Tyler Cowen

Monday assorted links

by on May 18, 2015 at 12:18 pm in Uncategorized | Permalink

1. Freddy recommends.

2. Christopher Balding on how the Chinese bailouts are going.

3. An excellent Todd Kliman piece applying the Schelling segregation model to DC restaurants.

4. Has the seasteading movement come to an end?

5. Hive Mind: How Your Nation’s IQ Matters So Much More Than Your Own; Garrett Jones’s book will be out this fall!

6. Unemployment: what’s really going on?

7. Dan Klein on “designer babies.”

8. App reads your CV, tells you how much you are worth.

Why China is hard to figure out

by on May 18, 2015 at 12:31 am in Economics, History | Permalink

It’s not just the differences of language, history, and culture.  It’s not just the (sometimes) questionable economic data, or the paucity of good Chinese academic research until very recent times.

Today’s China is sui generis.  The country has grown so quickly that every decade or so there is a very new China.  And so we cannot easily look to the past as a guide.  In economic terms, China seven years ago is equally removed from China today as the United States about thirty-five years ago is removed from the United States today, putting recent cyclical factors aside.

You could say that China’s recent past is relatively thin in terms of information.   For a more extreme example, how well would we understand an economy which went from zero to fully grown in the span of a week?  When do the diagnostics get to be run and how well would we understand its resiliency?  Arguably we also would not understand the resiliency of an economy which never grew and never changed in our sample…which raises the question of which rate of economic growth makes recent history “thickest” in terms of information and instructiveness?

Economics aside, China’s political system also has changed much more than ours, and it is less predictable than ours.

So for any question about contemporary China, it is n = 1, if that.

Has it been so bad?  For us?  For them?  How many of us had even noticed?

Here are some information (pdf), and here (pdf), I thank Matthew Vogel for reminding me of this.

Here is my previous post on ISDS and TPP.  Here is a good CRS brief on previous trade agreements with Vietnam.

Sunday assorted links

by on May 17, 2015 at 1:14 pm in Uncategorized | Permalink

1. Urbanization without Growth (pdf).

2. Adam Posen is wise on TPP.

3. Something about me in Chinese.

4. The world’s first emotional AI?

5. Claims about early gender equality.

6. Chess players’ fame vs. their merit, or why is fame so especially concentrated in chess and physics?

That is my recent Upshot column for The New York Times, here is one bit from it:

…there is a much more disturbing possibility that could turn out to be more accurate: namely, that the recession was a learning experience that we haven’t fully absorbed. From this perspective, the radical and sudden changes of the financial crisis were early indicators of deep fragility and dysfunctionality.

Slowly but surely, we may be responding to these difficult revelations by scaling back our ambitions for the economy — reinforcing negative trends that were already underway. In this troubling view, we have finally begun to discover some unpleasant truths. Borrowing a phrase from the University of Toronto economist Richard Florida, it’s possible that we are experiencing a “Great Reset.”

And this:

Here is another change that might be a broader sign of a pending reset: A heavy burden of adjustment in the overall labor market is being borne by the young. Wages for the typical graduate of a four-year college have dropped more than 7 percent since 2000, and the labor force participation rate of the young has been falling. One consequence is that young people are living at home longer and receiving more aid from their parents. They also seem to be less interested in buying their own homes.

…Earning a lower wage in earlier years is predictive of lower wages through the rest of one’s career. While we are seeing economic problems for the relatively young, they will eventually become dominant earners in the economy and the major force behind broader statistics.

Do read the whole thing.

Saturday assorted links

by on May 16, 2015 at 4:05 pm in Uncategorized | Permalink

1. Robin Grier podcast and interview about her new book on economic development.  And Mark Koyama reviews the new Jacob Levy book.

2. Eel-like robot could explore extraterrestrial oceans; let’s do it.  What 1956 thought driverless cars would be like in 1976.  Includes a good eight minute video, worth it.

3. Video tour of China Through the Looking Glass.

4. Comparing Kickstarter to NEA panels for funding the arts, theater in particular.

5. Noah Smith on TPP.  Jeffrey Frankel favors it too.

6. A post about a British person, but I am not sure how to title it.

7. The economics of the new Facebook media deal.

Supposedly they were built to guard the tomb of an emperor:

terracotta-army-pit1-l

So what’s up?

1. The emperor had a state-dependent utility function (e.g., money is worth less when you are dead), and this was the ancient equivalent of cryonics.  If there was a chance you might be called back to life, spend a lot of resources protecting your corpse and its burial site.

2. The emperor was signaling (sorry Noah!) his ability to assemble such an impressive row of life-size figures, and of course the original had many more than what has been restored to date.

