How are the major tech hubs evolving?

That is the topic of my latest Bloomberg column, here is the section on Miami:

In Miami and Miami Beach I had a wonderful time. But I don’t see the area as a new and budding tech center. Many tech entrepreneurs moved there during earlier phases of the pandemic, but many have since left. Perhaps the region is more of a place to spend tech money than to earn tech money.

The positives for southern Florida are clear: It is a major crossroads with significant connections to Latin America and the Caribbean, it is a fun place to live, Miami Mayor Francis X. Suarez is pro-tech, and there is no state income tax.

Yet that is not enough. Miami does not have a top-tier university, and the city does not have much of what I would call “nerd culture.” The city’s first language is arguably Spanish, but the tech world is mostly English, and its current ties to Asia are more important than possible future connections to Latin America.

Renowned venture capitalist Keith Rabois is in Miami and is a staunch advocate for the city. It would not be surprising if Miami developed a few significant tech companies due to his influence. Miami could also become more of a center for crypto wealth. If you’ve earned a billion dollars through Bitcoin, and live part of the year in Puerto Rico to avoid capital gains taxes, is there anywhere better to hang out and spend your wealth than Miami?

All that said, I do not see Miami as a serious contender to be a major tech center.

Comments on NYC and the Bay Area then follow…

Maradona Plays Minimax

This paper tests the theory of mixed strategy equilibrium using Maradona’s penalty kicks during his lifetime professional career. The results are remarkably consistent with equilibrium play in every respect: (i) Maradona’s scoring probabilities are statistically identical across strategies; (ii) His choices are serially independent. These results show that Maradona’s behavior is consistent with Nash’s predictions, specifically with both implications of von Neumann’s Minimax Theorem.

From Ignacio Palacios-Huerta.

*Peace, Poverty and Betrayal*

The author is Roderick Matthews, and the subtitle is A New History of British India.  This book has been highly controversial for its supposed “whitewashing” of British rule in India, but so far I find it insightful and indeed revelatory.  It is to date my favorite book this year, most of all conceptual but also remarkably well-informed historically.  Here is one excerpt:

Ultimately, we should condemn [British] colonialism not because it was self-glorifying and arrogant, but because it was small-minded and fearful.

Colonial rule was undoubtedly heavily responsible for the fact that India remainder both poor and backward — but the high Rah hid a subtler hypocrisy, in the way that Indian landlords, for a muddle of humanitarian and political reasons, were denied the scope that their British counterparts had allowed themselves.  British landowners drove their tenants off the land and adopted new methods of husbandry to increase profitability, which allowed them to create the agricultural surplus that stimulated the industrial revolution, and provided Britain with a float of national wealth to pay for colonial adventures.  Rural India remained overmanned and underproductive.

This short charge sheet differs from the extensive accusations made by modern left-leaning historians, who recognize economic exploitation but choose instead to emphasize cultural issues, especially the bureaucratization of Indian society and the introduction of capitalist norms.  This is hardly fair, because the progressive middle classes in India would have done broadly the same things if they could.  Almost nothing of the imperial administrative agenda was undone in independent India.  However, it is true that the modernization process was rushed and defective.  It was too self-interested, and the guiding hands were not indigenous.  Something similar might have emerged, but with a more Indian face.  We cannot know.

I will be covering this book more, but so far strongly recommended.  It is no accident that the author, while an experienced Indian historian, is not an academic.

Texas Covid and school reopenings

Mostly I think American schools have been closed for way too long, but I am typically wary when I read “dogmatic” cases for universal school reopenings, especially when those reopenings are not done under the proper circumstances, namely good data and plenty of testing, or low case levels.  Here is one new piece that sheds some new light on the topic:

This paper examines the effect of fall 2020 school reopenings in Texas on county-level COVID-19 cases and fatalities. Previous evidence suggests that schools can be reopened safely if community spread is low and public health guidelines are followed. However, in Texas, reopenings often occurred alongside high community spread and at near capacity, making it difficult to meet social distancing recommendations. Using event-study models and handcollected instruction modality and start dates for all school districts, we find robust evidence that reopening Texas schools gradually but substantially accelerated the community spread of COVID-19. Results from our preferred specification imply that school reopenings led to at least 43,000 additional COVID-19 cases and 800 additional fatalities within the first two months. We then use SafeGraph mobility data to provide evidence that spillovers to adults’ behaviors contributed to these large effects. Median time spent outside the home on a typical weekday increased substantially in neighborhoods with large numbers of school-age children, suggesting a return to in-person work or increased outside-of-home leisure activities among parents.

