The Ryan plan is here (pdf), an NYT summary is here. Overall it’s pretty good.  It attacks excess incarceration and occupational licensing and regressive regulations, three issues where a serious dialogue is badly needed.  It makes a good attempt to limit the incentives for lower-income people not to work.  It’s better than what the Left is turning out for the first time in…how long?

I’m not crazy about the complicated plan to monitor the lives of the poor in more detail (“…work with families to design a customized life plan to provide a structured roadmap out of poverty.”)  And my biggest conceptual objection is the heavy stress on block grants and letting the states figure things out.  I’m not opposed to that in principle, and I might even favor it, but I think it’s often the lazy man’s way of avoiding talk about difficult trade-offs.  I’d like to see a possible plan for just a single state, or better yet two or three, that is supposed to represent an improvement.  That shouldn’t be too hard to do, or if it is maybe the states can’t do it either.  It’s not as if fifty states are giving us a market-based discovery process, as the rhetoric sometimes implies.  Furthermore we have a bunch of large states with ongoing bad governance, such as CA, NY, and IL, and maybe the federal government really can do better for those places.

Here is Vox on the regulation side of the plan.  Kevin Drum offers comment.  Ross Douthat mostly likes it.  Jared Bernstein doesn’t like it.  Robert Greenstein is critical.  Here is Neil Irwin.  And Annie Lowrey.  And Josh Barro.  And Yuval Levin.  And Ezra Klein.  Other people have opinions about it, too.  Or so I am led to believe.

…they all had help in the early going from Matt Scherer. Scherer is, or was up until about a week ago, a professional track pacer, one of only a handful of people worldwide who used his speed and finely honed sense of time to help other people run fast. Though he started out as a competitive runner, his resume is filled with other runners’ accomplishments.

Pacers, or rabbits as they’re sometimes called (thus the bunny photo loop on his website), are frequently used in track races of 800 meters and longer to standardize the early laps and facilitate lively competition and fast times. Their job is to accurately lead through the first lap or 600 meters in a very specific time, getting the field off to a good start before stepping off the track, in anonymity. The pacer is a visual embodiment of time. Other runners in the field can easily judge their pace by how close they are to the rabbit. In recent years, almost every middle distance and distance world record was set with the help of a pacer. They’re not allowed in World Championship or Olympic competitions, which may account for the few world record performances at those events.

The full story is here, interesting throughout, and for the pointer I thank Michael Cohen.

What’s important to remember politically about this is if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits — but your citizens still pay the taxes that support this bill. So you’re essentially saying [to] your citizens you’re going to pay all the taxes to help all the other states in the country. I hope that that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these exchanges.

There is more detail here, from Peter Suderman, along with the video and also the fuller context for those (such as myself) who have not been following this issue very closely.

…in South Korea, the Hanwha Eagles (former team of Hyun-Jin Ryu) have gone “next level” by providing robots to stomp and yell unifying chants for those who cannot attend the game in person.

There is more here, good short video, the robots take on the actual faces of absent fans, and for the pointer I thank Isaac.

There is a new piece of interest in Technology Review, here is one excerpt:

Psychologists have always assumed that patterns of behavior change more quickly in countries that emphasize collectivism. Once an idea has taken hold, the pressure to conform means it spreads rapidly. “It has previously been argued that social support mechanisms in collectivistic societies make it more likely that a person will stop smoking,” say Lang and co.

And conversely, in countries that emphasize individualism, patterns of behavior must change more slowly because there is less social pressure to conform.

The puzzle is that the data on smoking shows exactly the reverse. Sweden was much slower to adopt smoking and much slower to stop.

Now Lang and co think they know why. They’ve created a mathematical model that includes the effects of social pressure allowing them to simulate the way behavior spreads through societies with different levels of individualism.

The model reveals why Sweden stopped smoking more slowly. “Our model suggests that … social inertia will inhibit decisions to stop smoking more strongly in collectivistic societies than in individualistic societies,” say Lang and co.

The original research, by Lang, Abrams, and De Sterck is here.  Their results do not rest on Sweden alone, but for the record I consider the Swedes to be relatively individualistic by most metrics, most of all when it comes to atomization.

Woodford on QE

by on July 24, 2014 at 12:47 pm in Economics | Permalink

Interesting interview by David Andolfatto of Michael Woodford. Woodford is skeptical of QE.

Andolfatto

You talk about Fed purchases of risky assets. I mean, do you have in mind some loose connection of the Fed’s purchase of the mortgage-backed securities, the agency debt?

Woodford

I think that the main argument that’s been made for the desirability of the Fed asset purchases relies upon the idea that certain types of risk are going to be taken onto the Fed’s balance sheet, and the claim that taking those types of risk out of the portfolios that people in the private sector have to hold is going to make a difference for the pricing of risk in the economy. And so the whole idea that you’re concentrating certain kinds of risks on the balance sheet of the central bank, I think, is entirely the theory behind what’s going on. It’s not just an accidental effect.

