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In Foreign Affairs, James Bessen writes:

U.S. procurement programs worked so well in part because the Pentagon gave its business to a diverse group of private firms, including start-ups and university spinoffs such as Bolt, Beranek and Newman (now BBN Technologies), one of the companies that helped develop the Internet. It also required contractors to share their technologies with universities and other private firms, encouraging further innovation outside the government. By contrast, France and the United Kingdom often used government contracts to promote national telephone and computer companies, and the United Kingdom and the Soviet Union limited the interaction between government researchers and their civilian counterparts, cutting off the private sector from high-tech advancements. The Pentagon also encouraged contractors to adopt open technical standards—such as the set of protocols, established in 1982, that specified how data should be packaged and transmitted on the Internet—which allowed knowledge to spread quickly and easily.

In the past few decades, however, procurement has strayed from this successful formula. Instead of awarding contracts to start-ups and spinoffs, the Pentagon has favored traditional defense contractors. The Defense Department tasks these contractors with meeting the military’s narrow needs and too often prohibits them from sharing their work with universities or other companies. An example from the past reveals how problematic such policies can be. In 1977, when the Pentagon sought to create high-speed semiconductor chips, Congress prohibited the contractors hired from sharing their research. University researchers were effectively excluded from the program, and chipmakers were forced to separate their defense work from their commercial operations. Unlike the government procurement programs in the 1950s and 1960s, which spawned many start-ups, this billion-dollar program did little to commercialize new technology.

The article offers other points of interest, mostly about how special interests have undermined entrepreneurship.  I have recently pre-ordered Bessen’s forthcoming book on this theme.

For the pointer I thank Spencer England.

Assorted links

by on January 17, 2015 at 3:45 pm in Uncategorized | Permalink

1. How is that higher-order polynomial shaping up?

2. Do academic sociologists discriminate against the poor?

3. Are youth sports one of our biggest signaling problems?  They were great for me (Little League especially, seven years), but much cheaper back then.

4. The movie A Most Violent Year is excellent on the creeping nature of corruption, the operation of credit markets, upward mobility and the nature of the American dream, and the New Jersey heartland circa 1981.  Here is a good article on it.  I liked Selma too.

5. Which are the disproportionately popular ethnic cuisines in each state?  They get most states right, but surely Virginia should be El Salvadoran, not Peruvian, unless they miscount some of the more generic Latino chicken places as Peruvian.  And “Belgian” for D.C.?  I can think of two or three places, although I suspect North Dakota has fewer than that.  Most people might guess Ethiopian.

6. Harvard economics exam from 1953, for senior undergraduates.

7. New drone will hunt other drones.  And “…domestic criticism of the SNB’s large buildup of exchange-rate reserves (euro assets) was mounting.”

Ezra Klein has an excellent essay on this topic, reviewing the (very good) Philip Klein book.  Here is one bit:

Klein’s book is a service: it’s far and away the clearest, most detailed look at conservative health-policy thinking in the post-Obamacare world. But it can leave a reader with the impression that the important cleavages in conservative health-policy thinking are between the Replacers, the Reformists, and the Restarters.

It’s not. It’s between those in the party who want to prioritize health reform and those who don’t. And it’s worth being clear: those who don’t have a case. Health reform is an incredibly tough, painful project. Everything you do has tradeoffs, some of them awful.

And to sum up, the Democrats really cared about health care reform (for better or worse), but:

…that’s really the problem for conservative health reformers. For all the plans floating around, there’s little evidence Republicans care enough about health reform to pay its cost.

I am less positive on Obamacare than is Ezra, but still the piece is interesting throughout and a good challenge to would-be reformers.

Assorted links

by on January 16, 2015 at 12:29 pm in Uncategorized | Permalink

1. Is average over for NoVa?

2. Jeffrey Sachs on the war with radical Islam.

3. Dani Rodrik calls for “the innovation state.”

4. A new hypothesis for gender under-representation across academic fields.  More here from Science.  Admits of alternative interpretations.

