Those who fail to repay a bank loan will be blacklisted, and they will have their name, ID number, photograph, home address and the amount they owe published or announced through various channels – including in newspapers, online, on radio and television, and on screens in buses and public lifts.

…In the southern city of Guangzhou, the personal details of some 141 debt defaulters have so far been displayed on screens in buses, commercial buildings and on media platforms at the request of local courts.

Meanwhile in Jiangsu, Henan and Sichuan provinces, the courts have teamed up with telecoms operators to create a recorded message – played every time someone calls – for those who fail to repay their loans. The message tells the caller: “The person you are calling has been put on a blacklist by the courts for failing to repay their debts. Please urge this person to honour their legal obligations.”

That is from SCMP, via Viking.

Elsewhere in the Middle Kingdom, Shanghai adopts a facial recognition system to name and shame jaywalkers.

That is the theme of my latest Bloomberg column, here is one excerpt:

The internet has been another equalizer. You can enjoy texting and social media from just about anywhere, and our near obsession with these activities is equalizing urban and suburban experiences, possibly for the worse.

Arguably, sex and alcohol were once more prominent in some American cities than in American suburbs. But the new generation of American youth seems less interested in these activities anyway.

As American travel infrastructure decays, and traffic congestion worsens, what we used to call cities and suburbs won’t be able to rely on each other so much, as trips become too exhausting and time-consuming. That too will encourage cities and suburbs each have their own mix of jobs, retail and cultural opportunities.

There is much more at the link.

Google is the first major tech company to build the Babel fish.

The search company, which is now making a slew of its own hardware products, announced the Google Pixel Buds at a San Francisco event today (Oct. 4). The earbuds connect wirelessly with Google’s latest smartphones, but more importantly, they’re able to access Google Assistant, the company’s virtual personal concierge, which launched exactly a year ago. Through this software, Google claims the earbuds can translate 40 spoken languages nearly in real time—or at least, fast enough to hold a conversation.

Here is the story at Quartz.  It’s funny how economists used to come up with theories that platform monopolies would stifle innovation…

That is the topic of a new paper by James E. Bessen, and it appears the answer is yes:

Industry concentration has been rising in the US since 1980. Why? This paper explores the role of proprietary information technology systems (IT), which could increase industry concentration by raising the productivity of top firms relative to others. Using instrumental variable estimates, this paper finds that industry IT system use is strongly associated with the level and growth of industry concentration. The paper also finds that IT system use is associated with greater plant size, greater labor productivity, and greater operating margins for the top four firms in each industry compared to the rest. Successful IT systems appear to play a major role in the recent increases in industry concentration and in profit margins, moreso than a general decline in competition.

I expect further work in this area.

My philosophy of interviewing

by on September 28, 2017 at 12:12 am in Education, Philosophy, Web/Tech | Permalink

After I do Conversations with Tyler interviews, I receive emails telling me I should have “stuck it to person X,” rather than “letting them off the hook,” etc.  “How could you not refute them on that topic!”  And so on.  Just to be clear, here is my underlying attitude behind the series:

1. Appreciation is an underappreciated art and skill.  These interviews are most of all about appreciation.

2. I hope to teach people how to learn from other people.

2a. For one thing, you can learn from what the interviewed person says, whether or not you agree with it.  In fact, you do better if you don’t focus on whether or not you agree with it.

2b. You also can learn something through a better understanding of how the person built his or her career into a success, and usually I ask something explicitly along these lines.  The broader conversation is implicitly all about this, of course.

2c. You also can learn something about how I try to learn from these people.  And that is the part of the conversation I have the most control over.  I am trying to teach the art of learning, and that art involves less rather than more contradicting and gainsaying.

3. Follow-up questions are overrated.

4. You want the interviewed person to be maximally open and relaxed, to bring out a steady stream of their best content.

5. If I leave a topic hanging, perhaps it is because I want you, the listener, to think more about it.

6. The best follow-up questions don’t sound like follow-up questions at all.

As I said to Ed Luce before my conversation with him: “You know, most famous people are used to someone trying to make them look bad.  They actually should be more nervous about someone trying to make them look really good.”


Here is the program, here are the videos, many luminaries were present.  My role was to comment on Korinek and Stiglitz.

Joshua Gans has set up a website to curate research into this topic.

It seems we never quite reach them:

Walmart is testing a service that delivers groceries straight to your fridge when you’re not home.

