1. Volkswagen and the trade agreements: “In the best of cases, the United States will emerge as the “world super-regulator.”” Bravo.
1. Volkswagen and the trade agreements: “In the best of cases, the United States will emerge as the “world super-regulator.”” Bravo.
One plausible estimate suggests this additional pollution has been killing 5 to 27 Americans each year, with that number worldwide reaching up to 404 as a maximum.
To put that number in context, the World Health Organization estimates that about seven million people die each year worldwide from air pollution. Even within the United States, early deaths from air pollution have been estimated to run about 200,000 a year, in comparison to which the losses from the Volkswagen scandal are a rounding error. For the American deaths, however, the culprits are often cars, trucks and cooking and heating emissions, so there is no single, evil, easily identified wrongdoer at fault. As Pogo recognized, often the real enemy is us.
Here are alternative estimates of the death from Volkswagen, published after my piece was set to run but the comparisons do not change fundamentally. From that same article here are two paragraphs of note:
Don Anair, deputy director of the vehicles program at the Union of Concerned Scientists, said the precise effect of the Volkswagen fraud would require intense and complex computation.
Still, he cautioned against taking the view that the Volkswagens have reversed the progress with pollution from automobiles. Since the standards went into effect from 2004 to 2009, he said, emissions of nitrogen oxides have been 90 percent lower. “It’s not like this is going to offset the majority of the benefits of these standards,” he said. “But there will be some impact, and we need to get a better handle on it.”
“Since the standards went into effect from 2004 to 2009, he said, emissions of nitrogen oxides have been 90 percent lower.” is a sentence which I fear will not receive much attention in the current debate.
1. Ngdp for the ECB?
2. Soviet bus stops.
3. Can we moderns no longer understand Shakespeare? If not, when will that time arrive?
The award announcement includes a description of her work (with further links), basically she does health care economics at MIT. In particular she considers when IP restrictions might hinder rather than support further innovation. Here is her home page, she also has interesting papers on prizes. Here is her research statement (pdf), interesting throughout, a very good selection from the committee.
Elsewhere, Matthew Desmond works on eviction as a cause and not just a symptom of poverty.
That is the title of my new piece in MIT Technology Review. It’s about a near future where bosses can measure the productivity of workers through software and surveillance more accurately than is now the case. Productivity will go up, but it is not all rosy, here is one excerpt:
Individuals don’t in fact enjoy being evaluated all the time, especially when the results are not always stellar: for most people, one piece of negative feedback outweighs five pieces of positive feedback. To the extent that measurement raises income inequality, perhaps it makes relations among the workers tenser and less friendly. Life under a meritocracy can be a little tough, unfriendly, and discouraging, especially for those whose morale is easily damaged. Privacy in this world will be harder to come by, and perhaps “second chances” will be more difficult to find, given the permanence of electronic data. We may end up favoring “goody two-shoes” personality types who were on the straight and narrow from their earliest years and disfavor those who rebelled at young ages, even if those people might end up being more creative later on.
The closer is this:
I wonder, by the way, if MIT Technology Review will tell me how many people clicked on this article.
Do read the whole thing.
2. Internet competition can raise prices (beware intuitive economics).
5. Vaclav Smil talk.
Japan Times reports:
Consumer prices excluding fresh food fell 0.1 percent in August from a year earlier, the first drop since April 2013, the same month Kuroda embarked on a campaign of record asset purchases to rid Japan of its “deflationary mindset.”
My goodness is economics a difficult subject. (Scott Sumner is implicitly surprised too.) So why is this happening?
Many of you might be tempted to utter some version of the words “liquidity trap.” Even if this is one of the more reasonable versions of the liquidity trap arguments, there remains a problem.
