The Great Recession

by on August 10, 2016 at 7:25 am in Economics, Education, Film | Permalink

Our latest video from Marginal Revolution University covers the Great Recession and financial intermediation. It draws from our popular textbook, Modern Principles of Macroeconomics.

It’s an interesting process working with our creative animation team. We don’t always know what is possible let alone what works best in this medium and they don’t always know the economics so we have lots of discussion about the visuals, the pacing, the storytelling elements, the sounds and the music. It took us quite a while to get this video right because it covers a lot of material and we had to get the animations precise to correctly convey the economics but we are pleased with the final result.


In early April, shortly after his team celebrated a postseason championship, a George Washington men’s basketball player visited a campus Title IX coordinator to log complaints about Coach Mike Lonergan. Lonergan, the player believed, had created an offensive, intolerable environment, evidenced in his mind — and in the minds of many of his teammates — by the spate of transfers during the coach’s five-year tenure.

There is much more to the story, here is just one bit, from a player:

“It was always weird. When he goes on those rants, it’s like, how do you react? How do you respond to something like that? Players kind of just stayed away from him. We knew every time it would be you and him, he would go on some kind of weird rant. We would just kind of stay away from him. He did a great job in terms of winning. Off the court, something weird is always going to come out.”

Can you imagine that response to either Bobby Knight or John Wooden?  But at GW many players have left the school, refusing to play under the coach’s tutelage.  He may yet be dismissed and possibly also sued for creating an abusive environment.  In the old days, at the end the team wins, everyone bonds, and the coach is a hero.  Or was it really ever like that?  Maybe we have just stopped pretending.

That is via Peter Boettke.  Via Mark Thorson, the Japanese just made their last VCR player.

Which Danish restaurant gained a third Michelin star in February 2016?

How many municipalities are there in Denmark?

In what constellation did the 16th-century Danish astronomer Tycho Brahe discover a new star?

Questions such as those are part of a new Danish citizenship test so difficult that more than two-thirds of applicants who took it for the first time in June failed, the Integration Ministry confirmed this week.

Here is the NYT article, this one stumped me too:

Danish Radio recently asked the actor Morten Grunwald a question on the test: When was the premiere of the first movie about the Olsen Gang, a fictional criminal syndicate? Mr. Grunwald, a star of the film, replied, “That, I can’t even answer myself.” His memory was jogged when he was given the choices: 1968, 1970 or 1971. (It was 1968.)

I hope you have all seen the episodes of the TV show Borgen, one of my favorites.

That question came up briefly in my chat with Cass Sunstein, though we didn’t get much of a chance to address it.  In the Star Trek world there is virtual reality, personal replicators, powerful weapons, and, it seems, a very high standard of living for most of humanity.  The early portrayals of the planet Vulcan seem rather Spartan, but at least they might pass a basic needs test of sorts, plus there is always catch-up growth to hope for.  The bad conditions seem largely reserved for those enslaved by the bad guys, originally the Klingons and Romulans, with those stories growing more complicated as the series proceeds.

In Star Wars, the early episodes show some very prosperous societies.  Still, droids are abused, there is widespread slavery, lots of people seem to live at subsistence, and eventually much of the galaxy falls under the Jedi Reign of Terror.

Why the difference?  Should we consult Acemoglu and Robinson?  Or is it about economic geography?  I can find think of a few factors differentiating the world of Star Wars from that of Star Trek:

1. The armed forces in Star Trek seem broadly representative of society.  Compare Uhura, Chekhov, and Sulu to the Imperial Storm troopers.

2. Captains Kirk and Picard may be overly narcissistic, but they do not descend into true power madness, unlike various Sith leaders and corrupted Jedi Knights.

3. In Star Trek, any starship can lay waste to a planet, whereas in Star Wars there is a single, centralized Death Star and no way to oppose it, short of having the rebels try to blow it up.  That seems to imply stronger checks and balances in the world of Star Trek.  No single corrupt captain can easily take over the Federation, and so there are always opposing forces.

4. Star Trek embraces analytical egalitarianism, namely that all humans consider themselves part of the same broader species.  There is no special group comparable to the Jedi or the Sith, with special powers or with special whatevers in their blood.  There are various species of aliens, but they are identified as such, they are not in general going to win human elections, and furthermore humans are portrayed as a kind of galactic hegemon, a’ la the United States circa the postwar era.

5. The single individual is much more powerful in the world of Star Wars, due to Jedi and Sith powers, which seems to lower stability.  In the Star Trek world, some of the biggest trouble comes from super-human Khan and his clan, but fortunately they are put down.

