest AI I could write in an afternoon.

22 rayward August 12, 2017 at 3:07 pm

6. Tweets by even smart people such as Ross Douthat make him appear rather stupid. Why do smart people use twitter if it makes them appear stupid? Tweets are like farts, they stink and don’t achieve that of something with more substance.

23 anomdebus August 13, 2017 at 10:29 am

On the plus side, we can see what lightly or non-edited writing from professionals looks like.

24 McMike August 12, 2017 at 3:21 pm

O/T. But I was wondering if the topic of organ transplants has been discussed here, from the libertarian perspective. Thus helpfully, um, digesting it for my short attention span.

The current system is obviously leading to a supply/demand disconnect. What interests me is not simply that the current approach is philanthropy-based for the donor. But I think more significantly, the organ is being donated to a profit-making entity. It would be one thing to rely on donors if the philanthropy ran all the way through, but instead, you give away something for free, to someone else that makes a considerable sum of money on, selling it to someone who is desperate for it.

There’s poor people who need cars, but no one is asking me to donate my car to an auto dealer.

25 cs48105 August 12, 2017 at 11:01 pm

Do you think that it is a deterrent to potential donors that someone is making profit? IE you think people would be more likely to donate if nobody made any money off the donation? It doesn’t strike me that is much of a deterrent to donating the organ(s) mostly because there are no relevance to you whether or not someone makes a profit (you’ll be dead).

FWIW most of your donated cars are sold to dealers who make a profit off of them.

26 McMike August 13, 2017 at 9:35 am

yet organ donations are stubbornly low.

If my estate was to get a five digit check for my donation, maybe that would change the supply?

Yes, donate your junk cars to pbs is a scam, most of the proceeds indeed go to a dealer.

27 uair01 August 12, 2017 at 3:27 pm

Since this is a link post let me add two: Meet the Artist Using Ritual Magic to Trap Self-Driving Cars – If driverless cars become anywhere as ubiquitous as the horseless carriage, innocuous vandalism like the Autonomous Trap is just the beginning the problems engineers will have to solve.
https://creators.vice.com/en_au/article/qkmeyd/meet-the-artist-using-ritual-magic-to-trap-self-driving-cars

This sounds like a joke but there is also “serious” research about this: https://www.schneier.com/blog/archives/2017/08/confusing_self-.html

28 derek August 12, 2017 at 4:57 pm

That is interesting. It isn’t uncommon to see some sticker on stop signs STOP (unpopular politician du jour).

There is an intersection nearby on a highway where under the wrong light it isn’t clear which way to go, and before they fixed it there was evidence of trucks and cars going into the oncoming lane and stomping on the brakes when they realized where they were. The layout was changed a bit and the problem went away. I’m certain there are people in the highways departments who stare at this stuff to try to get it right.

29 The Cuck-Meister General August 12, 2017 at 4:44 pm

You are ALL Cuckolds don’t forget that!

30 anonymous August 13, 2017 at 12:30 am

I am sorry somebody “stole” (in your mind) your boyfriend or girlfriend. That does not give you the right to boringly and unconvincingly insult people you do not know – even if, one day, your insults are heard by the person who stole your boyfriend or girlfriend. You know you can be a better person.

31 anonymous August 13, 2017 at 12:45 am

correction – “to boringly and unconvincingly try to insult people you do not know”. Anyway, once again, it makes no difference, you can be a better person. You might not even need a 12 step program, lots of people have become better people without a 12 step program.

32 anonymous August 13, 2017 at 12:56 am

and it is is not a big deal one way or the other, we all know that there are 50 million comments on the internet every day, all of them soon forgotten, even the dopey insults. What is important is becoming a better person.

33 Thor August 13, 2017 at 3:03 am

Pfffst. Tell me something my wife hasn’t already told me…

34 83es August 12, 2017 at 4:50 pm
35 Thiago Ribeiro August 12, 2017 at 4:52 pm

Well, I have read Newsmax for years by now and have found it an enlightening and entertaining reading.