And so then you have to ask: What do you think that does? And I think it’s a mistake to say, well, the central bank just takes the risk away. It doesn’t take it away. It can affect who is, in fact, going to bear the risk, because essentially it means that a public institution is taking on the risk, and that means that taxpayers as a group are going to have no choice about bearing that kind of risk. And the question is whether you think that concentrating the risks in that way is facilitating an allocation of risk that was, in fact, desirable and that the markets would have been achieving themselves through voluntary trades if financial constraints hadn’t been impeding it, or whether you’re bringing about an allocation of risk that people would have liked to trade away from if financial constraints weren’t keeping them from doing it. And you’re pushing them even further into a corner they don’t want to be in.

Assorted links

by on July 24, 2014 at 11:42 am in Uncategorized | Permalink

1. Did Victor Hugo really write naked?

2. Will the legal cap on San Francisco office space prove binding?

3. A family’s lost love letters.

4. Are books getting longer?

5. Professional snapchatters (those new service sector jobs).

6. Which ethnicity is most likely to be familiar with Bitcoin?

7. The great pharmaceutical stagnation.

In most Darwinian models there is competition across siblings for resources and parental attention, from the womb but also stretching into adulthood.  Siblings who do well therefore will be hyper-aware of the strategies employed by their brothers and sisters.  They will need to counter those strategies on a very regular basis and furthermore they will on average be deploying similar strategies themselves.

At the same time, siblings probably won’t see each other as so evil by nature.  They will be realistic about motives — some would say cynical — while at the same time recognizing that the siblings are probably, on average, no worse than themselves.  Plus there is a natural genetic and also family affinity.

How about mothers?  Genetically speaking, mothers often adopt the interests of the sibling as “their own.”  For instance a lot of mothers died in childbirth before modern medicine, when alternative biological arrangements would have given the mothers greater protection.  So the children can commandeer the loyalty of the mother (and sometimes the father) more readily than they can commandeer the loyalties of their siblings.

Mothers are therefore often deceived about or simply tolerant of the manipulations employed by their children on them.  In other words, mothers worry less about moral hazard problems with respect to their children.  The siblings will in some respects understand these strategies better than the mother will.

The other children may feel that a mother should punish (or possibly but less likely reward) the other siblings more.  And “Johnny is being a stinker” will be a more frequent complaint than “Johnny is possessed with Original Sin.”

In turn, mothers may worry more about problems of type.  If a mother is hyper-aware of the faults of her children, she may do a better job of protecting them or teaching them how to overcome those limitations.

A world where fewer people have siblings may be a world where recognizing moral hazard problems may be for many people less intuitive.  Is it also possible that men may on average be more aware of moral hazard problems than are women?  And women more aware of problems of type?

The author of this new and excellent book is my colleague Peter T. Leeson and the subtitle is Why Self-Governance Works Better Than You Think.  Here is one excerpt:

Twenty-two of thirty-seven street gangs Jankowski (1991: 78-82) studied have written constitutions.  Sicilian Mafiosi follow a largely unwritten code of rules, and recently police found a written set of “ten commandments” outlining the Mafia’s core laws…Kaminski (2004) identifies extensive (yet unwritten) rules dictating nearly every aspect of Polish prisoners’ lives, from what words are acceptable to use in greeting a stranger to how and when to use the bathroom.  And the National Gang Crime Research Center considers constitutions so central to criminal societies that the use of a constitution is one of the defining characteristics it uses when classifying gangs…

Peter of course does not favor criminal gangs, rather he seeks social principles for voluntarism and yes perhaps you could call these views a kind of anarchism.  My stance, however, differs from his.

I accept the reductionist argument that government too is a kind of anarchy, since it must rely on norms and internally polycentric and perhaps even ultimately intransitive mechanisms for maintaining order.  There is no “final court of authority” in the practical sense, but rather a series of overlapping constraints which give rise to a spontaneous order of rules and governance, for better or worse.  In this sense anarchy is not an absurd idea at all, and we can imagine many varieties of orderly anarchy, including those in a more libertarian direction.  That said, while I often favor smaller government, when it comes to political philosophy I do not seek to move toward “more anarchy.”  In fact I often admire the relatively centralized governmental structures of Great Britain and New Zealand, with their clean and sharp lines of accountability.

I think modern anarchy would indeed be “orderly,” but I also think that private protection agencies would end up colluding and re-evolving into a form of coercive government (pdf), furthermore in a form that libertarians would find objectionable.  I would much rather have the West’s current democratic governments, for all their imperfections, than a for-profit “shareholder state,” not to mention the transition costs and the uncertainties along the way.  The best thing you can say about a shareholder state is that it might have a better immigration policy.  In the meantime, we are seeking to rebuild the history we have.

