The culture and polity that is Seattle, Washington
Washington is at the top of “the terrible 10” states with the most regressive state and local tax systems, according to a report released this month by the Institute on Taxation and Economic Policy.
“These states ask far more of their lower- and middle-income residents than of their wealthiest taxpayers,” according to the institute.
This isn’t new news. My colleague Gene Balk wrote about the subject in April, highlighting a report from the Seattle-based Economic Opportunity Institute. That report found Washington taxation hardest on the poor, with Seattle the worst offender.
That is from Jon Talton, via Mike Rosenberg.
Interview with Chad Syverson
Interesting and substantive throughout, here is one bit:
Syverson: In general, we think companies that do a better job of meeting the needs of their consumers at a low price are going to gain market share, and those that don’t, shrink and eventually go out of business. The null hypothesis seems to be that health care is so hopelessly messed up that there is virtually no responsiveness of demand to quality, however you would like to measure it. The claim is that people don’t observe quality very well — and even if they do, they might not trade off quality and price like we think people do with consumer products, because there is often a third-party payer, so people don’t care about price. Also, there is a lot of government intervention in the health care market, and governments can have priorities that aren’t necessarily about moving market activity in an efficient direction.
Amitabh Chandra, Amy Finkelstein, Adam Sacarny, and I looked at whether demand responds to performance differences using Medicare data
. We looked at a number of different ailments, including heart attacks, congestive heart failure, pneumonia, and hip and knee replacements. In every case, you see two patterns. One is that hospitals that are better at treating those ailments treat more patients with those ailments. Now, the causation can go either way with that. However, we also see that being good at treating an ailment today makes the hospital big tomorrow.
Second, responsiveness to quality is larger in instances where patients have more scope for choice. When you’re admitted through the emergency department, there’s still a positive correlation between performance and demand, but it’s even stronger when you’re not admitted through the emergency department — in other words, when you had a greater ability to choose. Half of the people on Medicare in our data do not go to the hospital nearest to where they live when they are having a heart attack. They go to one farther away, and systematically the one they go to is better at treating heart attacks than the one nearer to their house.
What we don’t know is the mechanism that drives that response. We don’t know whether the patients choose a hospital because they have previously heard something from their doctor, or the ambulance drivers are making the choice, or the patient’s family tells the ambulance drivers where to go. Probably all of those things are important.
It’s heartening that the market seems to be responsive to performance differences. But, in addition, these performance differences are coordinated with productivity — not just outcomes but outcomes per unit input. The reallocation of demand across hospitals is making them more efficient overall. It turns out that’s kind of by chance. Patients don’t go to hospitals that get the same survival rate with fewer inputs. They’re not going for productivity per se; they’re going for performance. But performance is correlated with productivity.
All of this is not to say that the health care market is fine and we have nothing to worry about. It just says that the mechanisms here aren’t fundamentally different than they are in other markets that we think “work better.”
Here is the full interview, via Patrick Collison.
Which comics are accused of joke theft?
Why might observers label one social actor’s questionable act a norm violation even as they seem to excuse similar behavior by others? To answer this question, I use participant-observer data on Los Angeles stand-up comics to explore the phenomenon of joke theft. Informal, community-based systems govern the property rights pertaining to jokes. Most instances of possible joke theft are ambiguous owing to the potential for simultaneous and coincidental discovery. I find that accusations are not strongly coupled to jokes’ similarity, and enforcement depends mainly on the extent to which insiders view the comic in question as being authentic to the community. Comics who are oriented toward external rewards, have a track record of anti-social behavior, and exhibit lackluster on-stage craft are vulnerable to joke theft accusations even in borderline cases because those inauthentic characteristics are typical of transgressors. Vulnerability is greatest for comics who enjoy commercial success despite low peer esteem. Authenticity protects comics because it reflects community-based status, which yields halo effects while encouraging relationships predicated on respect. In exploring accusations of joke theft and their outcomes, this study illustrates how norms function more as framing devices than as hard-and-fast rules, and how authenticity shapes their enforcement.
That is from “No Laughter among Thieves: Authenticity and the Enforcement of Community Norms in Stand-Up Comedy,” by Patrick Reilly, from the American Sociological Review.
For the pointer I thank Siddharth Muthukrishnan.
The Year that Words Were First Used in Print
In the year that I was born, 1966, some words which were used for the first time in print were:
cryonics, art deco, assault weapon, ROM, biocontainment, hot button, kung fu, meth, male-pattern baldness, multitasking, multiorgasmic, Medicaid, number cruncher, paperless, street smarts, ranch dressing, z-score
I would have guessed that many of these terms were older.
New words in recent years are ico, manspreading, utility token and aquafaba (?).
All this is according to the Merriam-Webster Time Traveler.
Hat tip: Paul Kedrosky.
Thursday assorted links
Do SAT-optional policies matter?
