Month: June 2013
It’s worth emphasizing that the recent rise in interest rates has been a global phenomenon, not just something seen in the United States.
That is from James Hamilton.
Here is a very good discussion by Nelson Schwartz, here is one excerpt:
He is not predicting an imminent resurgence. Like most academic economists, Mr. Cowen focuses on the next quarter-century rather than the next quarter. But new technologies like artificial intelligence and online education, increased domestic energy production and slowing growth in the cost of health care have prompted Mr. Cowen to reappraise the country’s prospects.
“It’s better than it looked,” Mr. Cowen said. “Technological progress comes in batches and it’s just a little more rapid than it looked two years ago.” His next book, “Average Is Over: Powering America Beyond the Age of the Great Stagnation,” is due out in September.
The link is added by me, and the article covers other individuals too. There is also this:
“The great stagnation will end for a lot of people but not everyone,” Mr. Cowen said. “I think there will be great breakthroughs but the distribution of those gains will go to owners of capital and intellectual property.”
2. In The Great Reset, there is probably no Nashville Symphony Orchestra.
For a few years now Dani Rodrik has been tweeting about how second-rate, illegitimate, and undemocratic the current Turkish regime is. He never convinced me, not because I held firmly to some opposing perspective, but simply because I don’t follow Turkish politics closely enough for claims of any kind to have had traction on my views.
It now seems he has been quite clearly correct all along. The Turkish state has behaved very badly in response to recent protests and shown how deeply it is infected by many of the characteristics of autocratic and authoritarian regimes. The treatment of children, doctors, foreign and domestic journalists, the use of chemicals in the water cannon, the indiscriminate use of the riot police, and the generalized paranoid suspicion of the Turkish population — among other factors — all point in this direction. Democracy is about more than just elections.
If nothing else, it can be forecast that the variance of possible outcomes for Turkey has gone up.
I suspect nothing in this book can be trusted. Still, it is one of the more stimulating reads of the year, though I have to be careful not to draw serious inferences from it. Does its possible fictionality make it easier to create so many interesting passages?:
I can seem amazingly prescient and insightful, to the point that people proclaim that no one else has ever understood them as well as I do. But the truth is far more complex and hinges on the meaning of understanding. In a way, I don’t understand them at all. I can only make predictions based on the past behavior they’ve exhibited to me, the same way computers determine whether you’re a bad credit risk based on millions of data points. I am the ultimate empiricist, and not by choice.
The author argues that sociopaths are often very smart, have a lot of natural cognitive advantages in manipulating data, and are frequently sought out as friends for their ability to appeal to others. It is claimed that, ceteris paribus, we will stick with the sociopath buddies, as we are quite ready to use sociopaths to suit our own ends, justly or not. It is claimed that for all of their flaws, many but not all sociopaths are capable of understanding what is in essence the contractarian case for being moral — rational self-interest — and sticking with it. Citing some research in the area (pdf), the author speculates that sociopaths may have an “attention bottleneck,” so they do not receive the cognitive emotional and moral feedback which others do, unless they decide very consciously to focus on a potential emotion. For sociopaths, top down processing of emotions is not automatic.
We even learn that (supposedly) sociopaths are often infovores. It seems many but not all sociopaths are relatively conscientious, and the author of this book (supposedly) teaches Sunday school and tithes ten percent to the church. It just so happens sociopaths sometimes think about killing or destroying other people, without feeling much in the way of remorse.
I can also recommend this book as an absorbing memoir of a law professor and also of a Mormon outlier. It is written at a high level of intelligence, and it details how to get good legal teaching evaluations, how to please colleagues, how to evade Mormon proscriptions on sex before marriage, and it offers an interesting hypothesis as to why sociopaths tend to be more sexually flexible than the average person (hint: think more systematically about what abnormal or weakened top-down processing of emotions might mean in other spheres of life).
The author argues that sociopaths can do what two generations of econometricians have only barely managed, namely to defeat the efficient markets hypothesis and earn systematically super-normal returns. What does it say about me that I find this the least plausible claim in the entire book?
Here is a useful New York Times review. Here is the author’s blog, which is about being a sociopath, or about pretending to be a sociopath, or perhaps both. Here is the book on Amazon and note how many readers hated it. I say they just don’t like sociopaths.
One hypothesis is that this book is a stunt, designed as an experiment in one’s ability to erase or conceal an on-line identity, although I would think a major publisher (Crown) is not up for such tricks these days. An alternative is that a sociopath — not the one portrayed in the book — is trying to frame an innocent person as the author of the book (some trackable identity clues are left), noting that the book itself discusses at length plans to destroy others for various (non-justified) reasons. Or is it a Straussian critique of the Mormon Church for (supposedly) encouraging sociopathic-related character traits in its non-sociopath members? Or all of the above?
