Government shutdown (price-capped) markets in everything

Dozens of air traffic controllers are keeping Austin-Bergstrom International Airport functioning smoothly through the longest government shutdown in US history — and all without a paycheck.

Friday was the first payday since the shutdown began and while hundreds of thousands of federal workers can expect to be paid for the work they put in during the shutdown, they are not receiving paychecks until it ends. Tuesday marks Day 25 of the shutdown.

Austin pilots want to do what they can to help their aviation fellows who are affected by the shutdown.

“Those controllers have always had my back, during the normal flights and the rare times that I’ve had a slight abnormal flight that caused me concern,” Ken VeArd said, a longtime pilot.

VeArd recently posted on social media asking his fellow pilots to help him give back to ABIA’s controllers.

“I just made a post saying this is what I am thinking about doing and before I knew it, it just got out of control,” he said. “Whether you need diapers, milk or eggs, or even if all you need is a six pack of beer,” VeArd hopes it’s the small things that will make a difference.

He’s been buying $20 gift cards from H-E-B for the controllers.

“My biggest concern with this thing is that we try to do something nice for our air traffic control friends and it turns out to be a problem, we don’t want to make problems any worse than it is,” VeArd said. “So we capped it at $20.”

Here is the full story, via Air Genius Gary Leff.

John Bogle, RIP

In 1974, Paul Samuelson wrote Challenge to judgement, a searing critique of money managers. Samuelson challenged the money managers to show that they could beat the market. He concluded that “a respect for evidence compels me to incline toward the hypothesis that most portfolio decision makers should go out of business.” Samuelson hoped for something new:

At the least, some large foundation should set up an in-house portfolio that tracks the S&P 500 Index — if only for the purpose of setting up a naive model against which their in-house gunslingers can measure their prowess.

Inspired by Samuelson, John Bogle created the first index fund in 1976 and it quickly…failed. In the initial underwriting the fund raised only $11.3 million, which wasn’t even enough to buy a minimum portfolio of all the stocks in the S&P 500! The street crowed about “Bogle’s folly” but Bogle persevered and in so doing he benefited millions of investors, saving them billions of dollars is fees. As Warren Buffet said today:

Jack did more for American investors as a whole than any individual I’ve known. A lot of Wall Street is devoted to charging a lot for nothing. He charged nothing to accomplish a huge amount.

The creation of the index fund is a great example of how economic theory and measurement can improve practice. Our course on Money Skills at MRU is very much influenced by Bogle. Tyler and I recommend index funds and Vanguard in particular. In the videos and in our textbook we present data from Bogle’s book Common Sense on Mutual Funds. Here’s the first video in the series.

How to study history of economic thought

The Center for the History of Political Economy at Duke University will be hosting another Summer Institute on the History of Economics this summer from June 10-19, 2019. The program is designed for students in graduate programs in economics, though students in graduate school in other fields as well as newly minted PhDs will also be considered.

Students will be competitively selected and successful applicants will receive free housing and a booklet of readings. We are also able to provide limited travel support. The deadline for applying is March 1.

We are very excited about this year’s program, which will focus on giving participants the tools to set up and teach their own undergraduate course in the history of economic thought. There will also be sessions devoted to showing how concepts and ideas from the history of economics might be introduced into other classes. The sessions will be run by Duke faculty members Bruce Caldwell and Jason Brent, who will be joined by Steve Medema of the University of Colorado–Denver. More information on the Summer Institute is available at our website, http://hope.econ.duke.edu/

My Conversation with Larissa MacFarquhar

This was a really good one, here is the text and audio.  The opening:

TYLER COWEN: I’m here today with the great Larissa MacFarquhar. She is a staff writer for the New Yorker, considered by many to write the very best and most interesting profiles of anyone in the business. She has a very well-known book called Strangers Drowning. The subtitle is Impossible Idealism, Drastic Choices, and the Urge to Help. It’s about extreme altruists. And she’s now working on a book on people’s decisions whether or not to leave their hometown.

Here is one excerpt proper:

COWEN: If you’re an extreme altruist, are you too subject to manipulation by others? If you care so much about so many other people, and those people actually can be harmed pretty easily at low cost, does this mean that you, the extreme altruist, you just go through life being manipulated?

MACFARQUHAR It’s funny you say that because one thing that I have noticed about the extreme altruist . . . You know what? I don’t want to call them extreme altruists. I think they’re people with a very strong sense of duty.

The people I met were very, very different from each other, but one thing they had in common is they really, really barely cared about what other people thought. They had to feel that way because almost everyone they met thought they were at best weirdos, and at worst dangerous megalomaniacs. So they were unconventional in their degree of duty but also in many other ways.

COWEN: They didn’t care at all what people thought about anything they did like how they dressed or . . . ?

MACFARQUHAR: Things like that. I don’t mean they didn’t care about anything about what people thought because obviously —

COWEN: In this context they didn’t care.

MACFARQUHAR: Obviously they cared about making other people’s lives better. But yes, in terms of opinions of themselves, they were much less sensitive to that than most of us.

