Wednesday assorted links

by on September 20, 2017 at 2:40 pm in Uncategorized | Permalink

1 Anonymous September 20, 2017 at 2:54 pm

3. “One study found that only 10 percent of African countries have experienced ethnic conflicts that can be traced back to some pre-colonial origin. Authors David Leonard and Scott Straus argue that the rest of these conflicts are explicitly products of the colonial experience.”

LOL

2 rayward September 20, 2017 at 2:55 pm

6. Some are so committed to the gold standard that they will rewrite history (or be very selective in observing history) in order to make it look like the path to economic stability. The Mises Institute is one of the committed. To them, an economic depression is like an enema, sometimes necessary to cleanse the system of its toxins. Enemas are overrated, and so is the gold standard.

3 Mark Thorson September 20, 2017 at 3:20 pm

Bitcoin, on the other hand . . .

4 A clockwork orange September 20, 2017 at 3:25 pm

While there is weakly-consistent knowledge of process group membership on marginal revolution, we acknowledge there are traditional heart-beating protocols, which either impose authoritative regimes, such as Thiago’s and multiply quadratically, or compromise response time, and thus detect process crashes.

Rayward’s detection process then is based on piggyback-ing on Ray’s messages into a fast infection style of dissemination.

5 Dick the Butcher September 21, 2017 at 8:21 am

The 1913 Federal Reserve Act didn’t abolish the business cycle.

Extra credit question: Who invented the gold standard? Hint – he shares credit for “inventing” Calculus.

Second extra credit question: Who took the USA off the gold standard?

They abolished the gold standard and replaced it with the whims (coercion and deceit) of politicians, and models and theories of MIT economists.

Quick History of gold (Just the fact, Ma’am.):

1837 – $20.67 per ounce – US Constitution and Congress.

1934 – 69% devaluation to $35/ounce – Gold Reserve Act – gov owns all money (executive order April 1933 had confiscated all money)

1968 – unable to maintain $35 gold

1971 – Nixon, a big government-loving Republican closed gold window – ended dollar convertibility @$35/ounce; wage/price freeze; import restrictions. Effective dollar devaluation caused higher commodities prices – 21% US $ devaluation to $42.22/ounce gold; oil up 4x, gas lines; inflation 12% by 1974 and gold @ $195/ounce. The genius Fed raised rates to unprecedented levels to (13% mid-1974) to fight inflation (from 1971 dollar devaluation and oil shock after the Yom Kippur War 10/1973). That sent GDP crashing down 3.2% (biggest post-Depression drop until the 5.1% drop 2007 – 2009). Unemployment went to 9% – highest since Depression. S&P 500 went down 51.5% from January 1973 to December 1974.

Starting in 1971, credit soared out of sight to the benefit of the banks, CEOs, the already wealthy, and the politically connected.

The source of global trading imbalances, soaring debt, escalating median home prices, declining real wages, and the massive rise of the 1% at the expense of the bottom 90% aided and abetted by Nixon closing the gold window.

1980 – Gold high @$875/ounce was $591/ounce 12/31/1980

1980’s – Volcker kills inflation – 21% prime rate – real rate 7% – normal real rate 2%; Soros shorted Brit pound and broke BoE.

1990- Reflated – dot.com stock bubble – crash

1999 – Euro introduced backed by 15% gold reserve

UK sells half gold stock

Dow/Gold high – 42.19x – August 1999 – dotcom bubble

2001 – Gold @$250/ounce – I was buying

2002 – Gold @ $272 – I was buying.

2007 – the housing bubble bursts

2008 – the financial system collapses based on tens of millions defaulted home loans metastasizing through the system via massive, collateralized securitizations

2009 – CB’s buy gold first time in 20 years

6 Axa September 20, 2017 at 2:58 pm

#3: what a misleading plot.

a) vertical axis is “log of GDP per capita”, thus it compresses results into a coherent story even if data is scattered all around.

b) puerto rico has approx 30K of GDP per capita and in the plot it has near 10 of “log GDP per capita”. what is the base of the logarithm? log10 of 30K is 4.47.

7 Axa September 20, 2017 at 3:01 pm

oh, it’s natural logarithm.

In that case, Puerto Rico has 30K and Bermuda 60K. Does it makes any sense to put this difference in a scale where it’s 10 and 11?

8 mavery September 20, 2017 at 5:22 pm

There’s plenty of good criticisms of that picture. I don’t think the choice to do a log transformation is one of them.

