I especially enjoyed the part about his interior decorating, this segment was fun too:

Hart’s appetite for complex contract negotiations has also served him well at home. He and his wife embarked on a major renovation of their house several years ago, adding new rooms to the ground floor and expanding the kitchen and backyard. Though he admits that his wife spearheaded the design, which included an open kitchen and new sitting room just off the main entrance, Hart says he negotiated the contract with the builders. “You learn right away that nothing will be completed when they say it will,” he adds with a wry smile. “So there are lessons that even I can learn.”

Here is the full FT story.  Here is The Economist covering Rita Goldberg’s second-generation Holocaust memoir; she is Hart’s wife.

A philosophically-minded MR reader writes to me:

Tenure ought to be an occasion to explore radically new intellectual paths, ones not pre-approved by one’s field and ones that could, perhaps, do something to bridge the chasm between academic and non-academic intellectual life–and yet as a matter of fact what seems to happen is that people either stop working altogether or continue barreling down the groove they wore themselves into to get tenure.  (You mentioned this issue in a post last year: http://marginalrevolution.com/marginalrevolution/2016/06/does-tenure-encourage-risk-taking.html)  But I want to hear more.

So: why does this happen, how can we prevent it at the University/ departmental level, and, most of all, how can we prevent it at the personal level?  (Keeping in mind that most of us are not cognitively capable of processing information at the speed to go your route!)   The idea that we are incentivized to keep working by the prospect of being promoted to full Professor seems silly, given the increased administrative responsibilities.

Related problem: as one moves up the tenure hierarchy, the administrative responsibilities tend to fall disproportionately on fewer and fewer people,  b/c there are lots of deadbeats. I repeatedly see the few responsible people overwhelmed with administrative tasks which they refuse to delegate to those they know will not take them seriously.  (And I observe these responsible people are disproportionately women, even in a field–like mine–that is disproportionately male.)

I have a few suggestions, all feasible but only a few are practical:

1. All schools should copy the committee obligations policy of the school, within their quality tier, that has the fewest committee assignments for faculty.  Yes this can be done.

2. I don’t know how to operationalize this one, but on average give women half the committee assignments that men have.  That still won’t equalize the total work burden (women on average work harder per committee assignment), but it is a start.

3. Study your lecture preparation, and experiment with cutting parts of it out.  See if that matters.

4. Each year take at least one trip to a place you didn’t think you wanted to visit.

5. Go to some Liberty Fund conferences.

6. Refuse to have colleague lunches based around local politics, politics, small talk, sports (unless of the analytic variety), and campus gossip.  Just don’t do it.  Also avoid lunches with too many people attending.

7. Of the five or so smartest people you hang out with (family aside), try to ensure that no more than half of them are in your department.

8. Change the ratio of foreign-to-domestic TV shows you watch, in favor of the foreign.

9. Hang at least one piece of non-cheery art on your wall that will remind yourself of an ever-pending death.  Change its angle every now and then, or better yet change the picture, so you don’t get too used to it and stop noticing it altogether.  If need be, supplement this with Brahms’s German Requiem.

10. Write a periodic blog post, if only a secret and non-published one.  If you don’t find this process is going well, ask yourself what is wrong.

11. Worry if no one thinks you are crazy.  Supplement this with actually being crazy.

12. What else?

Saturday assorted links

by on January 14, 2017 at 12:33 am in Uncategorized | Permalink

1. How is the Nigerian anti-corruption campaign going?

2. This four-year-old girl knows how to read books fast and with superior comprehension.

3. Bernie Madoff dominates the hot chocolate market in prison.

4. What happens when algorithms design a concert hall?

5. David Brooks on markets in health care (NYT).

6. “As superlow rates reduce loan revenue, a Japanese lender branches out into farming, pinball, broadcasting, rice cultivation and blueberry jam; ‘If you’re going to go to the bank, it should be fun’”, WSJ link here.  And Basil Halperin on market monetarism.

7. “The ‘Krispy Kreme Familia’ and the black market doughnuts of Juarez.”

Bruce Caldwell emails me:

The Center for the History of Political Economy at Duke University will be hosting another Summer Institute on the History of Economics this summer from June 4 – 16, 2017. The program is designed for students in graduate programs in economics, though students in graduate school in other fields as well as newly minted PhD’s will also be considered. Students will be competitively selected and successful applicants will receive free housing and reading materials. The deadline for applying is March 3. Travel stipends for those coming from afar will be considered on a case by case basis.