3. This was a form of fiscal policy, to stimulate the economy in slow times, by employing craftsmen.

4. The guild of said craftsmen was an influential interest group.

5. It was intended as a gift to a distant future; what else could they have done that would be of more value to us today?

6. Because the emperor could.

What else?

In 2012 economists at the University of Auckland published research establishing clear correlations between family circumstances and incidents of child abuse or neglect. “No one realized we were sitting on such rich data in terms of its predictive power,” says Rhema Vaithianathan, who led the research. “We can find children who are at considerably elevated risk, and we can find them at birth.”

And:

Using data from welfare, education, employment, and housing agencies and the courts, the government identified the most expensive welfare beneficiaries—kids who have at least one close adult relative who’s previously been reported to child safety authorities, been to prison, and spent substantial time on welfare. “There are million-dollar kids in those families,” English says. “By the time they are 10, their likelihood of incarceration is 70 percent. You’ve got to do something about that.”

Moving closer to home:

Jennie Feria, who oversees risk assessment for L.A.’s Department of Children and Family Services, says one idea is to rate families, giving them a number that could be used to identify who’s most at risk in the way lenders rely on credit scores to determine creditworthiness. “The way we may use it, it’s going to be like it’s a FICO score,” Feria says. The information, she says, could be used both to prioritize cases and to figure out who needs extra services. “It’s at the very early stages, because we don’t know how we’re going to use it yet exactly.”

It will be interesting to see how that one develops.  The article is by Josh Eidelson.

David Smith sets us straight on this one:

One of the most enduring claims about the British economy in recent years is that the then coalition government abandoned austerity in 2012. It is a claim that gives comfort to those who see everything that has happened to the economy through the lens of fiscal policy. Only when austerity was abandoned in 2012, some argue, did the economy begin to recover. Unfortunately it does not fit the facts. It is a myth.

There are two elements to this. The first is the question of whether, in response to slower growth in the economy, or other factors, George Osborne abandoned his programme of fiscal consolidation.

The two foremost authorities on fiscal policy in Britain are the Institute for Fiscal Studies and the Office for Budget Responsibility. The IFS set out the position clearly after each budget and autumn statement during the last parliament. Chart 1.6 on p26 in its latest green budget, here, sets out the broad position. As it shows, consolidation continues through the parliament.

The IFS’s updated figures, published as part of its Election 2015 coverage, has the following sequence of numbers for the fiscal consolidation: 2010-11, 1.5% of GDP, 2011-12 2.3%, 2012-13 1.1%, 2013-14 1.5%, 2014-15 0.7%, 2015-16 0.6%, adding up to a cumulative fiscal tightening between 2009-10 and 2015-16 of 7.7% of GDP.

The OBR also addressed this, in its paper, Crisis and Consolidation in the Public Finances, here. Chapter 3 is the relevant chapter which, like the iFS, shows a programme of fiscal consolidation extending through the parliament. There was no abandonment of austerity.

There is more here, with other points of interest, hat tip goes to Chris Giles.

Adding the ‘errors and omissions’ deficit to recorded net hot money outflows gives an aggregate estimate of overall hot outflows or capital flight from the mainland. By construction, this slumped to a record $209.5bn ($838bn annualised) or an eye-watering 9¼% of GDP (Chart 2). Overall, in the year to Q1, China has seen capital flight of $584bn or 5.6% of GDP.

That is from Richard Iley, cited by David Keohane at the FT.

By the way, here is the response of the Chinese government:

China has again ruled out the possibility of massive capital outflow, saying an overwhelming majority of foreign companies that pulled out their investments in the country were shell firms, The Beijing News reported on Wednesday.

The average investment scale of those firms is relatively small, and 20 percent of them entered China less than five years ago, said the newspaper citing Tang Wenhong, head of the Department of Foreign Investment Administration of the Commerce Ministry.

Judge for yourself…a better response would have been “this outflow is a natural process of investment diversification, as China liberalizes its capital markets gradually over time.”  That doesn’t account for everything that is going on, but at least it makes potential sense.

By the way, if you ask some Chinese about India, they will mention Buddhism and people riding on the top of trains.

Friday assorted links

by on May 15, 2015 at 11:57 am in Uncategorized | Permalink

1. Here is an interactive name calculator.  Here is the history of Tyler, there are few Tylers my age.

2. The Growth Economics Blog has written a children’s book, mostly 3rd-7th graders, no knowledge of the Solow model required.

3. A Curanto in Ancud.

4. Wasabi-based fire alarms for the deaf

5. How strong is the demand for eugenics?

6. Scott Sumner and his wife on China.  And is there low-hanging fruit in the fight against inequality?  If so, how many people are urging us to grab it?

