Month: April 2014

Would net neutrality hurt the poor?

Eli Dourado has a new piece of note:

In much of the world, the net is not neutral, thanks to companies like Facebook and Google.Facebook Zero is an initiative launched in 2010 to give customers of 50 carriers, mostly in the developing world, access to a lightweight version of Facebook on their WAP-enabled feature phones at no charge. Users can post, like, poke, and comment to their hearts’ content, but if they want to view photos or access non-Facebook sites, they incur the usual data charge. The model has been so successful at growing Facebook adoption in Africa that Google followed suit with a competing offering, Google Free Zone in 2012. Lest anyone think that this is a cruel ploy by evil, for-profit corporations to trap the poor inside their walled gardens, the non-profit Wikimedia Foundation also copied Facebook’s idea with Wikipedia Zero, to great effect.

…non-neutrality can also help to fund necessary network buildouts on an ongoing basis. By giving access to Facebook, Google, and Wikipedia away as a loss-leader, carriers are serving with their basic tier of service those who can’t afford more, and habituating those who can afford to click beyond the walled garden to using the mobile web. This price discrimination not only increases access but also raises more revenue than a neutral strategy would. Developing-world carriers need that revenue if they ever intend to build the kinds of networks that will support widespread Internet use. Net neutrality, in other words, would not only keep the poorest offline, it would keep investment in poor-country telecom infrastructure down for longer.

A similar, but less stark, dynamic is playing out in rich countries. Anyone who has ever used their Kindle’s included 3G service has benefited from network non-neutrality; after all, you can’t use it to access non-Amazon services. Absent Amazon’s non-neutral arrangement with wireless carriers, you’d have to pay a nontrivial monthly fee to access books via the cellular network, which would mean that most people would forgo cellular and stick to Wi-Fi. Again, we observe a non-neutral arrangement expanding access and saving people money.

Read the whole thing.

Poll data on how much Americans care about inequality — not much

Joseph Lawler reports:

Respondents were not particularly worried about income inequality, which President Obama identified in December as the “defining challenge of our time.” Just five percent said that inequality was a major problem needing attention. And nearly all — 93 percent — of those who listed inequality as a problem said they were not at all or only slightly confident that the government could make real progress in addressing inequality in 2014.

Here is my post from earlier today.

Assorted links

1. Good interview with Michael Strain.

2. Raw data from Piketty, lots of it.  And confronting the Texas police with Bayesian reasoning.  And how Paul Krugman views his own endeavors.

3. When do men not want a pretty face? (speculative)

4. My 2005 post on whether or not we should tax capital.  And the bad rentier?

5. Very good Edward Luce FT piece on Modi.

6. Andrew Gelman on Seth Roberts, great piece.

7. Al Roth predicts 98 years out (seems more like thirty years out to me, or even less).

The Son Also Rises

Economist and Australian politician Andrew Leigh has a very informative review of Gregory Clark’s The Son Also Rises:

If you want to know who made up Australia’s elite in the nineteenth century, a useful place to look is the Australian Dictionary of Biography. In its many volumes, you’ll find business leaders, scientists, media barons and politicians who have featured among the upper echelons of Australian society.

Now, suppose we take the first cohort of significant Australians – those who died before 1880 – and identify those with unusual surnames like Ebden or Maconochie. People with those names were overrepresented among the elite in the nineteenth century. Are they still at the top of society, or are they mixed through?

The answer to this question will depend on the level of social mobility we have in Australia.

…For Australia, it turns out that if we look at the register of modern-day medical practitioners, we find the privileged names of the nineteenth century overrepresented by a factor of nearly three. In other words, if your ancestor was at the top of Australian society six generations ago, you are three times more likely to be a doctor today than the average Australian.

…if we accept Gregory Clark’s methodology, his results imply a very static society. For Britain, the United States, India, Japan, Korea, China, Taiwan, Chile and even Sweden, he concludes that the intergenerational elasticity is between 0.7 and 0.9. This would mean that social status is at least as hereditable as height. It suggests that while the ruling class and the underclass are not permanent, they are extremely long-lasting. Erasing privilege takes not two or three generations, but ten to fifteen generations.

Read the whole thing.

Paul Krugman on the political salience of inequality

Krugman wrote:

…it is notable that in a time of deeply depressed labor markets, our biggest thing is long-run inequality.

Or closer to home, I do of course track how my columns do on the most-emailed list; and there’s no question that inequality gets a bigger response than demand-side macro.

This doesn’t mean that we should (or that I will) stop trying to get the truth about depression economics across. But it’s an interesting observation, and I think it has implications for how politicians should go about doing the right thing.

