Tyler Cowen

That is the title given to my latest Bloomberg column.  Excerpt:

The new Britain appears to be a nationalistic, job-protecting, quasi-mercantilist entity, as evidenced by the desire to preserve the work and pay of London’s traditional cabbies. That’s hardly the right signal to send to a world considering new trade deals or possibly foreign investment in the U.K. Uber, of course, is an American company, and it did sink capital into setting up in London — and its reputational capital is on the line in what is still Europe’s most economically important city. This kind of slap in the face won’t exactly encourage other market entrants, including in the dynamic tech sector that London so desperately seeking.

I should note that I prefer London cabs, because of their higher quality service, and the people most hurt by this are from lower-income groups.

Friday assorted links

by on September 22, 2017 at 12:18 pm in Uncategorized | Permalink

…the greatest winners in 2026 would be Mississippi and Kansas, where federal health-care funding would more than triple and double, respectively. On the other hand, Connecticut’s aid would be cut by just over half.

And:

…the Kaiser Family Foundation…concluded that 35 states would lose $160 billion under the bill. The Kaiser study, like two earlier this week, looked at the cumulative effect from 2020 to 2026.

Here is the Amy Goldstein and Juliet Eilperin piece at WaPo.

Brazil fact of the day

by on September 22, 2017 at 2:03 am in Current Affairs, Law | Permalink

Brazil, for example, has only 1/14th the number of guns per person that the U.S. does, but many more murders.

That is from Noah Smith, mostly about how to reduce crime.

From my email:

Hi, Mr. Cowen. I recently read The Complacent Class recently and enjoyed it. I’m writing because there’s an another example of American complacency that’s only come to light in recent weeks…

Specifically: the Billboard music charts..

Shape of You by Ed Sheeran last week broke the record for most weeks in top 10, with 33 weeks. The song it beat, Closer by The Chainsmokers and Halsey, set the previous record less than a year ago. http://www.billboard.com/articles/columns/chart-beat/7948959/ed-sheeran-shape-of-you-record-most-weeks-top-ten

(And yet another song in last week’s top 10, That’s What I Like by Bruno Mars, currently holds the 8th-longest record on that metric — and potentially still rising.)

Meanwhile, Despacito by Luis Fonsi, Daddy Yankee, and Justin Bieber tied the all-time record with its 16th week at #1: http://www.billboard.com/biz/articles/news/record-labels/7942315/luis-fonsi-daddy-yankee-justin-biebers-despacito-ties-for

Meanwhile, the biggest country song in the nation right now, Body Like a Back Road by Sam Hunt, is currently in its record-extending 30th week at #1 on the Hot Country Songs chart: http://www.billboard.com/files/pdfs/country_update_0905.pdf

This did not happen in decades past. Look at the Billboard charts from the ’80s — it was a new #1 song almost every week!    https://en.wikipedia.org/wiki/List_of_Billboard_Hot_100_number-one_singles_of_the_1980s

Just like how you describe in your book how people are moving less and want to stay in the same town where they were before, or how they’re switching jobs less and want to stay in the same job where they were before, people apparently just want to listen to the same songs they’ve been listening to already.

That is from Jesse Rifkin, who is a journalist in Washington, D.C. who writes about Congress for GovTrack Insider and about the film industry for Boxoffice Magazine.  Jesse sends along more:

And if you want links for statistical evidence, here are two — one about which movies have spent the most weekends in the box office top 10, the other about which songs have spent the most weeks in the Billboard top 10:

I will be doing a Conversation with Doug in early October, although with no associated public event, just a later podcast and transcript.  Here is Wikipedia on Doug:

Douglas Irwin is the John Sloan Dickey Third Century Professor in the Social Sciences in the Economics Department at Dartmouth College and the author of seven books. He is an expert in both past and present U.S. trade policy, especially policy during the Great Depression. He is frequently sought by media outlets such as The Economist and Wall Street Journal to provide comment and his opinion on current events.[1][2]

Prior to Dartmouth, Irwin was an Associate Professor of Business Economics at the University of Chicago Graduate School of Business, an economist for the Board of Governors of the Federal Reserve System, and an economist for the Council of Economic Advisers Executive Office of the President.