7. Is it possible that within-firm wage inequality has not gone up (pdf)?

Declan Butler reports:

Giving some of the world’s poorest people a two-year aid package — including cash, food, health-care services, skills training and advice — improves their livelihoods for at least a year after the support is cut off, according to the results of an experiment involving more than 10,000 households in six countries.

The poverty intervention had already been trialled successfully in Bangladesh, and the study’s researchers say it shows the approach works in other cultures too. “We finally have truly credible evidence that a programme for the poorest of the poor can really help them meaningfully reduce their poverty,” says Dean Karlan, an economist at Yale University in New Haven, Connecticut, and a co-author of the study, reported today in Science. “Until now, we haven’t really been able to go to a government outside Bangladesh and say, we’re confident this works.”

Ethiopia, one of the countries that was in the trial, is planning to continue and scale up the intervention to cover around 3 million people, says Karlan, and Pakistan and India are considering scaling up interventions, too.

Banerjee and Duflo are involved in the work as well, and this is sometimes called the “graduation model,” because the aim is to graduate people out of poverty.  Note this:

The intervention is not cheap. Costs per household ranged from $1,455 in India to $5,962 in Pakistan, although they were offset by positive returns on investment ranging from 133% in Ghana to 433% in India. The researchers hope to cut costs in future by scaling back the experiment’s more expensive components, such as training.

And while the model worked in many places, it failed in rural southern India and Honduras, in part due to…problems with chickens.  Nonetheless this is big, big news.  The link to the original research is here.

For pointers I thank Kevin Lewis and Michelle Dawson.

Yes, it is a good idea to patronize the small restaurants on the outskirts of the hutong, but here is another tip.  Go to the very fanciest restaurant possible, in a fancy five-star hotel.  Then order the cheapest items on the menu.  That likely will involve some vegetables (pumpkin in egg, anyone?), tofu, and fried rice.  It will be an amazing meal, quite possibly better, at least to a Western palate, than if you had ordered the most expensive delicacies of that restaurant.  Many of these courses will not exceed $10 per shot, which is still about at American prices or even slightly below, and that’s not adjusting for massive differences in quality.  If you feel you can afford more than that, fine, but the low budget constraint actually directs your attention to some pretty fine items, and to items which are never truly good in American Chinese restaurants.

I’ve had good street food in Beijing, but in my view it is neither your first nor even your second preferred option.

 Truckmaker Freightliner’s newest commercial big rig can steer and drive itself, while the driver relaxes and enjoys the ride. No, I’m not talking about Autobot Ultra Magnus. It’s the Freightliner Inspiration Truck, the first ever self-driving commercial truck to receive a road license plate for autonomous operation on public highways.

The system, called Highway Pilot, operates like the autopilot on a commercial airliner. Once set and underway the system can maintain a cruise without the driver’s intervention. Highway Pilot uses stereoscopic cameras located at the front end of the truck that watch the road ahead for roadside signage, lane markers and other vehicles.

This 3D imagery is fed into the Inspiration Truck’s electronic brain, which then affects the electric steering rack, the drive-by-wire throttle and the automated manual transmission to keep the truck between the lines and a safe distance behind a leading vehicle.

It is not yet a fully autonomous vehicle:

Speaking of the human element, the Inspiration Truck still requires that a driver be in its driver’s seat. A person needs to get the truck moving from a stop, handle complex low-speed maneuvers and to monitor autonomous drive.

Freightliner tells us that the system will notify the driver with visual and audible cues in the event that conditions won’t allow confident autonomy (such as snow, rain or on roads with poorly defined lane markers) and a human is needed to take over. When driving conditions are optimal, however, and the road stretches out ahead, the Inspiration Truck’s driver can set the Highway Pilot and tend to other parts of the business of logistics.

There is more here.

Thursday assorted links

by on May 14, 2015 at 2:02 pm in Uncategorized | Permalink

1. What if Canada can’t become a major tech cluster?  And what does the Canadian trade balance look like without oil?

2. Broken windows theory tests.

3. “Austerity evidently killed GDP, but not the labor market. That’s a very interesting hypothesis, but I’m wondering which textbook theory is consistent with it?”  That’s the UK, folks.

4. Does hiking cigarette taxes drive poor people to enroll in food stamps (pdf)?  And which colleges have the best food?

5. Not a surprise, but a clarification: the U.S. won’t give up what is in effect its IMF veto.

6. Olivier Blanchard is leaving the IMF for the Peterson Institute.  And Piketty will be joining LSE, it seems.

7. UberCopter, pretty cheap, considering…