…anyone with a grandparent born in Ireland is entitled to claim Irish citizenship, and the numbers entitled to that status in Britain may exceed the entire population of Ireland.
Inside, two stocky men could be heard debating the merits of the different ambassadorships they hoped to earn under Mrs. Clinton. Even a low-ranking posting meant having “ambassador” on a child’s wedding invitation, the two agreed, and would be helpful in wrangling invitations to sit on corporate boards.
Gautam Gowrisankaran, Stanley S. Reynolds, and Mario Samano have a new JPE paper on this very important question, here is their abstract:
A key problem with solar energy is intermittency: solar generators produce only when the sun is shining, adding to social costs and requiring electricity system operators to reoptimize key decisions. We develop a method to quantify the economic value of large-scale renewable energy. We estimate the model for southeastern Arizona. Not accounting for offset carbon dioxide, we find social costs of $138.40 per megawatt hour for 20 percent solar generation, of which unforecastable intermittency accounts for $6.10 and intermittency overall for $46.00. With solar installation costs of $1.52 per watt and carbon dioxide social costs of $39.00 per ton, 20 percent solar would be welfare neutral.
20 percent solar for Arizona as the social welfare break-even point does not strike me as especially impressive, but of course the infrastructure integration technologies may yet advance. In gross terms, intermittency costs exceed carbon costs. Note also that forecastable intermittency accounts for most of the costs, and so with perfect storage solar would be a much more efficient technology.
Here are ungated versions of the paper.
That is the counterintuitive take from my latest Bloomberg column. Here is one part of the argument:
Perhaps the most overlooked point is that the supply of negative-yielding securities is not so large relative to total global wealth. A recent Credit Suisse estimate suggested that global wealth could reach $369 trillion by 2019, reflecting growth rates of perhaps 7 percent a year. Such numbers are typically inexact, because who can measure the value of all the land in China and the buildings in Uzbekistan? Nonetheless, this number is truly large and it has been growing rapidly. By comparison, the negative-yield securities seem like not such a big deal.
Maybe it’s time we started thinking of negative securities as the equivalent of fire or earthquake insurance for that wealth. If there is truly $300 trillion in global wealth, is it so crazy to think that investors would pay a premium to buy $10 trillion dollars’ worth of insurance?
Keep in mind that if you buy securities at a yield of negative 1 percent a year, and equities are yielding 4 percent on average, your insurance cost on the safer securities is roughly 5 percent of the upfront investment. So on $10 trillion of safe securities, that is an insurance premium of roughly $500 billion — a relatively small chunk of the $300 or $400 trillion of total global wealth. In percentage terms it is cheaper than the homeowner’s insurance many of us pay for every day.
Observers sometimes wonder why there are so many negative yields at a time when volatility indices are not always so high. But the key to the risk-protection insight is not that the world is more volatile, which may or may not be the case at a given point in time, but rather that the quantity of otherwise hard-to-insure global wealth is significantly higher than in times past. It is worth noting that in both China and India, standard insurance remains an underdeveloped sector.
Do read the whole thing.
Thank you all for making the first day of The Complacent Class such a success; pre-orders were strong and according to one standard metric it was the #1 best-selling book for Monday.
I am working to get you information on Kindle pre-order, as of now the pre-order extra book offer still stands. I also am told that on UK Amazon you have to search for title, not by my name, for whatever reason.
In Germany, where I live, you get money back for plastic bottles (“Pfand”). Sometimes €0.25 per bottle. And yet, I collect them, without ever finding the time to cash them. I never outright throw them away, but leave them standing neatly close to public trash cans. They are gone in less than an hour.
German colleagues are horrified by my barbaric behavior. I tell them that someone will recycle them, and get the money. But they are actually are horrified that I am not willing to claim the money as everyone else does. I can explain that I would be working below minimum wage if I were to spend time and mental bandwidth returning bottles. But these reasons are no use against the dogma that pfand bottles should be returned. Man macht das nicht.
So, my claim is that economists are only respected and accepted in the broader public discourse if they are like lawyers. And my conjecture is that this will remain so.
