Current Affairs

Once the craft approaches Mars — a trip of about 20 months or more — the craft will have to get through the atmosphere, reaching a temperature of 1,700°C, and use rockets to lower the craft gently onto the moon.

That is a description of the new Elon Musk plan to settle Mars.  He hinted at the ticket price someday being as low as 200k.  By the way, space flight is bad for your eyes, and here is Alex on the dangers of space travel.

I get that planet earth someday may be destroyed, but does that give anyone a private incentive to leave for Mars in the meantime?

Seasteading is looking better all the time…

It was said before that wedding that there would be ‘White House-level security,’ and there was an anti-drone falconer on the property.

The headline of the story is:

Art scion, 46, marries billionaire’s daughter, 23, in $5million French Riviera fete with ‘White House-level security’ and guests including Heidi Klum, the Olsen twins, Princess Bea and groomsman Owen Wilson

And do note:

The wedding took place at the Hotel du Cap-Eden-Roc in Antibes, France

For the pointer I thank Neville Andrew Mehra.

You can argue it either way.  On one hand, the forward march of the UK economy, and the inability to develop a coherent negotiating position, militate in favor of a relatively quick and condition-less Brexit.  The European Union is not offering any very flexible intermediate deals, perhaps to punish future would-be leavers.  On the other hand, the consequences would be sobering (FT):

Research by the FT shows the scale of the UK-based banks using passporting to sell into the EU. The group of 96 banks has assets of £7.5tn, directly employ more than 590,000 people and make annual profits of around £50bn.

Bank executives say EU passporting makes up 20-25 per cent of the London business of international investment banks, including the five big US players, who have assets of £1.5tn and staff of 21,000 in their UK-based banks, and the two big Swiss, which have assets of £415bn and staff of more than 6,000.

And:

…John Holland-Kaye, chief executive of Heathrow, warned that leaving the EU customs union would “add massive overhead” for businesses and port operators. “Can you imagine operating something like the Euro[tunnel] if you had to suddenly build in all these checks in place? It would be completely unmanageable,” he told the FT.

This explainer of the “gravity model of trade” shows the UK could not make up lost EU business elsewhere in the world.  Oil and a few other commodities aside, you trade with the countries that are next to you.

Overall, the Brexit stakes are higher than a few months ago, and that is making the final outcome harder not easier to predict.

When should you place a higher penalty on transparently false outright repeated lies, and when should you be more upset by hypocrisy, namely a mix of altruism and self-interest and greed and defensiveness, bundled with self-deception and pawned off to everyone including yourself as sheer goodness?  In recent times the question has taken on further import.

From @EpicureanDeal:

“Here’s the part of the 2016 story that will be hardest to explain after it’s… over: Trump did not deceive anyone.”

From Deplorable Me:

reporters take Trump literally and not seriously. We take Trump seriously but not literally.

From Elberry’s Ghost:

in general, i prefer liars to hypocrites. A liar knows the truth and is cold-bloodedly trying to deceive you, probably for material profit or personal advantage, or malevolence – but in himself he knows the truth and so the situation is less unreal than with the hypocrite; for the hypocrite’s motive is often self-righteousness mingled with material profit and personal advantage. And the hypocrite believes his own lies, so the situation is wholly unreal, saturated with deception. With the liar one can at least guess there is a real human being somewhere behind the lies, watching, calculating; and sometimes in the midst of the deception one catches this real human being’s eye, and there is a moment of mutual recognition – that he is lying and he knows she is lying, and you know too, but of course neither will say so. With the hypocrite, all is false – through and through deception.

For purposes of illumination, say you treat this as a principal-agent problem.  You sometimes prefer if your children lie to you transparently than if they are more deviously hypocritical, even if the lies in the former case are greater.  The former case establishes a precedent that you can see through their claims, and they will not try so hard to disguise the fraud.  So transparent lies about taking out the garbage are excused if you know you can see through the later claims about drugs and drink and prepping for the SAT.

You are more worried about the hypocrite when you see bigger decisions and announcements down the road than what is being faced now.  You are more worried about the hypocrite when you fear disappointment, and have experienced disappointment repeatedly in the past.  You are more worried about the hypocrite when you fear it is all lies anyway.  Lies, in a way, give you a chance to try out “the liar relationship,” whereas hypocrisy does not.  You thus fear that hypocrisy may lead to a worse outcome down the road or at the very least more anxiety along the way.

But note: for a more institutional and distanced principal-agent relationship, it is often incorrect, and indeed dangerous, to rely on your intuitions from personalized principal-agent problems.