9 dux.ie September 20, 2017 at 10:12 pm

It is simpler to comprehend linear relationship where more mathematical and statistical tools are available for those that want to go deeper into it. Fitting non-linear curves (many alternatives) are more prone to subjective biases.

10 MikeP September 20, 2017 at 11:45 pm

Growth in per capital income is proportional to income and therefore it’s logical to plot the log transform of the values.

11 The Engineer September 20, 2017 at 3:33 pm

6. My children are still my self-actualization, because if they are successful, then I am a successful parent. Thus, I spend a lot of time and money working on their travel baseball career and violin lessons, as well as tutoring in Japanese and the SAT.

I cannot just sit there and bask in the glow of their existence at the dinner table, their faces just remind me that I need to push them harder to get better grades and help them with their English term paper.

THAT is why people spend so much more time with their kids these days.

12 dux.ie September 20, 2017 at 10:24 pm

https://www.cbsnews.com/news/author-lenora-chu-chinese-education-system-new-book/

“”” “My son’s principal the first day says, ‘We don’t pick children, we pick parents,’ ” “””

13 Paul September 20, 2017 at 3:33 pm

4.
What militarily sensitive technologies are UNSW faculty working on? Nuclear weapons? Cyberwarfare? Rocketry? Nuclear sub design?
I don’t think so. So what’s the problem?

14 carlospln September 20, 2017 at 5:32 pm

Quantum computing.

And you won’t find any CHI or IRAN nationals on Michelle Simmons’ team:

https://newsroom.unsw.edu.au/news/science-tech/unsw-creates-future-launch-unique-quantum-computing-company

The USA doesn’t allow it.

15 Anon7 September 20, 2017 at 3:55 pm

#3. You’re welcome, Puerto Rico! Now it’s time to let the Chinese clean up the sorry mess Puerto Rico has made of things and rebuild the island.

16 Stefan September 20, 2017 at 4:37 pm

3. Why just islands? What effect would Latin, African and Asian colonies have?

17 PD Shaw September 20, 2017 at 5:18 pm

Islands of less than 150,000 sq. km in size are believed to be relatively homogeneous before colonization, and their colonization tended to be relatively random (attributable to trade winds and convenience of shipping routes, not some particularly attractive resource).

18 Becky Hargrove September 20, 2017 at 4:39 pm

5. If time based services could assume a commodity wealth function (time purchases compensated time) within a fiat regime, time based services would not only become easier to measure, they would provide more velocity and gradually ensure less volatility.
http://monetaryequivalence.blogspot.com/2017/09/monetary-rationale-for-time-value-as.html

19 Ray Lopez September 20, 2017 at 8:03 pm

#5 – was amazingly good, I’ve been making the same claim, using Angus Maddison data, for years now on the internet. Short summary: gold standard resulted in roughly the same growth levels in the late 19th century as in the late 20th century; kurtosis was greater today than back then, meaning more fat-tailed curves today, but by and large the average person was roughly the same and I think most people like price stability.

@Becky Hargrove – nice analysis, but keep in mind money is largely neutral long term even monetarists agree, and neutral even short-term says I and Fischer Black, so the choice of fiat vs precious metals, except for the price stability argument above, is largely trivial except it’s easier to debase fiat money than precious metals money, though if a ruler wanted to both kinds of currency can be debased easy enough.

20 beliddle September 20, 2017 at 4:49 pm

1. At this point the burden of proof on any disputed transaction or account should fall to seller/retailer/bank. Give them incentive to develop mechanisms to verify identity.

My family’s info has been stolen from an insurer. From equifax. A card from Chipotle.
That I know of.

The days where it could be claimed that the individual was careless and most likely at fault have been over for years.

21 mkt42 September 20, 2017 at 4:55 pm

3 & 5: Graphs that show only a single explanatory variable can be persuasive to some, but the wise reader does not accept them at face value. I look at those formerly colonized islands and I can think of all sorts of stories and confounding variables that might tell us that duration of colonization is an artifact rather than the true explanation. Including, as Stefan notes, omitted observations. Ditto the gold standard, there were a lot of other world-shifting events happening besides going on and off the gold standard.

That doesn’t mean that their conclusions are wrong, I certainly can’t prove that. But I’m not persuaded by those articles either.

On the speculatively pro-colonization side: I heard on the radio this morning some reporter or analyst speculating that the Caribbean islands that have been hit by the most recent series of hurricanes are better off if they are a current colony or territory of France/Britain/USA/the Netherlands, because they’re sending naval vessels and other national rescue and disaster crews to the area. Whereas an independent country is on its own to recover itself, or I suppose wait for handouts from the relevant great powers or UN or NGOs.

