I very much like this book, it is one of my favorites of the year so far.  It resists being excerpted, as it is an old-style think piece in the style of Montaigne, or for that matter Robert Burton.  Every page is idea-rich and should be read carefully and slowly, and that is rare these days.  Here is just one bit:

Melancholics are prominent…precisely because they are too full of life; because of them, existence overflows itself.  This explains their unappeasable sense of absence: since they have left the world of moderation, overflowing is inconceivable without being emptied.  The universe is damaged in their person; hence, melancholics’ sense of being among the elect, but also their self-hatred to the point of self-annihilation.  That makes them strong and outstanding, but also exceedingly frail.  Their strength is infinite, because they have gained knowledge of the end, but they are unhappy, since having experienced the ephemeral nature of humans, they have lost their trust in existence.  Their strength and frailty, their unhappiness and their heroism, cannot be detached from each other.  This leads us back once again to the starting point of our argument, to the Aristotelian question “Why is it that all those who have become eminent in philosophy or politics or poetry or the arts are clearly melancholic?”

Definitely recommended.

Saturday assorted links

by on April 30, 2016 at 1:03 pm in Uncategorized | Permalink

In response to my post on transgender issues, I was sent this in an email, by a very good economist, it is lengthy so I am putting most of it under the fold, but do please read the whole thing.

First of all, I would like to thank you for contributing to this debate and for consistently sticking up for trans people and LGBT people more generally. We need more people like you who can engage in good, reasoned debate.

I would like to make a few observations in order to summarize this debate, and to use this summary to push for a fourth alternative–a sort of Hayekian alternative, which involves building upon the spontaneous order that we already have. This is assuming that there will always be a legal definition (or several overlapping definitions) of gender, ruling out option 1. Option 2 (overlapping definitions) is already a reality, which we can use to build on. Seen in that light, option 3 (the current debate) seems like a step backward, driven by emotions rather than reason.

A little background about me: I am one of three (to my knowledge) “out” trans* economists, and one of two “out” trans women. As such, I have followed the debate about trans* people since I was young, since this debate is about my very survival. In addition, I think that it is useful to look at this debate through the lens of economics and moral philosophy, since that lens helps us to see some of our blind spots.

Read More →

Friday assorted links

by on April 29, 2016 at 11:53 am in Uncategorized | Permalink

From a new Pew Study:

In our latest national political survey, released in March, 59% of the public say immigrants strengthen the country, while 33% describe them as a burden. In 1994, opinions were nearly the reverse: 63% said immigrants were a burden and 31% said they strengthened the country.

You will note that they views of Republicans and Democrats diverge after 2006.  Millennials are especially favorably inclined.


Last month, De La Rue, the world’s largest currency maker, sent a letter to the central bank complaining that it was owed $71 million and would inform its shareholders if the money were not forthcoming. The letter was leaked to a Venezuelan news website and confirmed by Bloomberg News.

“It’s an unprecedented case in history that a country with such high inflation cannot get new bills,” said Jose Guerra, an opposition law maker and former director of economic research at the central bank. Late last year, the central bank ordered more than 10 billion bank notes, surpassing the 7.6 billion the U.S. Federal Reserve requested this year for an economy many times the size of Venezuela’s.

…While the cash was still arriving — at times, multiple planeloads a day — authorities set their sights on the year ahead. In late 2015, the central bank more than tripled its original order, offering tenders for some 10.2 billion bank notes, according to industry sources.

But currency companies were worried. According to company documents, De La Rue began experiencing delays in payment as early as June. Similarly, the bank was slow to pay Giesecke & Devrient and Oberthur Fiduciaire. So when the tender was offered, the government only received about 3.3 billion in bids, bank documents show.

That is from Andrew Rosati.  Here is a sad and poignant post on the suicide of Venezuela, by Joel D. Hirst.

Thursday assorted links

by on April 28, 2016 at 12:13 pm in Uncategorized | Permalink

Wednesday assorted links

by on April 27, 2016 at 12:25 pm in Uncategorized | Permalink

1. When were the great philosophers?

2. When it comes to the great stagnation, don’t blame the engineers.  A very good post with lots of detail; I say fear the services!

3. Are ravens as clever as chimps?  Paper here.

4. Traffic lights embedded in pavements, in case you cross the street while viewing your smartphone the culture that is Germany.