When it comes to how the agent speaks to allies and enemies, you almost always should prefer hypocrisy to bald-faced lies.  The history and practice of diplomacy show this.  Allies and enemies, especially from other cultures, don’t know how to process the lies the way you can process the blatant lies of your children, friends, and spouse.  They will think some of these lies are mere hypocrisy and that can greatly increase uncertainty and maybe lead to open conflict.  North Korea aside, the prevailing international equilibrium is “hypocrisy only,” and those are the signals everyone has decades of experience in reading.

Josh Barro tweeted:

People pretending to be better than they are is what holds society together.

International society too.

There is such a hullaballoo in my Twitter feed every day about the lies.  “It is now time to expose the lies!”  I feel sad when I read this, because many of the American people already are putting up with the lies or even welcoming them.  I do not see that as a correct course of action, as it is confusing personal morality with the abstract rules and principles that underlie social order (which is what voters almost always do, by the way).  We need continuing hypocrisy in the international order, and thus from our distanced political agents, even if we don’t want more of it in our personal lives.

I do not see enough people trying to understand lies vs. hypocrisy.  In fact it is tough for many people to make this leap, because doing so requires a Hayekian stress on the distinction between the personal and the abstract political and rules-based order.  That distinction does not always come easily to the non-Hayekians who comprise most of my Twitter feed.  They are very quick to invoke their own personal morality to attempt to settle political disputes.

Note also that if citizens care more about hypocrisy than lies, the media will in turn be harsher with hypocrisy than outright lies.  Some foundations will be covered (and criticized) more than others, even if the less-covered foundation has done more wrong and in a more blatant manner.  Covering hypocrisy also usually involves a longer story with more successive revelations and more twists and turns and narrative suspense and room for ambiguity and competing interpretations.

Furthermore, in this equilibrium the defenders of the morality of the hypocritical agent will in fact make things worse for that agent.  The hypocrisy will become not just a personal hypocrisy of the agent, but rather a broader, almost conspiratorial hypocrisy of greater society.  So the more you think one (hypocritical) agent is getting unfair press coverage, and the more you defend that agent, the worse you make it for that agent.

Talking about the lies of the lying agent may help that agent win popularity, by turning voter attention to the “lies vs. hypocrisy” framing rather than “experience vs. incompetence.”  The lying agent has at least some chance in the former battle, but not much in the latter.

I wonder if earnest Millennials have a special dislike of hypocrisy.

Think about it.  Or if not, at least pretend you will.

Bangladesh (Russia) fact of the day

by on September 24, 2016 at 11:14 am in Current Affairs | Permalink

The landmass of Bangladesh is one-118th the size of Russia, but its population exceeds Russia’s by more than 25 million.

Most of the article (NYT) is about the unbearably bad traffic in Dhaka.  Every year 400,000 new people arrive in Dhaka, the city has only 60 traffic lights, and only 7 percent of the surface is covered with roads (Paris say would be about 30 percent).

The piece, by Jody Rosen, is interesting throughout.

Here is one bit from a very good column:

She’s always been the duller, unfashionable foil.

Her donor base and fund-raising style is out of another era. Obama and Sanders tapped into the energized populist base, but Clinton has Barbra Streisand, Cher and a cast of Wall Street plutocrats. Her campaign proposals sidestep the cutting issues that have driven Trump, Sanders, Brexit and the other key movements of modern politics. Her ideas for reducing poverty are fine, but they are circa Ed Muskie: more public works jobs, housing tax credits, more money for Head Start.

Interesting throughout.  Here were my earlier thoughts on the matter, cited by David too.  Here are thoughts from John Judis.

Or just a way to get rid of political opponents?  The news on this front is by no means entirely bad.  Xi Lu and Peter L. Lorentzen report:

In order to maintain popular support or at least acquiescence, autocrats must control the rapacious tendencies of other members of the governing elite. At the same time, the support of this elite is at least as important as the support of the broader population. This creates difficult tradeoffs and limits the autocrat’s ability to enforce discipline. We explore this issue in the context of Chinese leader Xi Jinping’s ongoing anti-corruption campaign. There have been two schools of thought about this campaign. One holds that it is nothing but a cover for intra-elite struggle and a purge of Xi’s opponents, while the other finds more credibility in the CCP’s claim that the movement is sincere. In this article, we demonstrate three facts, using a new dataset we have created. First, we use the political connections revealed by legal documents and media reports to visualize the corruption network. We demonstrate that although many of the corrupt officials are connected, Xi’s most prominent political opponent, Bo Xilai, is less central by any network measure than other officials who were not viewed as challenging Xi’s leadership. Second, we use a recursive selection model to analyze who the campaign has targeted, providing evidence that even personal ties to top leaders provided little protection. Finally, using another comprehensive dataset on the prefectural-city level, we show that the provinces later targeted by the corruption campaign differed from the rest in important ways. In particular, it appears that promotion patterns departed from the growth-oriented meritocratic selection procedures evidence in other provinces. Overall, our findings contradict the factional purge view and are more consistent with the view that the campaign is indeed primarily an attempt to root out systemic corruption problems.