Liquidity trap arguments imply that someone’s marginal utility of holding money is basically flat, whether that be the banks, the bank shareholders, the customers — someone. And the flatness holds for a bunch of relevant someones, not just a few people. (Or is that a flat marginal utility curve for “money plus safe short-term bonds“? Whatever.) With a flat marginal utility curve of money there are multiple equilibria, just as multiple equilibria more generally plague liquidity trap models. Velocity could be something other than what it is, because at higher or lower levels of cash balance holdings the rate of return on those holdings still would be the same.
Institutional frictions may play a role in setting the equilibrium. So why an equilibrium with falling prices? Prices are sticky to some extent, which tends to militate against those of the multiple equilibria where prices are falling. One might expect the equilibrium where the aggregate of prices rises, if only slowly. But then why would a slightly higher rate of price inflation turn back down to a lower rate?
A second view is that the money supply/credit supply is endogenous, a’ la Fischer Black, Basil Moore, and others. Until the real economy does better, the force of M times V will be weak. This view involves no particular commitment to the slope of the marginal utility of money schedule. Post 2013, prices went up for a while, because people thought Abenomics might work, but now that they see it doesn’t prices are sliding back down again.
Yet a third view is that the Japanese simply haven’t tried hard enough yet to debase their currency, see for instance Krugman on credibility or various Scott Sumner posts. In this context I would myself cite gerontocracy rather than credibility issues.
My best guess is that some version of #3 makes #2 true at the relevant margin, but I don’t think such matters are well understood.
Addendum: Scott Sumner comments, for any plausible measurement I still say the rate of price inflation is relatively low in a puzzling manner, relative to asset purchases. Large increases in money are in principle capable of offsetting relative small declines in food and energy prices, and if they do not that is simply another way of restating the puzzle.
I very much enjoyed the new LRB piece by Amia Srinivasan. Here is a good “standing on one foot” statement of what effective altruism recommends:
The results of all this number-crunching are sometimes satisfyingly counterintuitive. Deworming has better educational outcomes among Kenyan schoolchildren than increasing the numbers of textbooks or teachers. If you want to improve animal welfare, it’s better to stop eating eggs than beef, since caged layer hens live worse lives than farmed cows, and because eating eggs consumes more animals than eating beef: the average American consumes 0.8 layer hens but only 0.1 beef cows per year. Buying Fairtrade goods can be worse than buying regular goods, since the extra cost goes mostly to middlemen rather than farmers, and when it doesn’t, it benefits farmers in relatively rich countries: because Fairtrade standards are hard to meet, most Fairtrade coffee production comes from Mexico and Costa Rica rather than, say, Ethiopia, where the marginal pound would go much further. The green value of buying locally grown food is overblown, too, since transport accounts for only 10 per cent of the carbon footprint of food, while 80 per cent of it is generated in production; tomatoes grown in the UK can have five times the carbon footprint of tomatoes shipped from Spain because of the energy required to hothouse them. If you’re really committed to minimising your carbon footprint, MacAskill recommends donating to the carbon offsetting charity Cool Earth; he estimates that the average American could offset all his carbon emissions by donating $105 a year. There isn’t much point in unplugging your electricals, either: leaving your mobile phone charger plugged in for a whole year contributes less to your carbon footprint than one hot bath.
And here is part of the critique:
MacAskill is evidently comfortable with ways of talking that are familiar from the exponents of global capitalism: the will to quantify, the essential comparability of all goods and all evils, the obsession with productivity and efficiency, the conviction that there is a happy convergence between self-interest and morality, the seeming confidence that there is no crisis whose solution is beyond the ingenuity of man. He repeatedly talks about philanthropy as a deal too good to pass up: ‘It’s like a 99 per cent off sale, or buy one, get 99 free. It might be the most amazing deal you’ll see in your life.’ There is a seemingly unanswerable logic, at once natural and magical, simple and totalising, to both global capitalism and effective altruism. That he speaks in the proprietary language of the illness – global inequality – whose symptoms he proposes to mop up is an irony on which he doesn’t comment. Perhaps he senses that his potential followers – privileged, ambitious millennials – don’t want to hear about the iniquities of the system that has shaped their worldview. Or perhaps he thinks there’s no irony here at all: capitalism, as always, produces the means of its own correction, and effective altruism is just the latest instance.