On Friday, the retail giant announced a partnership with August Home, a smart-lock startup, that would allow a delivery person to enter customers’ orders and put groceries away in their refrigerators…

Delivery drivers will have a one-time passcode that allows them to unlock the August smart lock if customers do not answer the door when the delivery team arrives to drop off groceries. They will then drop off packages in the foyer, unload groceries in the fridge, and leave — with the door locking behind them.

Customers get a notification when the driver rings the doorbell. August home-security cameras allow them to watch the entire process from the app if they wish.

Here is the story, via Peter Metrinko.

That is the theme and title of my latest Bloomberg column.

Here is one proposal:

What if I told you that the credit rating companies already had a system to verify identities before opening new accounts — but, because this would be a minor inconvenience, and a drag on their profits, they only allow this status to last for 90 days for any given account unless a police report can be filed, and furthermore, while they may claim that they’ll do this, it’s not actually a legal requirement? From a Krebs on Security piece from 2015 (as ever, Krebs is two years ahead of the zeitgeist):

“With a fraud alert on your credit file, lenders or service providers should not grant credit in your name without first contacting you to obtain your approval — by phone or whatever other method you specify when you apply for the fraud alert … Fraud alerts only last for 90 days, although you can renew them as often as you like. More importantly, while lenders and service providers are supposed to seek and obtain your approval before granting credit in your name if you have a fraud alert on your file, they’re not legally required to do this.”

That’s right: a solution to the ongoing insane catastrophe which is the American credit system already exists. The infrastructure and process for it is already in place. But thanks to regulatory capture, an inability to understand the scale of data hacks that modern technology enables, or sheer incompetence, it only exists on a case-by-case, opt-in, short-term solution.

Obviously everybody should have this verification — “two-factor authentication,” if you will — turned on and kept on. This would not be a panacea, of course. Security hipsters will loudly protest that phones and email are terrible second authentication factors that no one should even consider using. Phone and email are not ideal, but the point is, universalizing this existing solution would hugely improve matters for a relatively trivial cost.

That is from Jon Evans.  I still would like to know what is the social cost of identity theft.  Furthermore, what is the cost of identity theft as a ratio of the cost of some people simply not paying borrowed money back?

Everyone is all a-flutter on this issue, and attacking Equifax, but I am looking for more reliable information before voicing an opinion.

The education culture that is China

by on September 15, 2017 at 1:46 am in Education, Web/Tech | Permalink

Students at a major university in Beijing are now required to scan their faces upon entering dormitory buildings, a process that may soon make security guards obsolete.

Beijing Normal University has installed 44 facial scanners on its 19 dormitory buildings, for the 18,000 students on campus.

It is the boldest move taken by a Chinese university so far to apply advanced digital technologies in campus management and has drawn attention from administrators at other universities.

The machines have been placed at all entrances to dorm buildings. Students entering the building will have to pause and look at the sensor for a few seconds. They are then required to swipe their campus ID card. If the face and card match, the machine will open the gate and say “welcome home.”

The machines also come with voice recognition. Students who forget to bring their ID cards can scan their face and say the last four digits of their card number, said Yang Hailiang, general manager of Beijing Peace and Joy Technology, which produces the machines.

The system can recognize 26 Chinese dialects and has achieved an accuracy rate of 98 percent, Yang said.

Here is the full article.

Parenting by Panopticon?

by on September 11, 2017 at 11:29 am in Education, Web/Tech | Permalink

The cameras record the families’ lives — conversations, arguments, every interaction. If something is amiss, Cognition Builders can provide instant direction on how to remedy the situation, either verbally through a microphone in the camera or by sending a text to the parent.

Jessica Yuppa, Cognition Builders’ director of curricula and assistant clinical director, said the Nest Cams give CB an “unfiltered look” at what goes on inside the home. “Families think they know about themselves, but they don’t. Cameras give us a beat-for-beat of interactions. If a parent is struggling to communicate with a child, for example, we can watch a conversation and say, ‘Okay, why do you think he looked away when you said this?’” Yuppa said it doesn’t take long for families to adapt to the scrutiny. “My experience is the self-consciousness goes away very quickly,” she said. “People live their lives and forget we’re there.”

…A new rule was thus established. When an adult comes into the room and says hello to one of the children, the child stops what he or she is doing, looks the adult in the eye, shakes his or her hand, returns the greeting, and asks the adult how he or she is doing. This became the new expectation. If any member of the household failed to meet this expectation, he would receive a strike.

