Saturday assorted links

by on August 20, 2016 at 12:33 pm in Uncategorized | Permalink

1. Good explanation of wage segregation.

2. Box average is over.

3. John Cleese has a new Miss Anne Elk video out.  It’s not funny (at all), but viewing it is an object lesson in just how delicate a balance lies behind good humor.

4. BookForum does libertarianism.

5. “Indonesia considers renaming South China Sea to Natuna Sea.”  I’ve been saying for a long time they need to do something like this.

6. A good reductio of what some of you believe.

There are both costs and benefits to bringing property into the formal sector.  Along those lines, “The Deregularization of Land Titles” is a new paper by Sebastian Galiani and Ernesto Schargrodsky:

In the last years, several countries implemented policy interventions to entitle urban squatters, encouraged by the results of studies showing large welfare gains from entitlement. We study a natural experiment in the allocation of land titles to very poor families in a suburban area of Buenos Aires, Argentina. Although previous studies on this experiment have found important effects of titling on investment, household structure, educational achievement, and child health, in this article we document that a large fraction of households that went through a situation at which formalization was challenged (death, divorce, sale/purchase), ended up being de-regularized. The legal costs of remaining formal seem too high relative to the value of these parcels and the income of their inhabitants.

This piece helps explain why Hernando De Soto’s ideas, however useful they may be in some regards, have not quite transformed either the world or for that matter the practice of development economics.

Here is a good sentence from the paper: “The cost of processing the inheritance of an asset valued at US$ 11,700 is about US$ 2,300.”  Legal systems are a normal good, and legalizing everything too quickly leads to burdens as well as benefits.  Try this bit too: “When property rights are transferred to very poor people, preserving legal tenure will likely entail onerous expenses in the form of attorney and public notary fees, and courts costs.  In addition, these charges are higher in relative terms in very unequal societies where the gap between the poor and the relatively well-off is wider.”

These topics remain under-explored.

Friday assorted links

by on August 19, 2016 at 12:10 pm in Uncategorized | Permalink

Thursday assorted links

by on August 18, 2016 at 12:24 pm in Uncategorized | Permalink

Wednesday assorted links

by on August 17, 2016 at 11:52 am in Uncategorized | Permalink

1. “…the slowdown in TFP during and after the great recession is due to the decline in the speed of adoption of new technologies in response to the credit disruptions that shocked the US economy since the end of 2007 and that have affected the cost and availability of funds for companies until the end of 2013.”  Short paper here (pdf).

2. This piece takes too long to get going, it is nonetheless an interesting take on how tourism is transforming Iceland.

3. Aetna’s retreat from Obamacare.

4. A mathematical history of taffy pullers.

5. Myths about Sunnis and Shias.  Good piece, useful corrective.

I can think of a few reasons:

1. Many of the structures in places are perceived as failing, even though in absolute terms they are not obviously doing worse than previous times.

2. There is a rise in nationalist sentiment and a semi-cosmopolitan ethic is starting to lose influence.

3. The chance of violent conflict is rising.

4. Dialogue is becoming more polarized and bigoted, and at some margins stupider.

5. Tales of gruesome torture are being spread by new publishing and communications media.

6. The world may nonetheless end up much better off, but the ride to get there will be rocky iindeed.

I have been reading Carlos M.N. Eire, Reformations: The Early Modern World, 1450-1650.  Yes I know it is 893 pp., but it is actually one of the most readable books I have had in my hands all year.

Do you ever read someone and find you are too addled to tell when the author is being funny or not, and then perhaps some of you have the temerity to suggest your confusion is the fault of the author?

Well, imagine a whole novel like that, and about the hot-button topics of sex and above all power and power in the workplace and yes race too.  Helen DeWitt can in fact get away with writing sentences such as:

One man said he was not exactly disputing the points made but he did not think he could reward his top earners with titless sex.

So yes, buy this book but do not read it, for the temerity will rise in your soul.

Helen DeWitt is a national treasure, yet collectively we have driven her to Berlin.  We do not deserve whatever she plans on serving up next.

Here is my previous post on Helen DeWitt.

Tuesday assorted links

by on August 16, 2016 at 11:46 am in Uncategorized | Permalink

Monday assorted links

by on August 15, 2016 at 11:44 am in Uncategorized | Permalink

1. Contemporary art exhibit for dogs, via Yana.

2. “Tyler Cowen asks what I think the five biggest open questions are in the current economic debate.”  That is from Adam Ozimek, those are pretty close to my own list, I would toss in some China too like “what the hell is going on there?”.

