Claims about Bitcoin

by on January 14, 2018 at 3:22 pm in Data Source, Economics | Permalink

A single actor likely drove the USD/BTC exchange rate from $150 to $1000 in 2 months.

That is from the JME, via the excellent Kevin Lewis.  It is worth noting that the single actor was right!

I, Pencil Revisited

by on January 14, 2018 at 12:10 pm in Economics, The Arts | Permalink

Leonard Read’s essay I, Pencil showed how even simple objects like a pencil were produced only through the cooperation and coordination of many thousands of people all over the world who often knew neither one another nor even what their actions ultimately produced. Milton Friedman made the pencil metaphor famous in Free To Choose when he said that “There’s not a single person in the world who could make this pencil.” Tyler and I illustrate the same idea with a romantic twist in our I, Rose video.

The NYTimes doesn’t seem aware of the history but, as if guided by an invisible hand, has a lovingly produced series of photos from a pencil factory showing that even the proximate steps are charmingly esoteric.

Sunday assorted links

by on January 14, 2018 at 12:00 pm in Uncategorized | Permalink

1. Interview with Pandit Nayan Ghosh.  Could it be that Indian classical music, along with Bach-Brahms Germanic classical music, are mankind’s two greatest aesthetic achievements?  Shakespeare too?  And an interview with John Adams.

2. Is the Indian judiciary losing its independence?

3. Ralph Ellison reviews Gunnar Myrdal.

4. Niall Ferguson By the Book (NYT).

5. Parfitian worms.

6. Julian Assange, chess Straussian.

7. “Sticks are probably where the story of craft begins…

It took Dr. Edward Taylor’s inside perceptions to say, on publication: “It is not merely an American book, but a California book.  We do not mean merely that it is a book written in California by a Californian, but that it is distinctively and peculiarly Californian, for not only are its illustrations drawn from this coast, but the freshness of its views bespeak the novel and suggestive circumstances that have been presented in California.”

That is from Charles Albro Barker’s Henry George, still a useful biography.  Barker points out, by the way, that the notion of a “single tax” on land barely appears in Progress and Poverty, as at that time George was more focused on land nationalization.  The single tax idea became more prominent a bit later in the 1880s.

Norwegian psychiatrist Ørnulf Ødegaard has studied personality types.  He has shown that relatively more Norwegian-born persons in Minnesota suffered from mental illness, especially schizophrenia,in the 1920s than did members of Norway’s population.  He maintained that the greater frequency of illness might be due in some degree to the greater strains the emigrants were exposed to in a foreign society, but he also held that people who were disposed to this illness were more restless and found it easier than other personality types to break out of their environment.

That is from Ingrid Semmingsen, Norway to America: A History of the Migration, and I believe the original reference is to ” Immigration and Insanity: A Study of Mental Disease Among the Norwegian-born Population of Minnesota,” Ø Ødegaard – Acta psychiatrica Scandinavica, Suppl, 1932.”  Here is a related post on gene-culture interaction.

A few points:

1. Facebook can now claim it is truly addressing the problems (way exaggerated in my opinion) associated with the 2016 election.  This looks decisive, and the company can present it as a turning point.

2. In essence, they are blaming the media, without having to throw the stones themselves.  Americans respond positively to attacks on the media, so this is a strong public relations move.  Facebook retains the option of blaming the media more explicitly for its previous troubles, if need be.

3. The news feed can always be reintroduced under another name or guise.  Two years from now, the entire dialogue about the major web companies is likely to be different, one way or another.

4. I do understand this may devastate some marginal media outlets, and in fact many media outlets are marginal these days in economic terms.  Still, in the longer run I prefer a scenario where other web sites try to compete with Facebook rather than being co-opted by it and dependent on it.

5. Does this mean more ads will turn up on Instagram, chat apps, Facebook Messenger, and other Facebook services?

There is also this angle (NYT, speculative):

Facebook’s pulling back from the news — which necessarily depends on conflict — and elevation of homier material may bolster the company’s attempt to enter China, where it has been met with stiff resistance.

