Does Macron have any new ideas to save the moment?

My opening line for Bloomberg:

The sorry truth is that both progressives and neoliberals still don’t get it, and that seems true in France most of all.

Part of the argument:

In response, people want something beyond more income redistribution (what the left is offering) or more globalization (what the pre-populist right used to offer). People want ideas and inspiration, and when no good new ideas are put forward, the current default seems to be nationalist ideas, including of the less tolerant variety.

Macron doesn’t have any new ideas or vision, however much you might like the old ideas he has embraced. And so, however promising it might have seemed at first, his tenure has accelerated the collapse of the traditional European liberal order. For some time, his approval ratings in France have been lower than those of U.S. President Donald Trump.

And here is the least central paragraph:

The one intellectual group that really gets what is going on right now are the much-maligned libertarians. For decades they have been told that they are too analytical, that they lack empathy, that they don’t have much to offer the public in the way of inspiration. For all the (mostly failed) attempts to pretend otherwise, that is mostly true — and libertarians have to hope that analytical perspectives become more ascendant.

Oh, and don’t forget this:

A quick comparison with 19th-century French culture, with its emphasis on progress, utopia and the rationalization of social systems, shows just how much the forward-looking perspective is lacking.

Recommended.

Gustave Flaubert on travel books

Only, travel writing as a genre is per se almost impossible.  To eliminate all repetitions you would have had to refrain from telling what you saw.  This is not the case in books devoted to descriptions of discoveries, where the author’s personality is the focus of interest.  But in the present instance the attentive reader may well find that there are too many ideas and insufficient facts, or too many facts and not enough ideas.

That is from his November 1866 letter to Hippolyte Taine, reproduced in the Francis Steegmuller collection.  Here is my recent post on why most travel books are not good enough.  Here is a 2006 MR post on which are the best travel books.

Interstate trade is relatively high in India

The first-ever estimates for interstate trade flows indicate a trade to GDP ratio of about 54 per cent, a number that is comparable to other large jurisdictions and that contradicts the caricature of India as a barrier-riddled economy; the ratio of India’s internal and international trade also compares favourably with others.  De facto, at least, India seems well-integrated internally.  A more technical analysis confirms this: trade costs reduce trade by roughly the same extent in India as in other countries.

When it comes to internal trade, the big negative outlier is in fact Indonesia.

That is all from the new and interesting Of Counsel: The Challenges of the Modi-Jaitley Economy, by the excellent Arvind Subramanian.

Sorry people, but I will always be an independent…

Senate Democrats are pushing back against attempts to pass a compromise bill in the lame-duck session that could speed the introduction of driverless cars onto U.S. roadways, saying it lacks safeguards that would protect drivers.

Link here, and I’m sure you know the House Democrats don’t want to pass the new NAFTA.

Elsewhere, in Chicago, the war on democracy continues:

To get on the ballot, Krupa was required to file 473 valid signatures of ward residents with the Chicago Board of Elections. Krupa filed 1,703 signatures.

But before he filed his signatures with the elections board, an amazing thing happened along the Chicago Way.

An organized crew of political workers — or maybe just civic-minded individuals who care about reform — went door to door with official legal papers. They asked residents to sign an affadavit revoking their signature on Krupa’s petition.

And the background?:

The David is David Krupa, 19, a freshman at DePaul University who drives a forklift part time. He’s not a political powerhouse. He’s just a conservative Southwest Side teenager studying political science and economics who got it in his head to run for alderman in a race that pits him against the most powerful [Democratic] ward organization in Chicago.

Here is the story, it’s not just North Carolina where electoral law is treated with less than the utmost respect.

p.s. if you think or write “false equivalency” in response to this post, you fail the Intellectual Turing test.

Tuesday assorted links

1. Alex Zook tweet storm review of Stubborn Attachments.  Opener: “longterm-ism can be founded on many grounds, ranging from compounding economic growth to physics to intuitions about how to treat future generations. this felt *very* natural to me, and held stronger ground than typical moral philosophy arguments grounded in toy worlds”  And another review.  And here is the DC filtering of the Stubborn Attachments book party.

2. The new Hollywood trailer with Godzilla, Ghidrah, Mothra, and Rodan.  Let’s hope it is sufficiently morally serious.

3. AlphaFold.

4. Better not to know?

5. Addis Ababa photo fest.

6. New list of unacceptable French thinkers.

Fewer, Bigger Entrepreneurs Explains Rising Inequality

Why has wealth inequality increased in the United States? A lot of semi-plausible but vague theories have been offered–changes in the tax code, the diminished role of unions and so forth–but there are surprisingly few fully-specified models. In an important paper, Mohsen Mohaghegh (on the job market) has a new answer.

Wealth inequality has risen considerably in the US since 1975. For instance, the wealth share of households in the top 1 percent of the distribution rose from 25 percent in 1975 to more than 37 percent in 2007. This paper builds on theories of entrepreneurship and wealth inequality to address changes in inequality in the US between 1975 and 2007.

