Getting a signing bonus is often associated with top young athletes. Now, taking a job driving a chemical truck in the U.S. can earn you a signing bonus of as much as $5,000 — and then there are also recruiting bonuses, retention bonuses and safety bonuses.

Those are the tactics that Randy Strutz, president of Quality Carriers in Tampa, Florida, is using to fill positions as unemployment lingers near the lowest level since before the last recession. The situation is cropping up across more industries in the U.S., as businesses feel increasing pressure to offer better wages and incentives to attract workers.

“It’s been a challenge to get good, qualified drivers,” said Strutz, who supervises about 2,500 truckers at the company owned by private-equity firm Apax Partners. “I expect we’ll probably have to spend more money to find applicants.”

That is from Patricia Laya.  What does it say about the job prospects for the remaining able-bodied, male unemployed?  There has been some recent coverage of video games, and incarceration, now it is time for more consideration of “can’t pass a drug test.”

That is my latest Bloomberg column, here is the introductory section:

The richest Americans are much less likely to have inherited their wealth than their counterparts in many supposedly more egalitarian countries. They’re not remarkably rich in degrees from elite universities. Rich Democrats have more social connections than rich Republicans.

These are some surprising insights from a new study of the very wealthy by Jonathan Wai of Duke University and David Lincoln of Wealth-X, based on data on 18,245 individuals with a net worth of $30 million or more.

The study portrays high-net-worth individuals as a more idiosyncratic and diverse group than reductionist cliches about “the 1 percent” might suggest.

Looking globally, extreme wealth is most closely connected to elite education in South Korea, Chile, and South Africa, and least so in Ukraine and Qatar. The U.S. is near the bottom of the top third of the country rankings for the tightness of this connection. Germany is close to the bottom, reflecting how German paths to riches run through forms of manufacturing and medium-sized business that are not so closely tied to elite higher education.


For all the talk of Sweden and Austria as relatively egalitarian societies, they are also the countries where the greatest proportion of high-net-worth individuals inherited their wealth: 43.8 percent and 49.6 percent, respectively. In the U.S., inherited wealth accounts for only 12.6 percent of the very wealthy individuals in the study’s sample.

There is much more at the link.

Assorted Thursday links

by on October 6, 2016 at 2:28 pm in Uncategorized | Permalink

The very beginning is a little slow, but I thought Ezra was one of the very best guests.  The topics include the nature and future of media, including virtual reality, the nature of leadership (including Ezra’s own), how running a project shapes your political views, a wee bit on health care, what he thinks are the Obama and Clinton models of the world, Robert Putnam’s research on the costs of diversity, the proper role of shame in society, animal welfare, and of course Ezra’s underrated and overrated, with takes on Bob Dylan, The Matrix, William F. Buckley, Joe Biden, and more.  There is no video but here is the podcast and transcript.  Here is one excerpt:

COWEN: …Now Putman, let me ask you about Putnam, and how Putnam relates to Donald Trump. As you know, Robert Putnam at Harvard, he has some work showing that when ethnic diversity goes up that there’s less trust, less cooperation, less social capital.

If you think of yourself in the role of an editor, so you have an American society, diversity has gone up, and a lot of people have reacted to this I would say rather badly — and I think you would agree with me they’ve reacted rather badly — but there’s still a way in which the issue could be framed that while diversity is actually a problem, we can’t handle diversity.

Putnam almost says as such, and do you think there’s currently a language in the media where you have readers who are themselves diverse, where it’s possible not to just be blaming the bigots, but to actually present the positive view, “Look, people are imperfect. A society can only handle so much diversity, and we need to learn this.” What’s your take on that?

KLEIN: I strongly agree. We do not have a language for demographic anxiety that is not a language that is about racism. And we need one. I really believe this, and I believe it’s been a problem, particularly this year. It is clear, the evidence is clear. Donald Trump is not about “economic anxiety.”

COWEN: A bit, but not mainly, I agree.

KLEIN: That said, I think that the way it’s presented is a choice between economic anxiety and racism. And one I don’t think that’s quite right, and two I don’t think that’s a productive way of having that conversation.

COWEN: Why don’t we have that language? Where did it go, or did we ever have it?


COWEN: You see this with Medicaid. A lot of people don’t sign up. They don’t have addresses. You can’t even get them, whatever.

KLEIN: They don’t like doctors. They’re afraid of doctors.