5. How far are you willing to push the Pareto principle?

6. Economic history link dump splat (recommended, for some).

Further assorted links

by on January 15, 2015 at 3:29 pm in Uncategorized | Permalink

1. Work as a program manager for Scott Sumner.

2. Comparison with other oil price drops.

3. Confessions of a former TSA worker (speculative).

4. Securities law professors against Gallagher and Grundfest.

5. Thomas Piketty responds to critics from the Left, other interesting parts too.

Here is a very interesting piece by Claire Cain Miller, here is one excerpt:

The Pew and Rutgers researchers measured stress levels in a representative group of people by using a standard stress scale that ranks people’s responses to questions about their lives. Then they measured their frequency of digital technology use. They controlled for demographic factors like marital and education status.

They found no effect on stress levels among technology users over all. And women who frequently use Twitter, email and photo-sharing apps scored 21 percent lower on the stress scale than those who did not.

That could be because sharing life events enhances well-being, social scientists say, and women tend to do it more than men both online and off. Technology seems to provide “a low-demand and easily accessible coping mechanism that is not experienced or taken advantage of by men,” the report said.

Social media, particularly Facebook, increased stress in one way: by making people more aware of trauma in the lives of close friends. This effect was strongest for women. The finding bolsters the notion that stress can be contagious, the Pew and Rutgers researchers said.

But when such users of social media were exposed to stressful events in the lives of people who were not close friends, the users reported lower stress levels. Researchers said that was perhaps attributable to gratitude for their own lives being free of these stressors (the joy of missing out, offsetting the fear of missing out.)

Do read the whole thing.

Assorted links

by on January 15, 2015 at 3:06 am in Uncategorized | Permalink

1. Stimulus and jobs, hard to have it both ways.

2. How has economic convergence changed over time?

3. Philosophers on why they went into philosophy.

4. Korean adoptees returning home to Korea.

5. Philip Klein’s Overcoming Obamacare is a very useful and well-written guide to alternatives to ACA, although I am not sure the reader comes away especially heartened or optimistic.  Aaron Carroll reviews the book, mostly positively (though he disagrees), Veronique de Rugy has coverage also.

Assorted links

by on January 14, 2015 at 12:49 pm in Uncategorized | Permalink

1. How Amazon tricks you into thinking it always has the lowest prices.

2. Most neoclassical economists don’t understand most of these.  I think not one in fifty actually understands the Heckscher-Ohlin theorem, for instance.

3. In one restaurant in China, beautiful people eat for free.

4. The blockchainiacs?

5. 3-D printed drones.

6. British markets in everything: fish and chips chips.

7. In praise of Piketty’s translator.

What a strange pattern to find in a book.  The first 264 pp. are good enough but not exceptional and at times boring through being overly familiar.  The last two chapters I found to be a brilliant treatment of recent Japanese politics through the lens of public choice models, probably the best since Karel von Wolferen’s The Enigma of Japanese Power.

Have you wondered what distinguishes the regime of one Japanese prime minister from another?  Which are the different interest groups for and against the consumption tax hike and why?  What accounts for the initial failure and then later resurgence of Abe?  What role does Okinawa play in broader Japanese politics?  Which kinds of regular struggles are played out between the elected officials and the bureaucrats?  What does a sentence like this mean?: “The people around Abe wanted, finally, to stamp out forever the ghost of Tanaka Kakuei.”

How many other books rise to “superb” status but only through their last two chapters?

Here is a review of the book from The Economist, positive but not along the lines I offer above.  Here is a Literary Saloon review.  Here is an FT review by the excellent David Piling.

You can order the book here.  It came out in December 2014 but will make my best books of 2015 list for sure.  For the initial pointer to this book I wish to thank Jim Olds.

The actual title is “Decision-Making under the Gambler’s Fallacy” (pdf) and the authors are daniel Chen, Tobias J. Moskowitz, and Kelly Shue.  Here is one short bit from what is more generally a very interesting paper:

We test our hypothesis in three high-stakes settings: refugee court asylum decisions in the US, a field experiment by Cole et al. (2013) in which experienced loan officers in India review real small-business loan applications in an experimentally controlled environment, and umpire calls of pitches in Major League Baseball games. In each setting, we show that the ordering of cases is likely to be conditionally random. However, decisions are significantly negatively autocorrelated. We estimate that up to 5 percent of decisions are reversed due to the gambler’s fallacy.

To make that more concrete, if a baseball umpire first calls a ball, the next pitch he is more likely to then call a strike.  Of course this may plague your paper refereeing decisions, whether or not you finish your next book, and your dating life.

The original pointer was from Cass Sunstein on Twitter.