5. Frequency of Sex Shapes Automatic, but Not Explicit, Partner Evaluations.

6. Noah Smith is leaving academia for full-time at Bloomberg.

7. Why are reactionaries especially unpopular in the United States?

Here is one summary of the recent brouhaha.  North Carolina made a mistake in signing the new law.  Not just a practical mistake, because of the backlash, but a mistake outright.  I’m not aware there was a problem needing to be solved, and yet new problems have been created.

There is nonetheless a relevant argument for the law which I believe resonates with many Americans:

Cruz’s argument centers on the idea that allowing transgender women to use the women’s restroom would lead to deviants dressing up as women and preying on young girls. His campaign released an ad accusing Trump of capitulating to the “PC police” and asking viewers whether a grown man pretending to be a woman should use a restroom with your daughter or wife.

Whether you agree or not, that argument helps us rephrase the dilemma as follows: should there be a legal definition of who is a transgender person and why?  And should transgender people wish that there were such a legal definition?

If there were such a definition, problem solved, at least in principle.  Transgender individuals could use the bathroom which their legal stipulation entitled them to, or would entitle them to, were a court case to arise.

Women’s colleges of course face a private sector version of this issue (here is one pending change).  Private companies have policies on bathroom use, and gender-specific sporting events must make rulings.

So what to do with the law?  I see at least three options.

#1: The first and most libertarian view is to refuse to offer a legal definition of transgender.

The transgender concept seems so…fluid.  This page from Wikipedia illustrates the underlying legal problems:

These include people whose identities are not exclusively masculine or feminine but may, for example, be androgynous, bigender, pangender or agender — often grouped under the alternative umbrella term genderqueer[5] — and third-gender people (alternatively, some references and some societies conceptualize transgender people as a third gender).[6][7] Although some references define transgender very broadly to include transvestites / cross-dressers,[8] they are usually excluded, as are transvestic fetishists (because they are considered to be expressing a paraphilia rather than a gender identification) and drag kings and drag queens (who are performers and cross-dress for the purpose of entertaining). Intersex people have genitalia or other physical sexual characteristics that do not conform to strict definitions of male or female, but intersex people are not necessarily transgender, since they do not all disagree with their assigned sex. Transgender and intersex issues often overlap, however, because they both challenge the notion of rigid definitions of sex and gender.

Facebook has introduced about fifty different terms related to gender identification.  It is not difficult to argue the current legal system won’t be “getting this one right,” whatever that might mean.  For a start, would you trust the legal system in North Carolina?  (From my understanding, it would indeed be a state matter.)  Probably some people who right now “slip by” would be caught on the wrong side of an unpleasant dragnet.  And what exactly is the final test to be run to determine the right answer to a contested issue concerning a transgender individual?  If there were ever a time for some creative ambiguity in the law, it seems this might be it.

In this view, yet another problem with the North Carolina bill is that it may end up forcing everyone’s hand on constructing a legal definition of transgender.

If we stick with no legal definition of transgender, let’s tackle the remaining problems directly.  For instance we could significantly increase the penalties for men who abuse women or young girls in or near women’s rooms, if indeed that is an ongoing problem.  You can tax either inputs or outputs and in this case it seems to make sense to place the higher tax on the outputs.

#2: Offer two parallel legal systems for gender.

In one of the parallel systems, you can apply formally for a change of gender status, although I suspect this could not end up handling more than two or three categories, hermaphrodites perhaps being the third.  In the second of the parallel systems, you can decide not to apply for formal legal designation of gender and instead live under creative ambiguity.  The practical import of that ambiguity often will depend on how clearly a person fits traditional social categories of gender in a simple and visible way.  In any case, a person can choose which legal system to live under.

The formal legal designation would matter for which prison you would be assigned to, which bathroom you could visit, and which chess tournaments you can play in, among a variety of other questions.  Here is a brief survey of legal approaches around the world, with some countries opting for versions of the parallel approach.

#3: Use the law to force everybody’s hand.

In this view, the current status quo is not very good for many transgender individuals, so something must be done.  Forcing a legal solution to these issues might raise social consciousness, even if some state rulings on transgender issues are objectionable in the meantime.  Let’s create something to fight over.  With a full legal definition of transgender in place, the logic of individual rights will turn its wheels, as it so often does in America, and eventually transgender individuals would fall under the protection of anti-discriminatory laws.  Perhaps this is better than the parallel legal systems approach, because under the latter too many individuals slide along in a state of creative ambiguity and transgender issues will remain underemphasized.  In this vision, the law — whatever its limitations — is likely to prove the friend of transgender individuals, so things should be sped along as rapidly as possible.

