Current Affairs

The Great Zynga Reset

by on November 21, 2014 at 2:03 pm in Current Affairs, Economics | Permalink

At companies where pampering employees has always been part of the culture, it is hard to stop if business turns sour. Zynga Inc. shares have fallen more than 80% since 2012 as the game maker struggles to find a follow-up hit to “Farmville.” Before going public in 2011, Zynga began serving lunch and dinner daily to its employees, using specialty ingredients like Japanese Kewpie mayonnaise and pinecone syrup.

A spokeswoman for Zynga, based in San Francisco, says the company ended free haircuts for employees earlier this year. She declined to comment further.

As perks get bigger and better, some employees figure they can ask for anything. One worker at Pinterest recently wanted the company to build a zip line to a nearby bar, while an Adobe employee asked the maker of Photoshop and Illustrator design software to buy a Slip ’N Slide for workday use.

The article, which focuses on perks in the workplace, is of interest more generally.  For the pointer I thank Samir Varma.

Adam Ozimek reports:

A 2002 paper from Kossoudji and Cobb-Clark found that following the 1986 illegal immigrant amnesty, the wages of those amnestied rose 6% between 1989 and 1992. They found that the majority of the wage penalty of being illegal is due to an inability to move between occupations.

…The effect this will have on labor markets is complicated slightly by the fact that it’s not really a full amnesty. Instead it’s really a three year promise to not deport, and a three year work permit.

There is more here.  The original research is on JSTOR here.

The story is here, his book is Age of Ambition: Chasing Fortune, Truth, and Faith in the New China.  Previous MR coverage is here, it was one of my favorite non-fiction books of the year.

Here is one version of the latest report, here is another.  People, don’t be surprised by this bad news.  Unemployment in Japan already had fallen to about three and a half percent.  So how much of a miracle could Abenomics accomplish in the first place?  Not much, not even for committed Keynesians.  Commentators have grown to expect so much of the Phillips curve these days, but still a mechanism for the output boost is required and the Phillips curve (at best) holds only in some contexts.  Japan simply hasn’t had that many laborers to put back to work.  Getting more women in the workforce, as Abe has tried to do, is a positive development, but that is not mainly about macro policy nor is it mainly about the short run.

Some of you might be thinking “well, won’t inflation cause some kind of output rise, if only by stimulating demand?”  People, there is still no mechanism specified in that sentence.  And you may recall, the 1970s and early 80s saw the rise of a bunch of “monetary misperceptions” theories, often stemming from the work of Bob Lucas, postulating something to that effect.  It was the Keynesians who slapped them down on both empirical and theoretical grounds, as intertemporal elasticities of substitution are simply not high enough to support this as a major channel of output determination.  There has been no reason since then to think those theories deserve to make a major comeback.

Here is Scott Sumner on Japan, here is Megan McArdle on Japan, and here is Edward Hugh on Japan.

I noticed a comment by Alen Mattich on Twitter:

If a mere 3 percentage point increase in taxes kills Japan’s economy, got to wonder about how that 230% of GDP debt will ever be resolved.

I’m not sure 230% is the best number there, but still that is the question of the day.  With the continuing circulation of what I call “the Venceremos mentality,” the limits of economic policy remain underappreciated, and the recent news from Japan should provide a sobering lesson for us all.

There are many good bits, here is one of them:

…I have a slightly different cut on the Snowden revelations. I think it shows the NSA more as the Keystone Cops than as Big Brother. What is striking to me is how little James Bond-like stuff was going on and how little they did with all this information. That’s why I think, in some ways, the NSA is more in this anti-technological zone where they don’t know what to do with the data they find. So they just hoover up all the data, all over the world. I think it was news to Obama that he was tapping into [German Chancellor Angela] Merkel’s cell phone.

One way to think about this is that if the NSA bureaucracy actually knew what they were doing, they would probably need way less information. What’s shocking about Snowden is how much information they had and how little they did with it.

Read the whole thing.

