Most of the Tories are happy they found a semi-workable version of the deal.  They pay a big divorce bill to the EU, have a long transition period, opt for “regulatory standardization with the EU” for the whole UK, as enforced by the need to avoid a hard border in Ireland, and over the longer term end up with a customs union and free trade agreement of Norway-like nature.

In other words, they pay a lot of money, lose a seat at the table, and don’t significantly increase the policy autonomy of the country.  In the subsequent bargaining over the details, the EU still holds most of the cards.  Here are a few observations:

1. This represents an almost complete “fold” of the pro-Brexit stance, though like so many other political issues of the Anglo-American day it has become more about exerting one’s will over the opposition than achieving a very particular exit path or even outcome.  One group in British society has won quite a major victory in symbolic terms, namely it has been shown that the country has agreed to leave.

2. At this point, the chance of Brexit being reversed in the short term is very slim.  The anti-Brexit forces know that if this deal falls apart, they could end up with something much worse.  That said, the chances of a medium-term reversal may be higher.  Come the next election, it will still feel as if the UK is in the EU.  The transition period could be extended, and then extended again.  And then…

3. With the current deal, assuming it sticks, the chance of the UK itself unraveling is small.

4. The remaining pro-Brexit case is simply that the UK has limited its entanglement with the EU legal system and a possible future of full federal union.  That’s worth something, but still I am pro-Remain.

5. Real estate in Northern Ireland remains significantly undervalued.

6. the EU really has shown it has a fairly strong and indivisible commitment to the “Four Freedoms,” on migration much more than I would have expected.  You can debate whether this makes the rest of the union more or less stable over the longer term, but for sure it does one of those two things.

Here is a good piece on the Irish border issues.

Sunday assorted links

by on December 10, 2017 at 2:48 pm in Uncategorized | Permalink

There was the ever-present worry that aircraft would make war even more horrific.  Some called for the international control of aviation to prevent its misuse.  A few even advocated the complete destruction of all aircraft on the grounds that even civilian machines could be adapted for war.

…At the opposite end of the spectrum were the enthusiasts who expected that soon everyone would be able to fly their own personal aircraft…As early as 1928, Popular Mechanics predicted a car that could be turned into a helicopter, but most commentators thought the autogyro was a better bet — although it did need a short horizontal run before take-off…As late as 1971, Isaac Asimov was still expecting that VTOL [vertical take-off and landing system] machines would eventually take the place of automobiles.

That is from Peter J. Bowler, A History of the Future: Prophets of Progress from H.G.Wells to Isaac Asimov.

One thing I learned from this book is that “money crank” Frederick Soddy was an early prophet of nuclear power, before many others understood the potential.  I am reminded of how “socialist crank” [oceans of lemonade with ships pulled by dolphins] Charles Fourier once prophesied that all of Europe would be tied together by railways.

Saturday assorted links

by on December 9, 2017 at 3:19 pm in Uncategorized | Permalink

The IQ gains of the 20th century have faltered. Losses in Nordic nations after 1995 average at 6.85 IQ points when projected over thirty years. On Piagetian tests, Britain shows decimation among high scorers on three tests and overall losses on one. The US sustained its historic gain (0.3 points per year) through 2014. The Netherlands shows no change in preschoolers, mild losses at high school, and possible gains by adults. Australia and France offer weak evidence of losses at school and by adults respectively. German speakers show verbal gains and spatial losses among adults. South Korea, a latecomer to industrialization, is gaining at twice the historic US rate.

When a later cohort is compared to an earlier cohort, IQ trends vary dramatically by age. Piagetian trends indicate that a decimation of top scores may be accompanied by gains in cognitive ability below the median. They also reveal the existence of factors that have an atypical impact at high levels of cognitive competence. Scandinavian data from conventional tests confirm the decimation of top scorers but not factors of atypical impact. Piagetian tests may be more sensitive to detecting this phenomenon.

That is newly published research from James R. Flynn and Michael Shayer, via Rolf Degen.

Friday assorted links

by on December 8, 2017 at 11:27 am in Uncategorized | Permalink

Favorite popular music from 2017

by on December 8, 2017 at 12:56 am in Music, Uncategorized | Permalink

It’s wrong to call this “popular music,” because most of it isn’t that popular, but we certainly can’t call it rock and roll any more, can we?

First, here are the ones that everyone else recommends too:

Run the Jewels 3, not a let down.

Kendrick Lamar, Damn, a common pick for best of the year.

Tyler the Creator, the album has an obscene name, which I won’t reproduce, but I can list the name of the Creator.

