Uncategorized

1. The Democrats were debating single payer while this bill, which they dread, nearly passed (and still has some chance of passing).  This was not a random mistake, rather it reflects a more general tendency of the Democratic Party to focus on the wrong kind of expressive values, in a manner which does not seem remediable.  We need to re-model what they are, and build this kind of un-educability into the new model.

2. One lesson of Graham-Cassidy failure is that American health care, at the state level, is a race to the bottom not to the top.  Recall that the Canadian health care system also leaves key decisions to the provinces + block grants, but American Progressives love the results.  Most observers know the American states would not copy the Canadian provinces in their policies, and it is not only because fiscal equalization is weaker to the south.  The reality is that spending much more on health care would not make most American states much more desirable places for most people to live in.  If it did, Graham-Cassidy would be a better idea than in fact it is and a race to the top would ensue.  Better health care would brighten up states all around, attract more population, and increase the revenue going into governor’s coffers.

Democrats and Republicans both find this inadequacy of state-level outcomes difficult to accept, though for opposing reasons.  Democrats hate having to recognize that all the extra health care spending might be mainly redistribution rather than remedying a market failure or providing a broad-based social public good.  Republicans hate to see that giving states control over health care policy, and allowing them to revise Obamacare, won’t improve those states and probably would make most of them worse.

Of course my points #1 and #2 relate.  I agree Graham-Cassidy is a bad idea, but every time I hear the critics say it is heartless, or would “take away” people’s health insurance, or “kill people,” what I really hear is “If we let everyone vote again on Obamacare, with a real time balanced budget constraint, they wouldn’t vote for nearly as much health care next time around.”

Which is why you should not be obsessing over single-payer systems.

Across the board, pondering Graham-Cassidy, including its failure, should make you more pessimistic about economic and social processes.

Saturday assorted links

by on September 23, 2017 at 12:26 pm in Uncategorized | Permalink

1. “”Globally more and more men and women are stepping away from clinical (medical) sperm donation environments and choosing to find each other through online connection websites such as the UK-based PrideAngel through which we conducted our study,” said Mr Whyte, from the QUT Business School.”  Link here.

2. Does linguistic bias limit English-speaking investment into Quebec?

3. Have I mentioned that Sixthtone.com is a great place to read about China?  And on Twitter.

4. Cops should get more sleep.

5. How a (John Cochrane) paper gets published.

Here is one presentation of such an argument, but keep in mind these points:

1. The strongest argument for redistribution is when redistribution boosts economic growth and benefits all or most of society.  That is by no means always the case, but it is sometimes true and of course it is not a Rawlsian argument.

2. The second strongest argument for redistribution is that it is sometimes intrinsically better if a poor, needy person has a resource, as opposed to a wealthier person having that same resource.  That is in fact what most people think, no matter what argument they give you.

3. As we’ll see, the Rawlsian argument is parasitic upon #2, so why not use #2 directly?  Admittedly, #2 is a difficult conclusion to establish in a scientific manner, but the Rawlsian gloss, upon examination, makes it weaker not stronger.  It does however make the argument look a) more academic, and b) apparently more in line with neoclassical economic modes of thinking.

4. Most political philosophers, or indeed most philosophers, are not Rawlsians, even if they have been influenced by Rawls, which is frequently the case.  So why should you, if you’re an economist, be a Rawlsian?  Is it that you read Rawls and the critics, sided with Rawls, and then sat down to derive its implications?  Or did you find it a convenient rationalization for something you already believed or wanted to believe?

4b. Rawls is almost always invoked selectively, rarely being applied across national borders or across the generations, cases where it yields screwy results.  Rawls himself hesitated to approve of economic growth, because it does not maximize the well-being of the original “worst off” generation, which of course has to do some saving.  He had sympathies with the idea of Mill’s stationary state.  It’s fine to reject those conclusions, as indeed you should, but again maybe you’re not really a Rawlsian.  You are a selective Rawlsian, if that.

4c. Most people — rightly I might add — believe just as much in redistribution or maybe more when the position of the unfortunates is certain in advance. How many times have you heard social immobility cited as a problem that requires redistribution for its solution?  That argument is fine on its own terms, but again we’re back to #2.  The funny thing about econo-Rawlsians is that they want to cite the uncertainty of the wealth distribution as a reason for redistribution, and then they wish to turn around and cite the certainty of the wealth distribution as yet another reason for redistribution!

Yes, maybe you can apply a Rawlsian transform to those situations with certain allocations, using a “…but*if* these people were all behind a veil of ignorance…”  But look, a Rawlsian transform is appropriate with only some probability, so if you adhered to Rawls as the “most likely correct moral theory,” you still in these cases of certain distributions ought to believe in less redistribution.  But that is not how people’s opinions are structured, nor is it how they should be structured, so in other words again we are not really Rawlsians but rather again motivated by #2.