And:

COWEN: Your view on how much you should be lied to if you have dementia — is that the same as what you would propose for a sibling or a child, someone you loved and knew?

MACFARQUHAR: With dementia?

COWEN: Right. Would you be consistent and apply the same standard to them that you would want for yourself?

MACFARQUHAR: Ohhh, I don’t know.

COWEN: I would say don’t lie to me, but, in fact, for others, I would be more willing to lie to them than I would wish to be lied to myself.

Try this part too:

COWEN: If during a profile, when you describe people’s looks, are you worried that you are reinforcing stereotypes?

MACFARQUHAR: No. But I have —

COWEN: But isn’t there a thing, looksism?

MACFARQUHAR: Well, of course.

COWEN: There’s sexism, there’s racism, and looksism — people who look a certain way, you should make certain inferences. Is there any way we can describe people’s looks that doesn’t run that danger?

MACFARQUHAR: Probably not. But I’ll say two things about this.

First is, I think there is far too much emphasis on describing people’s looks. Because the thing about humans is that their faces are unique, so you can describe somebody, but you’re never going to be able to call up an exact picture in a reader’s mind about what the person looks like. So what you’re doing is not really describing what they look like — what you’re doing is evoking something which, I guess, the malign form of that is looksism.

But I’ve started avoiding describing what people look like, not because it results in looksism — though I’m sure that’s true — but because, unconsciously or not, it puts the reader in a position of being outside the person, looking at them.

And also, from me:

COWEN: Could the same person be both, say, a Rwandan killer in the 1990s and an extreme altruist? Or is that a contradiction?

Definitely recommended.

A new World Bank rumor

Ray Washburne, the Texan property developer who heads the US government’s development finance institution, has emerged as a contender in the race to be Donald Trump’s nominee for the presidency of the World Bank, according to people familiar with the matter. Mr Washburne became a candidate following his efforts to bolster the Overseas Private Investment Corporation since taking up the reins in September 2017, earning new funding from Congress that could help counter China’s sweeping investments — and influence — across many developing economies. Before taking on that role, Mr Washburne’s career spanned commercial property and restaurants in his hometown of Dallas, Texas. He was also a prominent Republican party donor, including helping raise money for former president George W Bush and former Republican presidential nominee Mitt Romney.

That is from James Politi and David Pilling at the FT.

Ivanka might be an improvement

Yes, yes, I know she is only running the interviewing process, but that is how Dick Cheney ended up as vice President.  Here is one excerpt from my Bloomberg column:

You might argue that Ivanka is not qualified to run the World Bank, and I might agree with you. (She would not be my personal pick; how about Carly Fiorina, Kristin J. Forbes or Arthur Brooks?) Yet consider that the previous president, Jim Yong Kim, was highly qualified on paper. He co-founded a famous foreign-aid public health group, has a Ph.D. in anthropology, was a professor at Harvard Medical School and the Harvard School of Public Health and then president of Dartmouth. As an Asian-American, he had the potential to be a powerful symbol of multicultural governance.

Yet by most accounts his tenure at the bank was a failure. He alienated much of the staff, and his organizational changes (after first creating chaos and bad morale) were largely reversed.

Now he is leaving suddenly, years before his term is up, allowing Trump to appoint his replacement. Not only that, Kim is moving to a for-profit infrastructure firm, hardly the best symbolism for the leader of an institution that is supposed to be about helping the global poor.

The sad reality is this: If Ivanka took over the reins of the bank, she probably would be an improvement.

And she might not even use the word “and” so much.

Tuesday assorted links

1. “Crowdfunding research flips science’s traditional reward model. Students and junior investigators are more likely than senior scientists to secure crowdfunding for their research.

2. “A row has broken out between the mayor of Rome and the Roman Catholic Church over what should happen to coins retrieved from the Trevi fountain.  Every year nearly €1.5m (£1.3m) is fished out of the famous landmark. It is traditionally given to a Catholic charity to help the destitute.  But now Mayor Virginia Raggi wants the money spent on the city’s crumbling infrastructure instead.”  Link here.

3. The Sex Raft no IRB for that one.

4. Agnes Callard Cato Unbound comment on Stubborn Attachments.  And Callard in The New Yorker.

5. Friday, January 25 I speak in Ann Arbor at the University of Michigan, and January 31 at the University of Chicago.

6. Many attitudes are becoming more neutral, except toward the overweight.

Subtitling>Dubbing

We study the influence of television translation techniques on the worldwide distribution of English-speaking skills. We identify a large positive effect for subtitled original version broadcasts, as opposed to dubbed television, on English proficiency scores. We analyze the historical circumstances under which countries opted for one of the translation modes and use it to account for the possible endogeneity of the subtitling indicator. We disaggregate the results by type of skills and find that television works especially well for listening comprehension. Our paper suggests that governments could promote subtitling as a means to improve foreign language proficiency.

That’s from TV or not TV? The impact of subtitling on english skills, a clever study with a useful finding.

I cannot help but note that our Principles of Microeconomics and Principles of Macroeconomics videos at MRU (and linked to in our textbook) are subtitled in English, Spanish, Hindi, Arabic and other languages so perhaps we can help teach languages as well as economics.