…At the end of each day, Elizabeth and Jason would receive a detailed, many-paged report on everything the family architects had observed.

Here is the article by Kim Brooks.  Yikes!  Read the last paragraph.

The economics of Bitcoin mining

by on September 7, 2017 at 1:37 am in Economics, Web/Tech | Permalink

There is a new paper (pdf) by Huberman, Leshno, and Moallemi on that topic, I found it very useful.  Here is the abstract, non-newbies can skip ahead to the second paragraph:

Many crypto-currencies, Bitcoin being the most prominent, are reliable electronic payment systems that operate without a central, trusted authority. They are >enabled by blockchain technology, which deploys cryptographic tools and game theoretic incentives to create a two-sided platform. Profit maximizing computer servers called miners provide the infrastructure of the system. Its users can send payments anonymously and securely. Absent a central authority to control the system, the paper seeks to understand the operation of the system: How does the system raise revenue to pay for its infrastructure? How are usage fees determined? How much infrastructure is deployed?

A simplified economic model that captures the system’s properties answers these questions. Transaction fees and infrastructure level are determined in an equilibrium of a congestion queueing game derived from the system’s limited throughput. The system eliminates dead-weight loss from monopoly, but introduces other inefficiencies and requires congestion to raise revenue and fund infrastructure. We explore the future potential of such systems and provide design suggestions.

Recommended to many of those who are otherwise merely baffled.

That is the topic of my latest Bloomberg column.  Here is one bit:

Let’s say bottled water was selling at $42.96 a case at the local Best Buy, as shown in this photo. A customer can take out his or her smartphone, snap a photo and post it on social media. The photo may go viral, and many people, including the legal authorities, will be mad at the company.

The reluctance to raise prices is especially strong for nationally branded stores. A local merchant may not care much if people in Iowa are upset at his prices, but major companies will fear damage to their national reputations. The short-term return from selling the water at a higher price is dwarfed by the risk to their business prospects. More and more of the value of business capital is intangible capital, more than 84 percent of the S&P 500 by some estimates. That’s why Best Buy so quickly apologized for its store selling the water at such a high price, blaming the incident on an overzealous local manager.

Consider an alternative: Instead of raising prices to very high levels, let’s say that the local big-box store sells out quickly during an emergency and has empty shelves for water. If those photos circulate, they will be interpreted as signs of general tragedy and want, rather than selfish corporate behavior. It’s too subtle an image to snap the price tag at pre-storm levels, contrast it with the empty shelves, and lecture your Facebook friends about the workings of market-clearing supply and demand and the virtues of flexibly adjusting prices.

Beware the culture of the image!  As I’ve said before, we should levy a micro-tax on photos on Twitter.

Here is Don Boudreaux on price gouging.  Here is David Henderson on price gouging.  I agree with them both.

Try on these propositions for size:

1. Intangible-rich businesses are harder to fund with debt, because the lenders cannot take home much in the way of physical assets.

2. Intangible assets, because of their potentially scalable nature, can produce the kind of “home run” successes that VC investors look for.

3. Given that intangible investments are relatively uncertain, the idea of successive funding “rounds,” with successive evaluations at each stage, makes more sense in those cases, and that too matches the VC model.

4. Companies with lots of intangible assets try to take over markets that are “contested,” but note that leading VC firms behind these investments are heavily invested in the entire ecosystem.

5. If a good VC company is plugged into the right social networks, and investing in a highly productive ecosytem, it can reap high returns year after year, and from a relatively “within-sector” diversified position.  The VC companies can outperform the broader market, even if the VC leaders themselves would not be superior “stock pickers” in a mutual fund context.  That said, the VC leaders may not be well diversified across sectors, and so a systemic tech bust can hurt them.

6. Not everyone can build those social networks with equal facility, so VC advantages can endure for considerable periods of time for the leading firms.  It is the ability to “position socially and manage contestedness and spillovers and maintain the flow of good deals” that is so hard to scale up.

That is all from the forthcoming Capitalism Without Capital: The Rise of the Intangible Economy, by Jonathan Haskel and Stian Westlake.  Their discussion of venture capital offers further points of interest, including a discussion of why it is so hard to replicate VC environments in other settings.  Here is my previous post on the book.