Uncategorized

I haven’t read through this paper (pdf) yet, but it seems quite important and here is the abstract:

For decades, migration economics has stressed the effects of migration restrictions on income distribution in the host country. Recently the literature has taken a new direction by estimating the costs of migration restrictions to global economic efficiency. In contrast, a new strand of research posits that migration restrictions could be not only desirably redistributive, but in fact globally efficient. This is the new economic case for migration restrictions. The case rests on the possibility that without tight restrictions on migration, migrants from poor countries could transmit low productivity (“A” or Total Factor Productivity) to rich countries – offsetting efficiency gains from the spatial reallocation of labor from low to high-productivity places. We provide a novel assessment, proposing a simple model of dynamically efficient migration under productivity transmission and calibrating it with new macro and micro data. In this model, the case for efficiency-enhancing migration barriers rests on three parameters: transmission, the degree to which origin-country total factor productivity is embodied in migrants; assimilation, the degree to which migrants’ productivity determinants become like ‘natives’ over time in the host country; and congestion, the degree to which transmission and assimilation change at higher migrant stocks. On current evidence about the magnitudes of these parameters, dynamically efficient policy would not imply open borders but would imply relaxations on current restrictions. That is, the new efficiency case for some migration restrictions is empirically a case against the stringency of current restrictions.

If I am reading this correctly, the authors are considering moving away from their previous open borders position, simply to a “more immigration (within limits) would be better” position, much like the one I hold.

For the pointer I thank G.

Friday assorted links

by on February 12, 2016 at 11:45 am in Uncategorized | Permalink

1. Clinton welfare reform was not such a big deal, one way or the other.  And what it is like to be obsessed with mood affiliation.

2. Greg Ip on the popularity of big economics books.

3. “Neuromancer is a commissioned work.

4. MIE: the woman who makes prosthetic pinkies for former Yakuza members. “Usually one of Fukushima’s fingers costs 180,000 yen ($1490), but she provides ex-yakuza in difficult financial situations with a discount.”  She has made hundreds of such fingers, recommended.

5. How small is the world really?, how networked are you anyway?, and why it matters.

6. Are Chinese-American students turning to Christianity?

That is a question from a very smart person, over thirty years of age, who claims not to have read very much (I don’t know how much).

So which book should I recommend?

Conditional on the person knowing me, the idea of simply introducing economics is not going to win, even if that would be the correct recommendation for many others.  And “Collected Works” are not allowed.

How about a broadly philosophical novel, such as Don Quixote or Homer’s Odyssey or In Search of Lost TimeMoby-Dick?  A play of Shakespeare?  A current favorite, such as Ferrante or Knausgaard?

How about a perfectly constructed travel book, touting the virtues of a new and magical place?  But most travel books I find dull, unsatisfying, and too scattered with wasteful, overly subjective sentences about sunsets and train trips.

A didactic, moralizing book, perhaps on charity or Effective Altruism?

For many people music may be more powerful than the written word, so perhaps the recent Jan Swafford biography of Beethoven, or John Eliot Gardiner’s book on Bach, or any number of good books on Mozart.  A critical guidebook to some of the best movies available?  Almost everyone can glean new ideas for their Netflix queue, even if they already have seen lots of films.

I don’t know of a biography which is inspirational for everyone or even most people, and I figure an intelligent person older than thirty already has been exposed to the world’s major religions.

How about a book which is a compendium for a hobby, such as a bird watcher’s guide, a Sotheby’s auction catalog, or a Fuchsia Dunlop cookbook?

I keep finding myself drawn to recommend a book which leads the advice recipient away from books, rather than toward them.  Is that a strength or weakness of the book medium?

Thursday assorted links

by on February 11, 2016 at 12:25 pm in Uncategorized | Permalink

1. Princeton Bitcoin textbook is freely available.

2. What became of Michael Jackson’s chimpanzee, Bubbles?  And speaking of the 1980s, Pee Wee’s Big Comeback (NYT).

3. “The black-white income gap was cut by about a third between 1992 and 2000…”  Link here.

4. Someone is building a fence.

5. A short introduction to gravitational waves.

6. Harvard faculty support Clinton over Sanders, overwhelmingly.

Birrieria Zaragoza

by on February 10, 2016 at 1:46 pm in Food and Drink, Uncategorized | Permalink

This small, family-owned Chicago Mexican restaurant specializes in barbecued goat.  It is the best barbecued goat I have had, the best accompanying sauce I have had outside of Mexico (you must order it separately), and the best tortillas I have had outside of Mexico.  It is one of the best restaurants in Chicago, for my taste perhaps the best.

Here is a short video about the restaurant.

Note also that goats are not in general raised on factory farms.  It is a significant question how steeply the marginal cost curve would climb, were we to substitute a lot of goat consumption for say pig or cow consumption.  In any case, at the margin it seems like a no-brainer, especially with the Birrieria to guide you.

Strongly recommended.