6. Star Trek replicators are sufficiently powerful it seems slavery is highly inefficient in that world.  In Star Wars the underlying depreciation rate, as you would find it measured in a Solow model, seems to be higher.  More forced labor is drafted into use to repair all of that wasting capital.

What else?

Addendum: Here is Cass on Star Wars vs. Star Trek.

There is audio, video, and transcript at the link.  I introduced Cass like this:

The Force is strong with this one. Cass is by far the most widely cited legal scholar of his generation. His older book, Nudge, and his new book on Star Wars are both best sellers, and he was head of OIRA [Office of Information and Regulatory Affairs] under President Obama from 2009 to 2013. Powerful, you have become.

So tonight I’d like to start with a survey of Cass’s thought. We’re going to look at legal theory and then go to Nudge and then consider Star Wars, how it all ties together, and then we’re going to talk about everything.

On every point Cass responded clearly and without evasion.  We talked about judicial minimalism, Bob Dylan’s best album, the metaphysics of nudging, Possession, the ideal size of the Supreme Court, the wisdom of Yoda, Hayek, why people should choose their own path, the merits of a banned products store, James Joyce, why the prequels are underrated, and which of the first six movies is the worst of the lot.  Here is one bit:

COWEN: Let’s take a concrete example from real life: Jedi mind tricks. Obi-Wan comes along and says, “These aren’t the droids you’re looking for.” And what does the stormtroooper do? He goes away. Now, is that a nudge?

SUNSTEIN: No, it’s a form of manipulation. So — .


COWEN: OK, but how do you draw the metaphysical categories? It seems like a nudge that just happens to work all the time.

SUNSTEIN: OK. I’ll give you a quick and dirty way of getting at that…

Here is another:

COWEN: If you were to pick one character from Star Wars who would nudge you — you get to elect them; you’re the only vote. Even Samantha doesn’t get a vote, just Cass — not your children — which character would you pick? Whom would you trust with that nudge? It’s a universe full of Jedi here, right?


COWEN: Yoda?

SUNSTEIN: I trust that guy.

COWEN: But I worry about Yoda.

SUNSTEIN: I trust him.


SUNSTEIN: Thank God for libertarian paternalism, that Luke has a choice. The Sith, by the way, like the Jedi, respect freedom of choice. In the crucial scene in Episode III where the question is whether Anakin is going to save the person who would be emperor, he says, “You must choose.” And so there’s full respect for freedom of choice. Nudgers have that. Good for them.

COWEN: Bad guys always tell you the deal, and then they say, “Choose evil.” It seems the good guys always mislead you.

There’s this funny tension. Star Wars makes me more nervous about nudge. I’m not like this huge anti-nudge guy, but when I look at Obi-Wan and Yoda lying to Luke — “Ben, Ben, Ben, why didn’t you tell me?” How many times have I heard that in these movies?

SUNSTEIN: It’s fair to ask whether Obi-Wan and Yoda had it right.

There is much, more more…self-recommending!

View story at

Poking big holes in long-held assertions, Goldberg and his colleagues at Stanford and Yale universities analyzed millions of Yelp and Netflix reviews to reveal that people considered the most culturally adventurous are actually the most resistant to experiences perceived as “crossing the line.”

That is, those dubbed “cultural omnivores” — because they eat Thai for lunch, play bocce ball after work, and stream a French film that night — are the very ones opposed to mixing it up. No hummus on their hot dogs, forget about spaghetti Westerns, and do not mention Switched-On Bach. Those offerings are not considered culturally authentic. They are a hodgepodge to which these folks would likely wrinkle their collective noses — as they did in 1968 when Wendy (nee’ Walter) Carlos electrified J.S. Bach. Today’s cultural elites approve only if the experience is authentic, which means eating pigs’ feet at a Texas barbecue passes the test and slathering a taco with tahini does not.

“We find these people hate the most atypical offerings,” says Goldberg, an assistant professor of organizational behavior at Stanford Graduate School of Business. “They can pretend to be the most open, but it turns out they are not. By being multicultural, they are the most conservative and the most resistant to changes to the status quo.”

Or should we just call it good taste?

Here is the Katherine Conrad article, via the excellent Dan Wang.

Hogan’s lawsuit was not “frivolous”—at least, not in the mind of the judge, who allowed the suit to proceed over Gawker’s many appeals, nor in the minds of members of the jury, who were so disgusted by Gawker’s conduct that they ordered the mischievous media mavens to pay Hogan tens of millions of dollars more than he asked for. And it is not at all clear that Thiel and Hogan did anything to menace to press freedom: As the legal scholar Erwin Chemerinsky told the New York Times when the verdict came out: “I think this case establishes a very limited proposition: It is an invasion of privacy to make publicly available a tape of a person having sex without that person’s consent.”