This is a very interesting point (link here), but it differs from my view.  I see the inequality issue as having high salience for NYT readers, for Democratic Party donors, and for progressive activists.  It has very little salience for the American public, especially with say swing voters in southern Ohio or soccer moms.  Unlike in Singapore or South Korea, where the major concentrations of wealth are pretty hard to avoid for most people, American income inequalities are well hidden for the most part.

McLean is one of the wealthiest towns in Virginia, but if you drive through the downtown frankly it still feels a bit like a dump.  I’ve never wanted to live there, not even at lower real estate prices.  You don’t stumble upon the nicest homes unless you know where to look.  Middleburg is wealthier yet, but it has few homes, feels unreal, and most people don’t go there anyway.  If they do, they more likely admire well-groomed horses and still read Princess Diana biographies.  They are not choking with envy over the privileges of old money rentiers, and there is no Walmart in town to bring in the masses (who probably would not care anyway).

Perhaps ironically, to the extent that inequality as a phenomenon consists of the top 0.01% pulling away from the pack (not my prediction, by the way), general public resentment against the very wealthy will be especially hard to generate.  Out of sight, out of mind.

What swing voters really hate is inflation, probably irrationally so.  That does mean the aggregate demand argument won’t have much political salience, but as a result I see the Left as not quite knowing what to do next.  We’ll get pre-school in more cities, a $15 minimum wage in Seattle, and lots of action targeted at high cable bills, which for the intelligentsia will be tied to net neutrality and various mergers.  As the de Blasio reign indicates, blue cities may be the new laboratories for trying out bad ideas.  The states which won’t expand Medicaid may yet budge, but most of them are firmly in the “red” category.  The political influence of the local hospitals will matter more than intellectual discourse.

In short, you can expect a series of totally unsatisfying political debates, and they will further distort the discussions of economists, on both sides of the political ledger.

Why Piketty’s book is a bigger deal in America than in France

On The Upshot I have a new piece, co-authored with Veronique de Rugy, here is an excerpt:

…the book’s timing may be behind the state of French debate. Had it been released in the halcyon days of Mr. Hollande’s 2011 presidential campaign, when many French considered soak-the-rich talk and 75 percent marginal tax rates to be practical fiscal strategies, Mr. Piketty’s book might have made a bigger splash in France. Today, with the economy still struggling, Mr. Hollande is talking about tax cuts rather tax increases. The 75 percent rate has suffered constitutional challenges, and even celebrity backlashes, such as when Gérard Depardieu pursued and received Russian citizenship to lower his tax rate. Mr. Hollande seems to be steering France away from its traditional role as a defender of high taxes and toward some structural reforms, albeit at a slow pace. During his New Year address, Hollande even turned into a rhetorical supply-sider, making the case for cutting taxes and public spending, improving competitiveness, and creating a more investor-friendly climate. In any case, the French appetite for stiff tax increases has diminished.

…Finally, some other French economists have taken the lead in challenging Mr. Piketty’s empirical claims. One recent paper by four economists at l’Institut d’Etudes Politiques de Paris challenges Mr. Piketty’s view that inequality has increased because the return to capital has been greater than general growth in the economy. The current shorthand is “r > g.”

The paper argues that the higher growth of capital rests entirely on returns to housing, and takes technical issues with the book’s treatment of housing, too. If Mr. Piketty’s argument depends on housing, it hardly seems to match his basic story about the ongoing ascendancy of capitalists.

There is much more at the link.

Homer Economicus

The editor is Joshua Hall and the subtitle is The Simpsons and Economics.  The Amazon summary starts with this:

In Homer Economicus a cast of lively contributors takes a field trip to Springfield, where the Simpsons reveal that economics is everywhere. By exploring the hometown of television’s first family, this book provides readers with the economic tools and insights to guide them at work, at home, and at the ballot box.

Here is one Joshua Hall essay related to the book (pdf).  Here is the book’s home page.

The Japanese “love nudge”

Generally, Japanese culture tends to handle emotional expression a little less directly than in English-speaking countries, especially where romance is concerned. In particular, couples in Japan aren’t nearly as likely to regularly say “I love you” as their Western counterparts are or be seen smooching in public.

In certain situations, though, these roles get flipped. For example, while most Westerners would feel awkward making the explicit statement, “Please be my boyfriend/girlfriend,” in Japan that exact phrase, tsukiatte kudasai, is a pretty common romantic milestone, and something that many actually expect their partner to say in order to explicitly recognize the nature of the relationship.

Now, couples can even have their affection officially recognized, as lovers in Japan can submit government documents certifying their love for each other.

While the national government still shows no interest in tracking who’s got the hots for who,the town of Nagareyama in Chiba Prefecture is currently accepting submissions of koitodoke, or “love declaration forms.”