Elaine Sciolino is pretty critical.  She writes:

A new consumer protection law meant to inform diners whether their meals are freshly prepared in the kitchen or fabricated somewhere off-site is comprehensive, precise, well intentioned — and, to hear the complaints about it, half-baked.

Public decree No. 2014-797, drafted and passed by the French Parliament and approved by the prime minister, went into effect last week. It allows restaurateurs to use the logo if they have resisted the increasing temptation to buy ready-made dishes from industrial producers, pop them in the microwave and pass them off as culinary artistry.

It doesn’t seem to be working to encourage quality:

French fries, for instance, can bear the “fait maison” symbol if they are precut somewhere else, but not if they are frozen. Participating chefs are allowed to buy a ready-made pâte feuilletée, a difficult-to-make, multilayered puff pastry, but pâte brise, a rich pastry dough used to make flaky tart shells, has to be made on-site. Cured sausages and smoked hams are acceptable, while ready-made terrines and pâtés are not.

…Périco Légasse, a food critic for the weekly magazine Marianne, wrote: “ ‘Homemade’ doesn’t mean freshly made. A dish totally prepared with frozen products, even if they come from a Romanian slaughterhouse, can enjoy this happy distinction as it was cooked on-site.”

Mark Bittman piles on.  I would stress there is no substitute for consumers who demand the right kind of food and who otherwise won’t buy it.

The subtitle is An Unexpected Guide to Human Nature and Happiness, and the author is Russ Roberts.  The focus is on Adam Smith’s Theory of Moral Sentiments and why that is an important book.  This is Russ’s best book in my opinion, so you should consider buying it here.  My favorite section is the discussion of the Chilean maid, definitely recommended.

Assorted links

by on July 23, 2014 at 12:24 pm in Uncategorized | Permalink

1. Cohen and Scheinmann on Israeli strategy in Gaza.  And a theory of how Hamas acted out of weakness.  And Vox considers Israel’s strategy.

2. The psychology of first impressions.  Lots of examples at that link.

3. Is Ethiopia the next China?  Or just the next Vietnam?

4. Was the Concorde an evolutionary dead end?

5. Sadly John Blundell has passed away.  He was always a great encouragement to me and I am sorry to hear he is gone.

6. What happened to Inoki?  Lots, in fact.  And Bryan Caplan re-reads Catcher in the Rye.  And the FT essay prize.

7. More on Swedish vouchers.

8. Larry Summers on secular stagnation, Ex-Im, and TPP.

The manufacturing sector is now operating at 77.8 percent of its capacity, according to Federal Reserve data, well above the 76 percent average during the last expansion and not far from the 79.1 percent peak during the mid-2000s.

That is from Neil Irwin.  As I’ve been saying for over a year, we are no longer at the point where boosting nominal demand will help very much if at all.

Slowest Growing Populations (%, 2000-10)

1 Moldova -13%

2 Georgia -8%

3 #Ukraine-7%

4 Bulg -6%

5 Latvia -6%

6 Lithuania -5%

7 Belarus -5%

That is from here, the most rapidly growing populations are given here, some Gulf states and Africa, both are tweets from Ian Bremmer.

It seems not.  Responding to an earlier piece by Ray Fisman, Tino Sanandaji writes:

Fisman doesn’t cite any plausible mechanism through which private schools could have dragged down the test scores of the 86 percent of Swedish pupils who attend public schools. The explanation cannot be that private schools have drained public schools of resources, as private schools on average get 4 percent less funding than public schools.

One-third of Sweden’s municipalities still have no private schools. Social Democratic strongholds in northern Sweden in particular were less enthusiastic about licensing such institutions, and if private schools were causing the Swedish school crisis, we would expect municipalities with no privatization to outperform the rest of the country. Two studies by Böhlmark och Lindahl suggest that school results, if anything, fell more in regions with no private schools.

He also argues:

…in my view, the main culprit was the experiment with radically new pedagogical methods. The Swedish school system used to rely on traditional teaching methods. In recent decades, modern “individualist” or “progressive” pedagogic ideas took hold. The idea is that pupils should not be forced to learn using external incentives such as grades, and children should take responsibility for their own learning, driven by internal motivation. Rote memorization and repetition are viewed as old-fashioned relics. Teacher-led lectures have increasingly been replaced by group work and “research projects.”

And this:

The private Swedish schools are not really allowed to innovate where it matters, with their pedagogic methods. The curriculum and rules in the classroom are determined by the state, which also trains teachers in the so called “modern” pedagogic theories. “Swedish schools have comparatively low levels of autonomy over curricula and assessments,” PISA notes.

In practice, what private Swedish schools have control over is management and cost control, and this is where they have directed their efforts. But since the public Swedish schools were pretty well managed to start with, productivity gains from privatization were limited.

For the pointer I thank Daniel B. Klein and Niclas Berggren.