COWEN: This is me.

KLEIN: You’re afraid of doctors?

COWEN: “Afraid” isn’t the word.

KLEIN: Averse. [laughs]

COWEN: Maybe dislike. Averse. [laughs] They should be afraid of me, perhaps.

Definitely recommended.  The same dialogue, with a different introduction, is included in The Ezra Klein Show podcast.

Uber Versus Taxi Cab Racism

by on October 6, 2016 at 7:28 am in Economics, Film, Travel | Permalink

Film maker Charles Mudede, a black Zimbabwean living in the United States, is thrown back into the racist past by a visit to Vancouver.

Vancouver B.C. does not have Uber or Lyft, the ridesharing service I mainly use in Seattle and New York City…the absence of ridesharing companies in Vancouver has meant the persistence of a problem that, in my experience, pretty much vanishes from the surface of things when you have an account with Uber or Lyft: taxi cab racism….I had all but forgotten this form of racism until this weekend, when I found myself in downtown Vancouver unable to hail a cab. They just simply passed by me, though many were not engaged. At first I thought I was not visible enough to drivers, but after a few cabs passed by my increasingly theatrical waving, I remembered the color of my skin.

It’s important to note that many of the taxi drivers were not white but South Asians—some who were even blacker than me. But when it comes to taxi racism, the color of the driver often does not matter. White racism, in this sector, has been adopted, sometimes even intensified, by all other races, many of which have been and still are the victims of white racism. Even in Seattle, when Yellow Cab was the top dog, East African drivers would pass by me because I looked like them. All of that nonsense came to an end with ridesharing, whose apps made hailing unnecessary.

The author, it’s worth noting, is not a fan of neoliberalism:

The sad thing is that much of my thinking is strongly opposed to the sharing economy because the society in which its modes are expressed, a neoliberal society, results, for one, in the encroachment of the “entrepreneurial spirit” into all aspects of our lives.

So give him credit for grudgingly acknowledging one important benefit.

The shortcomings of the catapult method do not appear to have deterred traffickers from seeking ways to shoot drugs from Mexico into the United States. Authorities in the Mexican state of Sonora recently discovered a vehicle modified to serve as a mobile air cannoncapable of launching packages of drugs across the border. It is not clear whether the apparatus — described by the news outlet Fusion as something that looked like it “came out of the Mad Max movie” — was ever used, nor is it clear if it even functioned as intended.

There are other documented instances in which traffickers have used cannon to launch drugs across the border, including another truck-mounted device discovered by Mexican authorities in 2013.

Here is the full story, via Norden Intelligence.

What I’ve been reading

by on October 6, 2016 at 12:59 am in Books | Permalink

1. Joshua Foer, Dylan Thuras, and Ella Morton, Atlas Obscura: An Explorer’s Guide to the World’s Hidden Wonders.  Short descriptions of places you ought to visit, such as ossuaries, micronations, museums of invisible microbes, the floating school of Lagos, the Mistake House of Elsah, Illinois, Bangkok’s Museum of Counterfeit Goods, and the world’s largest Tesla coil in Makarau, controlled by Alan Gibbs of New Zealand.  The selection is conceptual, so I like it.  I will keep this book.

2. James T. Hamilton, Democracy’s Detectives: The Economics of Investigative Journalism.  A highly original look at exactly what the subtitle promises, I thank Jay for keeping Cowen’s Second Law valid.  Has this topic ever been more important than this year?

3. Andre Schlueter, Institutions and Small Settler Economies: A Comparative Study of New Zealand and Uruguay, 1870-2008.  There should be more such books!  New Zealand and Uruguay had roughly comparable per capita incomes in 1920, yet New Zealand pulled away and never gave back much of that lead.  One factor, according to the author, was that the Kiwis had about 40% public ownership of farm land in 1930, resulting in a greater distribution of gains from agriculture and eventually a more egalitarian polity.  Uruguay, in contrast, had engaged in some badly-run land privatizations and ended up with excess concentration.  New Zealand also took the lead on frozen meat shipments, and New Zealand had a much more rapid recovery from the Great Depression, among other factors, and in Uruguay the enforceability of contract rights slipped away considerably in the 1940s and 1950s.  In sum, Uruguay ended up with more rent-seeking policies that redistributed resources toward elites.  I can’t believe this one wasn’t a bestseller.

