Saturday assorted links

by on September 17, 2016 at 2:42 pm in Uncategorized | Permalink

1. The geography of populist surgesThis update tells us that rural income did OK.

2. Airbnb + clapped out taxi cab = NYC on $39 a nightThis guy (NYT) pays $450 a month for a 40-square foot cubbyhole in Williamsburg.  And the homes of New Yorkers on TV are looking worse (NYT).

3. “…the phenomenon of men opting out of work is limited to the native-born.”  That is one reason why I don’t think it is just demand.

And here is Pleeps on the young men who do not wish to work.  Two points: a) the gaps he finds are actually pretty large relative to the residual that needs to be explained, and b) a lot of those young men going to school never finish and in fact they are engaged in a kind of leisured unemployment, albeit at an especially high price.  In fact, if you take non-completion seriously, the entire phenomenon becomes far more visible and obvious as a problem.  The funny thing is, in these mood-affiliated times, generally you can get people to recognize the problem if you present it in the context of degree completion only and make sure to portrays the students as pure victims of circumstance.  At lower tier schools, the completion rate is now about 38 percent.  It would be shocking if there were not an analogous problem in the job market, yes shocking.  Of course we live in shocking times.

4. “I tell her just marry anyone. Whatever. All the San Francisco guys seem like the same guy to me.”  Link here.

5. The culture that is Olive Garden markets in everything.

Bowling alone and for peanuts too:

In 1964, “bowling legend” Don Carter was the first athlete in any sport to receive a $1 million endorsement deal ($7.6 million today). In return, bowling manufacturing company Ebonite got the rights to release the bowler’s signature model ball. At the time, the offer was 200x what professional golfer Arnold Palmer got for his endorsement with Wilson, and 100x what football star Joe Namath got from his deal with Schick razor. Additionally, Carter was already making $100,000 ($750,000) per year through tournaments, exhibitions, television appearances, and other endorsements, including Miller, Viceroys, and Wonder Bread.

…Of the 300 bowlers who competed in PBA events during the 2012-2013 season, a select few did surprisingly well. The average yearly salary of the top ten competitors was just below $155,000, with Sean Rash topping the list at $248,317. Even so, in the 1960s, top bowlers made twice as much as top football stars — today, as the highest grossing professional bowler in the world, Sean Rash makes significantly less than a rookie NFL player’s minimum base salary of $375,000.

In 1982, the bowler ranked 20th on the PBA’s money list made $51,690; today, the bowler ranked 20th earns $26,645.

The article, by Zachary Crockett, suggests numerous hypotheses for the economic decline of bowling, but ultimately the answer is not clear to me.  I would suggest the null of “non-bowling is better and now it is better yet.”  A more subtle point is that perhaps bowling had Baumol’s “cost disease,” but under some assumptions about elasticities a cost disease sector can shrink rather than ballooning as a share of gdp.

For the pointer I thank Mike Donohoo.

Friday assorted links

by on September 16, 2016 at 11:50 am in Uncategorized | Permalink

I can think of a few candidate theories:

1. His views are the right views, more or less, and American voters recognized this.

2. A quite significant percentage of America is very directly racist.  I don’t mean statistical discrimination here, I mean “downright racist.”

3. Give Ray Fair (NYT) his Nobel Prize right here and now, economic conditions truly predict election results at the national level.

4. The “third term Party fatigue” effect is stronger in national elections than we had thought.

5. Hillary Clinton is a weaker candidate than many people had thought.  Maybe so, but that has to be unpacked a bit more.  I would try “the Democratic national establishment doesn’t understand why much of America trusts it so little, so it keeps on doing and saying unpopular things.  Those things include elevating some candidates and also encouraging them to take particular stances.”

6. As Robert D. Putnam suggested, ethnic diversity can lower the quality of governance, and this is one step along that path toward greater fractiousness.  This may blend into racism, but much of it is simply “fear of being in the losing coalition.”  The common claim that the electorate is more polarized than before fits into this.  You might try Ezra Klein’s podcast with Arlie Hochschild.

7. America is not ready for a woman president.  Or maybe it has to be a different kind of woman president, noting that Hillary, while she has passed through many filters, has not passed through the “truly popular with normal voters filter” in the same way that say Thatcher and Merkel did.  And no, New York isn’t normal, sorry people.

8. The Democrats have plenty of policy proposals, but only the Republicans are running on ideas.  And very often an idea beats no idea, even if the idea on the table is a bad one.

I don’t agree with #1, and while #4 sounds like a plausible part of the story to me, as a truly major explanation I find it hard to square with Obama’s continuing popularity.  #3 kicks in but as a dominant force, it seems hard to elevate when median household income just grew at 5.2%, inflation is low, there is no major war, gas prices are low, and asset prices are high.

On #2, I see #5 as a more convincing statement of related ideas, while admitting #2 is a factor.  How well the Democrats do in the Senate might give us some bead on the relative import of #5.