Noah Smith debates the 70 percent marginal tax rate with a bunch of us

Here is the Bloomberg link, here is a sentence from Noah on AOC:

Her proposal, which would make the tax structure similar to the one the U.S. had in 1921, is pretty much symbolic — a way of expressing disapproval of inequality, while kicking off a lively discussion of income taxes and redistribution.

We do not all agree.

What I’ve been reading

1. Jackie Chan, with Zhu Mo, Never Grow Up. “My ankle joint pops out of its socket all the time, even when I’m just walking around, and I’ll have to pop it back in.  My leg sometimes gets dislocated when I’m showering.  For that one, I need my assistant to help me click it back in…I can’t lift heavy objects.”  He needed brain surgery after filming Armour of God, and he sustained permanent hearing loss in his left ear.  Recommended, if you like the movies.  And: “That was how I pursued girls, I overwhelmed them.”

2. John L. Brooke, The Refiner’s Fire: the Making of Mormon Cosmology, 1644-1844.  “…the rise of the Church of Jesus Christ of Latter-day Saints can only be understood if it is placed in the context of the hermetic tradition.  The distinctive doctrines of the church — preexistent spirits, material spirit, human divinization, celestial marriage — are opaque unless we explore their relationship to the evolving fusion of hermetic perfectionism and radical sectarianism occupying the extreme edge of the Christian tradition from the late Middle Ages into the early modern age.”

3. Guy Arnold, Africa A Modern History: 1945-2015, second edition.  It is hard to image that a 1077 pp. doorstop kind of a book on “Africa” might be very good, but in fact this one is.  It is the best book on contemporary Africa and its (recent) historical roots that I know.  I am reading this book all the way through.

4. Cass Sunstein, How Change Happens.  How does social change happen, organized around Cass’s favorite topics, such as nudge and polarization and cascades.  This book doesn’t cover everything, but it is one of the essential introductions to a topic that is very difficult to handle.  And I am happy there is no subtitle.

Joshua S. Goldstein and Staffan A. Qvist, A Bright Future: How Some Countries Have Solved Climate Change and the Rest Can Follow, is a good and correct “green” take on the case for nuclear energy.

The Cato Institute has put out Michael D. Tanner, The Inclusive Economy: How to Bring Wealth to America’s Poor, and Randal O’Toole Romance of the Rails: Why the Passenger Trains We Love are Not the Transportation We Need.

China fact (?) of the day

China Daily reported Friday that unnatural deaths have taken the lives of 72 mainland billionaires over the past eight years. (Do the math.)

Which means that if you’re one of China’s 115 current billionaires, as listed on the 2011 Forbes Billionaires List, you should be more than a little nervous.

I don’t know about you but I find it somewhat improbable that among such a small population there could be so many “suicides,” “accidents” and “death by disease” (the average age of those who died from illness was only 48).

Here is the Forbes story by Ray Kwong, I am not sure how confirmed to treat this as being.

From the comments:

According to the original Chinese version of the news report, the base (number of billionaires) should be 60k, not just 115. I think ‘billionaires’ refers to 100M CNY in the original news report. It’s still shocking though…
“2010年,这一数字同比增长了9.1%,达到6万人左右。” http://www.chinadaily.com.cn/dfpd/shehui/2011-07/22/content_12957783.htm

Right. The Chinese number units are ones, tens, hundreds, thousands, ten thousands, and ten thousand ten thousands. The “billionaires” in the article are ten thousand ten thousandaires.

+1 (Google Translate confirms that the base is 55k people 🙂 )
The mortality rates now seem far more reasonable…

Dreyer’s *Day of Wrath* (this post is full of spoilers)

Yes this movie dates from 1943 but I don’t think it is (mainly) about the Nazi persecutions, and every review I have seen on-line seems to misunderstand the film rather badly.  First, it is a #MeToo film.  Anne is abused and in essence raped (repeatedly) by her much older husband Absalon, who is a powerful figure in the local community.  He saved her mother from being burnt as a witch, and in return took her body and matrimonial hand, never asking if she wanted this.  She ends up wishing for his death “hundreds of times,” and the movie focuses on how this marital experience hollows out her inner shell.  Her illicit romance with Martin, Absalon’s son, was never emotionally real and was mainly intended as an escape from her servitude and perhaps also as a bit of revenge.

The second theme of the movie, related to the first, concerns the equilibria of belief in witchcraft.  If some of the citizens believe in witches, some of the otherwise powerless women will pretend to be witches, to win some power.  Anne does this, as she knows that powerlessness is the worst thing in this society.  (The older Herlofs Marthe also left some uncertainty about her powers to reach demons and the like.)  Of course this strategy has potential downsides, especially when some women are burnt as witches, but ex ante it can make sense to parade as a witch with some probability.  For Anne, powerlessness is perceived as so bad she is even willing to be a witch ex post.  Of course she killed Absalon by poisoning his beer, not by placing a hex on him.  Even when facing death, she can’t give up the one source of perceived power she might aspire to have.

Monday assorted links