We are very excited about this year’s two week program, which has a somewhat different format from other years. The first week Bruce Caldwell will be the sole lecturer, and will present a mini-history of economic thought class, providing both content and tips on how to set up such a course. The second week is thematic. Steve Medema will present a history of the concept of market failure, and Kevin Hoover will present a history of macroeconomics. Applicants may sigh up for either week, or both. More information on the Summer Institute is available at our website, http://hope.econ.duke.edu/

Friday assorted links

by on January 13, 2017 at 12:25 pm in Uncategorized | Permalink

1. Do lenders of last resort really make financial systems that much safer?  And the bullfighting economist and Federal Reserve governor.

2. Disney negotiating with Carrie Fisher’s estate for more Princess Leia.

3. Seoul opens a bookstore with no employees and no prices.

4. “Virginia man spends $1,000 to deliver 300,000 pennies to Lebanon DMV.”  (The penny, and wheelbarrow, as rent-seeking behavior…):

Still, Stafford had one final act planned. After collecting the hundreds of rolls of pennies he needed, he hired 11 people to help him break open the paper rolls with hammers Tuesday night. It took four hours and he paid each person $10 per hour, costing him $440.

Stafford also purchased five wheelbarrows to deliver the pennies. The wheelbarrows cost $400, and he wasn’t going to dump the coins on the DMV’s floor, so he left the wheelbarrows there, bringing his expenses to $840.

He also paid $165 for the three lawsuits, which means he spent $1,005 to get 10 phone numbers and the satisfaction of delivering 300,000 pennies.

Via Annie Lowrey.

5. Maybe the AIIB is better after all:

William Faulkner’s novels in particular stuck with Mr. Jin, now the president of China’s Asian Infrastructure Investment Bank, a major force in the country’s rush to secure a leading role in the world’s financial architecture. An underlined copy of “Absalom, Absalom!” is on his office bookshelves, along with Shakespeare and the Bible. He said he found inspiration in Faulkner’s complex human relationships.

NYT link here.

Washington Post: The cyberattack struck Los Angeles Valley College late last month, disrupting email, voice mail and computer systems at the public community college in Southern California. Then, school officials found a ransom note.

The missive advised the college that its electronic files had been encrypted and that the files could only be unlocked with a “private key.” The attackers would supply the key after receiving payment in the valuable digital currency known as bitcoin, which can be used anonymously without a centralized bank.

“You have just 7 days to send us the BitCoin after 7 days we will remove your private keys and it’s impossible to recover your files,” the attackers warned, according to a copy of the note obtained by The Washington Post.

Leaders of the Los Angeles Community College District decided to pay the ransom.

The college paid $28,000 and the files were restored.

ArsTechnica: According to the FBI, ransomware payouts in the United States jumped from $25 million in all of 2015 to over $209 million in just the first quarter of 2016.

Clearly, this is just the beginning.

In my latest Bloomberg column I consider William F. Buckley’s old conundrum:

William F. Buckley famously said he would rather be ruled by the first 2,000 people listed in the Boston telephone directory than by the faculty of Harvard University.

Here is part of my take:

For better or worse, direct rule by Buckley’s 2,000 American citizens probably would mean a slower pace of immigration, less emphasis on free trade, more law and order politics, and a blunter form of nationalism in foreign policy.

Those don’t match my policy preferences (I am more of a globalist, and also a professional academic), but I fear what the Harvard faculty could bring. I can imagine an America closer to Bernie Sanders’s vision, with single-payer health insurance, levels of taxation exceeding 50 percent of GDP, levels of immigration unsustainable with a large welfare state, too many aggressive attempts to legislate equal treatment for various groups, excessive fondness for a universal basic income, and too many humanitarian interventions abroad.

Don’t forget:

It’s a good rule of governance that policy cannot race too far ahead of the citizenry, and I don’t view faculty as a class of people well-suited for that kind of humility.

But for the Fed and the EPA, among other areas, I very much want Harvard.  My conclusion is this:

The real issue here isn’t intellectuals versus populism writ large. There is a time and place for populist sentiment, but an excess can be counterproductive on its own terms. As expertise is pushed out the door, the citizenry itself gets a bad name, precisely when we most need it to step up to the plate and demand some excellence.

Do read the whole thing.

I should note that on this topic I have been very much influenced by my colleague David Levy and also his work with Sandra J. Peart, see for instance their newly arrived book Escape from Democracy: The Role of Experts and the Public in Economic Policy.

