A mistake by representatives of the Business Loop 70 Community Improvement District means a sales tax increase the district needs to thrive will require approval by a single University of Missouri student.

On Feb. 28, Jen Henderson, 23, became the sole registered voter living within the community improvement district, or CID, meaning she is the only person who would vote on a half-cent sales tax increase for the district.

Henderson says she feels negative about the tax idea, “but has not made a decision about how to vote. Henderson said her concerns include vague project outlines, Gartner’s pay, Business Loop improvements she said will help businesses but not nearby residents and how an additional sales tax would affect low-income people purchasing groceries and other necessities.”

For the pointer I thank Austin Vernon.

Utah fact (estimate) of the day

by on August 30, 2015 at 11:10 am in Uncategorized | Permalink

One of my web searches turned up a study from Trinity College’s American Religious Identification Survey (ARIS) on the demographics of Mormons. According to the ARIS study, there are now 150 Mormon women for every 100 Mormon men in the state of Utah—a 50 percent oversupply of women.

The article considers data on Orthodox Jews as well, via Jodi Ettenberg.

Solve for the equilibrium, as they say, and please consider as many different variables as possible…

Should the Fed tighten?

by on August 30, 2015 at 12:14 am in Current Affairs, Economics | Permalink

1. I do not know what the Fed should do, and I do not know what the Fed will do.  I don’t even like that phrase “should the Fed tighten?,” but the superior “what kind of multi-dimensional expectational monetary path should the Fed indicate?” is awkward.

2. Starting in 2008, I thought money was too tight during 2007-2011, and in general I am not afraid of upping the dose of inflation, ngdp, however you wish to express it.  I have never had “tight money” in my blood, so to speak.

3. There is good evidence from vacancies and the like that labor markets are fairly tight right now, equities are high and apparently China-robust, and we just had a gdp report of 3.8%.  So something other than more monetary loosening ought not to be out of the question.  Those variables simply cannot be irrelevant for the Fed’s current choice.

4. There is not a stable Phillips curve.  So the lack of strong price inflation does not carry clear labor market implications, nor does it mean we can boost employment through looser money.

5. Often I buy the “asymmetry argument.”  That suggests more price inflation probably won’t hurt us much, but monetary tightening could damage labor markets, so why tighten?  Paul Krugman among others makes this argument.

6. Now the risks look fairly symmetric.  The first reason is that zero short rates for so long might be encouraging excess risk-taking in the financial sector.  This can be the “reach for yield” argument, which in spite of its lack of replicable econometric support commands a lot of loyalty from serious observers within the financial sector itself.

7. The second reason for symmetric risks is that zero short rates for so long might be encouraging zombie companies:

The end of ultra-low interest rates may bode ill for the productivity of British businesses, which is already poor. Output per hour is still lower than before the crisis of 2007, whereas in America and even France it has grown. Tight monetary policy should be bad for productivity, since it makes business investment more expensive. As the cost to businesses of borrowing has fallen by more than half since 2008, investment by firms has risen by 20%. The worry now is that dearer borrowing will curb the investment binge, making productivity even more dismal.

Yet there is another side to the productivity equation. Kristin Forbes, a member of the MPC, points out that, as in Japan in the 1990s, cheap borrowing may allow inefficient “zombie firms” to survive for longer than they normally would. In Britain interest payments as a share of profits have fallen from about 25% in 2009 to 10% today, bringing down company liquidations with them. As they stagger on, zombie firms hold down average productivity levels in their industry and, as a result, put a lid on wage growth. Rising interest rates could slowly start to sort the wheat from the chaff.

That is from from The Economist and of course you can adapt it for an American context.

8. Those two arguments might be meaningful with only a chance of say fifteen percent each, but that still would put the risks in a broadly symmetric position.  I don’t see that the critics have made the case that a mere quarter point rate increase should be so damaging.

9. The contrarian in me rebels when I see article after article, blog post after blog post, consider the monetary policy problem in only two dimensions, namely as would be expressed by a Phillips curve.  See #4.  The “nice view” of monetary policy, as Faust and Leeper suggest (pdf), is probably wrong.

10. If I were at the Fed, I would consider a “dare” quarter point increase just to show the world that zero short rates are not considered necessary for prosperity and stability.  Arguably that could lower the risk premium and boost confidence by signaling some private information from the Fed.  But it’s a risk too — what if the zero rates are necessary?

