Month: June 2014
What do I think of David Brat?
I have received this question from many people. I still haven’t read much Brat, other than a very quick browse of some (poorly written) passages (by the way, here is a piece on Brat’s theology). In any case, my sense of him is this: he really believes in ideas, even if they are ideas a large number of people will find objectionable. He wants to govern on the basis of those ideas, and he wants to debate those ideas on the floor of Congress. He is authentic and thus he is exactly the kind of politician our Founding Fathers envisioned. It is no surprise that at least some subset of primary voters found that appealing, especially compared to the what-can-only-be-called-cynicism of Eric Cantor.
You don’t have to agree with what Brat stands for (mostly but by all means not entirely libertarian), but if you don’t like him at all you need to perform a broader reevaluation of this whole America idea, at least as it was laid out in the Constitution and other founding documents. This is in fact what it means to have citizen politicians, or alternatively we can call them amateur politicians. Along these lines, I also would like to see more candidates like Bernie Sanders — who basically seems to be a socialist — in Congress.
The victory of Brat also shows that money really does not rule politics these days.
By the way, he should learn to write “Deirdre McCloskey,” (p.60) instead of “Donald-Diedre McCloskey.” LBGT rights remain a neglected issue outside of “the Left,” but they are a good barometer of our overall degree of tolerance as well as a desirable policy in their own right. I am not sure it is an issue Brat is so likely to be good on or to make a priority.
What I’ve been reading
1. Alan Macfarlane, Thomas Malthus and the Making of the Modern World, Kindle edition. It starts off slow, but overall an excellent short look at Malthus as an underrated thinker and a theorist of the cultural and demographic preconditions of capitalism.
2. Louise Lawrence, Children of the Dust, excellent, short and highly readable post-apocalyptic story, think of it as a precursor (1985) of some of today’s YA popular fiction, it should be turned into a movie. I’ve ordered two more of hers.
3. Sudhir Vadaketh, Floating on a Malayan Breeze: Travels in Malaysia and Singapore. A Singaporean travels through Malaysia to discover what divides their two countries and what ultimately unites them too. I read this one straight through. File under “great books you’ve never heard about.” Honest and frank throughout.
4. Adam Tooze, The Deluge: The Great War and the Remaking of World Order, 1916-1931. This one also starts slow but after about 13% becomes fascinating, especially about the internal politics in Germany and Russia, circa 1917-1918. I’m not quite halfway through but finishing is a sure thing. He has yet to cover monetary policy, however.
5. David Bromwich, The Intellectual Life of Edmund Burke. Clear, thorough, and to the point on its stated topic.
6. Jenny Davidson, Reading Style: A Life in Sentences. Why do we fall in love with some sentences rather than others? This book is consistently insightful into classic (and sometimes not so classic) fiction. For whatever reason, I agree with her about various novels to a remarkable degree. Here is Jenny’s daily read. Here is her blog. This book induced me to order Stephen King’s Needful Things, which I have never read.
Before Hitler came along, who was cited as the embodiment of evil?
One good answer is from Tim O’Neill:
People were generally very familiar with the Bible pre-1900, so the figures usually cited as the epitome of evil tended to be Judas Iscariot, Herod the Great or, most commonly, the Pharaoh of the story of Moses in Exodus. In Common Sense, Thomas Paine wrote: “No man was a warmer wisher for reconciliation than myself, before the fatal nineteenth of April, 1775 [the date of the Lexington massacre], but the moment the event of that day was made known, I rejected the hardened, sullen Pharaoh of England forever.” The Confederates referred to Abraham Lincoln as “the northern Pharaoh” and abolitionists in turn called slaveowners “modern Pharaohs”. Americans also referred to all tyrants by comparing them to King George III and Napoleon was often cited as the ultimate bogeyman in Britain. But generally it was Pharaoh who was used the way we use Hitler.
Did they have something akin to Godwin’s Law back then: “if you have to mention the Pharaoh, you’ve lost the argument!” Somehow I don’t think so. A link to the Quora forum is here.
Update: It seems Brian Palmer deserves credit for the information behind that answer.
Assorted links
1. How the Dismal Science Got Its Name, by David M. Levy, excellent book now available with free download at the link. Here is Alex’s MRU video on related topics.