King Krule, Ooz, “The world is a filthy, utterly debased place, his music suggests, but there are rewards of sorts for those determined to survive it. In this spirit, The OOZ drops at our feet like a piece of poisoned fruit, a masterpiece of jaundiced vision from one of the most compelling artists alive.”

Migos, Culture, rap from Atlanta.

Vince Staples, Big Fish Theory, but not theory as they do it as Northwestern.

SZA- Cntrl, from New Jersey, “Her forebears are more Keyshia Cole and Mary J. Blige, who have hurt and have been fearless enough to sing about that hurt…”

Lorde, Melodrama, “the New Zealand century” is gaining on “the Norwegian century.”

Taylor Swift, Reputation.  This one is kind of popular.

Perfume Genius, No Shape, “The body has become sturdier, less despotic.

My summary remark is that I didn’t intend to listen to so much rap/hip-hop, but it remains the most vital genre.

Here are some more original selections:

Jlin, Black Origami, “…a gorgeous and overwhelming piece of musical architecture, an epic treatise on where rhythm comes from and where it can go.

Juana Molina, Halo.  Argentina, avant-garde songstress, vivid vocal and instrumental textures, she has almost abolished lyrics.

The Secret Sisters, You Don’t Own Me Any More, folk for 2017, “They went from opening shows for Bob Dylan and Paul Simon to cleaning houses to make ends meet.”

Django Bates, Saluting Sgt. Pepper.  A jazzy, big band, music hall take on the album, works surprisingly well, one of the freshest takes on the Beatles since Laibach.

Paul McCartney, Flowers in the Dirt, remastered, an underrated album to begin with, this release also includes the previously unavailable acoustic demo tapes with Elvis Costello.

Death Grips, Bottomless Pit.  Has the information density and partial unpleasantness of the old Skinny Puppy recordings, “seesawing from grit to gloss to back again.”

Beach Boys, Wild Honey, titled 1967 — Sunshine Tomorrow.  This remix brings out what was supposed to be just a “blues/soul/Brian cooling his heels” album as an acoustic masterpiece and proper successor to Pet Sounds and Smile.

Philip Glass, Piano Works, by Víkingur Ólafsson. One of the two or three best Glass recordings I know, here is an interview with the pianist.

Overall, if I had to push any of these on you it would be the last two.  Soon I’ll cover jazz and world music.

Thursday assorted links

by on December 7, 2017 at 12:43 pm in Uncategorized | Permalink

1. “And the real Dr. Ashkin wrote to his doppelganger in Utah with a remarkably generous offer. He said he would find a place for Hewitt in an actual physics program where he could quickly earn an actual Ph.D. and relieve himself of the stress of being an imposter. Hewitt declined and the university quietly dismissed him.”  Link here.

2. “For those unfamiliar with it, Dynamicland (from what I know of it, at least) is a computing environment at room / space scale. The room is the computer, and as much as possible, computing happens with physical objects. This enables you to interact with your whole body, to see systems by picking them up, and to share computing space with multiple people (compare this to traditional computing with a mouse and keyboard, with 1 person per computer and minimal sharing).

For starters, there’s a newly active twitter account showing off things…”  Source link here.

3. Books Mises wanted to see written: most of them still have not been done…get to work!  And the silent comedy of Jackie Chan.

4. Matt Notowodigdo recommends some favorite economics articles from the year, very good list.

5. Is the Republican tax plan raising the effective capital gains rate?  And for homes?

6. The game theory of recognizing Jerusalem, by Noah Feldman.

Wednesday assorted links

by on December 6, 2017 at 12:26 pm in Uncategorized | Permalink

1. “This Article presents the first empirical examination of giving to § 501(c)(4) organizations, which have recently become central players in U.S. politics. Although donations to a 501(c)(4) are not legally deductible, the elasticity of c(4) giving to the top-bracket tax-price of charitable giving is – 1.24, very close to the elasticity for charities.”  Link here.  And there is no tax break for private jets, setting the record straight.

2. Ranking generals using sabermetrics, Napoleon is #1.

3. My podcast with the excellent Jocelyn Glei on self-transformation and risk.

4. Does the estate tax affect the marginal investor?

5. Eliminating the filibuster wouldn’t help much with gridlock.

6. Animal mutualism and personality (NYT).

7. ““The pending transactions on the Ethereum blockchain have spiked in the last 24 hours, mostly from CryptoKitties traffic,” CoinDesk director of research Nolan Bauerle said in an e-mail.

In the game, players buy cartoon kittens and then breed them with other cats. More than 22,000 cats have been sold so far for a total of US$3 million, according to Crypto Kitty Sales.