It’s also not clear what policy response Gawker’s outraged defenders would recommend. Put caps on the amount of money people can contribute to legal efforts they sympathize with? That would put the ACLU and any number of advocacy groups out of business. It would also represent a far greater threat to free expression than a court-imposed legal liability for the non-consensual publication of what is essentially revenge porn. If Marshall and others are worried about the superrich harassing critics with genuinely frivolous lawsuits—as, yes, authoritarian characters like Donald Trump have attempted to do—they would have more success backing tort reform measures to limit litigiousness overall than attacking Thiel for contributing to a legitimate cause he has good reason to support.

Here is more.  Here are Thiel’s own words (NYT), here is one bit:

“It’s less about revenge and more about specific deterrence,” he said in his first interview since his identity was revealed. “I saw Gawker pioneer a unique and incredibly damaging way of getting attention by bullying people even when there was no connection with the public interest.”

Mr. Thiel said that Gawker published articles that were “very painful and paralyzing for people who were targeted.” He said, “I thought it was worth fighting back.”

Mr. Thiel added: “I can defend myself. Most of the people they attack are not people in my category. They usually attack less prominent, far less wealthy people that simply can’t defend themselves. He said that “even someone like Terry Bollea who is a millionaire and famous and a successful person didn’t quite have the resources to do this alone.”

Here is the transcript, the video, and the podcast.  We covered a good deal of ground, here is one bit:

COWEN: You once wrote, I quote, “My substitute for LSD was Indian food,” and by that, you meant lamb vindaloo.


COWEN: You stand by this.

PAGLIA: Yes, I’ve been in a rut on lamb vindaloo.

COWEN: A rut, tell us.

PAGLIA: It’s a horrible rut.

COWEN: It’s not a horrible rut, it may be a rut.

PAGLIA: No, it’s a horrible rut. It’s a 40-year rut. Every time I go to an Indian restaurant, I say “Now, I’m going to try something new.” But, no, I must go back to the lamb vindaloo.

All I know is it’s like an ecstasy for me, the lamb vindaloo.

COWEN: Like De Quincey, tell us, what are the effects of lamb vindaloo?

PAGLIA: What can I say? I attain nirvana.

And this:

COWEN: This is Sexual Personae, your best known book, which I recommend to everyone, if you haven’t already read it.

PAGLIA: It took 20 years.

COWEN: Read all of it. My favorite chapter is the Edmund Spenser chapter, by the way.

PAGLIA: Really? Why? How strange.

COWEN: That brought Spenser to life for me.

PAGLIA: Oh, my goodness.

COWEN: I realized it was a wonderful book.

PAGLIA: Oh, my God.

COWEN: I had no idea. I thought of it as old and fusty and stuffy.

PAGLIA: Oh, yes.

COWEN: And 100 percent because of you.

PAGLIA: We should tell them that The Faerie Queene is quite forgotten now, but it had enormous impact, Spenser’s Faerie Queene, on Shakespeare, and on the Romantic poets, and so on, and so forth. The Faerie Queene had been taught in this very moralistic way. But in my chapter, I showed that it was entirely a work of pornography, equal to the Marquis de Sade.

COWEN: [laughs]

PAGLIA: How interesting that you would be drawn to that.

COWEN: Very interesting.


You also can read or hear Camille on Star Wars: The Force Awakens, the Byrds, Foucault, Suzanne Pleshette vs. Tippi Hendren, dating, Brazil, Silicon Valley, Harold Bloom, LSD, her teaching career, and much, much more.

Typically a Conversation with Tyler is about ten thousand words, this one is closer to fifteen thousand.

The Economist’s new 1843 periodical asked me to write a short theme on that question, here is the result:

Work? What is work anyway? I’m a writer on economics and thus also a reader.  I don’t find writing to be so hard, but I need something to write about and that means reading. For me, working more means reading more. And you know what? Working less also means reading more. It does however mean reading different things.

If I worked less, I would read more fiction and less non-fiction. Is that such a bad thing? Perhaps the fiction enriches me more as a human being, but I enjoy reading the non-fiction (including The Economist) just as much, sometimes more.

Plus I get paid, usually indirectly, for absorbing non-fiction material, playing with the ideas, and converting them into content for others. I enjoy earning that money, and spending it.