Wednesday assorted links

by on February 10, 2016 at 12:15 pm in Uncategorized | Permalink

1. Should you be glad if your kid starts listening to heavy metal?

2. The economics of food truck location.

3. Nodes of visa-free travel.

4. “The largest rabbit in the world is Darius…

5. Magic Johnson responds to Kareem’s Conversation with Tyler.

6. Fire-using birds? (speculative)

7. New ruling will help enable driverless cars.

When private companies can’t or won’t go public, they become easy pickings for their competitors to buy them…In my not so humble opinion, this is the ultimate productivity and investment killer in the USA today.

And this:

One of the reasons today’s 3700 public companies hoard cash is because they know that rather than investing in uncertain R&D and productivity enhancements to protect them against the “Innovators Dilemma”, upstart companies that could disrupt them and their industries, they can simply buy those companies.

Finally:

It is undeniably destructive to our economy and future when many of our most innovative and exciting companies are bought by their competition.  It is a “Precognitive Anti-Trust Violation” I know that sounds laughable in so many ways. But at its heart, it’s true. It’s also incredibly destructive to our standing in the world and our economy.

Speculative, but worth a ponder.  The full post is here, and for the pointer I thank Michael Milburn.

My market hermeneutics is this: Japan is trying to weaken its currency by confiscating resources from its financial institutions only, using negative interest charges on bank deposits held at the Bank of Japan.  The market says “we don’t believe this can work.  If you really want to weaken your currency, you have to confiscate resources from your citizens, perhaps from your median voter too.”  Abe won’t do that, not yet at least.  And so the Yen is rising.  The currency looks stronger than before, yet the overall Japanese situation looks weaker, so Japanese equities are falling sharply.

I wonder which politician will be the one to use monetary policy — not for “people’s QE” — but to confiscate resources from the median voter.  It won’t happen tomorrow, or even next year, but yes it will happen in some of the developed economies, not just Venezuela.  That will change macro debates by more than a small amount.

Here is an FT account, here are other, less gated accounts.

Tuesday assorted links

by on February 9, 2016 at 1:01 pm in Uncategorized | Permalink

1. How I read.

2. Speed dating for rabbits.

3. Is Rwanda a Potemkin Village?

4. Legally notarize a document from your phone.  Notice how I just write “phone”?  Two years ago I would have written “smart phone.”

5. The economics of Arizona’s crackdown on illegal immigration.  WSJ, use Google if you need to.

6. Gratitude reduces economic impatience.

7. I agree with this David Brooks column on Obama.

Many of us think this diagram shows there has been some kind of structural break in the labor market, and/or that recovery is proceeding slowly.  Paul Krugman, very recently, suggests that structural factors play little role because the measured unemployment rate is now below five percent.

But in fact labor market indicators are quite mixed, and furthermore the best and latest research out of MIT indicates the structural story does indeed carry real weight.  See also Alan Krueger’s work, or recent research from the AER.  And there are plenty of markers of a more persistent shift in economic activity, as reflected in CBO markdowns of expected productivity growth, based partly on trends which preceded the recession.  That all might be wrong, but the mere citation of the current 4.9 unemployment rate doesn’t persuade me otherwise.

Let’s not forget what Krugman wrote in 2012:

My current favorite gauge of the jobs picture is the employment-population ratio for prime-age adults (25-54). EP ratio instead of unemployment rate, because U may be distorted by workers dropping out…Everything else is just noise.

At least as of yesterday, the preferred labor market indicator was once again the unemployment rate, no mention of 2012.  That was then, this is now, I suppose.

The rest of Krugman’s history on recovery is curious.  Very early on he predicted a rapid recovery (if not right away), then he predicted for several years a long-standing secular stagnation, now he seems to be citing “a recovery of demand.”  I don’t see anything wrong with such a change in emphasis, as the facts change, and Krugman himself makes this meta-point fairly frequently.  Still it is odd for him to be criticizing the predictive record of others on these issues.  He’s been through what appears to be three distinct positions on recovery, and two distinct positions on which labor market indicators really matter, and we are still not sure exactly which views are correct.

Bryan Caplan is pleased that he has won his bet with me, about whether unemployment will fall under five percent.  I readily admit a mistake in stressing unemployment figures at the expense of other labor market indicators; in essence I didn’t listen enough to the Krugman of 2012.  This shows there were features of the problem I did not understand and indeed still do not understand.  I am surprised that we have such an unusual mix of recovery in some labor market variables but not others.  The Benthamite side of me will pay Bryan gladly, as I don’t think I’ve ever had a ten dollar expenditure of mine produce such a boost in the utility of another person.

That said, I think this episode is a good example of what is wrong with betting on ideas.  Betting tends to lock people into positions, gets them rooting for one outcome over another, it makes the denouement of the bet about the relative status of the people in question, and it produces a celebratory mindset in the victor.  That lowers the quality of dialogue and also introspection, just as political campaigns lower the quality of various ideas — too much emphasis on the candidates and the competition.  Bryan, in his post, reaffirms his core intuition that labor markets usually return to normal pretty quickly, at least in the United States.  But if you scrutinize the above diagram, as well as the lackluster wage data, that is exactly the premise he should be questioning.