22 mavery September 20, 2017 at 5:32 pm

Not to be pedantic, but Jones’ chart on colonization shows two explanatory variables, not one. The trend line only shows one relationship, but the color of the data points shows their geography.

IMO, the simplest criticism is that the entire correlation appears driven by very few data points. I would guess that if you moved Grande Comore to 4 or 5 centuries colonized, the entire trend disappears. On top of that, the data is pretty noisy. Finally, if you consider the geographical groups separately, it’s not clear that you see the same trend. Just eyeballing it, I’d say the Pacific islands trend is driven entirely by Guam and Saipan (not much to hang your hat on), the Atlantic looks really, really noisy, and the Indian Ocean islands are a nothing burger plus the afore-mentioned Grande Comore.

Anyways, I don’t mean to sit here and eye-ball-analyze their whole data set without reading their paper. I just it just seems to me that this is not a very compelling plot, and if it’s the most compelling thing to recommend an article, that suggests that the article itself isn’t very compelling.

23 Borjigid September 20, 2017 at 7:44 pm

+1

24 dux.ie September 21, 2017 at 12:56 am

Re: “””Just eyeballing it, I’d say the Pacific islands trend is driven entirely by Guam and Saipan (not much to hang your hat on)”””

Read the article. Table II showed the initial result. Table VII: “””We dropped the three island countries that were in AJR and our islands database.”””

Three were dropped because of depopulation because of diseases and thus the GDP per capita were not reliable, two of which were Guam and Saipan (Marinas). The results were not that different.

“””Perhaps the worst depopulation occurred in Guam and the Marianas. The number of pure blooded
Chamorros on Guam fell from 12,000 in 1668 to 1,576 in 1742 6 .”””

Re: “””I would guess that if you moved Grande Comore to 4 or 5 centuries colonized, the entire trend disappears.”””

The list of islands with very small population was not given. However, with the three islands mentioned above removed but not the small pop islands,

GDPPC = +0.4336*Colonized +7.6724; # n=76; Rsq=0.302; p=2.734e-07

the result is pretty close to that in the paper

GDPPC = +0.401*Colonized +7.276; # n=64; Rsq=0.22; p at 0.01

By artificially moving Grande Comore to 5 centuries colonized, the new result

GDPPC = +0.3145*Colonized +7.9026; # n=76; Rsq=0.1724; p=0.0001919

The trend is still very statistically significant at p=0.0001919

25 mavery September 21, 2017 at 12:36 pm

My bad. Only half the trend disappears. (30% R2 –> 17%)

26 Yes September 20, 2017 at 4:58 pm

Its not too strange. The slope of the line is a semi-elasticity in this case (% change/level change). Since, GDP grows exponentially it makes since to have it in logs.

27 albatross September 20, 2017 at 5:13 pm

It seems like it’s a worthwhile question whether countries benefitted from colonialism or not, but also like it’s a question that’s so tangled up in politics and identity that it’s hard to figure out who’s right or even who’s arguing in good faith.

Obviously, the factual question (did countries benefit from colonialism on average) is not the same as the moral question (was colonialism a good thing, would it be good to resume colonialism). But there’s an almost irresistible temptation to answer the moral question instead of the factual question.

The closest analogy I can think of: some years ago, I read about a claim that former slaves actually ended up with a shorter life expectancy immediately after the end of slavery than in the time before, when they were slaves. I don’t know whether this specific factual claim is true or not, but I do know that nearly 100% of people responding to it were responding to the moral question “was slavery morally acceptable?” The nearby moral question made it all but impossible to discuss the factual question.

I suspect this is common. When the factual question is too close to a moral question that has only one socially acceptable answer (and the opposite answer to the moral question marks you out as evil), then it’s extremely hard to have a sensible discussion about the factual question.

28 Matthew Young September 20, 2017 at 5:36 pm

1. The problem of hacking personal data has been solved and is being built.

All of our financial and personal data is stored and protected by the credit card in our hand, which needs a thumbprint and legal contract before releasing it to anyone. Call it the Smart Cash Card. But it is hardware secure, and verifiable. No human ever has access to some of its keys, and its code is as hack proof as a 100 dollar bill. The card can carry bearer cash, in silicon encrypted messages. No counterfeiting or double spending.

The credit check companies become bots, as do the traditional bankers; everything is auto traded by the bots.