2. Soccer as an economic experiment.
3. Excellent Tom Gallagher piece on Scottish independence.
4. Hacker and Pierson on the decline of the Downsian vision (pdf)
5. A nanosat (small satellite) might be only a four-inch cube.
6. Excellent profile of Ken Regan and his campaign against cheating in chess, by using computer programs to detect play which is too good. But this is not merely a chess piece, think of it as a tour de force on the future of law enforcement, the role of Black Swans in life, the importance of social networks, and the different ways that humans organize information.
7. The political economy of special economic zones.
All hail Khan!
Congratulations to Razib Khan, the noted genetics blogger, on the birth of his son. Born just last week, Razib’s son is already making the news:
An infant delivered last week in California appears to be the first healthy person ever born in the U.S. with his entire genetic makeup deciphered in advance.
Razib, a graduate student at a lab at UC Davis in California, had some genetic material from his in-womb son from a fairly standard CVS test.
When Khan got the DNA earlier this year, he could have ordered simple tests for specific genes he was curious about. But why not get all the data? “At that point, I realized it was just easier to do the whole genome,” he says. So Khan got a lab mate to place his son’s genetic material in a free slot in a high-speed sequencing machine used to study the DNA of various animal species. “It’s mostly metazoans, fish, and plants. He was just one of the samples in there,” he says.
The raw data occupied about 43 gigabytes of disk space, and Khan set to work organizing and interpreting it. He did so using free online software called Promethease, which crunches DNA data to build reports—noting genetic variants of interest and their medical meaning. “I popped him through Promethease and got 7,000 results,” says Khan.
Promethease is part of an emerging do-it-yourself toolkit for people eager to explore DNA without a prescription. It’s not easy to use, but it’s become an alternative since the FDA cracked down on 23andMe.
Craig Venter was the first person to have his genome sequenced, that was in 2007. Now, just seven years later, costs have fallen by a factor of 10,000. Personal genome sequencing is going to become routine regardless of the FDA.
Restoring Anatole France
Tesco has agreed to remove the anti-homeless spikes from outside one of its central London shops after days of protest.
The inch-high steel studs provoked outrage when they were spotted outside the supermarket’s Regent Street branch and in the doorway of a block of luxury flats near London Bridge.
As protests against the spikes gathered pace this week, managers at Tesco insisted that they were designed to prevent antisocial behaviour rather than to deter homeless people from sleeping nearby.
…Homelessness charities described the studs as inhumane. Jacqui McCluskey, director of policy at Homeless Link, said: “It’s shocking to see the use of metal spikes to discourage rough sleeping and hardly helps to deal with the rising number of people who are forced to sleep on our streets.
The full story is here, the France reference is here.
In general, I do not think that the answer to the problem of homelessness involves raising the costs of being homeless. But if that ever were to be the case, even one percent of the time, who would be willing to do it? Furthermore, if we regard the current homeless as “low-elasticity” (e.g., raising the costs of being homeless will not much lower the number of homeless), is that a compliment to them or an insult? Does citing “bad luck” automatically connect one to the low-elasticity view, or can bad luck and high elasticity coexist in the same explanation of homelessness? It seems to me that the exonerative bad luck explanation and the low-elasticity view are packaged together in discourse, although not necessarily for any strong analytical reason. For instance, it is bad luck if my car breaks down, but if that cost me my life I would buy a more reliable car or maybe cease driving altogether.
Cities at or near their all-time peaks of excellence
I would cite a few:
1. Berlin
2. Kuala Lumpur
3. Mexico City
4. San Francisco
5. Seoul
6. Toronto
7. Stockholm
8. Lagos
Higher living standards count toward this designation, but they are not enough. Vienna’s general excellence was higher in the 20s, even though the city was much poorer back then, and so Vienna cannot make the list.
Los Angeles probably peaked in the 80s and New York arguably peaked in the postwar period through the 1970s or 80s. Chicago might have a claim. Can you think of others? Does Shanghai have a chance, or did it peak around 2000 or so, before it got so polluted and crowded?
Assorted links
1. Do imaginary companions die?
2. Albert Hirschman’s Hiding Hand.
3. Should adults read Young Adult fiction?
4. Edward Conard on whether rescuing subprime borrowers would have fixed the economy.
5. Why hasn’t the price of oil gone up more? And should you in fact fear Friday the 13th?
6. Do dogs prefer to avoid being part of the 47%? (speculative, to say the least)
Is the lack of war hurting economic growth?
