Month: January 2011

Assorted links

1. Google finds it hard to reinvent philanthropy.

2. WSJ coverage of The Great Stagnation; "…in terms of framing the dialogue Tyler Cowen may very well turn out to be this decade’s Thomas Friedman."

3. Can schools teach meta-cognition?

4. Could some British real marginal rates of taxation rise to 70-83 percent?

5. Via Tim Harford, analysis of proposed NHS reforms, and sources for following Egypt.

6. Will high-speed rail worsen traffic in China?

7. Ezra Klein reviews TGS.  And here is Karl Smith.

World Income Inequality

Here, courtesy of Catherine Rampell of Economix, is a remarkable chart from Branko Milanovic's book The Haves and Have Nots. Along the horizontal axis are within-country income percentiles running from the bottom 5% (1st ventile) to the top 5% (20th ventile). Along the vertical axis are world income percentiles.

The graph shows that the bottom 5% of Brazilians are among the poorest people in the world but the top 5% are among the richest. Thus the vertical range of the curve tells us about within-country inequality.

Comparing between countries we see that the poorest 5% of Americans are among the richest people in the world (richer than nearly 70% of other people in the world). The poorest 5% of Americans, for example, are richer than the richest 5% of Indians.

The Kitchen Test

Here is Paul Krugman, noting that innovations for the kitchen have slowed down.  He cites this earlier, mid-90s piece of his on kitchens, which I would have cited had I known about it.  His conclusion:

By any reasonable standard, the change in how America lived between 1918 and 1957 was immensely greater than the change between 1957 and the present.

As Krugman did in the mid-1990s, I now cook in a 1950s kitchen and it suits me fine.  I use the microwave reluctantly and when I first met Natasha, eight years ago, she and Yana thought it noteworthy that I did not know how to use the device at all.  I do not see that my cooking stands at a disadvantage.

Alexander J. Field has a long and very good piece on the evolution of kitchen technology.  He concludes:

Aside from the automatic dishwasher in the 1930s (which achieved significant penetration only beginning in the 1960s), the garbage disposer (introduced in the 1950s, but low penetration until the late 1960s) and the microwave oven in the 1970s, there have been no truly revolutionary kitchen appliances in the last eight decades.

Field makes good fun of the electric can opener and the electric carving knife.

Here is a related Krugman post on the 19th century.

Demand Media, a content mill

Via The Browser, this was an excellent article on one of the companies which manufactures superficial web content to draw interest from Google searches.  Three bits:

On Jan. 25, Demand Media sold 8.9 million shares at $17 each in an initial public offering. The following day, the price rose 35 percent to $22.61, which would give the company a market capitalization of $1.9 billion, greater than New York Times Co.'s (NYT) value of $1.5 billion.


Many analysts now say the best way to gauge a Web company's financial hardiness is to look not at page views or monthly unique visitors but at how much money it can generate from each user. Matthew Shanahan, senior vice-president of strategy for Web consulting firm Scout Analytics, says thriving digital ventures typically have a high ARPU (average revenue per user). (AMZN), for instance, makes on average $189 per unique user. Google (GOOG) takes in around $24. Web publishers, Shanahan says, tend to become reliably profitable at about $10 a user. Demand's average revenue per user currently hovers around $1.60.


Last year, Demand Media executives told Wired magazine that the mechanized assignments generate 4.9 times more revenue than ideas generated by humans.

The company employs 13,000 freelancers.

China “tiger mother” fact of the day?

Under a proposal submitted last Monday by the Civil Affairs Ministry to China’s State Council, adult children would be required by law to regularly visit their elderly parents. If they do not, parents can sue them.

“Before, the courts did not accept this kind of lawsuit,” Wu Ming, a deputy inspector for the ministry, told The Legal Evening News this month. “But from now on, they will have to open up a case.”

It is not obvious that the proposal is going to pass:

“The national delegates are rational enough,” Mr. Jing said.

China, by the way, has the world's third highest elderly suicide rate.  The article is interesting throughout.