5. When it comes to redistribution as social insurance, the biggest problems with the Rawlsian method is this.  People have all sorts of preferences across the distribution of income.  Some are merit-related, some liberty-related, some non-Rawlsian-fairness related, some insurance-related, maybe even some rooted in prejudice.  The list of motives and reasons is long.  As the veil is typically used by economists, it strips away all of those preferences but…the preference for insurance.  So it is no wonder that the final construct produces an argument for insurance.  You get out of the construct what you put into it.

6. If you already believe in #2, #5 won’t bother you much.  But #2 is doing the real work here.

7. Almost everyone stops applying #2 at some point or margin.  For instance, do you always and everywhere favor boosting the scope of the Obamacare mandate?  It would save lives.  If you don’t favor increasing the mandate, are you a despicable killer?  In fact what I observe is people taking the status quo, and its current political debates, as a benchmark of sorts, and choosing sides, yet without outlining the “stopping principles” for their own recommendations.  That’s a pretty sure sign a person is not thinking about the issues clearly.

8. Even #2, which I think of as a kind of “brute egalitarianism,” isn’t as straightforward as you might think.  We do not always apply it to people in other countries, wealthy people who are poor in net terms because they are about to die, ugly men who cannot get sex, and many of the disabled.  Just about everyone is more of a particularist, situation-based egalitarian than they like to let on.

In sum, the arguments for (some limited) redistribution are stronger than the arguments for Rawls.

Friday assorted links

by on September 22, 2017 at 12:18 pm in Uncategorized | Permalink

…the greatest winners in 2026 would be Mississippi and Kansas, where federal health-care funding would more than triple and double, respectively. On the other hand, Connecticut’s aid would be cut by just over half.

And:

…the Kaiser Family Foundation…concluded that 35 states would lose $160 billion under the bill. The Kaiser study, like two earlier this week, looked at the cumulative effect from 2020 to 2026.

Here is the Amy Goldstein and Juliet Eilperin piece at WaPo.

From my email:

Hi, Mr. Cowen. I recently read The Complacent Class recently and enjoyed it. I’m writing because there’s an another example of American complacency that’s only come to light in recent weeks…

Specifically: the Billboard music charts..

Shape of You by Ed Sheeran last week broke the record for most weeks in top 10, with 33 weeks. The song it beat, Closer by The Chainsmokers and Halsey, set the previous record less than a year ago. http://www.billboard.com/articles/columns/chart-beat/7948959/ed-sheeran-shape-of-you-record-most-weeks-top-ten

(And yet another song in last week’s top 10, That’s What I Like by Bruno Mars, currently holds the 8th-longest record on that metric — and potentially still rising.)

Meanwhile, Despacito by Luis Fonsi, Daddy Yankee, and Justin Bieber tied the all-time record with its 16th week at #1: http://www.billboard.com/biz/articles/news/record-labels/7942315/luis-fonsi-daddy-yankee-justin-biebers-despacito-ties-for

Meanwhile, the biggest country song in the nation right now, Body Like a Back Road by Sam Hunt, is currently in its record-extending 30th week at #1 on the Hot Country Songs chart: http://www.billboard.com/files/pdfs/country_update_0905.pdf

This did not happen in decades past. Look at the Billboard charts from the ’80s — it was a new #1 song almost every week!    https://en.wikipedia.org/wiki/List_of_Billboard_Hot_100_number-one_singles_of_the_1980s

Just like how you describe in your book how people are moving less and want to stay in the same town where they were before, or how they’re switching jobs less and want to stay in the same job where they were before, people apparently just want to listen to the same songs they’ve been listening to already.

That is from Jesse Rifkin, who is a journalist in Washington, D.C. who writes about Congress for GovTrack Insider and about the film industry for Boxoffice Magazine.  Jesse sends along more:

And if you want links for statistical evidence, here are two — one about which movies have spent the most weekends in the box office top 10, the other about which songs have spent the most weeks in the Billboard top 10:

I will be doing a Conversation with Doug in early October, although with no associated public event, just a later podcast and transcript.  Here is Wikipedia on Doug:

Douglas Irwin is the John Sloan Dickey Third Century Professor in the Social Sciences in the Economics Department at Dartmouth College and the author of seven books. He is an expert in both past and present U.S. trade policy, especially policy during the Great Depression. He is frequently sought by media outlets such as The Economist and Wall Street Journal to provide comment and his opinion on current events.[1][2]

Prior to Dartmouth, Irwin was an Associate Professor of Business Economics at the University of Chicago Graduate School of Business, an economist for the Board of Governors of the Federal Reserve System, and an economist for the Council of Economic Advisers Executive Office of the President.