In the data, there are two trends in entrepreneurship since 1975: the average debt-to-asset ratio among entrepreneurs has increased, and the number of entrepreneurs (the entrepreneurship rate) has fallen. I study how the distribution of wealth changes over time, when these two trends are accounted for in a model.

…[two] channels accounts for both the fall in the entrepreneurship rate and the rise in the entrepreneurs’ leverage: an increase in banks’ willingness to fund risky entrepreneurial projects and a rise in the costs of starting a business. When changes in entrepreneurship are accounted for, my model explains more than 90 percent of the rise in the share of wealth held by the top 1 percent of households, and just under half of the rise in the share of the top 0.01 percent of households in the data.

A lower rate of entrepreneurship implies that a smaller number of households can take advantage of their productive ideas. Active entrepreneurs, however, have access to more capital which allows highly productive entrepreneurs to expand their businesses. Both of these changes contribute to a rise in inequality over time.

Below are two figures from the paper showing the declining entrepreneurship rate and increasing leverage. Mohaghegh doesn’t explain these facts but he connects three literatures, declining entrepreneurship, increasing financialization and rising inequality and he shows that the first two of these well-known features of the US economy can explain a large share of the third, the rise in inequality.

Cohort effects and life expectancy and many other facts about the history of American medicine

The cohort reaching age 55 around 1982 (born around 1927) has significantly higher mortality than the cohort 10 years younger. That higher mortality continues through the cohort passing through that age range in the mid-1990s, roughly, when the cohort born in 1933 reaches age 65. That same cohort also has higher mortality when they are 65-74 and 75-84. The story is not one of selection – a handful of less healthy people who die and leave behind healthier stock. Rather, it seems that an entire generation was rendered vulnerable by being born during and just before the Great Depression (Lleras-Muney and Moreau, 2018).

That is from a new NBER history of health care paper by Maryaline Catillon, David Cutler, and Thomas Getzen.  This piece is interesting on virtually every page.  For instance, on the rise of American science:

Of the 18 Nobel Prizes in Physiology or Medicine awarded 1901-1920, none went to US researchers. Over the next two decades, four out of twenty-four did, then for the rest of the century, more than half.

Then:

…our analysis of Massachusetts data does not support a large impact of medical care supply on mortality in the pre-antibiotic era.

Using the best data I’ve seen to date, apart from RCTs, the authors conclude from their statistical work:

…there is little evidence that access to medical care plays a role in mortality over the entire 1965-2015 period, but it appears to have had an effect during recent years.

That is from p.33

Death rates from influenza/pneumonia and cancer seem most responsive to access to medical care.  And I had not known this:

The period from 1935 to 1950 saw the most…decline in infant and child mortality of any time period since 1900.  It is unclear how much of this change would have happened without antibiotics, but blood banking and advances in surgical techniques were among the host of distinct and incremental improvements that added to life expectancy while the health share of GDP increased only slightly.

Recommended.

Don’t arrest Chinese CFOs and CEOs

That is the topic of my latest Bloomberg column, here is just one short excerpt:

In the longer run, bringing charges against Meng is likely to accelerate the division of the world into two competing systems of law, technology and commerce — namely those of China and the U.S. That will encourage international relations to develop along the dimension of power — what can you get away with? — rather than law or orderly cooperation. The West’s dirty little secret is that the rule of law works well only when tempered with a high degree of discretion.

And:

At the margin, the legal reach and police power of the U.S. can always be invoked to fight another crime or resolve another corruption problem. Don’t like how FIFA — the international soccer federation — is being run? Get the U.S. in on the act. There are in fact laws that gave the U.S. jurisdiction over bad FIFA practices (wire fraud, racketeering, and money laundering), and the Department of Justice led a successful anti-corruption case starting in 2015.

That enforcement action seems to have gone fine, but where to stop? There a lot of wrongdoers who are connected, in one way or another, to the U.S. financial system. But America has more credibility as global policeman when it focuses on only the most pressing cases, such as when innocent victims are being killed.

Best yet, I offer remarks on Brexit as well.

The Cryptoeconomics Lab at Ivey

Ivey Business School at Western University (London Ontario, Canada) is looking for a Post doctoral Research Fellow to join our newly established CryptoEconomics Lab: http://cryptoeconomics-lab.com

The focus of the position is on conducting foundational research in the emerging discipline of cryptoeconomics, which examines the protocols and incentives that govern the production, distribution, and consumption of digital goods and services within decentralized online platforms.

The CryptoEconomics Lab at Ivey Business School is a cutting-edge initiative that is just getting started, and builds upon the school’s Scotiabank Digital Banking Lab and its interdisciplinary team of faculty members and graduate students.

The wild west era of blockchain is ending and the scams and flimflams are being revealed but the fundamental of the technology will be used to build socially useful mechanisms.

By the way, the CryptoEconomics Lab has a good bitcoin crash course ( I believe that should be read, bitcoin crash-course!).

Best movies of 2018

In the order I saw them:

Annihilation

A Quiet Place

Won’t You Be My Neighbor?

Three Identical Strangers

Crazy Rich Asians

Widows

Free Solo

Roma

You will find my reviews behind those three links.  Overall, you could take this year and multiply it by 2x, and still have the worst year for movies in my adult life.  If anything special comes out between now and the end of the year, as it often does, I will be sure to let you know.