I have a new piece for The Upshot on that topic, here is one excerpt:
Counterintuitive though it may sound, the greater peacefulness of the world may make the attainment of higher rates of economic growth less urgent and thus less likely. This view does not claim that fighting wars improves economies, as of course the actual conflict brings death and destruction. The claim is also distinct from the Keynesian argument that preparing for war lifts government spending and puts people to work. Rather, the very possibility of war focuses the attention of governments on getting some basic decisions right — whether investing in science or simply liberalizing the economy. Such focus ends up improving a nation’s longer-run prospects.
It may seem repugnant to find a positive side to war in this regard, but a look at American history suggests we cannot dismiss the idea so easily. Fundamental innovations such as nuclear power, the computer and the modern aircraft were all pushed along by an American government eager to defeat the Axis powers or, later, to win the Cold War. The Internet was initially designed to help this country withstand a nuclear exchange, and Silicon Valley had its origins with military contracting, not today’s entrepreneurial social media start-ups. The Soviet launch of the Sputnik satellite spurred American interest in science and technology, to the benefit of later economic growth.
I also discuss new books by Ian Morris, Kwasi Kwarteng, and some research by my colleague Mark Koyama, as well as Azar Gat. I did not have room in the piece to point out there is an interior solution concerning this issue. That is, if the chance of war is too high, and property rights are too insecure, that isn’t good for economic growth either.
More Matt Rognlie on Piketty — the most important point
Matt has what is probably the single best, focused technical critique of Piketty. Here are his concluding remarks:
Compared to the grand scope of Piketty (2014), the objective of this note has been quite narrow: to systematically explore the relevant evidence on diminishing returns to capital. Technical and uninspiring as this question may be, it is an essential step in knowing whether the prediction of rising capital income and inequality through accumulation—a prediction that gives Capital in the Twenty-First Century its title—will really come to pass. And given the evidence here that Piketty (2014) understates the role of diminishing returns, some skepticism is certainly in order.
But rejection of this specific mechanism does not constitute rejection of all Piketty (2014)’s themes. Inequality of labor income, for instance, is a very different issue—one that remains valid and important. Capital itself remains an important topic of study. Among large developed economies, the remarkably consistent trend toward rising capital values and income is undeniable. As Sections 3.3 and 3.4 establish, this trend is a story of rising capital prices and the ever greater cost of housing—not the secular accumulation emphasized in Capital — but it has distributional consequences all the same. Policymakers would do well to keep this in mind.
The full piece is here (pdf), excellent and on target throughout.
To be perfectly frank on this one, Matt here is completely correct and Piketty has not produced any effective response to this point, either within the book or without. The internal response “I still think we need to worry about inequality therefore I side with Piketty” simply represents a misunderstanding of Matt’s argument. Piketty’s mechanism of accumulation, as laid out in his book, is simply the wrong mechanism for understanding growing inequality, both theoretically and empirically. And it is a shame that the Giles critique from the FT has attracted so much attention because it has distracted everyone from the more serious problems with the argument of the book.
America fact of the day
…people in the United States now make more [phone] calls to India than to Western Europe…
Part of the background is this:
Traffic between the United States and Europe, both of which have high broadband availability, has shifted to substitutable services over the Internet (e.g. VoIP). India still has a low broadband penetration, meaning people in the United States call mobile telephones.
There is more here, via @internetthought.
Will the major central banks evolve into mega-hedge funds?
Here is the latest from Japan:
Bank of Japan officials are considering maintaining a large balance sheet for the central bank even after it achieves its inflation target, reducing the risk of a surge in long-term bond yields, sources said.
Under the potential strategy, the BOJ would use cash from maturing securities in its portfolio to buy long-term government debt, the sources said, asking not to be named as the talks are private. Gov. Haruhiko Kuroda and his colleagues have yet to meet their inflation target, and pledge to continue asset purchases until consumer prices are rising at a 2 percent pace.
The possibility of permanently large balance sheets — in Japan’s case, now amounting to more than half the size of the economy — may become a global legacy of unprecedented stimulus measures. The BOJ discussions parallel preparations at the U.S. Federal Reserve to avoid an exit strategy of asset sales.
“There’s no need for the BOJ balance sheet to go back to where it was,” said Hiromichi Shirakawa, chief Japan economist at Credit Suisse Group AG in Tokyo and a former BOJ official. “It’s a realistic approach to keep the size of the balance sheet large for a while to avoid a spike in yields.”