That is Rüdiger Bachmann: “Die hier geäußerten Meinungen sind nicht unbedingt die Sicht des Vereins für Socialpolitik.”
I see a number of proposals for inducing less well informed voters to make better choices:
1. Educating them better.
2. Boosting the rate of sustainable economic growth, which tends to persuade people to support better policies.
3. “Buying” voters with one-off transfers, in the hope they will show more support for the better sides of the system.
4. Shaming voters away from making mistakes.
5. Actually giving them control over electoral outcomes, say by having the elites copy the voting choices of the less informed.
Most of us prefer the first two options, but they are relatively hard to accomplish. What is striking is how much attention #3 gets relative to #4 and #5.
It all depends on the margin, but my view of human nature makes me relatively skeptical of #3. It is either ignored, or viewed as a kind of insult, or it induces people to simply up their demands and expectations. That is especially likely to happen for voters who express potentially “nasty” electoral preferences. I think it is less of a problem for say how a single mother responds to food stamps for her kids, but of course we could debate that. (By the way, if you are wondering, the main difference between Brazil and Denmark boils down to #2, not #3.)
I can’t recall anyone endorsing #5, yet of course the elites recommend an inverse version of #5 for the less informed voters, namely they should copy the elites. Hmm. The version of #3 we offer is actually more like “#3 but no way #5,” and I believe it is processed and understood as such, no matter how “under-informed” those voters may be. They’re not under-informed about that!
#4 is under-discussed. Take the less informed voters who voted for the better candidates in the 1960s. Why did they do that? Note that many of those people believed some pretty terrible things, including about race and about the suitability of George Wallace for higher office. I believe shame is part of the answer — they did not want to feel the shame of deviating from the preferences the elites wanted them to express.
Perhaps it is hard to re-bottle that genie, but there are plenty of historical examples where shame cultures go away and then return, consider for instance the United States after the 1920s.
Pride motivates compliance with voting norms only amongst high-propensity voters, while shame mobilizes both high- and low-propensity voters.
I believe in the last two years I have read at least five hundred times that elites should somehow do more for less informed voters, not only for efficiency or distribution reasons but also to improve the quality of our democracy. The efficiency and distribution claims are at least defensible, maybe more, but the electoral claims are remarkably unsupported. At the same time, shame barely comes up and I take that to be a reflection of the myopic nature of contemporary times.
Now, maybe elites think there is something wrong with shaming. But when I watch what elites do, including but not only on Twitter, they spend a great deal of time and effort trying to shame each other. If anything, that seems to drive them further apart and make a good solution less likely.
It might have been a better situation when the elites, acting with some joint collective force, directed more of their energies to shaming the less elite voters than to shaming each other.
And with that claim I am seeking to shame…the elites.
We should give more thought as to how we can get the advantages of shame cultures, without also taking on all of their disadvantages. Is it good or bad that shame, like many other aspects of American life, seems to be more income-segregated than before?
Chinese scientists are on the verge of being first in the world to inject people with cells modified using the CRISPR–Cas9 gene-editing technique.
A team led by Lu You, an oncologist at Sichuan University’s West China Hospital in Chengdu, plans to start testing such cells in people with lung cancer next month. The clinical trial received ethical approval from the hospital’s review board on 6 July.
…The Chinese trial will enroll patients who have metastatic non-small cell lung cancer and for whom chemotherapy, radiation therapy and other treatments have failed. “Treatment options are very limited,” says Lu. “This technique is of great promise in bringing benefits to patients, especially the cancer patients whom we treat every day.”
On this one, they’re ahead of us. There is much more information at the link, including a discussion of where the U.S. is at and also the FDA.
China’s “augmented fiscal deficit” (i.e. off-budget items included) has climbed to nearly 15% of GDP
That is from Goldman Sachs, via Simon Rabinowitz.