4. John Richard Boren, For Intellectual Property: The Property Ideas of Andrew J. Galambos.  As far as I can tell from this intriguing but maddeningly vague book, and based on what I have heard, Galambos was a 1960s-70s libertarian astrophysicist who believed in intellectual property rights for all ideas, indeed in ideas and not just for the expression of ideas as under current law.  The rumor, possibly apocryphal, was that those who knew his true doctrines were forbidden to explain them to others without first making the requisite payments.  I saw this in the bibliography in the back of the book:

Sic Itur Ad Astra, Volume One by Andrew J. Galambos.  This is the transcript of his 1968 delivery of Courses V-50 and V-50X.  The book discloses the basics of the Science of Volition but has been removed from sale by Galambos’ trustees.  Used copies are sometimes available.  Some of Galambos’ recorded lectures…can be heard online at the FEI website,, where the trustees have imposed significant restrictions on access.  Only one Galambos course, V-76…is available for purchase on CD without restrictions.

In fact I know more than I am letting on.

5. James Joyce, Ulysses, always worth a reread, in bits and pieces.  Don’t start on p.1.  That way, you won’t be discouraged by not knowing what is going on.  That is serious advice.

I have browsed the useful-seeming Johan A. Lybeck,  The Future of Financial Regulation: Who Should Pay for the Failure of American and European Banks?  Most books with titles like that are bad and boring, this seems to be a very useful collection of facts about previous bailouts.

I view antitrust law as a body of doctrine that is largely obsolete.  Here is one part of my broader argument, from today’s Bloomberg column:

Or consider the body of law assessing resale-price maintenance in the book trade. Today you can buy used books online. That constrains the prices of both used and new books, no matter how judges might rule. In 1998, the U.S. Justice Department initiated an antitrust suit against Microsoft, partly on the grounds that the company sought to extend its market power to browsers. Few people today think the company’s Internet Explorer browser failed because the government restored competitiveness; Firefox and Google built better software. Yet prosecutors spent years distracting the talent of one of America’s most successful companies, as they had with IBM earlier in a 13-year case dropped in 1982.

Policy should instead focus on the real problems that depress living standards for the middle class and the poor. Rates of inflation have been high for housing, medical care and higher education, major budget items for many people. As for housing, there are harmful restrictions on cheaper building, but in the expensive areas there is no monopolistic landlord who owns all the housing stock. So that is not an antitrust issue, nor is university tuition for the most part.

On the other hand, there is a strong case that growing concentration in the hospital market has raised health-care costs. Some major metropolitan areas have only a small number of hospital chains. Part of the problem is that highly regulated environments encourage consolidation and larger firms to deal with compliance costs, so antitrust law won’t provide an easy fix. Nonetheless, hospitals probably should be the biggest area of concern for antitrust enforcers, as competition does not now operate freely.

And this:

The major internet companies are a new target of antitrust attention, yet most of them give their main product away for free. Contrary to charges that they were going to stifle innovation, Google and its parent company, Alphabet, have led or subsidized innovation in driverless vehicles, artificial intelligence and wearable devices. Most major tech companies also are seeking to expand their innovative presence outside their main businesses, with artificial intelligence being a major new field of competition. Complainers about Amazon are more likely to be suppliers than consumers, the presumed beneficiaries of antitrust enforcement.

The best we can hope for is benign neglect, as I cannot imagine today’s politics producing an improved version of antitrust laws.  Do read the whole thing, I consider IP law, cable regulation, and a number of other issues too.

A variety of points are made, here is one of mine:

Finally, on immigration you might be right about the points system but I’m not yet convinced. I say take in more high-skilled immigrants, but I wouldn’t move to a Canada-like points system. It seems the current American criteria already attract entrepreneurs. Do we really want to focus admission on more degree-holding service-sector professionals who work in industries with low rates of productivity growth? I’m not so sure.

And Noah’s response:

As for skilled immigrants, both they and Americans can switch between jobs. For example, if we import more foreign doctors, pushing down U.S. doctor salaries, more bright young Americans might choose engineering over the medical profession. So I’m not at all worried about bringing in the “wrong kind” of skilled immigrants.

Do read the whole thing.

Fresh off his defeat (according to me!) in the signaling battle, Tyler is on fire in the rematch. Some heavy blows are thrown in our battle over artificial intelligence and the future of jobs. Is there a knockout? You be the judge! Either way, I guarantee a better debate than any you have seen recently.