You will note that the book’s opening diagnosis comes from an actual clinical psychologist in the area, and the Crown legal department would have no interest in misrepresenting him in this manner. So the default hypothesis has to be that this book represents some version of the truth, at least as seen through the author’s eyes.
Some version of the author, wearing a blonde wig it seems, appeared on the Dr. Phil show, to the scorn of Phil I might add.
I cannot evaluate the scientific claims in this book, and would I trust the literature on sociopaths anyway, given that the author claims it is subject to the severe selection bias of having more access to the sociopathic losers and criminals? (I buy this argument, by the way.) It did occur to me however, that for the rehabilitation of sociopaths, whether through books or other means, perhaps they should consider…a rebranding exercise? But wait, “Sorry, I could not find synonyms for ‘sociopath’.”
If nothing else, this book will wake you up as to how little you (probably) know about sociopaths.
Megan McArdle updates us:
Kaiser Permanente is one of the places that always gets cited as a model by health care reformers. It’s the biggest insurer in California, using a model that ended up being the basis for the HMO revolution. Kaiser owns its own hospitals, pays its doctors a salary, and provides the “continuum of care” that everyone says they want from our fragmented health care system–and does it at a reasonable price. So it’s a bit surprising to see the LA Times report that this model citizen submitted some of the highest bids for California’s health care exchanges.
…California is headed for two-tier service on the Exchanges. The carriage trade will head for full-service networks like Kaiser, with full access to the whole network of doctors and hospitals. The price conscious buyers–likely to be a sizeable majority–will crowd into plans with restrictive networks. And those networks will be very, very crowded. Effectively, they may end up as quasi-catastrophic insurance, simply because it will be difficult to actually access care outside of the emergency room.
Lower down the income scale, the new Medicaid patients–about half the expected additional coverage in states like California–will be similarly crowded, simply because Medicaid’s low reimbursement rates make doctors reluctant to take it.
Note that, for reasons explained in the post, this may not apply outside of California in every other state.
1. Greg Mankiw on income inequality (pdf).
3. Mistakes in German architecture, a three-way interview. Pretty amazing, and full of lessons about management and infrastructure and social capital and fiscal policy and principal-agent problems, not to mention the future of Europe: “The pure truth doesn’t get you far in this business.” Too instructive to otherwise excerpt.
Yana flew yesterday from Newark airport and will be arriving in Mumbai shortly, heading in a few days to live in Bangalore. She will be working with Forus Health to decrease preventable blindness among India’s poor, in part by aiding with their distribution of an affordable screening device.
Her indiegogo project is here, which also describes her trip and mission. I hope to visit later in the year. And I expect her to come back knowing three or four more languages.
At 7:03 p.m. on May 25, my dog went to the bathroom in front of the Chinese massage place up the block from my house in Park Slope, Brooklyn.
I was not there, but I know this is true because a “poop alert” popped up on my laptop, 22 miles away at a friend’s house. A poop alert is a little white-on-brown icon of a squatting dog with, yes, a small pile beneath its tail, superimposed on a map of the walk fed by GPS data from the walker’s phone and updated every few seconds.
In addition, I received a text message on my phone. “Barnaby has just pooped.”
I cannot say that I was relieved, exactly – certainly not the way Barnaby was – but the people behind the high-tech dog-walking company Swifto, progenitors of the poop alert, say that many of their customers take great comfort in exactly this sort of information.
“A very common problem that a lot of dog owners have is that they don’t know that their dog walker has actually walked their dog,” said Mohammed Ullah, Swifto’s 23-year-old chief executive. The alert, he said, “lets the owner know exactly where, for instance, the dog has actually used the bathroom.”
Here is more, and for the pointer I thank Vic Sarjoo.
I think the secular decline in various measures of dynamism is a pretty important topic, largely because we haven’t been able to figure out what’s causing it. We’re seeing it not only in worker flows but also job flows, migration, startup rates, etc.
Industry composition effects make the puzzle even bigger–retail and services are typically more volatile than manufacturing, so the larger employment share they’re seeing means we should expect to see HIGHER rates of churning rather than lower (see http://updatedpriors.blogspot.com/2013/02/job-flows-industry-composition-and.html).
One thing that DOES help explain secular declines in gross flows is firm age stuff. Startup rates and employment shares among young firms are on secular decline (see http://updatedpriors.blogspot.com/2012/12/startups-and-great-recession.html); since dynamism typically declines as you go up through the age classes, lower young-firm activity means we should expect lower flows. But it’s not clear that this is a sufficient explanation; and, more importantly, it’s only explanatory in an accounting sense. We don’t know why entry is declining. And this is a secular trend, so common political explanations may not work.
Whether we should be worried really depends on what is causing all of this. After all, churning is costly. If churning is declining for good reasons, we should applaud it. But that may not be the case.