As I’m the only one in this exchange fessing up to what I got wrong, and what I still don’t understand, and what the complexities are, in a funny way…I feel I’m the one who won the bet.

Addendum: Here is the graph of the ratio for prime age workers only, it too shows partial but by no means complete recovery.  And note this: the more optimistic you are about interpreting the labor market side, the more pessimistic you ought to be about the productivity picture, a conclusion which is anathema to Caplan at least.  Given recent configurations of data, it really is hard to avoid carving out room for structural factors as a significant part of the story.

The latest trend is social welfare programs to give free food to dogs and other pets (NYT):

The pantries have become part of a broader movement among animal welfare organizations, pet lovers and others that aims to reduce the population of animals in shelters by assisting pet owners before they resort to giving up their companions. The ASPCA has awarded $400,000 in grants since 2010 to 121 organizations nationwide to support pantries, food banks, and other programs that distribute free food for pets.

If you are wondering, this seems to involve both private and public funds, I am not sure of the ratios.  In a nutshell, here is the debate:

“I understand why this is important, but half the food pantries in New York City don’t have enough food to meet human needs,” Mr. Berg said, noting that he was a cat owner. “We should have fully stocked pantries for humans before we feed pets.”

Supporters of the pantries counter that they are, in fact, helping people by helping their pets, citing research that shows pets can help lower stress and blood pressure, improve moods, and provide emotional comfort to their owners.

I think more in terms of incidence.  Under one hypothesis, the owners will feed their pets in any case, so this is almost as good as a pure cash transfer to the owners.  Under another hypothesis, the transfers postpone a needed and beneficial reallocation of the dogs to wealthier owners.  Under yet another approach, the dogs eat more and reap most of the benefits.  Alternatively, in a Beckerian model, the owners may now feed the dogs more but take them on fewer walks, thereby capturing the value of the transfer.  Longer-run effects operate on the total quantity of dogs and their allocation across income classes.  How much better is it for a dog to have a wealthier owner?

Monday assorted links

by on February 8, 2016 at 12:05 pm in Uncategorized | Permalink

1. “Watson, who lives with his wife by the sea, says he is still facing charges under a 1935 law that states no one can possess more than 120 packs of cards at one time.”  The polity that is Thailand.

2. Productivity growth during the Great Depression.

3. Solar + storage.

4. How Hollywood’s favorite juice bar owner eats every day.  For real, not a joke, and parasitic on “Markets in Everything.”  Recommended.

5. Can you learn some skills twice as fast?

6. Evidence on candidate electability from prediction markets.

Two Brazilian movies of note

by on February 8, 2016 at 10:32 am in Film, Uncategorized | Permalink

1. The Boy & the World.  A Brazilian animated movie, it actually fits the cliche “unlike any movie you’ve seen before.”  Preview here, other links here, good for niños but not only.  Excellent soundtrack by Nana Vasconcelos.

2. The Second Mother.  A Brazilian comedy of manners about social and economic inequality, as reflected in the relations between a maid, her visiting daughter, and the maid’s employer family.  Now, to my and maybe your ears that sounds like poison, because “X is about inequality” correlates strongly with “X is not very good,” I am sorry to say.  This movie is the exception, subtle throughout, and you can watch and enjoy it from any political point of view.  It helps to know a bit about Brazil, and it takes about twenty minutes for the core plot to get off the ground.  Links here.

Dennis Shiraev emails me:

You are an investor with $10 million planning to cash out in 20 years. A genie appears and offers to send you the price of one but only one asset 20 years from now to inform your investment decisions (a stock, currency pair, commodity, equity index, etc.). What do you want to know? The genie also gives you 20 year cumulative inflation (or exchange rate change for non USD assets) so you won’t need to worry about price/value disentangling.

I said the price of Bitcoin but also considered the IBOVESPA or Shanghai composite index prices.

This isn’t as simple as it might seem at first.  You might look for the most volatile price among the liquid assets whose trading you can access.  But knowing the price only twenty years out then tells you little about what is happening in the meantime.  Which price twenty years out gives you the most information about the global path of prices along the way?  That may suggest looking for a price with some persistence, and which contains lots of information about other prices too.

For purposes of tractability, let’s assume that prices are not rescaled in the meantime, through say major changes in currency names or index definitions, and that knowing the future price of a variable is in some way commensurable with the current understanding of that same variable.

Then I would opt for the Shanghai composite.  I don’t see Bitcoin prices as correlated with enough other facts about the future state of the world.  Plus, if it turned out that price would fall to zero or undefined, you might find it hard to short significant quantities of Bitcoin in the meantime.

Sunday assorted links

by on February 7, 2016 at 1:07 pm in Uncategorized | Permalink

1. Abortion opponents secretly buy an abortion clinic.

2. Slower Chinese growth doesn’t have to mean military adventurism.

3. MIE: Moscow’s rage room in photos.  And the Monty Hall problem in Russian roulette.

4. One hundred historically famous jokes.

5. The rich are already using robo-advisors.  And Google AI will play the world Go master in March.

6. How and when do people change their minds on-line.  Does this article make any sense to you?

7. A trade theorist defends the use of diagrams.