The pointer is from the excellent Kevin Lewis.

This Andrew Gelman post on the replication crisis and the role that blogs have played in generating that crisis starts off slow but just builds and builds until by the end it’s like holy rolling thunder. Here is just one bit:

Fiske is annoyed with social media, and I can understand that. She’s sitting at the top of traditional media. She can publish an article in the APS Observer and get all this discussion without having to go through peer review; she has the power to approve articles for the prestigious Proceedings of the National Academy of Sciences; work by herself and har colleagues is featured in national newspapers, TV, radio, and even Ted talks, or so I’ve heard. Top-down media are Susan Fiske’s friend. Social media, though, she has no control over. That’s must be frustrating, and as a successful practioner of traditional media myself (yes, I too have published in scholarly journals), I too can get annoyed when newcomers circumvent the traditional channels of publication. People such as Fiske and myself spend our professional lives building up a small fortune of coin in the form of publications and citations, and it’s painful to see that devalued, or to think that there’s another sort of scrip in circulation that can buy things that our old-school money cannot.

But let’s forget about careers for a moment and instead talk science.

When it comes to pointing out errors in published work, social media have been necessary. There just has been no reasonable alternative. Yes, it’s sometimes possible to publish peer-reviewed letters in journals criticizing published work, but it can be a huge amount of effort. Journals and authors often apply massive resistance to bury criticisms.

If you are interested in the replication crisis or the practice of science read the whole thing.

Aside from the content, I also love Gelman’s post for brilliantly mirroring its metaphor in its structure. Very meta.

That is my latest Bloomberg column, here is one excerpt:

Looking at a broad swath of history, I see three major forces that can make financial systems safer: people being scared by recent events, solid economic growth and reduced debt in comparison to the value of equity. The financial crisis gave us the first on that list as perhaps its main “gift” (for now), but Dodd-Frank may have worsened economic growth problems.

On the plus side, we might like to think that Dodd-Frank improved the debt-equity balance by pushing banks to raise more capital. But that, too, now stands in doubt.

Last week Natasha Sarin and Lawrence H. Summers of Harvard University released a paper questioning whether Dodd-Frank has made big U.S. banks safer at all. The authors look at a variety of measures, including options prices, the ratio of market prices to book values, bank share volatility relative to overall market volatility, credit-default swap spreads and the value of preferred equity shares for banks. In every metric, it seems that the big banks are at least as risky as they were before the crisis, in part because they have lower capital values.

And this:

It’s a common economic prescription that regulation should insist that banks carry high levels of capital to withstand losses in bad times. But although Dodd-Frank raised statutory capital requirements, it may have drained banks of some of their true economic capital by regulating and sometimes prohibiting valuable banking activities. The ratio of market price to book value has declined for the biggest banks, and that is one sign of falling values for true economic capital, even though banks have met the letter of law by increasing capital as the regulations specified. Sarin and Summers note that measures of bank capital, as defined by regulators rather than the market, have little predictive power for bank failures.

Do read the whole thing.

That is my latest Bloomberg column, hardly anyone has a consistent and evidence-based view on this deal.  Here is one bit:

Critics who dislike Monsanto for its leading role in developing genetically modified organisms and agricultural chemicals shouldn’t also be citing monopoly concerns as a reason to oppose the merger — that combination of views doesn’t make sense. Let’s say for instance that the deal raised the price of GMOs due to monopoly power. Farmers would respond by using those seeds less, and presumably that should be welcome news to GMO opponents.

Yet on the other side:

What does Bayer hope to get for its $66 billion, $128-a-share offer? The company has argued that it will be able to eliminate some duplicated jobs and expenses, negotiate better deals with suppliers and invest more funds in research and development. Maybe, but the broader reality is less cheery. There is a well-known academic literature, dating to the early 1990s, showing that acquiring firms usually decline in value after tender offers, especially after the biggest deals. Mergers do not seem to make companies more valuable or efficient.

And this:

The whole Bayer-Monsanto case is a classic example of how a vociferous public debate can disguise or even reverse the true issues at stake. If Bayer fails to close the deal for Monsanto, Bayer shareholders may be the biggest winners. The biggest losers from a failed deal may be its opponents, who will spend the rest of their lives in a world where misguided judgments of corporate popularity have increasing sway over laws and regulations.