Also, most fiction isn’t that good. In fact, it isn’t even true. Or if it is true, it is true by coincidence or accident. That’s not a complaint, but I don’t see why I should give up cash income for the privilege of giving up reality. Can it be such a winning bargain to give up cash and reality at the same time? It’s not, and I won’t. Unless it’s Star Wars or Elena Ferrante.

Otherwise, see you at work.

Tyler Cowen, George Mason University

Here is the whole symposium, which includes Diane Coyle and Daniel Hamermesh.  This was all inspired by Ryan Avent’s excellent recent essay on work-life balance.

Here is Ann Althouse on Rhode Island:

I had to make a new tag for Rhode Island. I think it’s the very last state I’ve blogged about — I’d thought I already had a tag for every state — and it’s a story of it not getting respect. Oh, Rhode Island. You can use that previous sentence as your slogan if you want.

Or remember the old saying “Nothing but for Providence”?

It’s not even an island.  How is this for a relevant update?:

The idea was simple enough — to create a logo and slogan that cast the long-struggling state of Rhode Island in a fresh, more optimistic light to help attract tourists and businesses. A world-renowned designer was hired. Market research was conducted. A $5 million marketing campaign was set. What could go wrong?

Everything, it turns out.

The slogan that emerged — “Rhode Island: Cooler and Warmer” — left people confused and spawned lampoons along the lines of “Dumb and Dumber.” A video accompanying the marketing campaign, meant to show all the fun things to do in the state, included a scene shot not in Rhode Island but in Iceland. The website featured restaurants in Massachusetts.

By the way, they hired a New Yorker to do the campaign.

And yet, as a native northeaster who spent three years of his early life in Fall River (southern Massachusetts), I cannot bring myself to name Rhode Island the nation’s most obscure state.  It just doesn’t seem far away enough.  Brown University is world famous, and most people who go from New York to Boston come in contact with the state in some way.  It can count Gilbert Stuart and Cormac McCarthy and H.P. Lovecraft, and the film Dumb and Dumber starts off there, so probably it is no worse (better?) than the nation’s second most obscure state.

It has been suggested to me that perhaps North Dakota is the most obscure state in the Union.  Maybe so!  Let’s take a look:

1. Author: William Gass would be a possible pick, but I do not enjoy his work.  Same with Louis L’Amour.

2. Humorist: Chuck Klosterman.

3. Sociologist of religion: Rodney Stark.

4. Painter: Clifford Styll is the obvious pick, except I don’t much like his work.  If you were wondering, he dominates so many rooms in American museums because of restrictions placed on grants of his paintings from the artist’s own collection.  I suspect some curators have come to resent this, but often the grants were made propitiously near the peak of Styll’s reputation.  I suppose I’ll opt for James Rosenquist, although I am not a huge fan of his work either.

5. Evening television bandleader and toastmaster: Lawrence Welk.  I can’t even think of a clear runner-up, with or without bubbles; this video will show you why he was a favorite of so many.

6. Movie and TV show, set in: Fargo duh. Otherwise it is Man in the Wilderness, which was the original and in some ways superior source material for The Revenant.

7. Actress: Angie Dickinson comes to mind, Dressed to Kill is a good movie.

8. gdp per capitaThat can set many things right, although 2016 may not be as good as was 2014.

The bottom line: Hm..but yet we must consider Delaware and Rhode Island!

Plenty of American films had Soviet or Soviet-linked villains, but the opposite was not true.  Here is one excerpt from Ignatiy Vishnevetsky:

The Soviet and American mainstreams expressed themselves in radically different ways, with different fears. Being a single party state, the Soviet Union was always factionalist and unsustainable, and could only perpetuate itself through cycles of repression and repudiation. Its anxieties were mostly directed toward itself; as the Americans made fantasies of threat, the USSR made fantasies of stability and global standing. The Soviet Union was also dominated by Russian culture, and inherited its taste for oblique metaphor and indirect address. (It should be noted that the three greatest filmmakers to come out of the Soviet Union—Sergei Eisenstein, Andrei Tarkovsky, and Aleksei German—never completed a film set in the present day.)

Simply put, it wasn’t an environment that was primed to depict the Cold War directly. But it was also an environment with a Cold War mythos that was very different from that of the West. The Soviets did have a “worthy villain,” whom they beat year after year on the big screen: the Nazis. The Soviet Union was the hero who slew the dragon; defeating the Third Reich was a point of national pride. There would never be a more important opponent. The Soviets couldn’t reasonably elevate the Americans to the same status, or even to the status of the White Guard of the bloody Russian Civil War—the USSR’s origin-story villains, in a way.

