Friday assorted links

by on October 21, 2016 at 1:10 pm in Uncategorized | Permalink

No, here is my latest Bloomberg column on that question.  Here is one bit:

One criticism is that the tribunals could force governments to pay compensatory “takings” to foreign companies that incur costs as a result of safety or environmental regulations. But it has long been standard practice for trade treaties to protect foreign companies, for example by limiting the nationalization of foreign investment. Investors don’t always trust the courts of the nations they are investing in, and indeed from 1990 to 2013, at least 150 foreign-owned firms were nationalized, typically in emerging economies, or otherwise subjected to confiscation of value. Agreeing to refrain from such practices can attract more foreign investment and raise living standards.


…the U.S. and Vietnam have had a bilateral investment agreement since 2001, and with few if any negative consequences. More generally, there are now more than 2,000 bilateral investment treaties worldwide, 41 with the U.S. at last measurement, and they typically have some form of investor-state dispute resolution. So does the 1994 North American Free Trade Agreement between the U.S., Mexico and Canada. Over this same period, trade and investment have brought global living standards to unprecedented heights.

National sovereignty has not exactly disappeared. Trade treaties typically recognize that governments have a legitimate interest in regulating safety and the environment, and most of the world’s trading nations have made good progress in those areas.

Part of the discomfort over dispute-resolution panels is the notion that their private deliberations circumvent the democratic process. But it is a basic feature of most democratic governments that the legislature sets up legal institutions that subsequently act outside of direct democratic control.

I do readily grant that ISDS may be a bad idea for tactical reasons, simply because it is unpopular.  But a good question to ask is this: if someone opposes a trade agreement because of ISDS, is that person a committed opponent of excess litigation more generally?  Usually not.

I’ll be interviewing Mark soon, at a private venue, no public event, but for eventual release in the Conversations with Tyler series.  Here is a short bio of Mark.  He is credited as being the founder of modern Southwestern cuisine, and he was the driving force behind Coyote Cafe in Santa Fe and Red Sage in Washington, D.C.  He has written numerous books on food, including the very best books on chilies.  He is a supertaster, and more generally one of the world’s great food minds and a truly curious and generous soul.  He also has a background in anthropology, cooked for Chez Panisse in its early days, and is one of the best-traveled people I know.  Do you want to know what is/was special about chiles in Syria, or how many varieties of soy sauce you can find in one part of Hokkaido?  Mark is the guy to ask.

So what should I ask him?

…the most important technological change for the transportation of heavy goods in nineteenth-century India was not the arrival of the quick, expensive railway: it was the move from pack animals to carts pulled by two or four beasts in the first half of the century.  This was the process historian Amalendu Guha calls ‘the bullock cart revolution’.  Throughout the 1860s and 1870s railways found it impossible to compete not only with bullock carts, but also with human-powered river transport.  Rowing boats along the Ganges and Jamuna won a price war with the railways over the cost of transporting heavy goods.  Vessels powered by human beings were able to undercut steam vessels elsewhere.

That is from Jon Wilson, The Chaos of Empire: The British Raj and the Conquest of India, a new and excellent book that stresses how much British rule of India was rooted in chaos and violence, rather than the smooth operation of a colonial elite.

The year that is 2016

by on October 21, 2016 at 12:26 am in Current Affairs, Economics, Law | Permalink

Japan’s Financial Services Agency is nearing a landmark decision on the status and securitisation of PokeCoins, the virtual currency used to breed rare monsters in the highly successful mobile game Pokémon Go.

The FSA, which has not formally disclosed when it will make its ruling, is debating the issue with Pokémon Go’s US-based creator, Niantic. The outcome, according to lawyers scrutinising the matter, could oblige domestic Japanese and overseas companies whose games are available in Japan to secure the virtual money they have sold to local gamers with substantial deposits of real-world yen.

Analysts say that while the FSA is focused on PokeCoins, the regulatory time-bomb could threaten the magic stones of Puzzle & Dragons, the green gems of Clash of Clans and the rainbow orbs of Monster Strike.