29 Gary Lowe September 20, 2017 at 7:26 pm

6. My wife and I have been very happily married for 21 years. We recently had dinner with a happy couple who were celebrating their 50th wedding anniversary. When we asked them what their secret was, they said they got lucky. Lucky to meet someone who was similar enough in outlook, goals temperament, etc. We feel the same way about out marriage. It’s not that we are identical, but we are similar enough that it’s fairly easy to resolve any differences because they are typically minor. The couples that we know who’ve had the most problems with their marriages settled for someone that wasn’t as compatible because they were lonely or were up against the baby clock. Those types of marriages are probably closer to most so I can imagine they take much more work to resolve some pretty major differences about money, education, etc.

30 leppa September 20, 2017 at 9:44 pm

so “in all happy couples the spouses resemble one another, each unhappy couple is the other way?”

Sure it must be harder to adjust when people are different , but thats possibly only a sub-set of happy marriages/

31 mkt42 September 20, 2017 at 11:52 pm

A conscious echo of Tolstoy?

“”Happy families are all alike; every unhappy family is unhappy in its own way.”

32 Art Deco September 21, 2017 at 3:37 am

You should become a cuck like me!

33 albatross September 21, 2017 at 11:32 am

I think the failed marriages I’ve seen mostly involved the partners growing apart/changing over time, or changing circumstances that undermined the dynamic that made the relationship work, or some kind of trauma that damaged the marriage beyond repair. I think luck is a substantial component of a successful marriage (you can’t forsee, say, the impact on your marriage of having a badly disabled child who dies young). But there’s also long-term compatibility of values and ideas, and that, you can try to get. (My wife and I were close friends for many years before we started dating, which helped

It’s odd–of the married couples who came to our wedding (about 20 years ago), a large fraction are now divorced. Most of those were not the result of getting married on the spur of the moment, or in a panic because the biological clock was ticking too loudly.

34 P September 20, 2017 at 10:24 pm

re 3:

http://retractionwatch.com/2017/09/19/article-defending-colonialism-draws-rebuke-journal-defends-choice-publish/

Facing a volley of criticism for publishing an essay that called for a return to colonialism, a journal editor has defended his decision to print the article.

“The Case for Colonialism,” published Sept. 8 in Third World Quarterly (TWQ), was written by Bruce Gilley, a professor of political science at Portland State University. For an idea of what the piece was about, here’s the beginning of the abstract:

For the last 100 years, Western colonialism has had a bad name. It is high time to question this orthodoxy. Western colonialism was, as a general rule, both objectively beneficial and subjectively legitimate in most of the places where it was found, using realistic measures of those concepts.

Since the essay came out, scholars have criticized both the article itself and the journal’s decision to publish it. Several critics have called for retraction. [Update: 15 members of the editorial board have resigned in response.]

The article in question is at http://www.tandfonline.com/doi/full/10.1080/01436597.2017.1369037?scroll=top&needAccess=true

35 The Anti-Gnostic September 21, 2017 at 8:52 am

If the former colonies are going to vote with their feet for the former imperial powers any way, I don’t see that the criticisms of colonialism are particularly rigorous. Is Puerto Rico chafing for its independence? I know I am. Haiti might even want to re-think 1804.

The neo-Westphalian construct, while useful for maintaining order among the countries that actually matter, breaks down somewhat in a world with putative sovereigns who are actually incapable of self-governance, with their citizens voting against self-rule with their feet, by the millions.

I wonder if the future will see a number of countries ceding their national sovereignty and paying rents in exchange for investment and infrastructure.

36 carlospln September 21, 2017 at 12:55 am

1) The Justice Department is conducting a criminal investigation of the three Equifax executives who gained attention for $1.8 million in mysteriously timed stock sales, after the company learned of the 143 million-strong data breach but before that information got released to the public. Prosecutors may be interested in the nugget that Equifax’ data security problems go back to March. The company claims the two breaches are not related, but other reports suggest it was the same hackers who tested the system in March that made it through the security flaw to steal personal information of 143 million customers sometime before late July. In fact, the flaw that led to the breach was already known by March. And we already knew about two other breaches in the past year. So they aren’t so much breaches as they are recurring hacker open houses.

So this just gets worse and worse for Equifax. Massachusetts Attorney General Maura Healey has sued the company over cybersecurity negligence, and the disclosure of a March attack adds evidence to that case. Plus, it’s nearly impossible to believe that the chief financial officer and president of information solutions didn’t know for five months about data security attacks and just happened to sell their shares. And that’s before you get to their miserable customer service, which has actually sent consumers to a fake phishing website for nearly two weeks.

That said, a global settlement of $200 million, about $1 per customer violated, sounds sadly plausible. The various ways Equifax will devise to somehow profit from inidividual’s increased security needs should easily cover that and then some. Gross negligence is good business in America.