Doug has a very exciting new book on the history of trade coming out, which I covered here.  Here is Doug on Twitter.  Here is Doug’s recent WSJ Op-Ed on Steve Bannon, trade, and the history of America’s greatness.

So what should I ask Doug?  Your grace and wisdom are always appreciated and never in short supply.

Thursday assorted links

by on September 21, 2017 at 11:42 am in Uncategorized | Permalink

The co-authors on this paper (pdf) are Andrew Leigh and Mike Pottenger, here is the abstract:

The paper estimates long run social mobility in Australia 1870–2017 tracking the status of rare surnames. The status information includes occupations from electoral rolls 1903–1980, and records of degrees awarded by Melbourne and Sydney universities 1852–2017. Status persistence was strong throughout, with an intergenerational correlation of 0.7–0.8, and no change over time. Notwithstanding egalitarian norms, high immigration and a well-targeted social safety net, Australian long-run social mobility rates are low. Despite evidence on conventional measures that Australia has higher rates of social mobility than the UK or USA (Mendolia and Siminski, 2016), status persistence for surnames is as high as that in England or the USA. Mobility rates are also just as low if we look just at mobility within descendants of UK immigrants, so ethnic effects explain none of the immobility.

Social mobility is indeed difficult to pull off.  Hat tip goes to Ben Southwood.

They used to say this couldn’t be done:

We construct genomic predictors for heritable and extremely complex human quantitative traits (height, heel bone density, and educational attainment) using modern methods in high dimensional statistics (i.e., machine learning). Replication tests show that these predictors capture, respectively, ~40, 20, and 9 percent of total variance for the three traits. For example, predicted heights correlate ~0.65 with actual height; actual heights of most individuals in validation samples are within a few cm of the prediction. The variance captured for height is comparable to the estimated SNP heritability from GCTA (GREML) analysis, and seems to be close to its asymptotic value (i.e., as sample size goes to infinity), suggesting that we have captured most of the heritability for the SNPs used. Thus, our results resolve the common SNP portion of the “missing heritability” problem – i.e., the gap between prediction R-squared and SNP heritability. The ~20k activated SNPs in our height predictor reveal the genetic architecture of human height, at least for common SNPs. Our primary dataset is the UK Biobank cohort, comprised of almost 500k individual genotypes with multiple phenotypes. We also use other datasets and SNPs found in earlier GWAS for out-of-sample validation of our results.

While I don’t find “within a few centimeters” to be especially impressive, the question is still “what’s next?”

The authors on the paper are Louis Lello, Steven G Avery, Laurent Tellier, Ana Vazquez, Gustavo de los Campos, and Stephen D. H. Hsu.

Wednesday assorted links

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

That is the theme and title of my latest Bloomberg column.

Larry was in superb form, and we talked about mentoring, innovation in higher education, monopoly in the American economy, the optimal rate of capital income taxation, philanthropy, Hermann Melville, the benefits of labor unions, Mexico, Russia, and China, Fed undershooting on the inflation target, and Larry’s table tennis adventure in the summer Jewish Olympics. Here is the podcast, video, and transcript.

Here is one excerpt:

SUMMERS: Second, the VIX — people tend to underappreciate this. The volatility of the market moves very much with the level of the market. The reason is that if a company has $100 of debt and $100 of equity, and then the stock market goes up, it’s 50/50 levered.

If the stock market goes up by $100, then it has $100 of debt and $200 of equity and it’s only one-third levered. So when the stock market goes up, its volatility naturally goes down. And the stock market has gone way up over the last 10 months. That’s a factor operating to make its volatility go significantly down.

It’s also the case if you look at surprises. The magnitude of errors in the consensus estimates of company profits or the consensus estimates of industrial production or what have you, numbers have been coming in close to consensus to an unusual degree over the last few months.

