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Wednesday assorted links

by on February 22, 2017 at 12:19 pm in Uncategorized | Permalink

Alas Kenneth Arrow has passed away

by on February 21, 2017 at 8:38 pm in Uncategorized | Permalink

Tuesday assorted links

by on February 21, 2017 at 2:32 am in Uncategorized | Permalink

The area has become “the largest region for medical device manufacturing” in the world, says Faulconer, who explains that because of increasingly complex binational supply chains, “sometimes [one product] will cross the border two to three times.” UCLA’s Ohanian pegs the figure far higher: In some cases, he suggests, a product can cross the U.S.-Mexico border an astonishing 14 times before it goes to market. One study suggests that the average good exported from Mexico to the U.S. contains 40-percent American-made components. In the San Diego-Tijuana region, Solar Turbines, Kyocera International and Taylor Guitars are just a few of the companies that have facilities on both sides of the border.

Here is the full article, via the wisdom of Garett Jones.

Monday assorted links

by on February 20, 2017 at 12:47 pm in Uncategorized | Permalink

The obvious equilibrium is that more researchers can download papers from the internet, and thus we expect more papers to be read by a greater number of people.  If lay people enter the calculus, this is almost certainly true.  But what about researchers?  I am not convinced that more reading (of each paper) goes on, or that it should go on.

Most people, including researchers, cannot easily figure out if the main result of a research paper is correct.  That is true all the more as time passes, because the mistakes become less and less transparent.  But they can figure out who can figure out if the paper is right, and sample that opinion.  The internet aids this process greatly.  For instance, it is easier for me to find out what Bob Hall (one of the great paper analysts/commentators of all time) thought of a macro paper, if only by using email.  If I can find out whether or not the paper is true, often I don’t have to read that paper, though I may go through some parts of it.  The internet also gives me access to better summaries of the paper, if only in parts of other papers.

In this sense, researchers may rely on a fairly thin substructure of evaluation, though one of increasing accuracy.  As science progresses, perhaps scientists do/should spend more time honing their research specializations, and less time reading papers they are not expert evaluators for.  They do/should spend more time reading the papers where they are the expert evaluators, but that may mean reading fewer papers overall.

Viewed as a productivity problem, perhaps your read is competing against “further spread of the read and evaluation from the best expert” and is losing.  Efficient criticism is also sometimes winner take all.

I am indebted to Patrick Collison for a conversation on this topic, though of course he is not liable for any of this.  Neither he nor I have read a paper on such matters, however.  Thank goodness.

Sunday assorted links

by on February 19, 2017 at 11:19 am in Uncategorized | Permalink

1. The economics and behavioral economics of pimping and recruiting prostitutes.

2. “This glass fits around your nose so you can smell wine as you drink it.”  NB: the link serves up some noise to you.

3. “The state’s manual for execution procedures, which was revised last month, says attorneys of death row inmates, or others acting on their behalf, can obtain pentobarbital or sodium Pentothal and give them to the state to ensure a smooth execution.”  Link here, that is Arizona.

4. Here is my old interview with Atlantic on my news diet.  A few of you requested an update.  These days it is more Twitter, fewer blogs, more Bloomberg View, and less reliance on news magazines (though some remain excellent).  Inexplicably, on the first go-round I forgot to mention TLS and London Review of Books, I get Book Forum too  Most of all, I rely more on what people email me and tell me about.  Very recently, Twitter is more dramatic and sometimes more entertaining but also less useful for anything practical; my time allocation methods have yet to adjust but they will.

5. “It is possible to travel coast to coast—from, say, Coos Bay, Oregon, to Wilmington, North Carolina—without passing through a single county that Hillary Clinton won. Indeed there are several such routes.”  That is from Christopher Caldwell.  And new and long profile of Peter Navarro.

6. Workman’s cafe in France accidentally awarded a Michelin star.  And Hong Kong food trucks show that economy really isn’t as free as you might think (NYT).

Saturday assorted links

by on February 18, 2017 at 1:07 pm in Uncategorized | Permalink

From a loyal MR reader:

I’m very curious about the macroeconomics of the sheepskin effects. Traditional productivity forecast research tends to assume the wage premium is entirely human capital. Eg, Bosler/Daly/Fernald/Hobijn use a mincer equation with five education dummies http://www.frbsf.org/economic-research/files/wp2016-14.pdf   Jorgensen’s approach dividing workers into types also assumes this is not an issue.