UPSHOT: how you gonna spin this, TC?

37 Roy LC September 21, 2017 at 2:09 am

By linking to Gary Leff, the man who defended United long after the writing was on the wall and proclaimed that airline route competition is robust snd if only one airline serves a route it just means nobody wants to fly it.

38 carlospln September 21, 2017 at 8:46 am

TC’s got a man crush on Gary Leff, huh?

He can’t shake sh _ t like this off:

https://gizmodo.com/equifax-has-been-sending-consumers-to-a-fake-phishing-s-1818588764?IR=T

39 dux.ie September 21, 2017 at 3:34 am

#2 It might be better for the Guardian newspaper to worry about the situations back in UK.

https://www.bloomberg.com/news/features/2017-08-08/brexit-guts-british-science-and-risks-graphene-innovation

“””A Nobel Prize winning physicist considers taking his research elsewhere, while applications from foreign researchers have plummeted. … Every year Geim receives a steady flow of applications from abroad seeking to join the Marie Curie research program in Manchester. In 2017 he has received no applications at all. … Leaving was never even a consideration for me (Geim). But during the last few months that has changed… I can only imagine how many others are thinking the same. Singapore. China.”””

http://www.manchestereveningnews.co.uk/business/business-news/graphene-takes-flight-chinese-aviation-10561193

“””Beijing Institute of Aeronautical Materials – BIAM – has become the latest partner of the National Graphene Institute (NGI), based at the University (of Manchester), to promote the research and development in the use of graphene in the aviation industry and other sectors.”””

40 Anonymous September 21, 2017 at 4:14 am

6. My eye landed on the endorsement by Carol Dweck, and I closed the “All-or-Nothing Marriage” tab without finishing the blurb. Such is fame.

41 dearieme September 21, 2017 at 6:23 am

“3. Does being colonized make a nation richer?” What an odd question. Quite often being colonised made the nation.

42 dearieme September 21, 2017 at 6:24 am

Just to be clear: can I assume that they meant being colonised by white men?

43 jb September 21, 2017 at 7:33 am

And quite often being richer made them desirable to have as a colony.

44 Evans_KY September 21, 2017 at 6:42 am

1. Frankly the credit agencies are antiquities and should not have access to private information. For some reason, we are stuck in medieval times. I like Kevin Drum’s suggestion to hit them where it hurts. Embolden the CFPB to fine companies $1000 for each incursion. 143million X $1000. Ouch. Quite the incentive.

6. A good marriage is a luxury item in today’s world. It requires a certain level of wealth, leisure, and security.

45 Butler T. Reynolds September 21, 2017 at 7:34 am

#6 Did Brooks enjoy it? His conclusion comes back to his lifelong theme that what we really need in this world is more selflessness.

46 P Burgos September 21, 2017 at 9:21 am

Yeah, and he didn’t say anything about whether his marriage fell into the pattern described by the book, although I suspect it would, given the semi-autobiographical nature of the “The Social Animal.”

47 Monica September 21, 2017 at 12:23 pm

Yes, my impression was that Brooks was panning the book’s viewpoint. So I take the listing within “Wednesday’s links” to be a left-handed compliment?

I also am mystified by the MIE acronym. Can’t find the meaning online or within the MR blog.

48 Jonathan September 21, 2017 at 12:33 pm

Monica: “Markets In Everything”

49 Monica September 21, 2017 at 1:27 pm

Gracias!

50 Adam September 21, 2017 at 8:30 am

MIE?

51 Chris September 21, 2017 at 3:25 pm

#3. This seems more like correlation, but no causation. Island economies are notoriously difficult because of small market size and distance from other markets. Most have limited natural resources which impedes industrialization. Their big industries tend to be tourism and services which cater to people from outside the island. Looking at the graph, it appears to be important if the island is in the Caribbean so that you are close to the giant American and Latin American markets, and that being an isolated island in the Pacific far from large markets hurts you.

In the general picture away from island economies, European colonization was beneficial to the extend that it exposed native elites to modern managerial, industrial, and scientific methods. But how much it helped the countries in question really depended on how effective a state and society those lands had prior to European colonization. If you were an Asian state with a long history of statehood and self-governance with a large literate class, you likely did well unless you did something incredibly stupid like become Communist (but even here there tended to be achievements). If your institutions were relatively underdeveloped and lacked mass literacy like in most of Africa, you didn’t do as good. But there has to be something more since the countries in North Africa, Middle East, and South Asia only performed so-so despite having extremely long history of relatively strong or effective states for much of their history.

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