11. The prospect of a stronger dollar, and the subsequent hit on American exports, remains a domestic reason not to let rates rise.  I doubt if it is a global Benthamite reason, but it is probably a reason held by some within the Fed.

12. The biggest piece of information here is that both Janet Yellen and Stanley Fischer both seem genuinely uncertain as to what the Fed should do.  No, they haven’t been absorbed by the hard money Borg.  They have their own version of these arguments and it seems they see the risks as being relatively symmetric, and thus the correct monetary policy choice is far from obvious.  No one has yet said anything that is smarter or more potent in Bayesian terms than what they probably are thinking.

13. Let’s say the Fed did decide to allow rates to rise.  How exactly would they make that happen?  How hard would it prove to accomplish?  That’s an under-discussed angle to all of this.  And the Fed might either wish to postpone this curiosity or get it over with, another set of symmetric risks.

We’ll know more soon.

A very good paragraph and a half

by on August 29, 2015 at 3:06 pm in Books, Uncategorized | Permalink

Claire Messud on Elena Ferrante in the FT:

…the novelist remains true to her broadest undertaking: to write, with as much honesty as possible, the unadorned emotional truths of Elena Greco’s life, from timid peasant schoolgirl to respected literary icon, riven always between her origins and her ambitions, between her intellectual pursuits, her romantic desires, and her maternal responsibilities — always with Lila as her fractured mirror.

I’ve pressed Ferrante’s novels on friends with mixed results. Some fall upon the books with a familiar eagerness, but by no means all: one woman said, of My Brilliant Friend, “How’s it different from Judy Blume? Just girls getting their periods.” But I end up thinking that the people who don’t see Ferrante’s genius are those who can’t face her uncomfortable truths: that women’s friendships are as much about hatred as love; that our projections determine our stories as much as does any fact; that we carry our origins, indelibly, to our graves. To imbue fiction with the undiluted energy of life — to make of it not just words upon a page but a visceral force — is the greatest artistic achievement, worth more than any pretty sentences: Ferrante has done this, if not perfectly, then with a rare brilliance.

Here is a good review of Ferrante from The Economist.  As I’ve been saying for a while, this is one of the important literary projects over the last decade or more.  And of course we still don’t know who Elena Ferrante really is, her (his?) true identity remains a secret.  And here is the new Vanity Fair interview with Ferrante.

Saturday assorted links

by on August 29, 2015 at 12:56 pm in Uncategorized | Permalink

1. Which Republican candidates actually cut government spending?

2. Will the financial mainstream pick up on the block chain idea?

3. Emmanuel Todd is getting himself in trouble.

4. When it comes to travel, skip the iconic.

5. Claims from Donald Trump.

6. Interview with Josiah Ober on ancient Greece.

7. “But we are not utilitarians. We are Americans.”  Is there a coming car revolution?

There is a new opinion of sorts:

The Democratic Party platform now calls for a $15 per hour national minimum wage for all hourly workers after delegates voted in an amendment proposed by progressive activists during the Democratic National Committee Meeting here on Friday.

The pointer is from Conor Sen.

Here is the academic paper, by William Easterly, and Laura Freschi, and Steven Pennings:

Economic development is usually analyzed at the national level, but the literature on creative destruction and misallocation suggests the importance of understanding what is happening at much smaller units. This paper does a development case study at an extreme micro level (one city block in New York City), but over a long period of time (four centuries). We find that (i) development involves many changes in production as comparative advantage evolves and (ii) most of these changes were unexpected (“surprises”). As one episode from the block’s history illustrates, it is difficult for prescriptive planners to anticipate changes in comparative advantage, and it is easy for regulations to stifle creative destruction and to create misallocation. If economic growth indeed has a large component for increases in productivity through reallocation and innovation, we argue that the micro-level is important for understanding development at the national level.

It is a block on Greene St., near NYU, and so a section of this paper focuses on whorehouses.  History made them do it.  Here is the interactive site.  I am in general a big believer in this kind of micro-history, which remains undervalued in the economics profession.

The pointer is from Kottke.