If sheepskin effects are purely relative status effects, then the impact on total output and income should be zero, right? This implies increasing educational attainment will have a much smaller impact on productivity and output than typical productivity forecasts imply.

But it seems to me like showing you are “high ability”, if that’s all it does, makes you able to be slotted into higher ability jobs, and that this won’t simply give you a leg up on other workers but increase the number of higher ability jobs filled.

Anyway, I’m sort of thinking out loud but would be curious to read a blog of your thoughts on this, so consider this a bleg!

In the simplest Spence signaling model, the output goes to workers, and if one more worker sends the signal and boosts his or her wage, the non-signaling workers will receive an equal amount less.  That is an equilibrium condition, but it makes less sense as an account of dynamics.  As a practical matter, it’s not clear why the employers should revise their opinion downwards for the marginal products of these less educated workers.  You could say that competition makes them do it, but it’s tough to have good intuitions about an equilibrium that is hovering between/shifting across a varying degree of pooling and separating.

As a more general extension of Spence, a richer model will have market power and payments to capital and labor.  If one more worker finishes school, that worker is paid more and the higher wage serves as a tax on production.  Yet it is a tax the boss does not perceive directly.  The boss thinks he is getting a better worker for the higher wage, but in the counterfactual with more weight on the pooling solution, the boss would have hired that same person, with the same marginal product, at a lower wage.  The “whole act of production” will be and will feel more costly, including at the margin, but the boss won’t know how to allocate those costs to specific factors.  By construction of the example, the boss however will think that the newly educated laborer is the one factor not to be blamed.  So he’ll cut back on some of the other factors, such as labor and land.  Labor in the company will be relatively more plentiful, and the marginal product of labor in that company will fall.  So the incidence of a boost in the sheepskin effect falls on the land and capital that have to move elsewhere, plus to some extent the declining marginal products and thus wages for the remaining workers in the firm under consideration.  Note that outside firms are receiving some influx of capital and land, and so in those firms the marginal product of labor and thus its wage will go up somewhat.

Or so it seems to me.  The trick is to find some assumptions where the hovering between/moving across a varying degree of pooling vs. separation is not too confusing.

Friday assorted links

by on February 17, 2017 at 1:42 pm in Uncategorized | Permalink

There’s two versions of this.

1. One or a small group of entrepreneurs owns the robots.

2. The government owns the robots.

I see how we get from where we are now to 1. How would we get to 2, and is 2 better than 1?

That is a comment and request from Mark Thorson.  It’s embedded in a longer thread, but I suspect you can guess the context.

I would focus on a prior question: what is government in a world where everything is done by the robots?  Say that most government jobs are performed by robots, except for a few leaders (NB: Isaac Asimov had even the President as a robot).  It no longer makes sense to define government in terms of “the people who work for government” or even as a set of political norms (my preferred definition).  In this setting, government is almost entirely people-empty.  Yes, there is the Weberian definition of government as having a monopoly on force, but then it seems the robots are the government.  I’ll come back to that.

You might ask who are the residual claimants on output.  Say there are fifty people in the government, and they allocate the federal budget subject to electoral constraints.  Even a very small percentage of skim makes them fantastically wealthy, and gives them all sorts of screwy incentives to hold on to power.  If they can, they’ will manipulate robot software toward that end.  That said, I am torn between thinking this group has too much power — such small numbers can coordinate and tyrannize without checks and balances — and thinking they don’t have enough power, because if one man can’t make a pencil fifty together might not do better than a few crayons.

Alternatively, say that ten different private companies own varying shares of various robots, with each company having a small number of employees, and millions of shareholders just as there are millions of voters.  The government also regulates these companies, so in essence the companies produce the robots that then regulate them (what current law does that remind you of?).  That’s a funny and unaccustomed set of incentives too, but at least you have more distinct points of human interaction/control/manipulation with respect to the robots.

I feel better about the latter scenario, as it’s closer to a polycentric order and I suspect it reduces risk for that reason.  Nonetheless it still seems people don’t have much direct influence over robots.  Most of the decisions are in effect made “outside of government” by software, and the humans are just trying to run in place and in some manner pretend they are in charge.  Perhaps either way, the robots themselves have become the government and in effect they own themselves.