There are already more speakers of Aramaic in metropolitan Detroit (around a hundred thousand) than in Baghdad…

That is from Christian Caryl in the 4 December 2014 New York Review of Books, reviewing Gerald Russell’s Heirs to Forgotten Kingdoms: Journeys into the Disappearing Religions of the Middle East.

Both sides put out their joint statement, the U.S. issuing it via the White House and China releasing it through the official Xinhua News Agency. But whereas one side gave it a high gloss, the other seemed to be trying to bury it under the rug. The top story on the website affiliated with the Communist Party flagship paper The People’s Daily was about Xi and Obama meeting the press  – but the article made no reference to the climate agreement. Other stories on the homepage touched on the climate statement but tended to relegate it to the latter half of the article, and omitted the American-style superlatives. The popular Beijing News, a state-run paper known for gently testing the editorial boundaries, also didn’t mention the climate deal in its Nov. 12 cover story on the APEC meeting that brought Obama to China. It focused instead on the meeting’s anti-corruption accord and progress on plans for a pan-Asian free trade zone spearheaded by China.

Here is one reason why:

Beijing is under fire domestically for its unsuccessful efforts to curb local air pollution, noting that people were furious that authorities managed to clear the air for the visiting APEC dignitaries but can’t do it on a daily basis for their own citizens. ” There may be worries that focusing on climate change rather than air pollution doesn’t meet the public’s main concerns,” Seligsohn said via email.

That is all from a good piece by Alexa Olesen at Foreign Policy.

Is it up to three cynical tapes about Obamacare now?   I’ve lost track.

I’m not so interested in pushing through the mud on this one.  It’s a healthy world where academics can speak their minds at conferences and the like without their words becoming political weapons in a bigger fight.  Or how about blogs?: do we want a world where no former advisor can write honestly about the policies of an administration?  I’ve disagreed with Gruber from the beginning on health care policy and I thought his ObamaCare comic book did the economics profession — and himself — a disservice.  But I’m simply not very interested in his proclamations on tape, which as far as I can tell are mostly correct albeit overly cynical.  (If anything he is overrating the American voter — most people weren’t even paying close enough attention to be tricked.)  Criticisms of Gruber are not criticisms of a policy, and it is policy we should focus upon and indeed there is still a great deal of health care policy we need to figure out.  It’s hardly news that intellectuals who hold political power, even as advisors, very often do not speak the truth.  If anything, I feel sorry for Gruber that he has subsequently felt the need to so overcompensate by actively voicing such ex post cynicism, it is perhaps the sign of a soul not at rest.

In the meantime, I’d like to see more open discourse, not less.  Perhaps we should subsidize people who end up looking foolish, rather than taxing them.

The House of Lords, that is:

One hundred and thirteen draw paychecks from financial-services firms. Twenty-six are paid by resource-extraction companies. Twenty work for foreign governments, in capacities that include advising officials on policy and consulting for government-controlled companies.

Some of those jobs materialized after they joined the House of Lords.

There is much more here, from Justin Scheck and Charles Forelle.  For the pointer I thank Matthew A. Petersen.

The best defense is sometimes…a good defense:

When Tyler Allen agreed to fork over $3 million in cash for a luxury condominium near Concordia, Kan., he wasn’t attracted by the indoor swimming pool, 17-seat movie theater, or hydroponic vegetable garden.

The real selling point of the 1,820-square-foot apartment: It will be buried 174 feet underground in a decommissioned missile silo sturdy enough to withstand a nuclear attack.

…The so-called Survival Condo complex boasts full and half-floor units that cost $1.5 million to $3 million each. The building can accommodate up to 75 people, and buyers include doctors, scientists and entrepreneurs, says developer Larry Hall.

The development is sold out.  I found this bit interesting:

…the complex has enough emergency food on hand to last for up to five years. There’s also a holding cell for unruly occupants.

The full story is here.

In the modern sense that is, of course potatoes have been genetically modified for a long time:

The Agriculture Department on Friday approved the first genetically modified potato for commercial planting in the United States, a move likely to draw the ire of groups opposed to artificial manipulation of foods.