“Facebook is just desperate to get into China, and it will never do that unless it censors news — and this is actually a neat solution to that,” Mr. Weisberg, the Slate chairman, said. “If you only have news on the platform shared by users, users who live under repressive regimes don’t have access to real news and can’t share it, because it’s legally prohibited.”

I’m not entirely happy about this last factor, but I also don’t see how it is better for China for Facebook to remain permanently outside the country.  And if the desire to enter China makes Facebook in some way worse for Americans, that is a potential problem, but I don’t see how this move makes the overall media environment worse for Americans.

The World Bank repeatedly changed the methodology of one of its flagship economic reports over several years in ways it now says were unfair and misleading.

The World Bank’s chief economist, Paul Romer, told The Wall Street Journal on Friday he would correct and recalculate national rankings of business competitiveness in the report called “Doing Business” going back at least four years.

The revisions could be particularly relevant to Chile, whose standings in the rankings have been especially volatile in recent years and potentially tainted by the political motivations of World Bank staff, Mr. Romer said.

…Over time, World Bank staff put a heavy thumb on the scales of its report by repeatedly changing the methodology that was used to calculate the country rankings, Mr. Romer said.

The focus of the World Bank’s corrections will be changes that had the effect of sharply penalizing the ranking of Chile under the most recent term of Chile’s outgoing president, Michelle Bachelet.

“I want to make a personal apology to Chile, and to any other country where we conveyed the wrong impression,” Mr. Romer said. The problems with the report, he said, were “my fault because we did not make things clear enough.”

That is by Josh Zumbrun and Ian Talley at the (gated) WSJ.

Saturday assorted links

by on January 13, 2018 at 2:48 am in Uncategorized | Permalink

That is the topic of my latest Bloomberg column, here is one bit:

Or consider Nigerian-Americans, Nigeria being the most populous nation in Africa. Their education levels are among the very highest in the U.S., above those of Asians, with 17 percent of Nigerian migrants having a master’s degree.


Economist Edward Lazear suggests a simple experiment. Consider immigrants to the U.S. from Algeria, Israel and Japan, and rank them in order of most educated to least educated. The correct answer is Algeria, Israel then Japan. Although that’s counterintuitive at first glance, it’s easy enough to see how it works. If you are Algerian and educated, or aspire to be educated, your prospects in Algeria are relatively poor and you may seek to leave. A talented, educated person in Japan or Israel can do just fine by staying at home. These kinds of considerations explain about 73 percent of the variation in the educational outcomes of migrants.

Do read the whole thing.

Friday assorted links

by on January 12, 2018 at 10:47 am in Uncategorized | Permalink

Scott Alexander at SlateStarCodex riffs off my post on how we laugh at Oregonians afraid to pump their own gas while not looking at our own absurd restrictions on cutting hair, for example, and adds a few of his own:

There are way too many discrepancies in approved medications between countries to discuss every one of them, but did you know melatonin is banned in most of Europe? (Europeans: did you know melatonin is sold like candy in the United States?) Did you know most European countries have no such thing as “medical school”, but just have college students major in medicine, and then become doctors once they graduate from college? (Europeans: did you know Americans have to major in some random subject in college, and then go to a separate place called “medical school” for four years to even start learning medicine?) Did you know that in Puerto Rico, you can just walk into a pharmacy and get any non-scheduled drug you want without a doctor’s prescription? (source: my father; I have never heard anyone else talk about this, and nobody else even seems to think it is interesting enough to be worth noting).

Scott then strikes at the heart of the issue:

So maybe the scary thing about Oregon is how strongly we rely on intuitions about absurdity. If something doesn’t immediately strike us as absurd, then we have to go through the same plodding motions of debate that we do with everything else – and over short time scales, debate is interminable and doesn’t work. Having a notion strike us as absurd short-circuits that and gets the job done – but the Oregon/everyone-else divide shows that intuitions about absurdity are artificial and don’t even survive state borders, let alone genuinely different cultures and value systems.