Not really:
Despite many conversations regarding the applicability and relevance of the SAT as a valid admissions tool, there is limited evidence regarding the effects of test-optional policies on various aspects of an institution’s effectiveness and the collegiate experiences within each institution. Using data from the Integrated Postsecondary Education Data System (IPEDS) coupled with a difference-in-difference analysis, we find that test-optional policies have very limited effects. We find SAT optional policies to have no significant effect on diversity or enrolled student quality. The only statistically significant effect we find is a brief increase in the number of applicants in response to the new policy.
That is from Matt Saboe and Sabrina Terrizzi, in Economics Letters, via the excellent Kevin Lewis.
The new CEA report on socialism is better than critics are claiming
That is the topic of my latest Bloomberg column, here is one excerpt:
More to the point, by far the longest section in the report covers a specific health-care bill, introduced in both the Senate and House and supported by 141 members of Congress, that has become a centerpiece of debate in the Democratic Party. It is hardly irrelevant.
The legislation would eliminate cost sharing, prevent private insurance plans from competing, and prevent private markets from supplementing government coverage (outside of, say, cosmetic surgery). The House version would even prohibit health-care providers from earning profits. These provisions are far more extreme than what is found in most Western European health-care systems. The analogies with traditional socialism are indeed apt — the bill is much worse than anything the Trump administration has proposed to date.
Many of the criticisms of the report have been directed at the section on health-care economics. The critics tend to proclaim their own moderate views and favorably compare some of the Western European health-care systems to that of the U.S. The goal is apparently to smash the report for associating those well-functioning health-care systems with Lenin and Mao. Yet I haven’t seen any of the report’s critics acknowledge the extreme nature of the current Democratic proposal, or that it might need rebuttal, and that such a rebuttal is inevitably going to sound somewhat over the top.
And:
The report also commits the now-unpardonable and immediately punished sin of supporting a doctrine of “false equivalence” — namely, that these days many Democratic ideas are as unacceptable as those associated with Trump.
There are further points at the link, controversial throughout. Here is the report itself.
Wednesday assorted links
1. Yale to open new economics center, The Tobin Center.
2. Russ Roberts on whether the rich capture all of the gains from economic growth.
3. Trust in various institutions, by Democrat and Republican, including the major tech companies.
4. Rules for the history of philosophy (and many other things too).
5. Reason podcast with the excellent Nick Gillespie, on Stubborn Attachments.
6. Charter city > caravan. And again, here is Reihan’s new book on immigration.
My Conversation with Ben Thompson
Here is the audio and transcript. Here is the summary opener:
Not only is Ben Thompson’s Stratechery frequently mentioned on MR, but such is Tyler’s fandom that the newsletter even made its way onto the reading list for one of his PhD courses. Ben’s based in Taiwan, so when he recently visited DC, Tyler quickly took advantage of the chance for an in-person dialogue.
In this conversation they talk about the business side of tech and more, including whether tech titans are good at PR, whether conglomerate synergies exist, Amazon’s foray into health care, why anyone needs an Apple Watch or an Alexa, growing up in small-town Wisconsin, his pragmatic book-reading style, whether MBAs are overrated, the prospects for the Milwaukee Bucks, NBA rule changes, the future of the tech industries in China and India, and why Taiwanese breakfast is the best breakfast.
Here is one excerpt:
COWEN: Why should I want a tech device in my home at all? Take Alexa — I don’t have one, I’m pretty happy, my life is simple. I don’t want anyone or anything listening to me. What does it do for me? I know I can tell it to play me a song or buy something on Amazon, but that’s one-click shopping anyway, could hardly be simpler. Why do devices in the home have any future at all?
THOMPSON: The reality is — particularly when it comes to consumer products — is that in the long run, convenience always wins. I think people will have them in their homes, and they’ll become more popular because it’s convenient.
You can be doing whatever you want; you can say something like, “Set a timer five minutes,” or “What temperature should I grill my steak to?” And you’ll get an answer with your hands busy, and altogether it’s going to be a more convenient answer than it would’ve been otherwise.
And:
COWEN: How bullish are you on India’s tech sector and software development?
THOMPSON: I’m bullish. You know, India — people want to put it in the same bucket as, “Oh, it’s the next China.” The countries are similar in that they’re both very large, but they’re so different.
Probably the most underrated event — I don’t want to say in human history, but in the last hundred years — is the Cultural Revolution in China. And not just that 60, 70 million people were killed, or starved to death, or what it might be, but it really was like a scorched earth for China as a whole. Everything started from scratch. And from an economic perspective, that’s why you can grow for so long — because you’re starting from nothing basically. But the way it impacts culture, generally, and the way business is done.
Taiwan, I think, struggles from having thousands of years of Chinese bureaucracy behind it. Plus they were occupied by Japan for 50 years, so you’ve got that culture on top. Then you have this sclerotic corporate culture that the boss is always right, stay in the office until he goes home, and that sort of thing. It’s unhealthy.