Martin Feldstein had a recent piece in the WSJ that defended the idea of a border tax adjustment, which would be a part of the proposed corporate tax reform. He points out that if imports were no longer deductible, and exports received a subsidy, then the border adjustment would not distort trade. Rather the effect would be exactly offset by a 25% appreciation of the dollar. I certainly understand that this would be true of a perfect across-the-board border tax system. But is that what we will have?

1. Will the subsidy apply to service exports? (Recall that services are a huge strength of the US trade sector.) Let’s take Disney World, which makes lots of money exporting services to European, Canadian, Asian and Latin American tourists visiting Orlando. Exactly how will Disney determine the amount of export subsidy it gets? Do they ask each tourist what country they are from, every time they buy a Coke? That seems far fetched—what am I missing? If Disney doesn’t get the export subsidy, then the 25% dollar appreciation would hammer them, and indeed the entire US service export sector.

2. What about all those corporate earnings that are supposed to be repatriated? (And future earnings as well.) If the dollar appreciates by 25%, then doesn’t this hurt multinationals? Or am I missing something?

Update: It just occurred to me that corporate cash stuffed overseas is probably held in dollars. But future overseas earnings may still be in local currency.

Keep in mind that the prediction of 25% dollar appreciation is from the supporters of the plan, like Martin Feldstein. If you did this sort of adjustment without any dollar appreciation, the impact would be devastating on companies like Walmart. Given the Fed’s 2% inflation target, how could they pass along a (effective) 25% tariff on almost everything they sell?

There are other points of value at the link.  I agree with Scott’s most general claim that the case for this tax has not yet been made.

A few years ago I wrote this about Bolivia:

It is much debated in Bolivia whether corruption is going up or down.  I believe it is going up, but partially for good reasons.  For instance the construction sector is doing well, and construction tends to be corrupt in many countries, for reasons intrinsic to the activity itself (e.g., lots of big contracts, easy to claim invisible expenses, etc.).  That means higher corruption but also a better corruption than the penny ante bribes of a shrinking economy.

I still think that is correct, and at the time it didn’t meet up with mass moral opprobrium, even though with some very very small chance I may have condemned the citizenry of Bolivia to corrupt, exploitative rule for ever and ever.  I should add that such points are standard fare in the literature, see for instance the book on corruption by Susan Rose-Ackerman.

Now, these days, with more American status relationships on the line, everyone is up in arms because Peter Thiel had the following exchange with Maureen Dowd:

When I remark that President Obama had eight years without any ethical shadiness, Mr. Thiel flips it, noting: “But there’s a point where no corruption can be a bad thing. It can mean that things are too boring.”

As I interpret Peter, he is not saying it would have been good to have an exogenous increase in the corruption of Obama the individual.  Rather, had some other conditions been different/better, the overall level of corruption in government would have been higher and that combination might very well have been a net plus.  If you would like a “left wing example,” had the fiscal stimulus been twice as large, corruption in government probably would have been higher too (pointing out “the stimulus wasn’t very corrupt” is missing the point and in fact is a sign that you are a rampant mood affiliator, determined to restore the mood you feel is just, rather than tracing the analytic point at hand).  In other words, Peter’s point is entirely defensible and probably correct.  He’s not saying that “corruption is good.”

Now, to be sure, there is another dimension here.  The incoming Trump administration is showing too many signs of being corrupt, and many people are condemning it on these grounds.  Peter’s remark does not fit into that narrative and Peter has been a significant Trump supporter.  But let’s think about this a little more.   First, is there a role for some outsiders who eschew the dominant moral choruses of approbation and condemnation, in favor of making other, different points?  I certainly hope so, because often I try to be one of them (though unlike Peter I have not supported Trump).  Second, Peter is not an outsider in this process, rather he has taken on an important position on the Trump transition team.  Given that reality, you can’t expect him to produce a quotation here condemning Trump.  So he instead makes some other (valid) outsider-like point about corruption.  Now, you might object to Peter’s role on the transition team, but that is old news at this point.  You shouldn’t be holding any extra grudge against him for his corruption answer.  And above all, keep in mind these are reporter-chosen excerpts from a four-hour dinner/interview, and so we don’t know the surrounding context and qualifications and possibly accompanying off the record statements.

People, you need to pick your targets.  Get upset about the things worth getting upset about, such as the absence of a sustained foreign policy plan to head off imminent volatility in global relations.

How many of you have been expecting that heading?  Of course it involves cows:

A Dutch woman has seen her request for Swiss citizenship refused for the second time by local residents who object to her media campaigning against cowbells and other Swiss traditions.