That is a new NBER working paper by Charles J. Courtemanche, Anh H. Le, Aaron Yelowitz, and Ron Zimmer.  In other words, having the kids at home kept the adults tied down and less mobile.  Of course, even with this result, there is still a case for reopening the schools, but I am happy to see some of the trade-offs recognized.

The Essential James Buchanan

The Essential James Buchanan is an excellent new primer on Buchanan written by Don Boudreaux and Randy Holcombe. It’s part of the Essential Scholar series from the Fraser Institute which also includes Hayek, Nozick, Locke, Smith and Hume among others. Each book can be downloaded in entirety or by chapter and each comes with introductory videos and a guide to further readings. Boudreux and Holcombe’s chapter on Buchanan on government debt is especially clear and concise. All the books in the series are written by experts, such as Erik Mack on John Locke, Steven Landsburg on Milton Friedman and Sandra Peart on John Stuart Mill. Recommended.

Network Structure in Small Groups and Survival in Disasters

I wonder if this kind of result might apply to more than just disasters:

People in disaster and emergency situations (e.g., building fires) tend to adhere to the social obligations and expectations that are embedded in their preexisting roles and relationships. Accordingly, people survive or perish in groups—specifically, alongside those to whom they were connected before the situation emerged. This article uses social network analysis to expand on this collective behavior account. Specifically, we consider structural heterogeneity with respect to the internal configurations of social ties that compose small groups facing these situations together. Some groups are composed of cohesive subsets of members who can split off from each other during evacuation without violating their group’s internal role-based expectations. We argue that groups that possess this “breakaway” structure can respond to emergencies more flexibly. We explore this using data from the Beverly Hills Supper Club fire of 1977, which killed 165 people. Our data include 303 groups (“parties”) that consisted of 746 people who were present in the dining room where most of the fatalities occurred. Fatality rates were significantly lower in groups that were internally structured such that they could split up in different ways during the escape while still maintaining their strongest social bonds.

That is from Benjamin Cornwell and Jing-Mao Ho, via the excellent Kevin Lewis.

Offense vs. defense in the current NBA

…I do have to grudgingly admit the evidence seems to suggest that defense has become less important during this unusual regular season.

One way to look at this is the spread in ratings on both ends of the court. The standard deviation of teams’ defensive ratings relative to league average is the lowest it’s been since the 1984-85 season, while the standard deviation in offensive ratings is the second highest we’ve seen since 2007-08. That’s one way of showing that offense is not just winning the battle with defense but also controlling it.

Another way to show that is the correlation between a team’s defensive rating and its overall win percentage (.546). That’s the lowest it’s been since 1985-86. Meanwhile, there’s a far stronger correlation between a team’s offensive rating and its win percentage (.848). In general, offense tends to relate better to winning games than defense in the NBA. Typically, the two figures are much closer together than we see now.

That is Kevin Pelton, there is further discussion at the ESPN link.  Good news for the Wizards!  It also means you can’t trust your usual intuitions about who might be most likely to win the NBA title this time around.

Unmask the Vaccinated?

Ilya Somin points us to legal scholars Kevin Cope and Alexander Stremitzer who make the case that vaccine passports may be constitutional necessary:

Here’s why governments may be constitutionally required to provide a vaccine passport program for people under continuing restrictions. Under the U.S. Constitution, the government may not tread on fundamental rights unless the policy is “the least restrictive means” to achieve a “compelling” government interest. Even some rights considered nonfundamental may not be infringed without a rational or non-arbitrary reason. Before vaccines, blanket lockdowns, quarantines, and bans on things like travel, public gatherings, and church attendance were a necessary measure to slow the pandemic. The various legal challenges to these measures mostly failed—rightly, in our view. But now, a small but growing set of the population is fully vaccinated, with high efficacy for preventing transmission and success rates at preventing serious illness close to 99 percent or higher.