One of the cats went for US$117,712, although average sales price hovers about US$109, according to the sales tracker.”  Link here.

A few of you have written me to ask what I think of Paul Krugman’s recent posts on tax reform and evaluating it by gnp rather than gdp, the latter being an emphasis in the GOP literature.  Paul notes correct that a lower corporate rate will attract foreign investment, and the returns to that investment, by definition, will not accrue to American citizens.  So far, so good.

Paul reproduces the following graph for the Czech Republic, ratio of gnp to gdp:

If the GOP literature focuses on gdp, it is fine enough to criticize it on that basis.  What worries me, however, is that the corrective doesn’t go nearly far enough.  Gnp isn’t the right standard either, nor is gnp/gdp, rather it is welfare, either nationally or globally.

From that gdp/gdp ratio graph, you might come away with a grim view of life in the Czech Republic, but consider this cheerier picture of consumption, which nearly triples over a twenty year period:

Pretty awesome.  And under the standard story of the Czech economy, investment from abroad, most of all from Germany, has helped drive those gains.  Germany invested more, that boosted wages, improved the local political economy, and transferred some technology and entrepreneurial skills.  It is standard international economics, or for that matter Solow model, that capital-rich, lower-return economies should invest in their poorer peripheries (which is not to say it always works out that way).

It’s entirely fair to note that Czech household debt to gdp has risen to about thirty percent.  Still, in the U.S. it is about eighty percent, so the Czechs are not in dire straits just yet.  Private debt to gdp seems to run about 136 percent, compared to about 200 percent in the U.S.

Of course, this still could end up as a bad deal for the Czechs.  They might waste their foreign investment, the accompanying wage gains, the associated external benefits, and end up having to snap back their consumption and see their whole country owned by Germany, China, and others.  But that’s not the baseline case.  The default assumption is that these are gains from trade like other such gains, in this case gains from trading with foreigners who wish to invest.  They are not lesser gains or gains to somehow be subtracted from the overall calculus.

Here is a useful point of contrast.  Let’s say I advocated high taxes on foreign trade, on the grounds that “half of the gains from those trades are shared with foreigners,” and therefore we ought to, post-tariff, trade more with fellow citizens, so that only Americans get those gains.  We all know why that argument generally is wrong, noting there are some second best cases where tariffs can improve welfare.  It’s still wrong when the trades involve foreign investments.

So it is misleading to induce people to mentally downgrade foreign investment as a source of welfare gains.  I get that Krugman doesn’t quite say that, but that is the impression his discussion and diagram produces on the unwary.  Technically, he might only be criticizing the Republicans internally, using their own gdp standard.  The actual produced impression is to cause people to doubt that a lot of foreign capital inflow fully counts as a gain from trade.

America of course is in a quite different position than is the Czech Republic.  But the gains from foreign investment into the United States also ought not to be downgraded, either explicitly or by implied presumption.

Tuesday assorted links

by on December 5, 2017 at 2:19 pm in Uncategorized | Permalink

That is the topic of my latest Bloomberg column, here is the opening bit:

I’ve seen hundreds of articles on President Donald Trump and trade, but the real significance of the Trump economic revolution — for better or worse — is a focus on investment. There is no coordinating mastermind, but if you consider the intersection between what the Trumpian nationalists want and what a Republican Congress will deliver, it’s this: wanting to make the U.S. a new and dominant center for investment, including at the expense of other nations.


In essence, a new kind of supply-side economics has been invented. The theory of the 1980s focused mainly on individuals, and lowering the tax rates they faced on labor income and capital gains. Cutting these rates was supposed to mobilize the power of those individuals, through more work or more investment. The idea today is that the real power of mobilization comes through corporate associations. Assuming the tax bill passes, that theory is about to get a major test.

Strikingly, the tax bill and the trade policies of the Trump administration can be viewed as having a similar underlying philosophy, whether entirely intended or not. One of the president’s first official acts was to withdrawal from the Trans-Pacific Partnership. Although I favored that agreement, as did most other economists, it’s worth considering what the most intelligent nationalist case against the TPP looks like. It’s not about trade, because the deal wouldn’t have affected tariff rates faced by Americans very much (exports of beef to Japan aside). Rather, the TPP would have given American certification to Vietnam, Malaysia and eventually other emerging economies as stable repositories of foreign investment from multinationals. That could in turn draw investment away from the U.S.

Do read the whole thing, it is my favorite recent piece by me.