Any abrupt end to government bond purchases by the BOJ could send borrowing costs soaring, because the bank currently purchases the equivalent of about 70 percent of the new securities issued.
Were not these exit strategies supposed to be easy and painless? Maybe they are, except having no exit strategy is all the more easy and painless. In their shoes, I would not do differently but my level of unease with this situation continues to increase.
There is more here, via www.macrodigest.com. And here is a new VoxEU piece on what we know about the macroeconomic effects of asset purchases. And here is Noah Smith mounting a defense of Abe.
Charlie Stross unintentionally explains why Scottish independence is a bad idea
Here is one of the end paragraphs of his “interesting throughout” but unsettling piece in favor of independence:
Which brings me to the punch-line: I’ll be voting “yes” for an independence Scotland in September. Not with great enthusiasm (as I noted earlier, if Devo Max was on the ballot I’d be voting for that) but because everything I see around me suggests that there is some very bad craziness in the near future of England, and I don’t want the little country I live in to be dragged down the rabbit hole by the same dark forces of reaction that are cropping up across Europe, from Hungary to Greece. The failure modes of democracy, it seems to me, are less damaging the smaller the democracy.
Stross is a smart guy and I am an admirer of his writing. But my view remains pretty straightforward: when dislike of the policy choices of the electorate leads to a serious movement for secession, something has gone deeply wrong with the preconditions for democratic attachment. The UK is hardly the Third Reich, it has a long tradition of honest elections, and for left-leaning individuals the share of British government in gdp is likely to stay well over 40% in all plausible futures and furthermore most of the conservatives are relatively liberal on social questions. For those who favor independence for the Scots, what kind of general principle might you lay out for when other peoples also should seek secession? Do they think that the strongly red states in America also should consider secession? How about Vermont? I understand the libertarian case for such secessions, but most supporters of Scottish independence are not arguing from libertarian premises. How much secession do they think should be happening? Or do they hold particularist views which do not admit of any generalization at all? Either way, I consider this a true crisis of governance.
Addendum: Scottish wealth seems to be lower than they have been claiming: “More than 70% of Scotland’s total economic output – excluding banking and finance and the public sector – is controlled by non-Scottish-owned firms, according to Scottish government data.”
Tesla Says “All Our Patent Are Belong To You”
Big news from Tesla. Elon Musk writes:
Yesterday, there was a wall of Tesla patents in the lobby of our Palo Alto headquarters. That is no longer the case. They have been removed, in the spirit of the open source movement, for the advancement of electric vehicle technology.
Tesla Motors was created to accelerate the advent of sustainable transport. If we clear a path to the creation of compelling electric vehicles, but then lay intellectual property landmines behind us to inhibit others, we are acting in a manner contrary to that goal. Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.
When I started out with my first company, Zip2, I thought patents were a good thing and worked hard to obtain them. And maybe they were good long ago, but too often these days they serve merely to stifle progress, entrench the positions of giant corporations and enrich those in the legal profession, rather than the actual inventors. After Zip2, when I realized that receiving a patent really just meant that you bought a lottery ticket to a lawsuit, I avoided them whenever possible.
…We believe that Tesla, other companies making electric cars, and the world would all benefit from a common, rapidly-evolving technology platform.
Technology leadership is not defined by patents, which history has repeatedly shown to be small protection indeed against a determined competitor, but rather by the ability of a company to attract and motivate the world’s most talented engineers. We believe that applying the open source philosophy to our patents will strengthen rather than diminish Tesla’s position in this regard.
I believe that this announcement will be discussed in business schools for years to come much like Henry Ford’s announcement of the $5 a day wage.
How effective is internet advertising?
This new paper by Tom Blake, Steven Tadelis, and Chris Nosko is not entirely reassuring for the future of journalism, but it confirms what I have long suspected:
Internet advertising has been the fastest growing advertising channel in recent years with paid search ads comprising the bulk of this revenue. We present results from a series of large scale field experiments done at eBay that were designed to measure the causal effectiveness of paid search ads. Because search clicks and purchase behavior are correlated, we show that returns from paid search are a fraction of conventional non-experimental estimates. As an extreme case, we show that brand-keyword ads have no measurable short-term benefits. For non-brand keywords we find that new and infrequent users are positively influenced by ads but that more frequent users whose purchasing behavior is not influenced by ads account for most of the advertising expenses, resulting in average returns that are negative.