36 Mark Thorson August 12, 2017 at 5:31 pm

The warhead doesn’t need a guidance system and doesn’t need to reenter the atmosphere. Just detonate it in space above the atmosphere and watch the havoc caused by wiping out every satellite in LEO and all of the electronics on the ground vulnerable to EMP. This would be low-risk to DPRK because nobody is going to war over an event that doesn’t kill anybody. How to invest in this? Apple and Samsung will be producing lots of new phones to replace all of the ones destroyed by the EMP. There will be a delay, because the new phones will need to be EMP-hard.

37 Scioto August 12, 2017 at 6:48 pm

No, the crude low-yield weapons available to North Korea would have no significant EMP effects on the ground if detonated that high. A detonation at about 40,000 feet would be required and would affect a relatively small area.

38 Joan August 13, 2017 at 12:11 am

You are confusing two different EMP effects. Only the short range one would directly effect electronics like cellphones and satellites. However a high altitude burst produces a disturbance in the earths magnetic fields which would cause a surge in the electric power grides and could cause power outages over most of the nation. That is dB/dt x Area is the magnitude of the surge and since B is weak it would only effect very large Area.

39 Mark Thorson August 13, 2017 at 9:17 pm

The Starfish Prime nuclear detonation in space wiped out seven satellites, including the famous Telstar. It wasn’t the EMP. It was the highly energetic electrons which degraded their electronics over a period of months. The satellites were thousands of miles away from the blast, but the electrons were highly mobile. Such a blast probably would render the ISS temporarily or even permanently uninhabitable. This would be the most dramatic move DPRK could make with their technology without risking war.

40 JWatts August 14, 2017 at 10:38 am

“This would be the most dramatic move DPRK could make with their technology without risking war.”

I’m pretty sure that this action would risk a war.

41 Joan August 12, 2017 at 6:40 pm

1) Increasing the top individual tax rate would also encourage firms to be C corp. It was only after 1980s tax “reforms” that pass throughs had a tax advantage and the number of c corp fell. . Too bad if this paper is right it was not published then.

42 Boris_Badenoff August 12, 2017 at 7:41 pm

#5 – in 2003, TSA confiscated a nail set from my checked, closed luggage, a gift from my late mother I had never used. Included small scissors (<1/2" blades), 3" metal nail file, & clippers. Left a flyer saying items had been taken. Thieves. I won't fly until TSA is gone.

43 mkt42 August 12, 2017 at 7:53 pm

4: The statistics in that article look too incomplete to be useable. The JPE has a 0% acceptance rate? And some of the journals have 7 or fewer observations, or even just 1 observation. I wouldn’t attempt to draw conclusions from such a tiny and potentially biased sample.

44 Marcus August 12, 2017 at 9:13 pm

3: Was thinking Bill Kristol would make a great host of Planet Money. Then I noticed the Oxford period.

45 Shilpa August 13, 2017 at 5:44 am

On the Aleutian Islands, I went into a poi bar, and upon my eyes a delicate parade flashed — drinks and lukewarm washes and swallows, little chinks and confident cheers, cast in a diminish sparkle of tobacco smoke.

46 Bill McCullam August 13, 2017 at 8:08 am

Not having studied economics, I’m sure there is some simple answer to what must be a common question. It seems to me that if we tax companies that sell things like oranges or electricity to the public, they will pass along those taxes in higher prices to their consumers. Therefore, wouldn’t we all be better off if there were no taxes at all on such companies?

47 TSB August 13, 2017 at 8:19 am
48 JWatts August 14, 2017 at 10:43 am

“It seems to me that if we tax companies that sell things like oranges or electricity to the public, they will pass along those taxes in higher prices to their consumers.”

Indeed, they will.

49 Joan August 14, 2017 at 6:14 pm

If the tax is passed on to consumers it would not be bad since the most efficient way to tax is taxing consumption.

50 Bob August 14, 2017 at 1:51 am

7. Ray has yet to accept that Bridgewater has a broken culture: His principles have failed because full transparency just means a broken feedback mechanism, key on any company, it society for that matter. Being highly rated on a category means agreeing with the dominant opinion on that category ( 95% of the time, Ray himself), So people either disagree and end up called not performers, or they shut up and stop being useful intellectually.

Bridgewater will take a while to die, but did they will. Most of the things that look like great news in newspaper pieces look far worse when you ask an insider or two about what reality looks like.

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