The Innate potato, developed by the J.R. Simplot Co., is engineered to contain less of a suspected human carcinogen that occurs when a conventional potato is fried, and is also less prone to bruising during transport.

Boise, Idaho-based Simplot is a major supplier of frozen french fries to fast-food giant McDonald’s.

The story is here, and you will note that on Tuesday the mandatory GMO-labeling initiatives failed in Oregon and Colorado, the second failure in Oregon and that means failures in four states overall.  Less positively, voters in Maui County, Hawaii chose to restrict GMO cultivation altogether.  And now McDonald’s is under pressure not to use these new potatoes for its french fries.  But of course you can understand the marketing dilemma of McDonald’s here — they can’t just come out and say “these french fries won’t give you cancer.”

The excellent Akos Lada, a graduate student at Harvard, has a new paper on why countries sometimes invade their neighbors, it is called “The Dark Side of Attraction,” the abstract is here:

I argue that the diffusion of domestic political institutions is a source of wars. In the presence of an inspiring foreign regime, repressive elites fear that their citizens emulate the foreign example and revolt. As a result, a dictator starts a war against an attractive foreign regime, seeking to destroy this alternative model. Such wars are particularly likely when there are strong religious, ethnic or cultural ties between the dictator’s opposition and the inspiring country – connections that allow citizens to draw easy comparisons. My posited mechanism explains three case studies. The first describes the Russian invasion of Hungary in 1849. The second case study analyzes the origins of the First World War (1914-8), where Austria-Hungary invaded Serbia. The final case study discusses the Iran-Iraq War (1980-8). In all three cases, a dictator started a war in order to extinguish the foreign flame that fueled his domestic opposition.

Akos occasionally writes blog posts here.  Here is our previous coverage of Akos Lada — he stands a good chance of being one of the significant new “big picture” thinkers in economics.

A terrified window cleaner was rescued by a high-tech drone after the scaffolding he was on malfunctioned.

The man was cleaning windows close to the top of a high rise building in central Abu Dhabi, in the United Arab Emirates, when the motorised scaffold stopped working and started tilting dangerously.

The Security Media Department sent a wireless remote-controlled drone to rescue the cleaner amid dramatic scenes yesterday.

From the Daily Mail, there is more here, via the excellent Mark Thorson.

Philip Bump reports:

Note the big swing in the Asian voting bloc, too. In 2012, strong support for the president among Asian-American voters was a surprise. Asian voters preferred the president by 47 points. In 2014, the (low turnout) group split about evenly. It was a 46-point swing.

The full account is here, via Megan McArdle.

Religion in China.  That was the topic of a recent excellent Economist article.  Here is one good excerpt:

It is hard even to guess at the number of Christians in China. Official surveys seek to play down the figures, ignoring the large number who worship in house churches. By contrast, overseas Christian groups often inflate them. There were perhaps 3m Catholics and 1m Protestants when the party came to power in 1949. Officials now say there are between 23m and 40m, all told. In 2010 the Pew Research Centre, an American polling organisation, estimated there were 58m Protestants and 9m Catholics. Many experts, foreign and Chinese, now accept that there are probably more Christians than there are members of the 87m-strong Communist Party. Most are evangelical Protestants.

Predicting Christianity’s growth is even harder. Yang Fenggang of Purdue University, in Indiana, says the Christian church in China has grown by an average of 10% a year since 1980. He reckons that on current trends there will be 250m Christians by around 2030, making China’s Christian population the largest in the world. Mr Yang says this speed of growth is similar to that seen in fourth-century Rome just before the conversion of Constantine, which paved the way for Christianity to become the religion of his empire.

In the 1980s the faith grew most quickly in the countryside, stimulated by the collapse of local health care and a belief that Christianity could heal instead. In recent years it has been burgeoning in cities.

Read the whole thing.  You will note that when individuals engage in a “portfolio” approach to religion, social evolution can occur much more rapidly.  Not everyone has to fully convert to Christianity, or to embrace Confucianism wholeheartedly, for those approaches to suddenly acquire much more influence.