Kieran Healy has a new paper on that topic (pdf), by the way a paper with a very short title (but this is a family blog).  Here is his opening paragraph:

Nuance is not a virtue of good sociological theory. Sociologists typically use it as a term of praise, and almost without exception when nuance is mentioned is is because someone is asking for more of it.  I shall argue that, for the problems facing Sociology at present, demanding more nuance typically obstructs the development of theory that is intellectually interesting, empirically generative, or practically successful.
And yet I find this paper has a lot of…nuance.  But of course Healy is consistent, it is “Actually Existing Nuance” he is railing against…

Friday assorted links

by on August 28, 2015 at 11:25 am in Uncategorized | Permalink

1. More on China and the silver standard.

2. Is there too much cream cheese on your bagel for the same reason the air conditioning is too cold?

3. The gravity model (trade) in ancient times.  A remarkable piece.

4. Switzerland launches special trains for Asians, Rigi-Kulm edition.  But back home in China: “The service sectors we do have data for have flat or falling output similar to other industries.”  Lots of signs of pending negative growth in there.  And the NYT covers the rise of China’s zombie factories.

5. Critique of Daniel Bell on Chinese meritocracy.

6. The theological poverty economist.  And she is moving to GW.

7. The cash or the tuna?  The law firm is taking the cash.

8. One of Facebook’s founders is taking on the Fed.

9. New AEA video on how good and interesting the life of an economist is.  I don’t find it so informative, and it is odd how little economic reasoning it uses.

10. Can a novelist be too productive?

How left-leaning are lawyers?

by on August 28, 2015 at 10:07 am in Data Source, Education, Law | Permalink

Adam Bonica, Adam S. Chilton, and Maya Sen have an extensive new paper (pdf) on this subject:

American lawyers lean to the left of the ideological spectrum. To help place this in context, the mean DIME score among the attorney population is -0.31 compared to -0.05 for the entire population of donors. Moreover, some 62% of the sample of attorneys are positioned to the left of the midpoint between the party means for members of Congress. Morover, the modal CFscore is in the center-left. This places the average American lawyer’s ideology close to the ideology of Bill Clinton. To be more precise, the modal CFscore for American lawyers is -0.52 and Bill Clinton’s CFscore is -0.68. This confirms prior scholarship and journalism that has argued that the legal profession is liberal on balance. To our knowledge, however, this figure represents the most comprehensive picture of the ideology of American lawyers ever assembled.

There is however a (quite slight) bimodal nature to the distribution and a cluster of right-leaning attorneys has views similar to those of Mitt Romney.  Not so many lawyers are true extremists, at least not in this data set.  Figure 2 on p.19 will not reproduce for me but it is an excellent picture of the data, including comparisons with other professions.

We learn also that female attorneys are considerably more liberal than male attorneys, but the number of years of work predicts a conservative pull.  Being a law firm partner also predicts views which are more conservative than average.  If you consider “Big Law” attorneys, while they are overall to the Left, they are more conservative on average than the cities they live in, such as NYC or Los Angeles.  Lawyers in Washington, D.C. are especially left-leaning.

The top fourteen law schools all have distributions which lean to the Left (pp.28-29), and UC Berkeley has the most left-leaning alumni.  The five law schools, of the fifty surveyed, with right-leaning alumni are University of Oklahoma, Texas A&M University, University of Georgia, Louisiana State University, and Brigham Young University.  Pages 38-40 of the paper rank different major law firms by how left- or right-leaning their employees are.

Oil and gas, M&A, and energy lawyers are relatively conservative, see p.45.  Entertainment lawyers are relatively left-leaning, same for civil rights and personal injury lawyers.  Don’t even ask about law professors.  Public defenders are far more left-leaning than prosecutors, though prosecutors are still more left-leaning than lawyers as a whole.

This paper is interesting throughout.

I very much enjoyed this Live Chat, and I thank the participants for all of their stimulating questions and remarks.  Here is one excerpt:

Ben Casnocha:

How do you think your career and life would have been different if blogging, twitter, and digital media had be ubiquitous in your teens and 20’s? Would you have still pursued an academic path or would you have become a full-time columnist/commentator/speaker earlier on? I seem to recall you saying at one point that you’re glad the internet didn’t exist early on in your life as it gave you the time to read the classics and develop a substantive base of knowledge.

Tyler Cowen:

I am glad I was forced to live in “book culture” and “meat space’ for my first forty years. Or maybe thirty-five years would have been enough. People these days have lost the sense of information being scarce, and counterintuitively that makes it harder for them to develop profound thoughts. It’s like practicing chess by asking the computer right away, all the time, what the right move is.