Overall I am seeing a lot of room for #5 and #6 and #7 and #8.  Presumably 5, 6, and 8 are hard for many Democrats to admit, and I genuinely wonder how their thoughts run in the quiet of their homes.  Some are plugging hard for an extreme version of #2, but, as long as we are considering matters of prejudice, I find the gender bias of #7 easier to swallow.  We did after all just elect Obama for two terms in a row, and we have never ever had a woman president or even a serious contender before.

If, I wish to stress that word if.  But that he is still in the running, and making it close, is reason enough to ponder these questions.

Thursday assorted links

by on September 15, 2016 at 1:50 pm in Uncategorized | Permalink

Globalization goes national

by on September 15, 2016 at 11:47 am in Uncategorized | Permalink

That is my latest Bloomberg column, and it address the common charge that globalization is over or has peaked.  Global trade has in fact slowed down a great deal.  But we are seeing a new kind of globalization, only inside the borders of the larger emerging economies, which often are not yet mature nation-states with complete economic integration.  Here is one excerpt:

India also is seeing its different states and regions being tied together through migration, trade, and investment. You can see this in the food: tandoori chicken and dosas have become national standards, available throughout the country, and less closely associated with their particular regions of origin. Hindi is becoming more of a national lingua franca, and the Internet makes it possible to broadcast the same messages to the entire country at relatively low cost. Many these “globalizing” developments have spread expertise and capital from the more developed southern and western parts of India to the poorer eastern and landlocked regions. Labor, in turn, has migrated from the poorer states to the wealthier cities.

Significant barriers remain; for example, Indian trucks must pass through numerous checkpoints to carry goods around the country. Logistics costs remain high, at about 13 percent of gross domestic product. Fortunately, the recent move to a national goods-and-services tax will lower some of the state-level taxes on internal trade. Keep in mind that India’s most populous states would be among the larger nations in the world. So if Uttar Pradesh (over 200 million people) and Bihar (over 100 million people) have closer economic relations, it is a major advance in trade relations and resembles globalization in its economic consequences.

Here is the close:

But a lot of today’s globalization-by-any-other-name is, counterintuitively, taking the form of nation-building. And just as we got both good and bad sides of globalization, so will this process of nation-building be a mixed bag. It may, for example, sometimes include too much nationalism. Nonetheless, these stronger and better integrated political units probably will grow in wealth and economic sophistication, and in due time that will give us more globalization yet.

Much of the piece deals with China, do read the whole thing.

Wednesday assorted links

by on September 14, 2016 at 12:01 pm in Uncategorized | Permalink

1. Free copy of Roger Paulin’s 662 pp. biography of August Wilhelm Schlegel, which received a very strong review from the TLS.

2. Explaining the cross-regional features of the Great Recession in the United States.

3. Polygenic scoring.

4. I can’t say I am convinced by this defense of Chomsky’s universal grammar.

5. Some basic economics of Wells Fargo.

6. A West Coast Straussian defense of Trump (no, not my view but the contrarian in me wishes to pass along some of the smarter people writing on this topic).

7. The secret stimulus: another fiscal failure.

I am indebted to Bryan Caplan for developing and popularizing the idea of “firing aversion.”  The core notion is that employers often do not wish to fire people for one of the same reasons they do not wish to cut nominal wages — it can demoralize their broader workforce.  Furthermore, some bosses simply may feel squeamish about the idea of firing people they know and like.

In the old days, bosses might have enjoyed “busting heads” to keep all the workers in line, but in this softer millennial age, well firing aversion is the order of the day, if only to ease future recruitment and boost intangible capital and institutional continuity.

Now imagine a macroeconomy where firing aversion is present.  At time period zero, a boss hires one hundred workers, who at the time are perceived as being of roughly equal quality and thus are offered the same wage.  After a few years on the job, however, some are “keepers,” while others are being paid more than their marginal products.

Because of firing aversion, they are not fired.  Because of sticky nominal wages, they also do not take a pay cut.  If the economy is imperfectly competitive, and times are good, this nonetheless can be a stable equilibrium.

Now let’s say a negative shock comes along: demand, supply, maybe a bit of both, as is usually the case.  At some margin these workers can no longer be carried and the firing aversion of the boss is overcome and they lose their jobs.  Then, a few points:

1. They’re not getting those jobs back.

2. They’re not worth a comparable wage elsewhere in many cases.

3. Per hour productivity likely will rise, even adjusting for ex ante measures of changes in worker composition.

4. Companies won’t want to pay higher wages to lure these workers out of leisure, rather they are branded as less productive than average and properly so.

5. These workers will have to lower their wage expectations for the next job by an above-average amount.  That is one reason why their reemployment may be slow.  And they won’t re-enter the labor market at anything like their old wages.

6. As the economy returns to full employment, you won’t observe rising wages in the traditional sense because these workers are pulling in relatively low wages.

7. The more that Charles Murray is right in his Coming Apart, the stronger some of these effects will be.   Yet none of it requires a “sudden attack of laziness.”

8. The more the employer can tell apart the quality of different workers, the slower the recovery will be and the less pro-cyclical wages will be.  Arguably we have been seeing this difference at work since the G.H.W. Bush recession.