Doug has a very exciting new book on the history of trade coming out, which I covered here.  Here is Doug on Twitter.  Here is Doug’s recent WSJ Op-Ed on Steve Bannon, trade, and the history of America’s greatness.

So what should I ask Doug?  Your grace and wisdom are always appreciated and never in short supply.

Thursday assorted links

by on September 21, 2017 at 11:42 am in Uncategorized | Permalink

Wednesday assorted links

by on September 20, 2017 at 2:40 pm in Uncategorized | Permalink

Larry was in superb form, and we talked about mentoring, innovation in higher education, monopoly in the American economy, the optimal rate of capital income taxation, philanthropy, Hermann Melville, the benefits of labor unions, Mexico, Russia, and China, Fed undershooting on the inflation target, and Larry’s table tennis adventure in the summer Jewish Olympics. Here is the podcast, video, and transcript.

Here is one excerpt:

SUMMERS: Second, the VIX — people tend to underappreciate this. The volatility of the market moves very much with the level of the market. The reason is that if a company has $100 of debt and $100 of equity, and then the stock market goes up, it’s 50/50 levered.

If the stock market goes up by $100, then it has $100 of debt and $200 of equity and it’s only one-third levered. So when the stock market goes up, its volatility naturally goes down. And the stock market has gone way up over the last 10 months. That’s a factor operating to make its volatility go significantly down.

It’s also the case if you look at surprises. The magnitude of errors in the consensus estimates of company profits or the consensus estimates of industrial production or what have you, numbers have been coming in close to consensus to an unusual degree over the last few months.

I think all those things contribute to the relatively low level of the VIX, but those are more in the way of ex post explanations. If you had told me everything that was going on in the world and asked me to guess where the VIX would be, I would expect it to have been a little higher than it is right now.

And:

COWEN: If there’s an ongoing demand shortfall, as is suggested by many secular stagnation approaches, does that mean monopoly cannot be a major economic problem because that’s from the supply side, and that the supply side constraint isn’t really binding if you think of there as being multiple Lagrangians. Forgive me for getting technical for a moment. Do you see what I’m saying?

SUMMERS: That wouldn’t have been the way I’d have thought about it, Tyler, but what you’re saying might be right. I think I’d be inclined to say that, if there’s more monopoly, there’s more money going to monopoly firms where there’s a low propensity to spend it, both because the firms don’t invest and because the owners of the firms tend to be rich or endowments that have a low propensity to spend.

So the greater monopoly power, to the extent that it exists, is one factor operating to raise savings and reduce investment which contributes to demand shortfalls and secular stagnation.

I also think that there’s likely to be less entry in competition in markets that aren’t growing rapidly than there is in markets that are growing rapidly. There’s a sense in which less demand over time creates its own lack of supply.

And:

COWEN: What mental qualities make for a good table tennis player?

SUMMERS: Judging by my performance, qualities that I do not possess.

[laughter]

SUMMERS: I think a deft wrist, a certain capacity for concentration, and a great deal of practice. While I practiced intensely in the run-up to the activity, there were other participants who had been practicing intensely for decades. And that gave them a substantial advantage.

Recommended!

If you think you know someone who is very smart, Larry is almost certainly smarter.

Tuesday assorted links

by on September 19, 2017 at 12:33 pm in Uncategorized | Permalink

Monday assorted links

by on September 18, 2017 at 12:26 pm in Uncategorized | Permalink

Sunday assorted links

by on September 17, 2017 at 1:24 pm in Uncategorized | Permalink

Why men are not earning more

by on September 17, 2017 at 2:33 am in Uncategorized | Permalink

“And it all starts at age 25,” Mr. Guvenen said. The decline in lifetime earnings is largely a result of lower incomes at younger ages rather than at older ages, he said, and “that was very surprising to us.”

Most younger men ended up with less because they started out earning less than their counterparts in previous years, and saw little growth in their early years. They entered the work force with lower wages and never caught up.

That is from a very good NYT piece by Patricia Cohen.  And note that in spite of all the recent very good economic news, for men the basic story really hasn’t changed, namely that of stagnation as a class.

I wonder sometimes if a Malthusian/Marxian story might be at work here.  At relevant margins, perhaps it is always easier to talk/pay a woman to do a quality hour’s additional work than to talk/pay a man to do the same.  And so as the demand for such additional hours opens up, the gains go to women, not men.  That is at least for the lower income brackets, and perhaps the very most for younger earners.  In other words, especially at young ages, women might be serving as a kind of “reserve army of the underemployed.”