[and later] …contemporary academic is overly bureaucratized and there is a very good chance I would [if I were starting today] look for another model of success and contentment. It is an open question whether or not I could find one. Whatever its limitations, there is still a followable formula for academic success, which of course is part of the problem.

Other topics include when is the best age to live in various parts of the world, Alban Berg and Rilke, Marc Andreessen, my one hidden talent, Rene Girard, labor market networks, optimal travel into the past, and which is the most underrated or overrated wisdom tradition.  Do read the whole thing.

What I’ve been reading

by on August 28, 2015 at 12:46 am in Books | Permalink

1. William Skidelsky, Federer and Me: A Story of Obsession.  An excellent short book on how tennis has changed through technology, the nature of excellence in human performance, and why fans are interested in sports and sports stars at all.  There is no great tennis stagnation.

2. Bill Hayton, The South China Sea: The Struggle for Power in Asia.  If you wish to be convinced that no one has much of a good claim to the Spratlys, this is the place to go.  The best guide to current disputes.

3. Padraig O’Malley, The Two-State Delusion: Israel and Palestine — A Tale of Two Narratives.  This “substance on every page” book can be read profitably no matter what your point of view on this conflict.  It has lots of economics too, most of all a good discussion of what it would take for a Palestinian state to be economically viable.  Definitely recommended.

4. Barry Allen, Vanishing into Things: Knowledge in Chinese Tradition, is a consistently interesting take on the history of ideas in China, including Daoism, Chan Buddhism, and much more.  It is unusual for a book to both make scholarly contributions and engage the common educated reader, most of all on these sometimes arcane topics.

I don’t currently have time to read it, but Robin Lane Fox’s forthcoming Augustine: Conversions to Confessions looks quite good.

Patrick Modiano’s newly translated Pedigree: A Memoir is perhaps excellent in the original French, but I found very little in it to hold my attention.

Jeremiah D. Lambert’s The Power Brokers: The Struggle to Shape and Control the Electric Power Industry is full of useful and interesting facts, organized by the stories of various personalities, including Paul Joskow and Kenneth Lay.  Cintra Wilson’s Fear and Clothing: Unbuckling American Style is written in exactly the opposite manner, breezy and fun but at times could use more facts.

Claims about China

by on August 27, 2015 at 9:13 pm in Current Affairs, Economics | Permalink

Pay close attention to the 500+ stocks in China that are still frozen. Earlier it was reported virtually all these firms borrowed money with pledged stock near the peak of the market in May and June.  If these reports are true, it is likely that given the length of time these stocks have remained frozen, that these firms would be in technical bankruptcy.  That would be a major blow and cause all kinds of panic so clearly something will be worked out to soften the blow here.  These 500 firms might be the epicenter.

That is from Christopher Balding, the piece makes other points of interest as well.

This is from a recent working paper (pdf) by Miguel Morin:

When the adoption of a new labor-saving technology increases labor productivity, it is an open question whether the economy adjusts in the medium-term by decreasing employment or increasing output. This paper studies the effects of cheaper electricity on the labor market during the Great Depression. The first-stage of the identification strategy uses geography as an instrument for changes in the price of electricity and the second-stage uses labor market outcomes from the concrete industry—a non-traded industry whose location decisions are independent of the instrument. The paper finds that electricity was an important labor-saving technology and caused an increase in capital intensity and labor productivity, as well as a decrease in the labor share of income. The paper also finds that firms adjusted to higher labor productivity by decreasing employment instead of increasing output, which supports the theory of technological unemployment.

You will note of course that the short-, medium- and long-run effects here are quite different, and of course electricity is a major boon to mankind.  Still, technological unemployment is not just the fantasy of people who have failed to study Ricardo.

Here is a short summary of the paper, via Romesh Vaitilingam.

Thursday assorted links

by on August 27, 2015 at 11:42 am in Uncategorized | Permalink

1. Why do so many new restaurant names sound the same?

2. Why do papers with shorter titles get more citations?  The paper on that is here, six words in the title (“The advantage of short paper titles.”)

3. Worries about Greece, still nascent but worth noting.

4. Good review of volume IV of Elena Ferrante.  And German literary critic reviews IKEA catalog.  Is it perhaps the world’s most widely distributed new edition?

5. Uber with goats — “goats out of context…”(link is safe but it is to Playboy, fyi)

6. Who supports the public administration major at Auburn?

7. Is value-added trade growing nonetheless?