Or is this how it already is, albeit with much of the “software” being a set of social norms?

Replacing social norms by self-modifying software –how big of a difference will it make for how many things?

Thursday assorted links

by on February 16, 2017 at 2:38 am in Uncategorized | Permalink

*The Complacent Class* event

by on February 15, 2017 at 11:52 am in Books, Uncategorized | Permalink

Katherine Mangu-Ward will interview me, here are the details.  That is March 6, 6:00pm7:00pm, Founders Hall Auditorium George Mason University – Arlington Campus, 3351 Fairfax Drive, Arlington.

complacentclassphotocover

 

One of my favorites, David was great, here is the link to the podcast, video, and transcript.  Here is the opening summary of the chat:

Named one of the most influential Jewish thinkers of our time, Rabbi David Wolpe joins Tyler in a conversation on flawed leaders, Jewish identity in the modern world, the many portrayals of David, what’s missing in rabbinical training, playing chess on the Sabbath, Srugim, Hasidic philosophy, living in Israel and of course, the durability of creation.

Here are a few bits:

WOLPE: So as my friend Joseph Telushkin says, “Polygamy does exist in the Bible, it’s just never successful.” David does have many wives, and very strained and interesting and complex relationships with women. David has the most complicated and most described relationships with women of any character in the Hebrew Bible.

Those qualities that can be negative, in David are to some extent positive. One of the things that draws David out of the charge of simple narcissism is that he really listens, he pays attention — he pays attention to women over and over again. He listens to what they say and changes himself because of it. And that’s not a characteristic of men in the ancient world or the modern one that you can rely on.

And:

COWEN: So again, I’m an outsider in this dialogue, but say I were thinking of converting to Judaism and I were asking you about Hasidic philosophy. Now in terms of some social connections, I probably would fit better into your congregation than into a Hasidic congregation. But if I ask you, on theological grounds alone, is there a reason why I should be hesitant about Hasidic philosophy? From the point of view of theology, what do you think is the greatest weakness there, or your biggest difference with it, given how much you like Heschel?

And:

COWEN: How would you alter or improve rabbinical training?

WOLPE: I’ve given this a lot of thought. Let me just mention one area. When I speak to rabbinical students, I tell them all the time that the single most valuable commodity you have as a rabbi . . . you can answer that yourself, and then I’ll tell you what I think: your voice. Most people are going to come in contact with you when you speak to them. Not all of them, but most. There’ll be more people who come to your services than the number of people at whose bedside you will sit as they die.

And yet, most rabbis — most people — don’t know how to speak.

There is much more at the link, including about Israeli TV, where to visit in Israel, whether King David parallels Trump, the future of biblical commentary in a world of context-less social media, whether Canadian Jews are more likely to stick with the faith, whether Los Angeles is underrated, what is beautiful and significant in Islam, and the Iran nuclear deal and the settlements, among other topics.  Self-recommending…

And again, here is David Wolpe’s most recent book David: The Divided Heart, which was the centerpiece for the first part of the discussion.

The Pathology of Domestic Aid

by on February 15, 2017 at 5:19 am in Uncategorized | Permalink

Arvind Subramanian, Chief Economic Adviser to the Government of India, and co-authors have a nice summary of the effect of internal domestic aid on governance (the longer version is a chapter in the excellent Indian Economic Survey.) The bottom line is this:

The evidence suggests that all the pathologies associated with foreign aid appear to manifest in the context of intra-country transfers too

In particular, using one measure of aid to states, Redistributive Resource Transfers or RRT the authors find:

rrtHigher RRT seem to be associated with:

  1. Lower per capita consumption
  2. Lower gross state domestic product (GSDP) growth
  3. Lower fiscal effort (defined as the share of own tax revenue in GSDP)
  4. Smaller share of manufacturing in GSDP, and
  5. Weaker governance.

Causality likely goes both ways of course but using an instrumental variable of distance to New Delhi (which correlates with transfers) the authors find suggestive evidence, as shown in the figure, that transfers are a cause of weaker governance.

It’s interesting to read an official government report which discusses instrumental variables!