6. Data is the new middle manager (WSJ).
6. Data is the new middle manager (WSJ).
Here is a long and excellent post, whereby Robin outs himself as a strange kind of environmentalist. Do need the whole thing, but here is one summary excerpt:
So, bottom line, the future great filter scenario that most concerns me is one where our solar-system-bound descendants have killed most of nature, can’t yet colonize other stars, are general predators and prey of each other, and have fallen into a short-term-predatory-focus equilibrium where predators can easily see and travel to most all prey. Yes there are about a hundred billion comets way out there circling the sun, but even that seems a small enough number for predators to careful map and track all of them.
“At first they came for the rabbits…and then they came for me.” I find that intriguing, but I have a more marginalist approach, and perhaps one which encompasses Robin’s hypothesis as a special case. The death of human (and other) civilizations may be a bit like the death of the human body through old age, namely a whole bunch of things go wrong at once. If there were a single key problem, it would be easier to find a patch and prolong things for just a bit more. But if we have reason to believe that, eventually, many things will go wrong at once…such a concatenation of problems is more likely to defeat us. So my nomination for The Great Filter, in a nutshell, is “everything going wrong at once.” The simplest underlying model here is that a) problems accumulate, b) resources can be directed to help solve problems, and c) sometimes problems accumulate more rapidly than they can be solved.
This is also why, in many cases, there is no simple “fact of the matter” answer as to why various mighty empires fell in the past. Here is my earlier review of Apocalypto, a remarkable and still underrated movie.
Let’s say that you and a casual friend meet for lunch two or three times a year, but otherwise have little contact. One day you would say to the friend “let’s become Batman and Robin and fight violent crime together in Gotham City, trusting our lives to each other along the way. We’ve built up trust through these lunches, and besides if you say no I will yank the lunches away to your detriment.”
Hardly anyone would think that is a workable arrangement. I would say there was not enough social capital built up in those lunches to make the larger cooperative venture sustainable. Repeatedly citing the social benefits of a Batman-Robin alliance would miss the point of this critique.
I also read people arguing the global trade agreements should be used to enforce carbon emissions policy. Similarly, I believe there is simply not enough political and social capital built into those trade agreements. They are limited and rickety as it stands, and could not sustain the force of initiating what the Chinese would consider to be an act of economic warfare.
Now, let’s consider Greek default. As Wolfgang Münchau suggests (and I think many agree), Greece should default to the IMF but stay inside the eurozone, or alternatively the IMF can just let Greece off the hook. The economics of that argument make sense. But does the IMF have enough embedded political capital to let Greece off the hook, when they deny credit to much poorer countries? Does the IMF have enough capital and credibility to relieve Greece of that debt, and then return to its previous policies of simply not accepting any defaults? What about the poorer countries in the eurozone — poorer than Greece — who do not receive comparable breaks? How is this all supposed to work? Or is it simply asking too much of the IMF?
We are about to learn how much embedded political capital is in the IMF. I say 70-30 this cannot work, it is too late to suddenly turn the IMF into what it ought to be, one problem of many being that the United States simply has not cared enough. Developing…and we’ll know more soon…
2. The esoteric Adam Smith (Dan Klein video). And Tim Harford’s FT piece on what British economists recommend doing.
3. The highest-grossing restaurants in America, via the estimable Chug.
That is the next NBER macro paper at these sessions, by Fang, Gu, Xiong, and Zhou, here is the pdf. The abstract is this:
We construct housing price indices for 120 major cities in China in 2003-2013 based on sequential sales of new homes with the same housing developments. By using these indices and detailed information on mortgage borrowers across these cities, we find enormous housing price appreciation during the decade, which was accompanied by equally impressive growth in household income,e xcept in a few first tier cities. Housing market participation by households from the low-income fraction of the urban population remained steady. Nevertheless bottom-income mortgage borrowers endured several financial burdens by using price to‐income ratios over eight to buy homes, which reflected their expectations of persistently high income growth into the future. Such future income expectations could contract substantially in the event of a sudden stop in the Chinese economy and present an important source of risk to the housing market.
2. What is the best combination of people to achieve maximum height in a human pyramid? (“Questions that are rarely asked”)
That is a new must-read post from Dani Rodrik. Here is a pieced-together excerpt:
…low domestic saving has been the perennial constraint on the Turkish economy…Under Erdogan, the constraint has become ever more binding, as the saving rate (and particularly, the private saving rate) has come down…
So how has Turkey overcome this constraint over the last 12 years? By applying the same recipe of macroeconomic populism it has always relied on to generate growth – by borrowing, especially short-term, to sustain domestic consumption and investment. This strategy typically bears fruit as long as finance is cheap and available. But it comes at the cost of accumulating fragility and increased vulnerability to reversals in financial market sentiment. It often ends up in crisis as the funds dry up.
The novelty under AKP is that the populist strategy was modified in two respects. First, there was much greater reliance on foreign capital inflows and less reliance on printing money. Second, there was a switch from public-sector to private-sector borrowing.
There are useful pictures at the link.
2. Which NBA city has the greatest number of “fair weather ” fans? (hint: Toronto)
1. How much will the demand for dilithium crystals go up? And is there a free lunch after all? (Isn’t the universe as a whole a large free lunch?) Possibly speculative.
6. Hidden agendas in Yemen, a good piece by Graham Fuller, recommended.
4. What to do about those p values? (Humorous too)
4. Beware the comments (scroll down a bit to find it, but actually the whole link is interesting).
The author is Andrej Svorenčík and he has produced the definitive account of the history of experimental economics. The SSRN paper is here, but it is more accurate to think of this as a monograph at 248 pp. of text. I hope a major publisher is interested, but do note it starts off a bit slow. Once it gets going it never lets up and I learned a great deal from it. Here is just one excerpt:
When Austin C. Hoggatt died on April 29, 2009, at the age of seventy-nine the experimental economics community lost a low profile yet very influential figure. Hoggatt was the first to build a computerized laboratory for controlled experimentation in economics or, more broadly, in the social, behavioral, and decision science — the Management Science Laboratory at the Center for Research in Management Science at UC Berkeley in 1964.
If you think you might be interested you will be. The paper/monograph is strong on recognizing the need for an integrated approach to experiments, involving software, support staff, programmers, and researchers, and tracing how all this came together, or in some cases did not. You really get the inside story from Svorenčík.