Do read the whole thing.

In two separate cases, thieves snatching bags from city streets and train stations inadvertently helped law enforcement get the upper hand in an ongoing bomb spree that’s hurt dozens of people and spans both sides of the Hudson River, sources said.

The day Ahmad Khan Rahami allegedly planted two bombs in Chelsea  — one of which detonated on West 23rd Street — two thieves accidentally helped to disable his second pressure cooker bomb left inside a rolling suitcase on West 27th Street, sources said.

The young men, who sources described as being well-dressed, opened the bag and took the bomb out, sources said, before placing the explosive into a garbage bag and walking away with the rolling suitcase.

In doing so, investigators believe they inadvertently disabled the explosive, sources said. That allowed investigators to examine the cellphone attached to the bomb intact and discover that it was connected to the family of Rahami.

From there, they were able to identify pictures on social media of Rahami’s family and of him, and they matched one of his photos to surveillance footage captured in Manhattan.

Here is the full story, via David Montgomery.  This somehow relates to Hume’s Dialogues on Natural Religion and the watchmaker analogy, but I’m still pondering that one…

In Africa this process seems not to work as well. According to one 2007 study of 90 developing countries, Africa is the only region where urbanisation is not correlated with poverty reduction. The World Bank says that African cities “cannot be characterised as economically dense, connected, and liveable. Instead, they are crowded, disconnected, and costly.”

I say the one big problem is premature deindustrialization:

What ties them [African cities] together, and sets them apart from cities elsewhere in the world, according to the Brookings Institution, an American think-tank, is that urbanisation has not been driven by increasing agricultural productivity or by industrialisation. Instead, African cities are centres of consumption, where the rents extracted from natural resources are spent by the rich. This means that they have grown while failing to install the infrastructure that makes cities elsewhere work.

That is from The Economist, the article is interesting throughout.

After Texas high school builds $60-million stadium, rival district plans one for nearly $70 million

Need I say more?  I will nonetheless:

In Frisco, which neighbors Allen and McKinney, the district will pay $30 million over several years to use the Dallas Cowboys’ new 12,000-seat practice field for high school football and soccer games, as well as graduation ceremonies.

Here is a nice bit of fiscal illusion:

In McKinney [one of the stadium-building districts], school taxes for property owners amount to $1.63 per $100 of assessed valuation. The tax rate had been higher in the recent past, but it fell 5 cents this year, partly because the district had dropped some old debt. Because of the 5-cent decrease, district officials repeatedly note, property owners will see their taxes go down, even as the new stadium goes up.

Jim Buchanan would be proud.  And it’s a good thing we have the public sector to protect us from negative-sum status-seeking games!

The original pointer is from Adam Minter.

Total outstanding mortgage loans rose more than 30 percent and new mortgage growth clocked in at 111 percent in the past year. Since June 2012, outstanding mortgage loans have grown at an annualized rate of 30 percent. Predictably, that’s pushed prices higher and higher.

In urban China, the average price per square foot of a home has risen to $171, compared to $132 in the U.S. In first-tier cities such as Beijing and Shenzhen, prices have increased by about 25 percent in the past year. A 100-city index compiled by SouFun Holdings Ltd. surged by a worrisome 14 percent in the last year. Developers are buying up land in some prime areas that would need to sell for $15,000 per square meter just to break even.

That is from Christopher Balding, there is more at the link.  Might as much as 70% of Chinese household wealth be in housing?  Here is some follow-up analysis.

Senior figures in the EU believe that Britain will give up on Brexit if they make negotiations as tough as possible, the Telegraph understands.

British officials are fighting to stop Europe adopting a no-compromise position in talks in the hope that the UK will change its mind about leaving the bloc.

This belief is fuelling the hardline message on issues like freedom of movement that have emerged from Berlin, Paris and Brussels in recent weeks.

More than five senior EU figures interviewed by the Telegraph this week expressed doubts that Britain would go through with Brexit when confronted by the “reality of the bureaucratic nightmare” and the “insane act of economic self-harm”, as they referred to Brexit.

One senior British official involved in the set up for the coming negotiations said the EU elite “seem to think the game is to make us change our minds”.

This stance has left officials fighting to explain to European leaders how “dangerous” a game they were playing, and how “unlikely” it was to succeed.

Here is the full story.  Speculative of course, but don’t forget this bit:

“Perhaps there was a time when this could not have got nasty,” said one source close to Mr Verhofstadt, “but when the Brexit minister calls the chief negotiator ‘Satan’ what response, really, does Britain expect?”

Do they really spell “fuelling” with two l’s?