The ashes belonged to Capote’s close friend Joanne Carson

The ashes of the author Truman Capote, who wrote In Cold Blood and Breakfast at Tiffany’s, was sold at auction for $43,750 in Los Angeles to an anonymous buyer this weekend.

The ashes, which are housed in a sealed wooden Japanese box, originally belonged to the late Joanne Carson, ex-wife of former Tonight Show host Johnny Carson. She was a close friend of Capote, who died at her Bel-Air mansion in 1984.

“We had people from Russia, Germany, China, South America and here in the U.S. who had interest in them,” President and Chief Executive of auction house Julian’s Auctions, Darren Julien, told CNN of the Sept. 24 auction. “I anticipated it could sell for over $10,000, but didn’t anticipate it going to $45,000.”

Here is one story, here are the auction records.  For the pointer I thank Bill.

Reductions in entry costs allow producers to “take more draws,” and given the unpredictability of quality at the time of investment, taking more draws can generate more “winners.”  Our illustrative estimates for music show that the production mechanism could generate almost 20 times as much benefit as the consumption mechanism for an equal-sized increase in the number of products.

That is from a new working paper by Luis Aguiar and Joel Waldfogel, @pmarca oh we miss ye I bet you would have retweeted this.

Tuesday assorted links

by on October 4, 2016 at 1:51 pm in Uncategorized | Permalink

1. Out of prison, out of work.  I say the key point is “moral decay,” and not prison vs. video games, etc.

2. Y Combinator.

3. Ozimek update on Trump and the stock market.

4. An app for rating scientific papers.

5. The shanties culture that is Fairfax.  And Vox interviews Ed Glaeser on infrastructure.

6. “The government’s agreement with the FARC had taken nearly six years to negotiate and won the support of the United States, the United Nations and Pope Francis. Ringo Starr even recorded a song for it.

It didn’t matter.”  Good analysis by Nick Miroff.

I’ve never once nailed the timing, but I have two predictions.

The first is William Baumol, who is I believe ninety-four years old.  His cost-disease hypothesis is very important for understanding the productivity slowdown, see this recent empirical update.  Oddly, the hypothesis is most likely false for the sector where Baumol pushed it hardest — music and the arts.

Baumol has many other contributions, but the next most significant is probably his theory of contestable markets, plus his writings on entrepreneurship.

The other option is a joint prize for environmental economics, perhaps to William Nordhaus, Partha Dasgupta, and Martin Weitzman.  A prize in that direction is long overdue.

The “Web of Science” predicts Lazear, Blanchard, or Marc Melitz, based on citation counts.  Other reasonable possibilities include Robert Barro, Paul Romer, Banerjee and Duflo and Kremer (joint?), David Hendry, Diamond and Dybvig, and Bernanke, Woodford, and Svensson, arguably joint.  I still am of the opinion that Martin Feldstein is deserving, don’t forget he did empirical public finance, was a pioneer in health care economics, and built the NBER.  For a dark horse pick, how about Joseph Newhouse (RCTs and the Rand health care study)?

There are other options — what is your prediction?

Why do left wing governments sometimes support policies which harm their constituents? In A Theory of Political Entrenchment Gilles Saint-Paul, Davide Ticchi and Andrea Vindigni offer an answer:

A partially self-interested left-wing party may implement (entrenchment) policies reducing the income of its own constituency, the lower class, in order to consolidate its future political power. Such policies increase the net gain that low-skill agents obtain from income redistribution, which only the Left (but not the Right) can credibly commit to provide, and therefore may help offsetting a potential future aggregate ideological shock averse to the left-wing party.

The basic idea may also be put this way.  A left wing government might not want to pass policies to educate the masses or open markets to small business firms because such policies are likely to be successful and in the process create a class of skilled workers and petty bourgeoisie who will vote against the left-wing party and its policies of income redistribution. By keeping its constituents poor, the left-wing party keeps its constituents beholden because only the left-wing party will support income redistribution.

The left-wing party might even pass policies that the right-wing party wants in order to build its own future power base. The authors give the example of the Democrats under Bill Clinton supporting NAFTA which may have harmed the left-wing constituency of labor. The authors show, moreover, that the effect is likely to be bigger the bigger are political rents and the more stable are political careers. In other words, Bill Clinton passed NAFTA so that Hillary Clinton could run against it. An interesting idea if not wholly convincing.