The FSA is so far the only regulator in the world weighing the measure, but its decision looms over Japan-based pools of cash worth tens of millions of dollars, according to industry consultants. Yen-denominated sales of virtual currencies are especially high in Japan because of its status as the world’s most valuable mobile games market.

According to SuperData Research, annual revenues from mobile games in Japan have nearly tripled since 2012 to an estimated $8.6bn in 2016 — much of that, say analysts, driven by sales of virtual currency.

Pokémon Go, the Nintendo smartphone game that was launched in Japan in July and surged at record speed to the top of the accumulated revenue charts, has made the sale of its virtual currency especially appealing to players eager to complete the full collection of monsters. One hundred PokeCoins, costing Y120 ($1.16), will buy a monster lure while 500 will buy eight lucky eggs.

That is from Leo Lewis at the FT.

The primary reason Washington operators can dictate the terms of engagement with Washington journalists is that the true insiders are few and the journalists are many. In medium-sized towns, the power dynamic is reversed, as the number of journalists is very small and sources are many. This means journalists need not ingratiate themselves in the same way to get a story. Until the Washington press corps is reduced by 90 percent—which won’t happen in our lifetimes—the mortifying dance we see in the Podesta emails will continue.

That is from Jack Shafer at Politico, via the excellent Kevin Lewis.

Thursday assorted links

by on October 20, 2016 at 12:23 pm in Uncategorized | Permalink

1. The drone advertising wars have begun.  In Mexico City, at least.

2. Claims about evolution, and one reason why people are getting taller.

3. Half of U.S. adults are in a face recognition database.

4. “The way the students made decisions about drinking actually resembled the single most common feedback controller that’s used in engineering,” Passino said. “It’s called a proportional-derivative controller, and it measures how far a system has moved from a particular set point and adjusts accordingly. It’s the same as cruise control on a car.”  Link is here.

5. “Objects that recycle ambient radio signals can get online without a power source.

6. Doug Elmendorf’s recommendations for debt.

Philippine President Rodrigo Duterte announced his “separation” from the United States on Thursday, declaring that it had “lost” and he had realigned with China as the two agreed to resolve their South China Sea dispute through talks.

Duterte made his comments in China, where he is visiting with at least 200 business people to pave the way for what he calls a new commercial alliance as relations with longtime ally the United States deteriorate.

His trade secretary, Ramon Lopez, said $13.5 billion in deals would be signed

Duterte’s efforts to engage China, months after a tribunal ruling in the Hague over South China Sea disputes in favor of the Philippines, marks a reversal in foreign policy since the 71-year-old former mayor took office on June 30.

“America has lost now,” Duterte told Chinese and Philippine business people at a forum in the Great Hall of the People, attended by Chinese Vice Premier Zhang Gaoli.

“I’ve realigned myself in your ideological flow and maybe I will also go to Russia to talk to (President Vladimir) Putin and tell him that there are three of us against the world – China, Philippines and Russia. It’s the only way,” he added.

“With that, in this venue, your honors, in this venue, I announce my separation from the United States,” Duterte said to applause. “I have separated from them. So I will be dependent on you for all time. But do not worry. We will also help as you help us.”

Here is the Reuters story.

Ford fact of the day

by on October 20, 2016 at 1:32 am in Current Affairs, Economics | Permalink

Mr. Trump and others have criticized Ford for creating jobs in Mexico rather than in the United States. Seldom mentioned by Ford’s critics, though, is an essential fact. The Wayne factory will remain fully staffed, with 3,700 workers, to build what Ford really needs now: more trucks and S.U.V.s.

There is no doubt that Nafta has played a role in the migration of many American manufacturing jobs to Mexico in the last 22 years. Before the trade agreement, United States automakers barely had a presence in Mexico. Now, Mexico’s car-making work force is about 675,000 strong, according to the Mexican auto industry’s trade association.

But the story of Ford’s Wayne plant makes clear that many factors determine the number of auto-making jobs in the United States — a figure that according to federal labor statistics has actually grown by 200,000 jobs, to around 900,000, since the recession gave way to economic recovery in 2009.

That is from Bill Vlasic at the NYT.