Facilitating mass immunity—and exempting the immunized from restrictions—is now both the least liberty-restrictive method for ending the pandemic through herd immunity and the most effective one. Imagine a fully vaccinated person whose livelihood is in jeopardy from ongoing travel or business restrictions. She might go to court and argue: “I present little or no danger to the public. So restricting my freedoms and preventing me from contributing to society and the economy isn’t rational, let alone the least restrictive means of protecting the public. Since you’re not lifting restrictions for everyone, the Constitution requires that I be exempt.”

This argument alone should be enough to justify mandating that passports be made available where COVID restrictions are still in place….

The NYTimes also notes that surveys suggest that the right to go maskless could increase vaccine take-up:

Enforcement is an issue but this might work well with universities and workplaces. See Ilya’s post for more.

Elon on SNL

He started by declaring that he speaks in a monotone and “has Asperger’s,” was funny and self-assured during the rest of the introduction, brought his mom on stage, and later played a variety of roles, including murderer, awkward guy at a party, a Mario character (Wario), and an Icelandic TV producer.  He played a financial analyst repeatedly asked to explain “What is Dogecoin?” (Dogecoin was down significantly during the evening).  The final skit was a gold-mining motif, something like “why are we panning for this gold when we can just invent our own currency?”  Elon’s plan was to dig a tunnel to get at the bad guys.  I enjoyed his line: “And I like self-driving horses, which are just…horses.”

He was funnier than any of the professional comedians.

Is there anything in American business history even vaguely comparable to this event?

From the comments, on restaurant labor and UI

I own a restaurant and bar in a rural community in western Washington. Our state minimum wage is currently $13.69 per hour which is what we pay our tipped front of the house employees. After tips these employees are making $25 to $35 per hour. Not bad for a job that requires no formal training.

We start our back of the house cooks at $17 hour and up. For full time employees we also offer health insurance.

We are still having major problems finding employees. I have ads for employees that get zero responses. I am not alone in this. Everyone in our area from Costco, to Walmart, to all of the construction companies which pay very well can’t find help. In all my years I have never experienced a labor market like this.

My anecdotal experience from talking with local individuals is that they are enjoying the paid time off and have no plans to come back until the bennies run out.

For those of you who think you can just pay more and raise prices by a nickel, you are out of touch. As a point of reference, in 2020 the minimum wage increased from $12 hour to $13.50. The increase in costs to my business based on 2019 hours was over $65,000 which is most of my profit. Then covid hit.

Finally, keep in mind that most restaurant workers are not going to learn to code. I’ve have had recovering drug addicts, felons, and people with other social and mental disorders work for us. The restaurant business is an opportunity for many people at the margins of society to be productive and to get their lives together. We give them structure, training, and a paycheck. But the big question is how can you pay someone $15 hour who is only giving you $7 of value? In the long run you can’t.

The current policies of paying people not to work in the long run is going to hurt a lot of small businesses and more importantly, a lot of people in the margins of society.

And Slocum chimes in:

Everyone commenting here and every restaurant owner out there facing labor shortages is perfectly aware that if they raise wages high enough, they’ll get all the applicants they could ever want.

But some of the commenters here (and restaurant owners themselves) also know that restaurant profit margins are not large and that they have limited pricing power because restaurant meals are highly elastic, and that as restaurants raise prices, their customers will come less frequently and buy less when they do come. They also know that wages are sticky — that when the pandemic UI ends, they won’t be able to simply reduce wages back to previous levels without having a big impact on employee morale.

And as a business owner, just how big a bidding war would you want to get into just to be able to bribe the least ambitious prospects into getting off their couches?

Here is the link to the comments.