Month: February 2015
Knausgaard does America, the new Tocqueville but for the NYTimes
I was supposed to write about America for an American newspaper, and the last thing I wanted was to seem like an introverted European complaining about how awful everything was here.
Here is another bit:
Cleveland meant nothing to me.
There is more here, via Michael Rosenwald.
Assorted links
1. Measuring the quality of NBA defenders. And digitalizing NFL players. Both are interesting pieces. And don’t ridicule Manny Pacquiao.
3. Vermont, Gruber.
4. Paul Krugman on superstars and the economics of music. I think of the era of the music superstar as having peaked in the 1980s or so.
5. Old photos of old economists, lots of them. And the story behind the sale of the Kuznets medal.
China pigeon markets in everything
This is also not new news, but it is new to me:
In May 2013, Chinese businessman Gao Fuxin set a new record, paying 310,000 euros ($351,000) in an online auction for a pigeon named Bolt, after Jamaican sprinter Usain Bolt.
It seems also that the pigeons, before a race, are given performance-enhancing drugs. But:
Expensive birds such as Bolt are simply too valuable to race. They’re put out to stud after being auctioned. “In pigeon racing, blood is everything,” says Mike Ganus, a breeder and racer in Granger, Indiana, who sells about 500 birds a year to China. “If you don’t have the genetics, you won’t have a winner, no matter what you do.”
The full story is here.
Totally conventional views which I hold
Most days on MR we try to bring you something new, whether it be a report or an opinion of ours. Even if it is not truly new, perhaps it is at least new relative to the discourse on most other web sites. We are reluctant to recycle old posts, even though I am still thinking about whether a lot of food tastes better when you eat it with your fingers.
But maybe telling you something conventional can be new in a way too. So here are a few totally conventional views which I hold, or still hold, but otherwise don’t bother reporting very often if at all:
1. Scott Walker and Jeb Bush are the most likely candidates to win the GOP nomination.
2. The GOP won’t try to repeal Obamacare, see #Syriza.
2b. Obamacare hasn’t made us healthier (yet?), but it has served as an inefficient form of wealth insurance for some lower-income groups. On net, the negative health consequences of the disemployment effects of the law could easily counterbalance the direct positive health care access effects. Imagine that, a health care reform that doesn’t even boost health. Given their utility functions, many of the law’s backers should be happy with it, but they shouldn’t think I am impressed with their numerous “victory lap” blog posts. Here is my 2009 post on what we should have done instead. I still think that, noting that I remain happy with the cost control parts of what was done.
3. The Supreme Court will rule against the current version of Obamacare and send the matter back to Congress. Confusion will result.
4. During the upward phase of the recovery, monetary policy just doesn’t matter that much.
5. We are still in the great stagnation, for the most part. But with nominal gdp well, well above its pre-crash peak, it is not demand-based “secular stagnation.” It just isn’t, I don’t know how else to put it. And the liquidity trap is still irrelevant and has been since about 2009.
6. There is modest good news on the wage front, but so far it doesn’t amount to a fundamental shift in regime. Following the monthly squiggles doesn’t tell us much. And since wage trouble dates from 1999 and arguably earlier, I don’t attribute much of it to debt overhang from the recession.
7. Edward Snowden is both a hero and a traitor.
8. Syriza still has to try to make a Greek economy work with roughly the same means their predecessors had. I don’t think they can do it, and I am sticking with my recent Grexit prediction, which by the way had an 18-month time horizon on it (see my earlier Twitter response to Felix Salmon).
9. No one knows what to do about ISIS or Putin. The latter is a bigger danger than the former. Confusion will result.
If you’re not excited, fine, that’s the point. The predictable is a kind of news, too. But hold on and come back, because tomorrow you might just hear more about remote-controlled, cyber cockroaches.
Arrived in my pile
Melissa Lane, The Birth of Politics: Eight Greek and Roman Political Ideas and Why They Matter.
Melanie Swan, Blockchain: Blueprint for a New Economy. This appears to be a very clear and useful treatment of the idea of a blockchain, including Ethereum and even futarchy.
Oxford Companion to the Economics of China, edited by Shenggen Fan, Ravi Kanbur, Shang-Jin Wei, and Xiaobo Zhang.
Robert Alter, a translation with commentary, Strong as Death is Love, including The Song of Songs, Ruth, Esther, Jonah, Daniel. I haven’t read this one yet, but Alter’s biblical works are among the greatest scholarly creations of our time.
The economics of antibiotics
Ezekiel J. Emanuel writes:
The big problem is profitability. Unlike drugs for cholesterol or high blood pressure, or insulin for diabetes, which are taken every day for life, antibiotics tend to be given for a short time, a week or at most a few months. So profits have to be made on brief usage. Furthermore, any new antibiotics that might be developed to fight these drug-resistant bacteria are likely to be used very sparingly under highly controlled circumstances, to slow the development of resistant bacteria and extend their usefulness. This also limits the amount that can be sold.
Assorted links
1. State governments are pre-empting local government interventions.
2. There is no great snowplow stagnation!
3. Did intervention in Libya just make everything worse?
4. The Great Reset, in a single picture.
5. Critics of Greek austerity are basically asking for a free lunch. You never hear them compare more aid to Greece to more aid for a developing nation, for instance. And 7-11 charcuterie.
Default Rates on Student Debt Increase with Lower Balances
Here’s a stunning graph from the New York Fed’s Liberty Street Blog:
What it shows is that default rates on student debt decrease with higher balances or, to put it the other way, the students with the highest default rates are the ones with the least debt.