Assorted links

by on January 13, 2015 at 12:11 pm in Uncategorized | Permalink

1. Long interview with Janos Kornai (pdf).

2. New ways your car will monitor you.  And how well can computers judge your personality?

3. Kurosawa’s favorite movies.  A good list.

4. Barbaric Icelandic markets in everything.

5. Profile of Jerry Brito and Coin Center.

6. Scroll down for research on France and Muslims.

Assorted links

by on January 12, 2015 at 12:51 pm in Uncategorized | Permalink

1. Book preview for 2015.  Good stuff, including volume four of Knausgaard, a new Stephenson, a new Gaiman, a new Ishiguro, a Philip Glass memoir, perhaps the Niall Ferguson book on Kissinger will be interesting too.  Here is another preview list.  And who was nominated for a literary Nobel Prize in 1964.

2. The pick-up culture that is Chinese.

3. Another (right-wing?) view on why the leading public intellectual economists are left-wing.  And more from Krugman.

4. Voodoo and Haitian mental health.  And the culture that is Singapore.

5. Sri Lanka’s surprise (positive) political transition.

6. Summers responds to Andreessen on secular stagnation.

The review is excellent and interesting throughout, here is one good bit:

Come to think of it, lack of intelligibility runs like a red thread throughout Average is Over, from “ugly” machine chess moves that human players scratch their heads at, to the fact that Cowen thinks those who will succeed in the next century will be those who place their “faith” in the decisions of machines, choices of action they themselves do not fully understand. Let’s hope he’s wrong on that score as well, for lack of intelligibility in human beings in politics, economics, and science, drives conspiracy theories, paranoia, and superstition, and political immobility.

Cowen believes the time when secular persons are able to cull from science a general, intelligible picture of the world is coming to a close. This would be a disaster in the sense that science gives us the only picture of the world that is capable of being universally shared which is also able to accurately guide our response to both nature and the technological world.

Read the whole thing, the pointer is from Arthur Charpentier.

Assorted links

by on January 11, 2015 at 12:56 pm in Uncategorized | Permalink

1. The importance of sociologist Howard Becker in France.  And Harry Jaffa has passed away.

2. Many variants of Moore’s Law are now over.

3. 25 predictions about media and the internet.

4. How to convert your Mercedes into a self-driving Mercedes (sort of) and impress your date.

5. Duolingo.

6. Paul Krugman on why there is no right-wing Paul Krugman today.

7. Jeff Denning on the economics of community college.

David Leonhardt writes:

The plan — which would require congressional approval — would apply to students attending a two-year college, including part time, so long as the college offered credits that could transfer to a four-year college or provided training that led to jobs.

David’s article is excellent and has much useful information:

As Reihan Salam of National Review notes, community college tuition is already low. In fact, it’s zero, on average, for lower-income families, after taking financial aid into account. Vox’s Libby Nelson wrote, “Community college tuition for poorer students is often entirely covered by the need-based Pell Grant.”

One potential implication is that by making community college universally free, the government is mostly reducing the cost for higher-income families.

Calculating the completion rate at community colleges is difficult, this estimate does some work to get it up to 38 percent.  What would the completion rate be for the marginal students encouraged under the Obama plan?  We don’t know, but I’ll guess at 20-30%, no more.  That’s the real problem.

Furthermore some of the value of education is signaling to the labor market that you are able to finish college.  I do think the learning component of education is generally more important, but for “marginally not attending community college individuals” — who are often regarded with suspicion by employers — I would not be surprised if the signaling component were one third or more of the value of a degree.  To that extent, pushing more marginals into the degree funnel lowers the value of the degree for the others who were getting it already by lowering the average productivity of the pool of finishers.  That would lower the efficiency gains from the program and also partially offset some of the intended distributional consequences.

Mike Konczal likes the idea, and believes it may lower higher education prices more generally.  Libby Nelson at Vox considers it to be a middle class benefit.  Neil McCluskey at Cato is negative.  Carrie Sheffield is critical.  Here is a look at potential winners and losers in the higher education sector.  The plan could lead to federal money replacing state money, rather than leveraging it.

Citing the growing economy and improving labor market, Andrew Flowers noted:

college enrollment is declining for recent high school graduates (those 16 to 24 years old). And it’s falling fastest for community colleges.

Overall my take is that the significant gains are to be had at the family level and at the primary education level, and that the price of community college is not a major bottleneck under the status quo.