I do not have a good sense of which of these three approaches would be best in the United States.  In any case, it seems to me the question “how should the law deal with or define transgender individuals, if at all?” is more fruitful and fundamental than asking “how should North Carolina regulate bathroom admission policies?”  I would be interested to read a law and economics paper on these issues.

Addendum: Here is a paper on whether LGBT inclusion boosts economic growth in emerging economies, though I doubt if the effects are causal.

Second addendum: Henderson and Cordato make good points, and favor a version of option one.  That said, I don’t think all judgments can be left to markets, given prisons, the continuing existence of public bathrooms, etc.  Here are yet further comments.  Here is a good Jacqueline Rose piece from LRB.

Tuesday assorted links

by on April 26, 2016 at 12:34 pm in Uncategorized | Permalink

Monday assorted links

by on April 25, 2016 at 1:56 pm in Uncategorized | Permalink

Sunday assorted links

by on April 24, 2016 at 12:10 pm in Uncategorized | Permalink

Saturday assorted links

by on April 23, 2016 at 12:30 pm in Uncategorized | Permalink

Larry Summers says it is worth a rethink:

Former Harvard University President Lawrence Summers suggested that the school consider curbing annual payouts from its world-record $37.6 billion endowment to reflect the likelihood of lower investment returns.

Real, or inflation-adjusted, short-term interest rates have been falling steadily since 1999 and are effectively projected by financial markets to be around zero percent in the long-run, Summers said in a presentation Friday to a National Bureau of Economic Research meeting in Cambridge, Massachusetts, where Harvard is based.

“If it makes sense for Harvard University to pay out 5 percent of its endowment in 1999 when the real interest rate was 4 percent, it’s really quite unlikely that it makes sense to pay out 5 percent of its endowment in 2016 when the real interest rate is zero,” said Summers, a former U.S. Treasury secretary who is now a professor at Harvard.

I’ve never had a good handle on what you might call “the welfare economics of endowments,” in part because I don’t think economists have a good theory of endowments period.

One normative view is that if g > r, funds should simply accumulate in the endowment, more or less indefinitely, to further maximize societal wealth.  The g > r condition might hold for Harvard, though it is hard to measure what the school’s borrowing rate consists of.  Arguably new money at the margin comes from donations rather than from loans or bond issues.

A second view is that inequality is bad, and institutions tend to become sluggish and excessively bureaucratic in the longer run.  Perhaps every now and then they should be required to “start afresh”; a’ la Jefferson: “every now and then higher education must be refreshed…” etc.  That would suggest a higher payout rate.  You will note that the law mandates a payout rate of five to six percent for charitable foundations; Harvard isn’t a foundation, but analogous factors might apply.

A third view is to note that income inequality has gone up, and that means higher returns from investing in Harvard students, even if overall rates of return in the economy are low.  We know that the variance of corporate returns is much higher than it used to be, and many of those successful corporations stem from Harvard, MIT, and Stanford, among other top schools.  That would suggest spending more money today, because the Harvard endowment may not always be so valuable in terms of the uses to which it can be put.  Low rates of return on (most) investments are more reason to follow this advice and keep on spending, not less reason.  Can you imagine a better investment these days than Harvard human capital?  You will note that in this view “keeping Harvard at the top,” while a goal, is not the number one consideration.

There is something to be said for all of these perspectives, but mine is closest to number three.  In any case the question deserves closer consideration than I see it receiving.

Here is the one file, print it all out version, just revised.  Here is the blog version, which is easier to follow in bits and pieces, looks nicer, works better (thanks to the estimable Chug), and accepts comments.  Here are the links on Twitter.

The old trends were good hamburgers and pizza.  Those haven’t gone away, but the new area trends are Yemeni, Filipino, and more more more Chinese of many different kinds.  Good Mexican is on the way, finally.  Vietnamese and El Salvadoran are fine but stagnant.  Persian is growing, Ethiopian is robust, and will more African be next?  The biggest growth in quality and interest has come in DC (!), not the suburbs, at least this time around.  In Virginia, Chantilly has made the largest gains.

The good news, at least from a culinary point of view, is that the gentrification of northern Virginia — northern and central Arlington excepted — is proceeding at a much slower rate than people might have expected say ten years ago.