I think all those things contribute to the relatively low level of the VIX, but those are more in the way of ex post explanations. If you had told me everything that was going on in the world and asked me to guess where the VIX would be, I would expect it to have been a little higher than it is right now.

And:

COWEN: If there’s an ongoing demand shortfall, as is suggested by many secular stagnation approaches, does that mean monopoly cannot be a major economic problem because that’s from the supply side, and that the supply side constraint isn’t really binding if you think of there as being multiple Lagrangians. Forgive me for getting technical for a moment. Do you see what I’m saying?

SUMMERS: That wouldn’t have been the way I’d have thought about it, Tyler, but what you’re saying might be right. I think I’d be inclined to say that, if there’s more monopoly, there’s more money going to monopoly firms where there’s a low propensity to spend it, both because the firms don’t invest and because the owners of the firms tend to be rich or endowments that have a low propensity to spend.

So the greater monopoly power, to the extent that it exists, is one factor operating to raise savings and reduce investment which contributes to demand shortfalls and secular stagnation.

I also think that there’s likely to be less entry in competition in markets that aren’t growing rapidly than there is in markets that are growing rapidly. There’s a sense in which less demand over time creates its own lack of supply.

And:

COWEN: What mental qualities make for a good table tennis player?

SUMMERS: Judging by my performance, qualities that I do not possess.

[laughter]

SUMMERS: I think a deft wrist, a certain capacity for concentration, and a great deal of practice. While I practiced intensely in the run-up to the activity, there were other participants who had been practicing intensely for decades. And that gave them a substantial advantage.

Recommended!

If you think you know someone who is very smart, Larry is almost certainly smarter.

Japan (America) fact of the day

by on September 20, 2017 at 2:21 am in Law, Medicine | Permalink

So consider the amount of standard daily doses of opioids consumed in Japan. And then double it. And then double it again. And then double it again. And then double it again. And then double it a fifth time. That would make Japan No. 2 in the world, behind the United States.

That is from German Lopez at Vox.

…teenagers are increasingly delaying activities that had long been seen as rites of passage into adulthood. The study, published Tuesday in the journal Child Development, found that the percentage of adolescents in the U.S. who have a driver’s license, who have tried alcohol, who date, and who work for pay has plummeted since 1976, with the most precipitous decreases in the past decade.

The declines appeared across race, geographic, and socioeconomic lines, and in rural, urban, and suburban areas.

…Between 1976 and 1979, 86 percent of high school seniors had gone on a date; between 2010 and 2015 only 63 percent had, the study found. During the same period, the portion who had ever earned money from working plunged from 76 to 55 percent. And the portion who had tried alcohol plummeted from 93 percent between 1976 and 1979 to 67 percent between 2010 and 2016.

Teens have also reported a steady decline in sexual activity in recent decades, as the portion of high school students who have had sex fell from 54 percent in 1991 to 41 percent in 2015, according to Centers for Disease Control statistics.

Teens have also reported a steady decline in sexual activity in recent decades, as the portion of high school students who have had sex fell from 54 percent in 1991 to 41 percent in 2015, according to Centers for Disease Control statistics.

Here is the Tarah Barampour WaPo story.  Is it evolutionary psychology pushing us more into a more stable mode of behavior for safe circumstances, or perhaps teens being more aware of the need to build their resumes?  Or something else altogether different?

These developments are mostly positive, both as symptoms and as active causal agents, and yet…

Somewhere along the line there is a positive social payoff from risk-taking, including sometimes from teenagers.  How would rock and roll evolved in such a world?   Who is to help undo unjust social structures?  The graybeards?

Not really.  Here is John Cochrane:

The Irish bank [holding Apple profits] can lend the money anywhere. It can buy US mortgage backed securities, it can lend the money wholesale to US banks who lend it out to US businesses. It can even lend the money to Apple US. If Apple or any other US company wants to invest, they can borrow from the Irish bank. Conversely, if profits are repatriated to US banks, those banks can lend the money overseas.

Here is the full story.

Addendum: There are some very good points in the comments.