Very little of the content of this book has appeared on Marginal Revolution. It contains my thoughts on the death of American restlessness, what is happening with segregation by race and income, how we have become a nation of “matchers,” why crime rates will move up, the ultimate sociological roots of the economic great stagnation, why Steven Pinker is probably wrong about world peace, what we can learn from the riots and violence of the 1960s, why the bureaucratization of protest matters, marijuana vs. cocaine vs. heroin, in which significant way gdp statistics really do under-measure productivity, the importance of cyclical theories of history, and what Tocqueville got right and wrong about America.
And much more! Most of all it is about why the future will be a scary place.
I also am making a special offer for those who pre-order the work. Just send me an email to firstname.lastname@example.org (or my gmail), and tell me you have pre-ordered The Complacent Class, and I’ll send you a free copy of another work by me — about 45,000 words — on the foundations of a free society.
I have been revising this second one for over fifteen years, and it is called Stubborn Attachments: A Vision for a Society of Free, Prosperous, and Responsible Individuals. It is finally ready.
You will receive links to an on-line version with images, a pdf with images, and a plain vanilla pdf for Kindle.
In that work, I outline a true and objectively valid case for a free and prosperous society, and consider the importance of economic growth for political philosophy, how and why the political spectrum should be reconfigured, how we should think about existential risk, what is right and wrong in Parfit and Nozick and Singer and effective altruism, how to get around the Arrow Impossibility Theorem, to what extent individual rights can be absolute, how much to discount the future, when redistribution is justified, whether we must be agnostic about the distant future, and most of all why we need to “think big.”
These are my final thoughts on those topics. And to be fair, this is likely to come out someday as a more traditional book, but that will not happen soon as I have not shopped it around to any publisher. So if you pre-order The Complacent Class, you’ll get what is an advance and also free copy of Stubborn Attachments.
Are you feeling down because of the political conventions? Or maybe you’re feeling down because of me? This is exactly the bracing and optimistic tonic you need. These two works, taken as a whole, cover where we are at and also where we need to go.
Addendum: If you are a member of the media and would like to receive a review copy of THE COMPLACENT CLASS (St. Martin’s Press; On-sale: February 28, 2017), please contact Gabrielle Gantz: email@example.com; or 646-307-5698.
Here is perhaps the least analytical paragraph in what is mostly an analytical piece by Gideon Lewis-Kraus (NYT). It is however the paragraph easiest to excerpt:
Joseph Stiglitz is a short, oracular man with gray hair and gray stubble trimmed to equal length, which gives his head the round softness of a late-stage dandelion. His minimal-cognitive-load uniform is a blue sportcoat, an open-necked blue dress shirt and roomy gray trousers over thick-soled black sneakers; I saw him wear this unvarying attire to work in his vast personal complex at Columbia University, meetings at the Ford Foundation, a public Roosevelt colloquy with the Black Lives Matter activist Alicia Garza and Hill briefings. His clothes, along with his trundling gait, give him the appearance of a curmudgeonly but twinkle-eyed shtetl tailor, come to dispense wisdom about structures of international trade-dispute arbitration as he fits the bar mitzvah boy for a suit. He has a dry wit but seems not entirely sure when jokes have been received as such, and so, as if someone once told him that he should soften his fearsome intellect by smiling more, he punctuates his speech with a randomized distribution of grins.
There is much on the Roosevelt Institute, Mike Konczal, and how the Left tries to copy the Right, among other topics, recommended.
Here is one bit, there is more analytical political science at the link:
5. Trump’s foreign policy advisor on Russia and Europe is Carter Page, a man whose entire professional career has revolved around investments in Russia and who has deep and continuing financial and employment ties to Gazprom. If you’re not familiar with Gazprom, imagine if most or all of the US energy industry were rolled up into a single company and it were personally controlled by the President who used it as a source of revenue and patronage. That is Gazprom’s role in the Russia political and economic system. It is no exaggeration to say that you cannot be involved with Gazprom at the very high level which Page has been without being wholly in alignment with Putin’s policies. Those ties also allow Putin to put Page out of business at any time.
Recommended reading for your final exams in public choice. Do read it all.