Nancy Holten, 42, was born in the Netherlands but grew up in Switzerland from the age of eight, speaks fluent Swiss German and has children with Swiss citizenship.

A vegan and supporter of animal rights, she gained a reputation in her community of Gipf-Oberfrick, in the canton of Aargau, after campaigning against cowbells, claiming they were damaging to cows’ health.

She has also objected to hunting and piglet racing, and complained about the noise of church bells in the village, campaigns that have seen her regularly interviewed in the Swiss press over the past few years.

Last November, Holten had her citizenship application turned down for the second time by the residents’ committee.  That’s despite her meeting all legal requirements and the municipal and cantonal authorities having no formal objection.

In Switzerland local residents often have a say in citizenship applications, which are decided primarily by the cantons and communes where the applicant lives, rather than federal authorities.

In Holten’s case it seems her campaigning has not won her many friends in the village, with the president of the local branch of the Swiss People’s Party, Tanja Suter, telling the media that Holten has a “big mouth”.

The commune did not want to give Holten the “present” of Swiss citizenship “if she annoys us and doesn’t respect our traditions”, said Suter.

Is this not what politics should be about, namely the relationship between man and nature?  Here is Gipf-Oberfrick, the community in question:

swiss

Here is the full story, with a variety of interesting points and examples at the link, via Ted Gioia and Dan Wang.

Thursday assorted links

by on January 12, 2017 at 12:14 pm in Uncategorized | Permalink

Following up on yesterday’s discussion, I received this in my email:

I think you protest society (and whatever you think the cause is) on the unconditional probabilities but only protest cops on the conditional probabilities.

That is from a very high quality correspondent.  Since I think BLM is in large part trying to raise consciousness about society at large, and not just complaining about the cops, it is fine for them to protest the large number of bad outcomes for many black people without getting too caught up in the “conditional upon x, y, and z, is a cop more likely to shoot a black or a white person?” sort of question.  Body cameras, reforming/ending the War on Drugs, stronger civil liberties, and other changes make sense for macro reasons, no matter what your view on the conditional probabilities.  So a big chunk of your 300+ comments are simply off the mark.

My response to the correspondent included the following good advice:

Every movement…has a smart version and a stupid version, I try to (almost) always consider the smart version.  The stupid version is always wrong for just about anything.

If you focus on the stupid version, you too will end up as the stupid version of your own movement.

RMB accounted for 98% global bitcoin trading volume over past six months

Here is the link, picture, and source.  Of course that is all about capital controls, and a capital control-evading mechanism is what Bitcoin has evolved into.  I wonder how it will evolve further, especially if the Chinese crack down on the practice, which they are more than capable of doing.

That is the topic of my latest Bloomberg column, I know that so many of you are full of excuses.  Here is one part of the column:

If we’re really headed off the cliff, selling all equities has to be better than doing nothing. Buying nonleveraged puts would be a possible Step 2, and most of the people in my Twitter feed have the smarts to figure out the mechanics. If it’s geopolitical and indeed market volatility you expect, deal in VIX options instead; VIX measures of volatility are lower than a few years ago, giving you a juicy target if you are sure volatility will rise. I get that this is somewhat hard, but if you’re right about Trump you can make a fantastic rate of return by acting on your worries. If you’re capable of getting an MBA at a good school, this learning should not be off-limits to you.

It is true that stock markets don’t typically predict “black swan”-style political catastrophes, but that is like saying sports betting markets don’t usually predict upsets. The point remains that upsets are not the norm, and if markets don’t predict them probably you should not expect them. But if you do nonetheless, go ahead and bet (or invest) accordingly.

What about the notion that market timing is a bad idea for amateurs, and how would you know when to come back into the market with your funds? That’s a fair worry, but not if you think the U.S. is headed for fascist catastrophe or rule by a KGB cabal.

I do give an answer at the end, and it is all the more worrying.

So if people have bifurcated mental modes, and their behavior is ruled so often by inertia, opposing the worst aspects of a Trump administration is going to be all the harder for most of us.

Which is all the more reason to short the market.

By now I’ve queried quite a few people, and I’ve yet to hear of anyone being short.  You might argue that stock markets don’t reflect social welfare, which is fair enough.  But then what market prices would you propose we look at?  Consumer durables for instance are doing fine.  Or is there no market discipline on your view at all?

Wednesday assorted links

by on January 11, 2017 at 1:51 pm in Uncategorized | Permalink