OK, now maybe you don’t buy firing aversion, fair enough.  Just sub back in the traditional assumption that bosses study and scrutinize worker quality more in tough times, when revenue is tight, and you get essentially to the same place and the same conclusions as listed above.  Firing aversion is simply one way of stylizing a pretty simple incentive effect, namely that the weaker workers have a better chance when cash is flush.

Addendum: How many blog posts have I read asserting “Since wages are not rising, etc., therefore various conclusions including lack of full employment, etc.”?  Hundreds, I believe, mostly from the Keynesian bloggers.  But in the data, real wages were never very cyclical in the first place.  And in theory we should not expect much if any real wage cyclicality either.  Most of all, the more employers can measure worker quality, the less cyclical real wages will be.  And yes I know real wages just rose a lot (see the next blog post to come), if anything that is a sign recovery has been here for some time, not that finally recovery is arriving.

Monday assorted links

by on September 12, 2016 at 1:48 pm in Uncategorized | Permalink

I hadn’t known Ed “Let’s take the con out of econometrics” Leamer was the VP on the Larry Kotlikoff ticket.

The quality, and popularity, of Sully raises anew the question of why Hollywood doesn’t make more such movies.  Which is the scarce input?  The script?  Yet virtually every Clint Eastwood movie seems to come up with a good script.  I suspect “a recognized auteur with bargaining clout” is what is scarce.

Insects are not so scarce, but the marketing is tough:

Aketta grows its crickets in the United States and fills orders on a first come, first serve basis with weekly harvests. The company sells cricket flour and whole-roasted crickets. Flour is made from 100% milled crickets and has a “deep, earthy, umami flavor with hints of raw cocoa.” Sold in small batches of 1 to 1.5 lbs. Order online.

Here are many more insect food sources, but the claim is that the most innovative insect-selling start-ups are in Europe.

This story has scary good photos:

The Bund reached the height of its prominence on February 20, 1939, when some 20,000 members held a “Pro-America Rally” in Madison Square Garden.

Inside, jackbooted Nazi supporters filled the aisles while speakers ranted against President “Frank D. Rosenfeld” and his “Jew Deal.”

Outside, some 80,000 anti-Nazi demonstrators furiously protested the event, clashing with police and attempting to gain entry to the arena and shut it down.

The Bund called George Washington “the first fascist.”

Chileans remain upset at their semi-privatized pension system (NYT), and I say that is now the country to sell short.

Sunday assorted links

by on September 11, 2016 at 3:14 am in Uncategorized | Permalink

Saturday assorted links

by on September 10, 2016 at 12:13 pm in Uncategorized | Permalink

1. Review of the new Richard Posner biography.

2. How to read a closed book.

3. The blind astronomer of Nova Scotia.

4. “Patrick describes the success case for Atlas as being visible in global macroeconomic indicators, which is crazy.

And this:

A couple of months ago, Patrick Collison came to me with another crazy idea. He said Stripe wanted to make “simple incorporation as a service”, so that any entrepreneur worldwide could have a corporate entity and a bank account spun up about as easily as they could get an EC2 server.

This idea is crazy. I’ve incorporated four companies and opened business bank accounts for all of them. The most recent required over a hundred pages of documentation and six weeks of negotiation to assuage a risk department’s concerns about foreign tech entrepreneurs. (Thanks, Bitcoin.) You’re not supposed to be able to do this.

Stripe did it. With crazy speed: the project was in beta within 11 weeks of conception. It can take that long to form a single company in much of the world. Stripe solved the problem like an engineer: establishing one company requires an annoying amount of form-filling so instead of buckling down and doing it you just make a company-establishing web application and abstract away form-filling for all time.

And they’re crazily ambitious about where it ends up: not simply incorporating companies, but eating all of the crufty back office work which distracts Internet businesses from getting more real products into the hands of real customers. Payments, contracts, invoices, bookkeeping, incorporation, taxes, etc etc, all things you have to do even if what you’re actually doing is selling bingo cards to elementary schoolteachers.

Crazy!  But stay tuned…

5. Meanwhile, the surf wars are growing more violent.

My Conversation with Ezra Klein

by on September 10, 2016 at 3:36 am in Uncategorized | Permalink

I will be interviewing him shortly, for the Conversations with Tyler series, podcast only no public venue.

What should I ask him?

Friday assorted links

by on September 9, 2016 at 11:40 am in Uncategorized | Permalink

1. Compared to other consumption expenditures, the U.S. is not a significant health care outlier.

2. Enjoy famous artworks without gluten.

3. “The man said he was hired by the airport to keep track of the precise location of every car in the lot, explaining that the data is most often used by the airport when passengers returning from a trip forget where they parked their vehicles.”  Link here.

4. You get what you measure: millions of fake accounts at Wells Fargo.

5. Not all Chinese companies are paying off on the Taylor Swift boyfriend break-up.

6. One way to rank World Bank presidents, not the way I would choose.

7. John R. Coleman, RIP: “In his abbreviated career as a blue-collar worker, he concluded that academia was not quite as artificial as he had thought and manual labor not nearly as satisfying.”