Whereas China — it’s much more bare-knuckled competition and “Figure out the right answer, figure it out quickly.” The competition there is absolutely brutal. It’s brutal in a way I think is hard for people to really comprehend, from the West. And that makes China, makes these companies really something to deal with.
Whereas India did not have something like that. Yes, it had colonialism, but all that is still there, and the effects of that, and the long-term effects of India’s thousands of years of culture. So it makes it much more difficult to wrap things up, to get things done. And that’s always, I think, going to be the case. The way India develops, generally, because they didn’t have a clear-the-decks event like the Cultural Revolution, is always going to be fundamentally different.
And that is by no means a bad thing. I’m not wishing the Cultural Revolution on anyone. I’m just saying it makes the countries really fundamentally different.
Definitely recommended.
We are conformists who to some extent become regional thinkers
…voters appear to be sorting on non-political neighborhood attributes that covary with partisan preferences rather than explicitly seeking politically congruent neighbors. But, critically, we demonstrate through a simulation study that the estimated partisan bias in moving choices is on the order of five times too small to sustain the current geographic polarization of preferences. We conclude that location must have some influence on political preference, rather than the other way around, and provide evidence in support of this theory.
Unemployment is always about the supply side too
We document that unemployment is increasing with GDP per capita. Furthermore, we show that this fact is accounted for almost entirely by low-educated workers, whose unemployment rates are strongly increasing in GDP per capita, rather than by high-educated workers, whose unemployment rates are not correlated with income.
That is from Ying Feng, David Lagakos, and James E. Rauch. In their core model, reallocating low-education workers to the formal sector makes them harder to reemploy at short notice, in contrast to the informal sector and self-employment. An alternative view, not mutually exclusive, is that in poor societies low-education workers simply have to take jobs, due to extreme need.
You will on Twitter, and in blogs, see various attempts to mock supply-side theories by showing increasing employment, often accompanied by remarks such as “I didn’t know video games were getting so much worse.” Such comments are a mistake and a misunderstanding. Proper supply-side theories do not deny the relevance of the demand-side, and so nor should demand-side theories deny the relevance of the supply-side. It is possible to believe both “supply-side factors made the labor market recovery slower than usual,” and “demand-side forces have at this moment overcome many of those problems.” Just look at the disability rolls. The ability to receive disability kept many people out of the labor force in earlier years, slowing down labor market recovery. Yet it is also true that currently demand-side forces are creating jobs good enough that many of those same people finally are leaving the disability rolls.
The deeper lesson of course is that — outside of the short-run — demand-side forces are supply-side forces. And right now we are out of the short run indeed, at least when it comes to macroeconomic shocks.
Tuesday assorted links
1. Do conservatives prefer nouns?
2. The world’s longest sea bridge in pictures.
3. Wage growth is slower for just about everybody (in the U.S.) (NYT).
4. Preserving the visual history of K-Mart.
5. My podcast with Sean Carroll, with an interlude on cosmology and quantum mechanics and whether we are all doomed really, really soon. Transcript too.
My Conversation with John Nye, what should I ask him?
Soon I will be having a Conversation with my esteemed colleague John V. Nye, one of the smartest people I know. John is an economic historian but also a polymath with broad-ranging interests, including travel, classical music, chess, education, “institutions,” Asian food, the Philippines (his home country), and much more.
So what should I ask him?
In a short number of years this story will sound like madness
Canada installs Chinese underwater monitoring devices next to US nuclear submarine base
- Ocean Network Canada confirms addition of hi-tech sensors built by Chinese scientists to its marine observatories in Pacific Ocean
- US state department has ‘nothing to say’ on matter
Full story here, here is some further context from the piece:
Whatever the devices end up being used for, Chen Hongqiao, a researcher at the Centre for Canadian Studies at Guangdong University of Foreign Studies in Guangzhou, said there was no doubting the sensitivity of the issue.
“Deep sea observation networks are highly sensitive, and closely related to national security,” he said. “Countries don’t open them up to third parties unless there is a high level of trust and confidence.”
The decision to give China such access could have only come from highest corridors of power on both sides, he said.
“Such collaboration is very unusual. The implications go far beyond science, [so] it could have only happened with a nod from the top on both sides.”
Are we exporting Austrian business cycle theory?
We estimate that over a typical U.S. monetary easing cycle, EME [emerging economy] borrowers experience a 32-percentage-point greater increase in the volume of loans issued by foreign banks than do borrowers from developed markets, followed by a fast credit contraction of a similar magnitude upon reversal of the U.S. monetary policy stance.
And this:
This result is robust across different geographies and industries, and holds for U.S. and non-U.S. lenders, including those with little direct exposure to the U.S. economy. EME local lenders do not offset the foreign bank capital flows, and U.S. monetary policy affects credit conditions for EME firms, both at the extensive and intensive margin. Consistent with a risk-driven credit-supply adjustment, we show that the spillover is stronger for riskier EMEs, and, within countries, for higher-risk firms.
That is from a new NBER working paper by Falk Bräuning and Victoria Ivashina.