Not my view, but well written as a piece and definitely recommended. Here is comment from Scott Alexander.
I have a few points:
1. There is decent evidence that many other car companies have done something similar. Read this too. Besides, Volkswagen committed a related crime in 1973. When I was a teenager (maybe still?), it was commonly known that New Jersey service stations would help your car pass the emissions test if you slipped them a small amount of money. So we shouldn’t be shocked by the new story. The incentive of the agencies is to get the regulations out the door and to avoid subsequent bad publicity, not to actually solve the problem. So yes, there is a “regulation ought to be tougher” framing, but there is also a “we’ve been overestimating the benefits of regulation” framing too. Don’t let your moral outrage, which leads you to the former lesson, distract you from absorbing some of the latter lesson too.
2. We are more outraged by deliberate attempts to break the law, compared to stochastic sloppiness leading to mistakes and accidents. But it is far from obvious that the egregious violations should be punished more severely in a Beckerian framework. In fact, if they are harder to pull off, compared to sheer neglect, perhaps they should be punished less severely, at least from a utilitarian point of view. I am not saying we should discard our intuitions about relative outrage, but we ought to look at them more closely rather than just riding them to a quick conclusion. I’ve seen it noted rather frequently that the head of the supervisory committee at Volkswagen is named Olaf Lies.
3. Don’t think this is just market failure, it springs from a rather large government subsidy program. Clive Crook makes a good point:
Remember that “clean diesel” was a government-led initiative, brought to you courtesy of Europe’s taxpayers. And, by the way, the policy had proved a massively expensive failure on its own terms even before the VW scandal broke.
…At best, the clean-diesel strategy lowered carbon emissions much less than hoped, and at ridiculous cost; at worst, as one study concludes, the policy added to global warming.
4. One back of the envelope estimate is that the added pollution killed 5 to 23 Americans each year. Now I don’t myself think we should always or even mostly use economic methods to value human lives. But if you wish to play that cost-benefit game, maybe here we have $25 million to $100 million in economic value a year destroyed. It’s not uncommon to spend $100 million marketing a bad Hollywood movie. So in economic terms (an important caveat), this is a small event. Most of the car pollution problem comes from older vehicles with poor maintenance, not fraud on the newer tests. It also seems (same link) that diesel engines are 95% cleaner since the 1980s.
5. The German automobile sector exported about $225 billion in 2014. That’s almost as big as Greek gdp.
6. Manipulated data will be one of the big, big stories of the next twenty years, or longer.
7. It is worth citing Glazer’s Law, which is designed to classify explanations for microeconomic puzzles: “It’s either taxes or fraud”
This one isn’t taxes.
5. Animals attacking drones (video).
No, not Dani Rodrik, the guest for tomorrow’s Conversations with Tyler chat, rather Elias Canetti. As prep for Dani at 3:30 tomorrow (live stream), I thought I should read some more Canetti. Here are a few maxims from his The Secret Heart of the Clock:
At the edge of the abyss he clings to pencils
Curiosity diminishing, he could now start thinking
He reads only for appearances now, but what he writes is real
Newspapers, to help you forget the previous day
His disintegrating knowledge holds him together
1. Should you be an insider or an outsider? With advice from Larry Summers.
3. Would leaving the EU make it easier for the UK to control its border? (no, shout from rooftops)
4. Video excerpt, Luigi Zingales on whether Pope Francis is overrated or underrated. And lots of cheating on emissions tests, not just Volkswagen. Speaking of cheating, Angus and I say North Carolina barbecue is in decline.
5. The polity that is New York City:”Custodians took home an average pay of $109,467 in the 2013-14 school year — and 634 of the city’s 799 custodians earned more than $100,000 in salary and overtime during that time, city payroll records show.”