Monday assorted links

by on February 13, 2017 at 1:35 pm in Uncategorized | Permalink

A while ago I had some email with Noah Smith on this topic, now we are getting somewhere, this is from a new NBER working paper by Daniel M Hungerman, Kevin J. Rinz, and Jay Frymark:

We use a dataset of Catholic-parish finances from Milwaukee that includes information on both Catholic schools and the parishes that run them. We show that vouchers [funded by the government] are now a dominant source of funding for many churches; parishes in our sample running voucher-accepting schools get more revenue from vouchers than from worshipers. We also find that voucher expansion prevents church closures and mergers. Despite these results, we fail to find evidence that vouchers promote religious behavior: voucher expansion causes significant declines in church donations and church spending on non-educational religious purposes. The meteoric growth of vouchers appears to offer financial stability for congregations while at the same time diminishing their religious activities.

I’ve long maintained that the fiscal effects of vouchers, if they were implemented on a much larger scale, are the elephant in the room.  For better or worse.

1. A Night at the Opera – Queen

2. Queen – Queen

3. Parachutes – Coldplay

In Hawaii it is Bob Marley, AC/DC in Idaho, Alanis Morrisette in Iowa and Maine, Revolver and Coltrane in NY, Michael Jackson in Utah, and the Rolling Stones’ Goat’s Head Soup does surprisingly well.  Coldplay, Fleetwood Mac, and Arctic Monkeys all have multiple placements.  Here is the link, based on eBay data.

That is the 1936 book by British fascist Oswald Mosley, and it is arguably the clearest first-person introduction to the topic for an Anglo reader, serving up less gobbledygook than most of the Continental sources.  Mosley actually makes arguments for his point of view, and thinks through what possible objections might be, which is not the case with say Marinetti.  Beyond the basics, here are a few points I gleaned from my read:

1. Voting still will occur, at least once every five years, because “The support of the people is far more necessary to a Government of action than to a Democratic Government, which tricks the people into a vote once every five years on an irrelevant issue, and then hopes the Nation will go to sleep for another five years so that the Government can go to sleep as well.”

2. Voting will be organized by occupation, not geographic locality.

3. If an established British fascist government loses a vote, the King will send for new ministers, but not necessarily from the opposing party.

4. The House of Lords is to become much more technical, technocratic, and detailed in its knowledge, drawing more upon science and industry.  The description reminds me of the CCP State Council.

5. A National Council of Corporations will conduct much of economic policy, and as far as I can tell it would stand on a kind of par with Parliament.

6. “M.P.’s will be converted from windbags into men of action.”

7. A special Corporation would be created to represent the interests of women politically.  Women will not be forced to become mothers, but high wages for men will represent a very effective subsidy to childbirth.

8. The government will spend much more money on research and development, with rates of return of “one hundred-fold.”

9. Wages will be boosted considerably by cutting out middlemen and distribution costs.  The resulting higher real wages will maintain aggregate demand.  Cheap, wage-undercutting foreign imports will not be allowed.

10. Foreign investment abroad will be eliminated, as will the gold standard and foreign immigration into Britain.

11. “…foreigners who have not proved themselves worthy citizens of Britain will deported.”  And “Jews will not be afforded the full rights of British citizenship,” as they have deliberately maintained themselves as a distinct foreign community.

12. Any banker who breaks the law will go to jail, just as a poor person would.

13. Inheritance will not be allowed, but private property in land will persist and will be accompanied by with radically egalitarian land reform.

14. To restore the prosperity of coal miners, competition from cheap Polish labor and Polish imports will be eliminated.

15. The small shopkeeper shall be favored over chain stores, especially if the latter are in foreign or Jewish hands.

16. All citizens, rich and poor, are to have the right to an education up through age 18.  Overall there is considerable emphasis on not letting human capital go to waste, and a presumption that there is a lot of implicit slack in the system under the status quo ex ante.

17. Hospitals will be coordinated, but not nationalized.  That would be going too far.

18. Roosevelt’s New Deal is distinct from fascism because a) the American government does not have enough “power to plan,” and b) it relies on “Jewish capital.”

19. The colonies will sell raw materials to Britain, and produce agriculture for themselves, but will not allowed to compete in manufactures.  And this:  “If we failed to hold India, we should be 1/100th the men they were.”

20. By removing the struggle for foreign markets, fascism will bring perpetual peace.

Mosley was later interned from 1940 to 1943.

That is a question from Kevin Burke, who emailed it to me rather than going up to a microphone and asking.  His exact wording was “Why don’t we have better formats for soliciting audience feedback than going up in front of a microphone?”