This is part of what I meant by collective action kills innovation. I wasn’t saying that DARPA can’t work but rather that by subjecting everything to collective action we subject it to debate. discussion and legislation and that slows down innovation, in part because our notions of what is normal are so time and culture bound.

Maybe not, as I argue in my latest Bloomberg column:

The numbers instead indicate that lobbying hurts the underlying capital values of the corporations. Lobbying doesn’t increase the chance that favored bills are passed by Congress, and it isn’t associated with the company receiving more government contracts.

Those are the key results from a new study by Zhiyan Cao, Guy D. Fernando, Arindam Tripathy and Arun Upadhyay, published in the Journal of Corporate Finance and considering 1,500 S&P companies over the period 1998 to 2016. Neither spending money at all on lobbying nor spending more money on lobbying over those years seem to help companies, and for that matter contributions to political action committees don’t work either.


If corporate lobbying is an unprofitable use of money, why does it happen? One possibility is that corporate leaders are using company resources to indulge their own ideological preferences. Other researchers have found that companies with weaker governance and more entrenched management are those more likely to spend on lobbying. This study finds that lobbying expenditures are higher when the percentage of CEO perks is higher and when the board of the company is larger.

It’s also possible lobbyists are ripping off companies with slick sales pitches, or that incompetent CEOs are spending money on lobbying so they seem to be doing something constructive.

Do read the whole thing, I also consider under what kind of hypothesis the lobbying actually might be paying off.

The title of the paper is “The Churches’ Bans on Consanguineous Marriages, Kin-Networks and Democracy” and the author is Jonathan F. Schulz, here is the abstract:

This paper tests the hypothesis that extended kin-groups, as characterized by a high level of cousin marriages, impact the proper functioning of formal institutions. Consistent with this hypothesis I find that countries with high cousin marriage rates exhibit a weak rule of law and are more likely autocratic. Further evidence comes from a quasi-natural experiment. In the early medieval ages the Church started to prohibit kin-marriages. Using the variation in the duration and extent of the Eastern and Western Churches’ bans on consanguineous marriages as instrumental variables, reveals highly significant point estimates of the percentage of cousin marriage on an index of democracy. An additional novel instrument, cousin-terms, strengthens this point: the estimates are very similar and do not rest on the European experience alone. Exploiting within country variation support these results. These findings point to the importance of marriage patterns for the proper functioning of formal institutions and democracy.

I recall reading related ideas in the MR comments section from Steve Sailer and others.  For the pointer I thank Alexander B.

A company which supplied lingerie to the Queen has lost its royal warrant over a book which revealed details of royal bra fittings.

Rigby & Peller, a luxury underwear firm founded in London, had held the royal warrant since 1960.

It was withdrawn after June Kenton, who fitted bras for the Queen, released a book called ‘Storm in a D-Cup’.

Mrs Kenton said there was “nothing” in the book to “be upset about”, adding that it was an “unbelievable” decision.

Buckingham Palace said it did not “comment on individual companies”.

A statement from Rigby & Peller said it was “deeply saddened” by the decision, adding it was “not able to elaborate further on the cancellation out of respect for her Majesty the Queen and the Royal Warrant Holders Association”.

The Royal Warrants Association says 20 to 40 Royal Warrants are cancelled every year – and a similar number granted.

File under “elsewhere in the cosmos.”  And for the pointer I thank M.

A Twitter battle over the size of each “nuclear button” possessed by President Donald Trump and North Korea’s Kim Jong-un has spiked sales of a drug that protects against radiation poisoning.

Troy Jones, who runs the website, said demand for potassium iodide soared last week, after Trump tweeted that he had a “much bigger & more powerful” button than Kim — a statement that raised new fears about an escalating threat of nuclear war.

“On Jan. 2, I basically got in a month’s supply of potassium iodide and I sold out in 48 hours,” said Jones, 53, who is a top distributor of the drug in the United States. His Mooresville, N.C., firm sells all three types of the product approved by the Food and Drug Administration. No prescription is required.

Here is the full piece, via the excellent Mark Thorson.