Monday assorted links

by on December 4, 2017 at 1:11 pm in Uncategorized | Permalink

Here are my selected bits and pieces from a longer list:

“Artificial intelligence systems pretending to be female are often subjected to the same sorts of online harassment as women.” [Jacqueline Feldman]

Swintec is a company in New Jersey that sells up to 5,000 typewriters a year to prisoners in the US. Their typewriters have clear plastic covers so inmates can’t hide anything inside. Transparent TVs, CD players and Walkmen are also available. [Daniel A Gross]

In the UK, marriages between couples over 65 have risen 46% over the last decade. [Cassie Werber]

A cryptocurrency mining company called Genesis Mining is growing so fast that they rent Boeing 747s to ship graphics cards to their Bitcoin mines in Iceland. [Joon Ian Wong]

Dana Lewis from Alabama built herself an artificial pancreas from off-the-shelf parts. Her design is open source, so people with diabetes can hack together solutions more quickly than drug companies. [Lee Roop]

In August, Virginia Tech built a fake driverless van — with the driver hidden inside the seat — to see how other drivers would react. Their reaction: “This is one of the strangest things I’ve ever seen.” [Adam Tuss] (Fluxx have also been experimenting with fake autonomous vehicles in Cambridge)

Women are eight times more likely to ask Google if their husband is gay than if he is an alcoholic. [Sean Illing]

Men travelling first class tend to weigh more than those in economy, while for women the reverse is true. [Lucy Hooker]

Facebook employs a dozen people to delete abuse and spam from Mark Zuckerberg’s Facebook page. [Sarah Frier]

Pro tip: Ask your current customers “What nearly stopped you buying from us?” [Karl Blanks]

Here is the full list, Tom has an excellent algorithm for building the list.

1. Moore’s Law plus the internet makes smart people smarter, and stupid people less smart.

2. Manipulable people can be reached with a greater flood of information, so over time as data on them accumulate, they become more manipulable.

3. It is often easier to manipulate smart people than stupid people, because the latter may be oblivious to a greater set of cues and clues.

4. Social media bring smarter people together with the less smart more than used to be the case, Twitter more so than Facebook.  Members of each group are appalled by what they experience.  The smarter people see the lesser smarts of many others.  The less smart people — who often are not entirely so stupid after all — can see how manipulated the smarter people are.  They also see that the smarter people look down on them and attack their motives and intellects.  Both groups go away thinking less of each other.

4b. The smarter people, in reacting this way, in fact are being manipulated by the (stupider) powers that be.

5. “There is a performative dimension that renders both sides more rigid and dishonest.”  From a correspondent.

6. Consider a second distinction, namely between people who are too sensitive to social information, and people who are relatively insensitive to social information.  A quick test of this one is to ask how often a person’s tweets (and thoughts) refer to the motivations, intentions, or status hierarchies held by others.  Get the picture?  (Here is an A+ example.)

7. People who are overly sensitive to social information will be driven to distraction by Twitter.  They will find the world to be intolerably bad.  The status distinctions they value will be violated so, so many times, and in a manner which becomes common knowledge.  And they will perceive what are at times the questionable motives held by others.  Twitter is like negative catnip for them.  In fact, they will find it more and more necessary to focus on negative social information, thereby exacerbating their own tendencies toward oversensitivity.

8. People who are not so sensitive to social information will pursue social media with greater equanimity, and they may find those media productivity-enhancing.  Nevertheless they will become rather visibly introduced to a relatively new category of people for them — those who are overly sensitive to social information.  This group will become so transparent, so in their face, and also somewhat annoying.  Even those extremely insensitive to social information will not be able to help perceiving this alternate approach, and also the sometimes bad motivations that lie behind it.  The overly sensitive ones in turn will notice that another group is under-sensitive to the social considerations they value.  These two groups will think less and less of each other.  The insensitive will have been made sensitive.  It’s like playing “overrated vs. underrated” almost 24/7 on issues you really care about, and which affect your own personal status.

9. The philosophy of Stoicism will return to Silicon Valley.  It will gain adherents but fail, because the rest of the system is stacked against it.

10. The socially sensitive, very smart people will become the most despairing, the most manipulated, and the most angry.  The socially insensitive will either jump ship into the camp of the socially sensitive, or they will cultivate new methods of detachment, with or without Stoicism.  Straussianism will compete with Stoicism.

11. Parts of social media will peel off into smaller, more private groups.  At the end of the day, many will wonder which economies of scale and scope have been lost.  And gained.  Others will be too manipulated to wonder such things.

12. The “finance guy” in me thinks: how can I use all this for intellectual arbitrage?  Which camp does that put me in?

13.  What bounds this process?