…Americans couldn’t be expected to kill or die for their cause, because—as the 1965 spy film Game With No Rules, set in Berlin at the start of the Cold War, suggests—they didn’t have a cause to begin with. Instead, the rare American antagonists of popular Soviet film were portrayed as pawns of business interests, military-industrial collusion, or, of course, the Nazis. Portraying a monolithic United States of true believers, focused on the eradication of the USSR, would have gone against two essential aspects of the mythology of Soviet propaganda: the defeat of Nazism, which rid the world of an evil the likes of which it would never see, and the notion of communism as a self-evident ideal.

For decades, Soviet media attacked the United States—with varying degrees of subtlety—as a broken society, its failure obvious. Capitalism and Western democracy weren’t values that could inspire the same kind of commitment as communism, and the only reason anyone would fight for them was because they’d didn’t know better.

Here is the full piece, via someone in my Twitter feed sorry I can no longer find it.

OK, OK, I have decided Nebraska is not the most obscure state.  How about Idaho?  What can we can think of which is noteworthy from Idaho?  More than you might expect, here goes:

Author: A variety of writers have lived in or passed through the state for a few years’ time, including Ernest Hemingway and Edgar Rice BurroughsA few of Hemingway’s short stories I admire very much.

Poet: Ezra Pound, yes I know he left at age three.  Still, he was from Idaho.

Native American sage and explorer: Sacagewea.  Did you know that her portrait design on the dollar coin is not in the public domain?

Economist: Lant Pritchett was raised in Boise.

Popular music: Built to Spill.

Composer: La Monte Young, The Well-Tuned Piano is one of the better pieces of contemporary classical music, still highly underrated.  Here is a two minute sample from what is more or less a five hour work.

Artist: Matthew Barney, twelve years in Idaho.  Here is an interview.


Director: David Lynch, who spent formative years in Boise.  Here is a good recent piece on how powerful Blue Velvet still is.  Is it fair to say this state has produced some pretty weird stuff?

Actress: Lana Turner, and Patty Duke just passed away.  Mariel and Margeaux Hemingway also have claims.

Movie, set in: The only one I can think of is…My Private Idaho.

Other notables: Philo T. Farnsworth invented television, more or less, and he also worked on nuclear fusion.

The bottom line: Per capita, this isn’t bad, even if not much of it is associated with Idaho.  I’ll have to look harder for the most obscure state.  It might be Idaho, but it doesn’t deserve to be Idaho.  So perhaps Delaware, Wyoming, and Rhode Island will come under the microscope soon.

I thank Roy LC, Marcus, and kb for essential pointers here.

If it is the most obscure state, I thought it worth a ponder and profile of what they have produced.  And the answers are surprisingly strong:

1. Author: I’ll take Willa Cather over Raymond Chandler, but neither puts the state to shame.  I don’t care for Nicholas Sparks’s writings, but he makes the list.  Malcolm X wrote one of the great memoirs of American history.

2. Actors and actresses: There is Brando, Harold Lloyd, Hilary Swank, Henry Fonda, Montgomery Clift, and James Coburn.  What a strong category.

3. Dancer and singer: Fred Astaire, try this from Swing Time.  For his underrated singing, try “Cheek to Cheek.”

4. Music: I can think only of Elliott Smith, am I missing anything?

5. TV personalities: Johnny Carson and Dick Cavett.  Did you know that Carson learned Swahili on-line after his retirement and became fluent in the language?

6. Painter: Edward Ruscha.

7. Album, set in: Bruce Springsteen’s Nebraska, favorite song “Open All Night.”

8. Movie, set in: Election.  I feel there are others too, Nebraska for one but presumably a fair number of Westerns too.

9. Investor: Duh.

10. Economist: Lawrence Klein was born in Omaha, although I cannot say his is my favored approach.  How about Edith Abbott?

11. Other: I cannot count L. Ron Hubbard as a positive.  I believe I have neglected some native Americans born in Nebraska, maybe some cowboys too.  I don’t have favorite cowboys.


The bottom line: People, this state should not be so obscure!

Angolan arbitrage

by on March 24, 2016 at 2:01 pm in Film, Music, Television, Web/Tech | Permalink

Wikimedia and Facebook have given Angolans free access to their websites, but not to the rest of the internet. So, naturally, Angolans have started hiding pirated movies and music in Wikipedia articles and linking to them on closed Facebook groups, creating a totally free and clandestine file sharing network in a country where mobile internet data is extremely expensive.

Here is more, via Kevin Burke.