3. Smart tattoos can control your phone — and what else?

4. Taxidermist robotic deer there is no great stagnation.

5. I’ve been telling you that foreign agents will continue to be a big and growing issue (NYT, #Ukraine, #Russia, #Manafort).

6. Iran fact of the day: per gdp, they are number one in medial count, USA is number three.

Sunday assorted links

by on August 14, 2016 at 2:30 pm in Uncategorized | Permalink

1. Mistakes people make with publishing academic books.

2. What makes a McMansion bad architecture?  Great piece.

3. Why so many lottery jackpots this year? (NYT)

4. The US and UK versions of Cloud Atlas are quite different.

5. So far the worst predictions about Brazil’s Olympics have not come true.  And which are the most popular Olympic sports?  I didn’t know people enjoy watching volleyball so much.

6. “The FDA wants to make it harder to buy and sell poop.”  Are the pro-choice forces lining up against this one?  I hope they will.  There is in fact a new saying “My colon. My choice.”  You don’t even have to worry about the status of the fetus…

Saturday assorted links

by on August 13, 2016 at 1:25 pm in Uncategorized | Permalink

Xenophon paragraphs to ponder

by on August 13, 2016 at 12:23 am in Uncategorized | Permalink

Australia’s government needs to scrap its “free trade Taliban mentality”, buy more local products and properly scrutinise foreign investment, says Nick Xenophon, the leader of one of the minor parties that holds considerable sway following last month’s election.

Most of all, it hurts that he is called Xenophon; some of you will know that Xenophon from ancient Greece was the first (surviving) author to point out the phenomenon of division of labor.

Apparently there is a “Great Xenophon stagnation” or even retrogression.  This passage notwithstanding, the Taliban, by the way, did not favor free trade.

Here is the full FT piece by Jamie Smythe.

Friday assorted links

by on August 12, 2016 at 11:56 am in Uncategorized | Permalink

No, it is not zero, not even if government borrowing rates were literally at zero.  Yet I’ve seen that claim a few dozen times in the last year or two, so let’s walk through some arguments that were fully standard by the 1970s.

Opportunity cost is ultimately defined in real resource terms, converted into value.  So if the government borrows more money and mobilizes robots to do some work, that means fewer robots to do work elsewhere.

So what is the marginal private rate of return on capital?  That’s a bottomless pit sort of question, but it’s not unusual to find sources which suggest a number for the average return in the range of 15% or so, see p..53 from this Stern School study here (pdf), with the median estimate running at about 12% (p.54).  The papers from the 1980s found about the same, sometimes higher.

That’s way too high, says this stagnationist!  Let’s instead cut it down to historic U.S. equity returns and say seven percent for the return at the margin.

Now, even today there are some unemployed resources.  But most government fiscal policy works through well-known, fairly large contractors that at the margin have already well-established networks of capital and labor.  So circa 2016, I don’t think that is a significant factor.  Even in more down times, fiscal policy doesn’t always target unemployed resources so well.

That means a government project faces a seven percent hurdle rate.  You may wish to up that for risk (the value of government output covaries positively with national income), and more yet for irreversibility.  Let’s say that brings us up to a ten percent hurdle rate, and that’s being quite conservative.  Sometimes irreversibility premia can multiply hurdle rates by 2x or 3x.

So that’s a (hypothetical) hurdle rate of ten percent, not zero percent.  Of course it’s not unusual for private companies to use hurdle rates of twenty or more for their investment decisions.

There are further complications if the borrowing is financed by foreign finance capital.  But there is still likely a real resource displacement in the home market as robots are shifted from one line of work to another.  In addition, foreign ownership of the debt is about one-third of the total, noting the average and marginal here may diverge.  Still, the domestic capital case seems to be the dominant effect.

You really can bicker about the right number here, and I’ve elided the question of whether some of the crowding out might come from consumption through a positive elasticity of robot supply; check the early papers of Martin Feldstein on related questions.  But if someone tells you zero percent is the correct hurdle rate for government infrastructure investment, they are wrong.

Opportunity cost remains an underrated idea in economics.

Thursday assorted links

by on August 11, 2016 at 1:55 pm in Uncategorized | Permalink