First, I have seen event organizers move away from the questions at a microphone format to some degree.  They prefer either no Q&A, to draw upon written or social media questions, or to conduct the entire event as an interview with a single questioner or panel.  (Personally, I like to receive handwritten questions.)

That said, this format still persists.  The Hansonian point would be that questioning isn’t about questions (or answers!), or however else you might wish to put it.  Rather the point is to show various constituencies that they are being recognized by the process and given some voice.  The more cumbersome and inefficient the questioning period, the more effective this signal may be.  There are, however, problems with this approach, one of them being that the Q&A period can be hijacked by weirdos, rather than remaining the province of the boring drones you wish to placate.   Furthermore, social media-generated questions, if manipulated, may serve the signaling function more directly, as you can ensure that some specific interest group is recognized as doing the asking (“And Mildred, from the teachers union in Ohio, sent in a question about caring for the children…”)

These days there are more and better ways to ask questions than ever before, including of course Reddit and Quora.  That means audience Q&A at the mike is less about information than it used to be.  I predict a kind of bifurcation, in which events either will run away from the format altogether or embrace it all the more firmly, and that is I think what we are seeing.  How about a limiting case for the signaling approach, whereby you invite a famous person, and simply make him or her submit to audience questions, with not even a chance to respond?

I consider this question at some length in my forthcoming The Complacent Class, and now there is a new study by Greg Kaplan and Sam Schulhofer-Wohl, consistent with my conclusions:

We analyze the secular decline in gross interstate migration in the United States from 1991 to 2011. We argue that migration fell because of a decline in the geographic specificity of returns to occupations, together with an increase in workers’ ability to learn about other locations before moving. Micro data on earnings and occupations across space provide evidence for lower geographic specificity. Other explanations do not fit the data. A calibrated model formalizes the geographic specificity and information mechanisms and is consistent with cross-sectional and time-series evidence. Our mechanisms can explain at least half of the decline in migration.

As I put it in the book, if you are a dentist you probably are not going to move from Columbus, Ohio to Denver, Colorado for higher dentist wages.  Rather you will figure out pretty early on which location you prefer and then stay there.

Hat tip goes to the excellent Kevin Lewis.

Sunday assorted links

by on February 12, 2017 at 8:09 am in Uncategorized | Permalink

Saradhu Dhivar, 57, an unemployed villager, said he had daily spats with Mr. Koshle’s associates, arguing that Nimora had ample space to go “freestyle.” His food entitlements were withheld for a month, he said, until he built a toilet. It took days “to get used to this style,” he said.

There is much more:

In October, Mr. Koshle sealed a gap in the walls of a school whose large, grass-covered grounds had become a bathroom of choice. Dozens marched to his home in protest, wielding water buckets they carry for outside duty. They demolished the wall.

In December, Mr. Koshle got his police friends to stage the faux arrest of four locals he had instructed to relieve themselves outside—an attempt to strike fear, he said. He rented an auto-rickshaw with a loudspeaker, announcing that transgressors’ electricity supply would be cut.

Recently, teams of saree-clad women kept daily vigil around lakes and grassy fields from 4:30 a.m., shouting pro-toilet slogans and blowing whistles at offenders.

“Going to the toilet has become very political,” said Mr. Koshle. “You can’t imagine the hostility we’ve encountered.”

Don’t forget this:

“I like to take a walk,” said Luv Nishad, 35, a laborer in the village of Nagar, “and do my business away from where we sleep and pray.”

Here is the Niharika Mandhana WSJ story, via the excellent Samir Varma.

Saturday assorted links

by on February 11, 2017 at 9:46 am in Uncategorized | Permalink

1. Brendan Nyhan reading list on the authoritarian turn and U.S. politics.

2. Ben Casnocha put a lot of time into this blog post on why people work as much as they do.  And I know why he did it.

3. In San Francisco, sometimes even the renters support NIMBYism.

4. Survival is Syria’s strategy.  And what’s behind the flare-up in eastern Ukraine?

5. “Influential Mexicans are pushing an aggressive and perhaps risky strategy to fight a likely increase in deportations of their undocumented compatriots in the U.S.: jam U.S. immigration courts in hopes of causing the already overburdened system to break down.” (WSJ)

6. “The U.S.-educated Mexican economists who negotiated the trade pact in the 1980s are worried more about their own country’s protectionist tendencies than about Donald Trump.” (WSJ)

I don’t have a similar graph for subway workers, but come on. The overall pictures is that health care and education costs have managed to increase by ten times without a single cent of the gains going to teachers, doctors, or nurses. Indeed these professions seem to have lost ground salary-wise relative to others.

That is just one bit from a very excellent blog post by Scott Alexander.