Maybe I already covered this, but it is worth re-upping this Michael Rosenwald piece from March:
A man had just gone on a shooting rampage in Kalamazoo, Mich., allegedly killing six people while driving for Uber. Sherry Towers, an Arizona State University physicist who studies how viruses spread, worried while watching the news coverage.
Last year, Towers published a study using mathematical models to examine whether mass shootings, like viruses, are contagious. She identified a 13-day period after high-profile mass shootings when the chance of another spikes. Her findings are confirmed more frequently than she would like.
…Studies have shown that the aircraft hijackings of the 1970s were contagious. Product tampering — also contagious. So is highway speeding, rioting and even military coups. Contagion is especially pronounced in suicides.
Do read the whole thing. It is related to my recent Bloomberg piece about macro and political and financial contagion across borders. And here is Michael’s very latest piece on the Munich shootings.
That is the new and excellent book by Kerry Brown. Almost all books on China are either bad or mediocre, but this one is the best book I ever have read on the exercise of power in contemporary China. Every page is good, here is a short excerpt:
More important than a cabinet in the Western system of government, yet ostensibly separate from day-to-day decision making, the Politburo owns the crucial function of dispensing ideological, spiritual and political leadership. This description means it covers nothing and everything. It has the broadest framework within which to operate, which means it can wander into every area of administrative and governmental life in the country. But like the ideal city described in Plato’s Republic, in a strange way China is really run on the model of philosopher kings.
Definitely recommended, one of my favorite non-fiction books of the year so far. I can readily imagine re-reading it.
Trump’s critics complain about his relentless invoking of crisis — despite agreeing with him that the system is collapsing. Conservatives keep telling us that the American project is in mortal danger, that liberty itself is at stake. Liberals keep telling us that global capitalism is wrecking everything that’s decent in society, that the U.S. is institutionally racist, and America’s traditional values are so much hypocrisy. I think back to the rapturous reception accorded by the left in 2014 to Thomas Piketty’s “Capital,” which argued, you may recall, that capitalism is an engine of injustice, headed for self-destruction; progressives everywhere nodded wisely in agreement. Here’s what puzzles many of them today: Why does Trump have to be so negative?
Trump has the advantage of a fairly simple message, namely “Something has gone fundamentally wrong.” No, I do not think he will win, but “something has gone wrong and you will make it worse” is not as effective a rebuttal as you might think. Alternatively, the opposition could and will try “things aren’t as bad as you might think,” and also “yes something has gone wrong but we can fix it for you,” but those are also less compelling even when correct. And while the former of those two is correct the latter probably is not.
I am reminded of a 2007 post I once wrote which I formerly considered my worst prediction ever. I grimace again, but here goes:
I apply what I call The Angry Ape Test to the candidates. Imagine each mimicking an angry ape, and ask how pretty or appealing the resulting picture is. Most swing voters perceive America as being at war and so they demand toughness. They demand An Angry Ape, if not at every moment in time, at least in principle. Most Americans don’t find an angry Hillary to be a pleasant Hillary, whereas an angry, raging Giuliani fits his basic image. Americans claim not to be biased, but at their core they don’t much like angry women; being female remains Hillary’s biggest barrier, even when explicit prejudice is absent. Related prejudicial forces will keep Barack Obama from the presidency. Being black, he is supposed to sound reasonable and intelligent all the time. He is not allowed to mimic An Angry Ape. Americans want their first women President to be like Margaret Thatcher — firm, no-nonsense schoolmarmish strength without much radiation of anger — and they want their first black President to be like Colin Powell. We will allow “Magisterial” — I’m too strong to need to throw a tantrum — to trump Angry Ape, but Hillary can’t play that card. Barack is too young, too inexperienced, and doesn’t have the military record.
Mitt Romney also can’t do The Angry Ape. This same hypothesis suggests McCain still has some chance, though obviously his path to the top is no longer clear, given his limited resources. He can at least do The Ape. This is the main reason why I still think Giuliani will win.
Obviously I was quite wrong, but I no longer think it was one of my worst posts ever. Still, timing is everything…