I wouldn’t have predicted that but here are some possible explanations. First, dropouts have less debt and also less income. But while the debt rises proportionally with years of education the income rises in less than proportion. As I said in Launching, students who drop out after 2 years get less than half of the gains from completing a four-year degree (the sheepskin effect). Thus the 40% or so of students who dropout see their debt rise faster than their income so burdens are higher and default rates increases.
Although the debt to income ratio story is plausible it’s still surprising how many students default with low amounts of debt. Raymond, a commentator at the Liberty Street Blog, offers some additional hypotheses:
I work in financial aid at a large public community college. We pulled data on our defaulters and we found over 60% started with remedial coursework and borrowed their first and second terms. About 80% of the total data population suspended soon after the second term – thus the low amounts. Many were not students just out of high school, they were independent adults. Putting this altogether with the many years I’ve been in financial aid speaking with students I’ve come to a conclusion. 99% of the time when I have a student that has been suspended asking for loans and I mention private or alternative loans they immediately say they don’t have good credit. Bad credit seems to correlate with bad academics. Many seem concerned more with paying bills than paying education. Sometimes they are just out of jail and no one will hire them. Their probation requires they work or get a job which the later is nearly impossible. Other times we have people so deep in the hole in debt already that the student loans was a way to buy more time. The word is out if you have bad credit and are desperate for funds just go to a community college where tuition is low and borrow the maximum. We noticed in our data pull many students graduated from high school or received their GED up to 10 years ago or more! Want the defaults to go down – stop lending to students that have a significant number of remedial courses their 1st and 2nd terms at a college where tuition is already low.
Meta-markets in everything, single phone number edition
What if you could text a number and get anything you want?
That’s the ambitious goal of a new startup called Magic, a text-messaging-based concierge service that promises to pull strings, place orders, and schedule deliveries all so you don’t have to.
Magic doesn’t have a dedicated app. It instead exists as a phone number nestled inside your contact list, acting as your go-to “guy” for anything (legal) you may need.
It’s only available in the US for now, and you can sign up by texting 408-217-1721.
Does war drive progressive income taxation?
Here is evidence for the Roberts Higgs thesis and, if I recall correctly, some recent remarks by Thomas Piketty on revolution and tax progressivity (does anyone know the link?). Juliana Londoño Vélez writes:
Abstract I argue that progressive income taxation in the twentieth century is a product of the exigency of war and not of democracy. I obtain long-run series of the top marginal personal income tax rate for a large sample of OECD countries, and use data on wars of mass mobilization and democracy from the Correlates of War data set and Scheve & Stasavage (2012) to test this hypothesis. My results suggest that wars of mass mobilization (i.e. wars in which more than 2% of the population served in the military) cause substantial increases in tax progressivity. These effects are persistent and do not vanish upon the conclusion of war.
The full paper is here (pdf), taken from the generally interesting Berkeley Economic History Lab list, as cited by Barry Eichengreen. As Barry notes, see also the revised and much improved version of Lemin Wu’s paper on the Malthusian trap (pdf).
Goolsbee and Krueger on the auto bailout
I have not read their new paper, but here it is (pdf), along with the abstract:
This paper takes a retrospective look at the U.S. government’s effort to rescue and restructure General Motors and Chrysler in the midst of the 2009 economic and financial crisis. The paper describes how two of the largest industrial companies in the world came to seek a bailout from the U.S. government, the analysis used to evaluate their request, and the steps taken by the government to rescue them. The paper also summarizes the performance of the U.S. auto industry since the bailout and draws some general lessons from the episode.
Sentences to boggle the mind
Also, unlike Silicon Valley, the Stasi was regulated.
That is from Bryan Appleyard.
The self-assembling chair
There are few tasks more infuriating than assembling a piece of furniture. But a new project at MIT may eventually eliminate that pesky life chore entirely.
As Wired’s Liz Stinson reports, the loopy geniuses over at the Massachusetts Institute of Technology’s Self-Assembly Lab recently debuted a chair designed to put itself together, without the need for a single vaguely illustrated instruction manual.
There is also a good video at the link, courtesy of the excellent Samir Varma, a loyal MR reader. I sometimes toy with the proposition that there is in fact nothing I can assemble, not even simple items. My requested birthday gift this year was that Yana show me how to put together and operate that which I got for Christmas.
Assorted links
1. Modeling economic civil war and protection in Somalia, and why Islam has an advantage.
2. Witches of Chiloé. And the price of condoms in Venezuela. Real world development indicators.
3. Greek debt/eurozone rap video, best is Merkel.
4. Why it is better to read on paper. And there is no great beehive stagnation.
The new and increasingly female path to the middle class
Right now the compass seems to be pointing in the direction of health care. That probably won’t change anytime soon:
In 1980, 1.4 million jobs in health care paid a middle class wage: $40,000 to $80,000 a year in today’s money. Now, the figure is 4.5 million.
The pay of registered nurses — now the third-largest middle-income occupation and one that continues to be overwhelmingly female — has risen strongly along with the increasing demands of the job. The median salary of $61,000 a year in 2012 was 55 percent greater, adjusted for inflation, than three decades earlier.
And it was about $9,000 more than the shriveled wages of, say, a phone company repairman, who would have been more likely to head a middle-class family in the 1980s. Back then, more than a quarter of middle-income jobs were in manufacturing, a sector long dominated by men. Today, it is just 13 percent.
The full story is here, by Searcey, Porter, and Gebeloff.