The Screen Actors Guild and several players’ unions have filed briefs supporting Mr. Hart, saying that athletes, actors and other celebrities must have the right to control the use of their identities and to harvest the financial fruits of their fame. The movie industry, book publishers and news organizations, including The New York Times, have lined up on the other side, saying that allowing celebrities to control speech about them runs afoul of the First Amendment.
The dueling briefs cited a grab bag of cases that are hard to wrestle into a coherent legal framework.
The courts have, on the one hand, rejected right-of-publicity suits arising from a painting of Tiger Woods, a comic book evoking the musicians Johnny and Edgar Winter, parody baseball trading cards and a fantasy baseball game that used the names, statistics and biographies of Major League players. But courts have allowed suits over the broadcast of a human cannonball’s entire act, a comic book using a hockey player’s nickname, an ad evoking Vanna White’s skill at turning letters on “The Wheel of Fortune” and a reference to Rosa Parks in a song.
If there is a legal principle that unites these rulings, it is hard to discern. What is clear, though, according to an expansive 2011 Supreme Court decision, is that video games deserve full First Amendment protection.
While the ethics behind holograms of deceased celebrities might be questionable (in the words of a parody Twitter account called Aaliyah’s Ghost, “The best duets imo are the ones where both artists are alive & agreed to work together”), copyright permissions and objections from various estates, in addition to the high costs, have so far prevented “resurrections” from becoming a more widespread trend. For its closing ceremony, the London Olympics scrimped on costs, reviving Freddie Mercury for a duet with Jessie J by broadcasting his image on a flat screen rather than a hologram body. It is hard to imagine the Tupac hologram moving forward without permission from his mother Afeni Shakur. The Marilyn Monroe estate, on the other hand, contested plans for a “Virtual Marilyn” concert organised by Musion partner Digicon Media.
The Supreme Court ruled unanimously yesterday in Association of Molecular Pathology v. Myriad Genetics that a gene, such as BRCA1 or BRCA2, does not qualify for a patent. The fact that Myriad isolated the DNA is not enough to distinguish it from its in situ counterpart as the information it contains is the same. However, cDNA, a version of the gene that has been stripped of non-coding sequences is subject to patent.
With this ruling the price of most of Myriad’s tests will fall as competition enters the market (the BRACAnalysis tests are actually a number of different tests, as I read the technical specifications, only some of these depend on cDNA. The markets appeared to have been initially confused about this.). Even more importantly, the Myriad patents were broad and they prevented researchers from freely studying the BRCA1 and BRCA2 genes, from improving the tests or from developing additional applications. The giants demanded payment (video) from those who would stand on their shoulders. I think the restrictions retarded progress–as have similar restrictions–to an extent that made the patents difficult to justify.
Although I am broadly in agreement with the ruling, it’s also clear that the limited flexibility of patent law–you get a 20-year patent or nothing–and the fact that patent law is not based on patent theory (pdf) greatly hampers the ability to tailor patent law optimally. The ruling, for example, says that a firm can’t patent a gene that it discovers but it can patent the cDNA that it develops. It’s the discovery, however, that’s expensive. The development of cDNA is today a trivial step. Thus, you can patent the trivial step but not the giant leap.
You might think that the law draws a bright line between discoveries which cannot be patented and inventions which can but that’s not correct. Discoveries can be patented and the ruling goes out of its way to push back against the view that they can’t. The ruling correctly notes that a “considerable danger” is that patents on basic ideas and tools would “inhibit future innovation”. Yet the law makes no mention of these considerations and the court provides no guidance on implementation.
Coherent or not, the recent patent cases do indicate that the SC is no longer acceding to the United States Court of Appeals for the Federal Circuit–they are reestablishing control and pushing back in the right direction on the Tabarrok curve.
That is a new paper by E. Glen Weyl, and here is one excerpt:
Using relatively crude methods to translate publicly-available data into income estimates, I estimate that approximately 40% of income of authors in both fields comes from consulting activities, roughly consistent with self-reported income figures for the broader profession in the National Center for Education Statistics’s National Study of Postsecondary Faculty. Second, I show that consulting activity in industrial organization is primarily policy-oriented while consulting work in finance is primarily geared toward private interests. Together these two facts are weakly suggestive that material incentives are at least complementary with research focus.
But this is not Inside Job either:
…the view I put forward is not that financial economists defended the interests of the firms for which they worked in regulatory disputes; this is precisely what I believe industrial organization economists, in contrast to financial economists, often did. Instead it is that financial economists were simply not interested in such disputes instead focusing on aiding private accumulation of wealth in markets rather than pushing public policy in one direction or the other.
Glen predicts that future work in finance will become more like research in industrial organization and move in a more legal and regulatory and policy-oriented direction, as the real world shifts toward greater regulation of finance.