What is often missed—and, frankly, it would seem deliberately misrepresented in his own autobiographical works—is that in Italy, Modigliani, by age 20, was a well published fascist wunderkind, having received in 1936 an award for economics writing from the hand of Benito Mussolini himself. Further, in 1947, at age 29, Modigliani published a 75-page article whose title in English translation would be “The Organization and Direction of Production in a Socialist Economy” (Modigliani 1947), an article that affirms socialist economics. In 2004 and 2005 there appeared English translations of five fascist works by Modigliani originally published during 1937 and 1938 (all five translations are collected by Daniela Parisi in Modigliani 2007b). The socialist paper of 1947 has never been translated in its entirety, though the  Appendix to this profile contains excerpts selected and newly translated by Viviana Di Giovinazzo, to whom we are very grateful.

That is from Econ Journal Watch, by Daniel B. Klein and Ryan Daza, with Viviana Di Giovinazzo, and here is the broader page on the ideological histories of the Nobel Laureates (interesting throughout).  The point here is not to trash Modigliani, but rather to point out how thoroughly fascist ways of thinking can seep into a society.  Furthermore, fascism and other forms of authoritarianism rule are a massive tax on human creativity, as it is unlikely Modigliani could have turned his career around had his life under Mussolini’s regime persisted.

Friday assorted links

by on February 10, 2017 at 12:27 pm in Uncategorized | Permalink

He emails to me:

Hi Tyler, Alex

Tyler asks Is a strong dollar better than a weak dollar? and says “Yes, for Americans though not for the world as a whole.  For the relevant thought experiment, assume an exogenous shift in noise trading boosts the value of the dollar.  That increases the wealth of individuals and institutions that are long dollars, and presumably this is the case for this country overall.”

Actually, I think that the baseline economic answer is Neither : the optimal level is just the equilibrium frictionless real business cycle level — if the dollar is above or below it, the US is worse off (and so is the rest of the world).

Why? Matteo Maggiori and I have a model to analyze such things (“International Liquidity and Exchange Rate Dynamics”, QJE 2015) – a full-fledged GE model  that allows to study in particular the effects of those noise trader shocks.
 
Short version: a strong dollar appreciation now helps the US now (as Tyler rightly says), but will force a depreciated dollar later (as this GE intertemporal model works out), which will hurt the US later. Summing over all periods, it’s a small (2nd order) negative.

Long version (see section II.D and III.B of the paper). Suppose there are 2 periods. At time 0, Tyler is right – the US is better off that period. However, that creates a trade deficit, which increases US indebtedness, and that will create a lower dollar in the future, and will hurt the US (as Tyler would rightly have said). E.g. if the equilibrium dollar yen rate is 100, and if the dollar is stronger at 105 at 0 because of a demand shock, then at period 2 it will need to be 95 (the logic also works with more than 2 periods). All in all, it’s a first order wash, and the loss comes from the 2nd order distortion terms (worked out in full detail in Proposition 8 of the NBER WP version). Likewise, a weak dollar now would hurt the US now, help the US later – again with a small negative overall.

A caveat: if the US is in a recession with high unemployment, a weak dollar is strictly better (for the US and the world), as it alleviates unemployment and increases total production.

Policy conclusion: don’t intervene, unless you have a very strong reason to think your currency is appreciated (or depreciated) – then, reverse that via FX interventions.
 
I hope that helps.
 
Continued thanks for the great blog!

Xavier
TC: My theory of exchange rates is “less intertemporal” than that, but a fantastic answer in any case.  Read also Ryan Avent on all of this.

A taxpayer-funded voucher that paid the entire cost of educating a child (not just a partial subsidy) would open a range of opportunities to all children. . . . Fully funded vouchers would relieve parents from the terrible choice of leaving their kids in lousy schools or bankrupting themselves to escape those schools.

…the public-versus-private competition misses the central point. The problem is not vouchers; the problem is parental choice. Under current voucher schemes, children who do not use the vouchers are still assigned to public schools based on their zip codes. This means that in the overwhelming majority of cases, a bureaucrat picks the child’s school, not a parent. The only way for parents to exercise any choice is to buy a different home—which is exactly how the bidding wars started.

…Under a public school voucher program, parents, not bureaucrats, would have the power to pick schools for their children—and to choose which schools would get their children’s vouchers.

That is from her 2003 book The Two-Income Trap: Why Middle Class Parents Are (Still) Going Broke, with Amelia Warren Tyagi.  Here is the WSJ link to the full passage, Friedmanesque throughout.  The more general underlying point is that the “rent is too damn high crowd” ought to be somewhat more sympathetic to vouchers than is often currently the case.