There is more here, including photos of the forms (not dramatic), and for the pointer I thank Samir Varma.

Assorted links

1. Christian Odendahl on EU quantitative easing.  And will narrow banking eliminate bank runs?

2. Daniel Drezner will start writing for The Washington Post.

3. Flying car vs. self-washing car?  And soccer-playing robots.

4., on black markets.

5. Austin Frakt defends the Medicare doc fix.

6. German girl trains cow as show horse (recommended, the article not the practice).

7. How much does it cost to dominate collegiate chess?

8. Is there really a way to board planes more quickly?

Three weeks of

Melissa Bell surveys three weeks of Vox and asks what you think.  A few things strike me:

1. One of their innovations — which has occasioned lots of hostility — has been to shift the window of what is considered “reportable as accepted truth.”  A MSM article does not put defenders and opponents of evolutionary theory on the same footing.  Vox presents the workability of a health care mandate as something — if not quite to be taken for granted — as a matter where a pro-mandate journalistic stance can be considered a matter of fact.  By no means do I agree with all of their judgments, but I see them as ahead of the curve and outflanking their critics.

2. The site looks great, works great, and they are consistently finding interesting topics to report on, at a higher rate than most better-established MSM outlets.  If I go to the site I will find something new I didn’t know about, every day.  I don’t feel a need to push them into an RSS feed.  By the way, the site looks especially good on an iPad.

3. When I was in fifth grade, I was pulled out of some of the more boring classes and give “SRAs” to work with.  SRAs were color coded material laid out on a series of cards and boxed tabs, which could be manipulated and re-ordered if the student so chose, and which allowed progression to increasing levels of difficulty. reminds me of SRAs, and of some of the instructional theories of the 1960s, although of course on the web and thus with a superior presentation.  I preferred SRAs to class, but anything I like is to be considered suspect from a broader market point of view.  By the way, IBM eventually sold the SRA brand name and content to McGraw-Hill.

4. With any site you have to ask where the “pandering element” comes in.  With MR the TC pandering is to yours truly — the unpaid author — and it comes in the form of puffins, Japan, movie reviews, and obscure Straussian references, among other things which make me giggle.  With Vox the pandering is highly factual and tonally neutral coverage of some hot button issues, such as the racism of Donald Sterling or telling your parents your true profession (porn star).  This strategy likely will succeed, although those articles tend not to interest me personally.  I think they will do pretty well on Facebook and other social media sites.

5. I am most worried about a certain uniformity of voice across the articles.  Think of the headings, photos, and prose style as geared to put the links high in eventual Google searches.  But readers miss the presence of distinctive voices, including Matt and Ezra themselves, who of course have served this role in the past.  I’ve liked all of Matt’s articles for Vox so far, but I miss hearing Matt.  You know, the Matt of and wisecracks about the Wizards.  Slate and Salon are full of voices, and they have found this to be a successful formula, at least relative to the alternatives if not always in terms of net revenue.

I’ve liked Joseph Stromberg’s science coverage, and been impressed by his depth, but he does not (yet?) ring as a distinct voice in my mind.  I don’t even have an illusory picture of what he might be like, and I wonder if their writers can continue to attract readers with such a relatively low level of vividness.  (On the other hand, this limits the bargaining power of the writers!)  Yet can the writers be given greater voice while keeping the Google maximization strategy in place?

Over time this uniformity of tone also will make it hard for them to recruit or keep top writers or writers looking for a path to the top.  And every outlet needs a few of these writers, even if many of the pieces are to be more cookie-cutter in presentation.

6. Costs will rise when they send people outside of the office to do stories, as eventually they must.

7. I am still a pessimist about the long-term economics of media, and I remain unconvinced they have solved the key problem of a weak advertising market for on-line material.  Still, I am keen to see how they will extend the site.

Markets in everything the culture that is Japan (Finland)

Introducing Japan’s Moomin Cafe, which seats those who are dining alone with large stuffed animals to keep them company.

Moomin Cafe is a theme restaurant, based on a series of Finnish picture books about a family of hippopotamus-like creatures.


At the link you also will find interesting pictures of the food.  For the pointer I thank R.H. and also Jeffrey Lessard.

By the way, here is a parable about the “Hello Kitty” craze in Singapore.

China fact of the day

Last year, for the first time, the working-age population declined, a trend set to continue for the next two decades. Unless the country can keep lifting the labour force participation rate (for example by getting more women into the workforce or persuading older people not to retire), China will struggle to expand its labour force by even 1 per cent per year. To sustain economic growth of more than 7 per cent, productivity would need to grow by 6-7 per cent a year across the entire economy.

That is from Prasenjit Basu at the FT.