I also saw 2001: A Space Odyssey for the first time on a large screen in a long time, review here, Barry Lyndon too, they are two of the best movies ever made though not on your TV.

Tom Lehrer, man ahead of his time

Ever since I was a young teenager I loved Tom Lehrer (thanks to Ken Regan, by the way), and I thought I would re-listen to some fresh.  I tried the Copenhagen concert, a good overview of his work and with good visuals.  I was struck by the following:

1. Lehrer represented the IDW of his day.  He said (sang) things others couldn’t, and his main enemy or target was political correctness.  It surprised me to hear how little many of the battle lines have changed.  Yet Lehrer, while warring against hypocritical political discourse, was in his day on the Left.  (Shades of Eric Weinstein!)  He worried about the “decline of the liberal consensus,” following the Kennedy era.  In 1982 he wrote that he considered feminism, abortion, and affirmative action “more complicated” than the older liberal causes, so perhaps he simply did not blend into the contemporary Left (the piece is interesting more generally).

2. Lehrer’s songs (repeatedly) indicate he saw nuclear weapons and nuclear proliferation as a major problem; in that regard his time probably was wiser than ours.

3. He is very interested in language and the question of how words are used in the public sphere, and how words are used to obfuscate.  Might that be the central theme in his thought?

4. He often sneaks China into the cultural references, for instance: “And I’m learning Chinese, says Werner von Braun.”  He seems to think it is a much more important country than Russia, although this concert was from 1967 and often was drawing on songs which were older yet.

5. He is much more interested in math and science than current comedians, for instance his “Elements” is a classic [22:54], and redone here with an Aristotle coda, mocking The Philosopher.  His audience seems to take this interest in stride.  This song is yet another example of inverting what should be said, or not.

6. Yes I know the tunes sound derivative, but most of them are original.  And as music…they’re a lot catchier than most of the other musical theatre of his time and I think of many of them as minor classics.  I still enjoy hearing them as music.  And other than Sondheim and Dylan, how many better American lyricists were there?

7. When he wants to get really gory, he doubles down on mock sadism (“Poisoning Pigeons in the Park”: “…we’ll murder them all with laughter and merriment…except for the few we take home to experiment…”).  He once said: “If, after hearing my songs, just one human being is inspired to say something nasty to a friend, or perhaps to strike a loved one, it will all have been worth the while.”

It would be hard to pull this off today.  Yet, when I listen to Lehrer, perhaps because I know the historical context, I am not offended.  Plus he is flat-out funny.  He cited losing his “nasty edge,” and starting to see things in shades of grey, as one reason for what appeared to be a quite premature retirement.

8. He wore a white shirt and his tie was tightly knotted.

9. He’s one of America’s great comics, and the material is idea-rich to a remarkable extent.  He hardly ever sung about social themes or person-to-person social interactions.

10. Many of the songs of his that you never hear are in fact commentaries on various folk song movements.  Circa 2018, few can understand their references, but they do showcase Lehrer’s extreme idealism.

11. He was at first a math prodigy and later in the mid-1950s, as a draftee, crunched numbers for the NSA.  He remains alive and turned 90 earlier this year.

 

Sunday assorted links

1. Buju Banton returns to Jamaica, released from prison.

2. China thread.  How China does and does not want to change the rules.

3. How and why Honduras, El Salvador and Guatemala are becoming less violent (The Economist).

4. It seems there are atheists in foxholes.

5. Does adult guardianship differ from slavery? (NYT)  Currently the number of Americans under guardianship may range between one and three million.  And: ““It’s worse than incarceration,” she said. “At least in prison you have rights.””

6. “Researchers disagree on whether loneliness is on the rise, in part due to the difficulty in identifying who is lonely and who is socially isolated…”  And here: “Why, then, all the assertions that loneliness has increased and now constitutes an epidemic?

Increases in Inequality Have Been Overestimated

Stephen Rose of the Urban Institute (not exactly a right-wing or libertarian think tank) compares recent studies measuring changes in inequality and finds that although inequality has increased the Piketty and Saez (2003) results, which generated a tremendous amount of discussion and research, are very likely over-stated.

The results from at least four studies were compared for three measures of income change: change in median incomes, share of growth captured by the top 10 percent, and the changing income share of  the top 1 percent. In all cases, Piketty and Saez (2003) were the outlier, showing the most increased inequality. And in all three measures of income change , Piketty, Saez, and Zucman (2018) found much less growth in income inequality than Piketty and Saez (2003).

This brief does a meta-analysis of different findings to estimate a “consensus” level of change…I find that instead of stagnating, real median incomes grew by just over 40 percent (1 percent a year) from  1979 to 2014;  the top 10 percent of the income ladder captured 45 percent of income growth from 1979 to  2014; and the share of the top 1 percent grew 3.5 percentage points.

All studies find that income inequality rose after 1979, but common perceptions that all income gain went to the top 10 percent and middle class incomes stagnated (or even declined) are wrong.

Russ Roberts also has several good videos showing how the numbers can be cut in various ways.