The world’s highly skilled immigrants are increasingly living in just four nations: the U.S., U.K., Canada and Australia, according to new World Bank research highlighting the challenges of brain drain for non-English-speaking and developing countries.

I don’t think we have thought through well enough the final equilibrium here.  English will be the global language for a long, long time to come, and China will remain robust as a major source of indigenous talent.  A lot of Chinese could leave and there would still be a lot of smart Chinese around in China.  I do fear, however, for the politics in this semi-cosmopolitan but not cosmopolitan enough Anglo-American world in the making…

That is from Adam Creighton at the WSJ.

The accuracy of these tests is astounding.
Hat tip: Nathaniel B.

Single quarter jobs

by on October 19, 2016 at 1:27 pm in Data Source, Economics | Permalink

We find that the decline in these jobs accounts for about a third of the decline in the fraction of the population that holds a job in the private sector that occurred from the mid-2000s to the early 2010s.

Here is the full paper, by Henry R. Hyatt and James R. Spletzer, via the excellent Kevin Lewis.

Assorted Wednesday links

by on October 19, 2016 at 11:27 am in Uncategorized | Permalink

Kevin Grier lets loose at Cherokee Gothic:

People! Check out this quote,

“Michael Gapen, chief U.S. economist at Barclays Plc in New York, said Fischer’s comments “reflect an ongoing divergence of opinion” at the central bank. Fischer “doesn’t see much room for running the economy hot” while Yellen’s views “seem to provide a wide-open door to do that. You have a chair and a vice chair who see policy differently right now,” he said.”

After the events of the great recession, it’s just amazing to me that people think the economy is a steak, the Fed is a precision sous-vide machine, and all we have to decide is medium-rare or well-done.

For the millionth or so time, the models implying the Fed can do this, completely and utterly failed during the great recession. There is also evidence that a large part of the good outcomes credited to the Fed during the great moderation were actually due to exogenous forces (i.e. good luck).

Neither the Fed nor the President “runs” the economy. There is no stable, exploitable Phillips Curve / sous vide machine that lets us cook at a certain temperature.

This Fed worship is more religious than scientific. The past 10 years should be enough to convince anyone with an open mind that the Fed’s power over the economy is quite limited and tenuous.

But I guess it’s comforting to think that the little old lady behind the curtain can fix things for us.

She can’t, Stan Fischer can’t, Bernanke couldn’t. Maybe the sous vide machine is unplugged?

Yup, whatever your prior was, after the events of the Great Recession, you should surely downgrade your belief that Fed has a lot of control over the economy and yet I see a resurgence of this view despite it being at all odds with the evidence.

From Brad Plumer at Vox:

“We have done extensive polling on a carbon tax,” Podesta apparently told Clinton adviser Jake Sullivan back in January 2015. “It all sucks.”

There is further detail at that link.  A quite remarkable David Roberts piece at Vox, worth reading in its entirety, lays out why much of “the left” opposes the carbon tax on the ballot in Washington state.  It is revenue-neutral, doesn’t produce enough social justice, and as I would say it doesn’t have the right mood affiliation, among other factors.  Economist Yoram Bauman plays a key role in the article, and here is a quotation from him:

I am increasingly convinced that the path to climate action is through the Republican Party. Yes, there are challenges on the right — skepticism about climate science and about tax reform — but those are surmountable with time and effort. The same cannot be said of the challenges on the left: an unyielding desire to tie everything to bigger government, and a willingness to use race and class as political weapons in order to pursue that desire.

I’m not so sure about that portrayal of the Republicans, but still that is a perspective you don’t hear enough.  (Scott Sumner comments on the piece.)  You may recall my earlier post on Republicans and Democrats:

At some level the Republicans might know the Democrats have valid substantive points, but they sooner think “Let’s first put status relations in line, then our debates might get somewhere.  In the meantime, I’m not going to cotton well to a debate designed to lower the status of the really important groups and their values.”  And so the dialogue doesn’t get very far.

To return more directly to the title of this post, why don’t we have a carbon tax?  I would put it this way: for better or worse, the American people expect their government to solve this problem without raising the price of energy.  Funny that.