Assorted links

1. The most exclusive university in the world?

2. Dating site for sea captains, and the site itself is here (possibly sketchy, one reader tells me).  The captains are here.  Lots of beards, and some strange requests.

3. The bestselling books in France, 2010.

4. Caplan and Wilkinson and the Libertarian challenge.

5. Why grain prices are high for Tunisians.

6. Indie rock and African music.

7. The problem with memoirs.

Median-itis and The Great Stagnation

Here is my NYT column from today, on themes relevant to The Great Stagnation.  I won't rehash this entire discussion, but I would like to focus on this one column excerpt:

From 1947 to 1973 – a period of just 26 years – inflation-adjusted median income in the United States more than doubled. But in the 31 years from 1973 to 2004, it rose only 22 percent. And, over the last decade, it actually declined.

I am noticing that some reviews or commentaries (and here) are citing per capita income growth as a response to my argument.  It is true that per capita income grows at a slower rate post-1973, but my argument is about the slowing down of median income growth and that is a much stronger shift.  The productivity data also tell a glum story.   

CPI bias can change those numbers in absolute terms (see comments from Russ Roberts), but it also changes the pre-1973 median income growth numbers and arguably more so.  The gap remains and TGS refers to the living standard for the average person or household in the United States, not the total amount of innovation, which remains quite high.  They're just not innovations with the same trickle-down or broad-based effects as in an earlier era.

Kindle eBooks are themselves a good example.  It's a real improvement for a lot of us — especially travelers – but even the median reader, much less the median American, doesn't have a Kindle or buy eBooks.  As I argued in The Age of the Infovore, the big gains of late have gone to the extreme information-processors.  

I've seen in the MR comments (and elsewhere) a lot of anecdotal comparison of recent gains vs. earlier gains in technology.  Don't we now have this, don't we now have that, and so on.  Of course.  Median incomes have risen somewhat.  But, when it comes to the average household, the published numbers for median income are adding up and trying to measure those gains and it turns out their recent rate of growth really has declined.  Most serious researchers who work in this area use and accept these numbers as the best available (though they do not in general advocate my causal interpretation; see for instance Mark Thoma or Jacob Hacker).  

If the numbers for median income growth are low we ought to take that seriously, as does Scott Sumner.  We are not cheerleaders per se (BC: "I'm baffled why Tyler would focus on slight declines in American growth when the world just had the best decade ever."  Is it then wrong to focus on any other problems at all?  I also was one of the first people to make the "best decade ever" argument, which I still accept.)  Medians also matter for the political climate, even though the median earner is not exactly the median voter.  Adam Smith's welfare economics was basically that of the median, a point which David Levy has made repeatedly.

I'm also being called a "pessimist" a lot.  Yet in my view our current technological plateau won't last forever.  That's probably more optimistic than the Hacker-Pierson approach, which requires a Progressive revolution in economic policy (unlikely), although it is not more optimistic than denying the relevance of the numbers.

I'll soon blog some remarks on changing household size as another attempt to avoid confronting the facts about slow median income growth.

The wisdom of Rocco Landesman

Speaking at a conference about new play development at Arena Stage in Washington on Thursday, Mr. Landesman, the chairman of the National Endowment for the Arts, addressed the problem of struggling theaters. “You can either increase demand or decrease supply,” he said. “Demand is not going to increase, so it is time to think about decreasing supply.”

Here are some of the responses from the sector:

“What does he mean there’s too much supply?!?” wrote Trisha Mead, the public relations and publications manager at Portland Center Stage in Oregon. “What does he mean we can’t increase demand?!? Who determines which theater companies are wheat and which are chaff?!?” In another post, Durango Miller, a playwright and director, said: “Why not just increase funding? Maybe the N.E.A. is outdated and should be replaced by another system for funding the arts in the United States. Or maybe the people who are running the N.E.A. should be replaced.”

Assorted links

1. More from Arnold Kling on The Great Stagnation.

2. Kevin Drum on the Kindle version.

3. Predictions about Egypt, from Egyptians, January 2010.

4. How good is Kobe Bryant in the clutch?

5. Markets in everything: Lie back and think of Mother England.

6. Critique of behavioral economics for not being behavioral enough, full paper here.

7. Will Medicaid expand or shrink?

8. TSA halts further "privatizations."

My favorite things Egypt

1. Novel: I like all of the Mahfouz I have read, but the Cairo Trilogy is the obvious pick.  Here is a very useful list of someone's favorite Egyptian authors and novels.

2. Musical CD: The Music of Islam, vol.1: Al-Qahirah, Classical Music of Cairo, Egypt.  The opening sweep of this is a stunner, and it shows both the Islamic and European influences on Egyptian music.  Musicians of the Nile are a good group, there is Hamza El Din, and there is plenty of rai.  What else?  I can't say I actually enjoy listening to Um Kalthoum, but her voice and phrasing are impressive.

3. Non-fiction book, about: Max Rodenbeck, Cairo: The City Victorious.  Few cities have a book this good.  There is also Dream Palace of the Arabs and Tom Segev's 1967.  Which again is the really good book on the 1973 War?

4. Movie, set in: Cairo Time.  This recent Canadian film avoids cliche, brings modern Cairo to life, and is an alternative to many schlocky (but sometimes good) alternatives, such as The Mummy, Death on the Nile, Exodus, Raiders of the Lost Ark, and so on.  There is Agora.  Egyptian cinema surely has masterpieces but I do not know them.  If you're wondering, for books, I could not finish Norman Mailer's Ancient Evenings.

5. Favorite food: I was impressed by the seafood restaurants on the promenade in Alexandria.  Food in Cairo did not thrill me, though I never had a bad meal there.

6. Philosopher: Must I say Plotinus?  I don't find him especially readable.

7. City: I enjoyed Alexandria, but I can't say I liked Cairo beyond the museum (much better than any Egyptian collection outside of Egypt) and the major mosques.  The Sphinx bored me.  The air pollution prevented me from walking for more than an hour and there was cement, cement. and more cement.  The ride between Cairo and Alexandria was one of the ugliest, most uninspiring journeys of my life.  The Egyptians were nice to me but I never had the sense that anything beautiful was being done with the country.  Let's hope that changes.

8. Opera, about: Philip Glass, Akhnaten.  But wait, there's also Aida, with Callas.  And there's Handel's Israel in Egypt.  Handel set a lot of his operas in Egypt, including Berenice and Giulio Cesare.

Diane Rehm is Egyptian-American but I don't know her show.  The new biography of Cleopatra is smooth but the narratives made me suspicious.  Was Euclid Egyptian?

Egypt facts of the day

The Market Vectors Egypt Index (EGPT) ETF is down 20% since Jan. 14 and down 2.9% today on more than six times the daily average volume. Egypt’s credit-insurance costs have also spiked. According to Markit, a data provider, a credit-default swap to insure $10 million of Egyptian sovereign debt over five years has spiked 33% to $405,000. (Update: the CDS cost has jumped to $450,000 since this post was first made.) It may surprise, given what you see on TV, but that’s still cheaper than similar insurance for Portugal, Ireland and Greece.

The article is here.  And:

The Nasdaq Israel Index (ISRQ) is down 1.2% today and 3% in the past 10 days.

*The Order of Public Reason*

That is the title, the author is Gerald Gaus of U. Arizona, and the subtitle is A Theory of Freedom and Morality in a Diverse and Bounded World.  This is a big and ambitious work, broadly in the liberaltarian tradition, mixing Rawls and Hayek, pondering the implications of disagreement, and experimenting with the idea that morality itself has a coercive element.  It is Gaus's attempt to lay out the proper foundations for a liberal society and he summarizes the hard-to-summarize book a bit here.

Also new on the market is Ronald Dworkin's Justice for Hedgehogs.  I like the title and I like most of his previous books, but I am not finding this one rewarding to read.  Here is one previous debate on related material.