Month: May 2015

Enough said

Labor leaders, who were among the strongest supporters of the citywide minimum wage increase approved last week by the Los Angeles City Council, are advocating last-minute changes to the law that could create an exemption for companies with unionized workforces.

The push to include an exception to the mandated wage increase for companies that let their employees collectively bargain was the latest unexpected detour as the city nears approval of its landmark legislation to raise the minimum wage to $15 an hour by 2020.

The story is here.  And here is a mood-affiliated Jared Bernstein piece on the L.A. minimum wage hike; it would have been stronger if all he had written were the simple eleven words: “I’m sorry, but I don’t think this is a good idea.”  In a way, the labor unions have just said the same.

Hat tip goes to Modeled Behavior.

Why you should visit China more

I suggest two plans, each of which I have been able to implement in a partial way only:

1. Take the train around to random first, second, and third tier Chinese cities.  Many of them will have their own cuisines, or they will represent a nearby regional cuisine.  It’s like discovering the food of a new country.  Imagine if Shandong province were a separate country!  How compelled you would feel to visit it for the food, often considered China’s foundational cuisine, plus it uses the finest vinegars.  And yet, because it is part of “China” (Gavagai!), you feel you already know something about Chinese food and thus the need to sample it is not so pressing.  Redo your framing, and rush to some of the lesser visited parts of China.

By the way, you can stay in the second or third best hotel in most Chinese cities for only slightly more than $100 a night, and yet receive five star treatment and quality.

2. How many provinces does China actually have?  I don’t wish to litigate that dispute, but most of them have restaurants devoted to their regional dishes in Beijing.  These are state-owned restaurants, and most of them are excellent.  Furthermore they are scattered around town, so if you visit them all you will see many parts of Beijing.

A month in Beijing should allow you to visit them all, plus the air pollution really is better these days.

I should add that western China has by far the best raisins I have sampled in my life, most of all the big red raisins.  Until my trip to Xi’an, I had never actually tried a real raisin with the real raisin flavor.  Forget the Terra Cotta Warriors, discover what a raisin is!

Assorted links

1. Critical review of the Alice Goffman book.  Like Alex, I thought the felony made the whole thing more interesting, though of course I do not approve.

2. Fertility is rising for educated women.

3. Has there been a supercapacitor breakthrough?

4. The Future Library.  Will anyone care?

5. The Chinese strategic tradition.  Will anyone care? (yes)

6. John Nash on encryption.

7. New Politico site on ideas and policy.

HIPAA, the Police, and Goffman’s On the Run

Some people are calling Steven Lubet’s new review of Alice Goffman’s On the Run “troubling” and even “devastating” but I am non-plussed. Lubet questions the plausibility of some of Goffman’s accounts:

She describes in great detail the arrest at a Philadelphia hospital of one of the 6th Street Boys who was there with his girlfriend for the birth of their child.  In horror, Goffman watched as two police officers entered the room to place the young man in handcuffs, while the new mother screamed and cried, “Please don’t take him away. Please, I’ll take him down there myself tomorrow, I swear – just let him stay with me tonight.” (p. 34). The officers were unmoved; they arrested not only Goffman’s friend, but also two other new fathers who were caught in their sweep.

How did the policemen know to look for fugitives on the maternity floor?  Goffman explains:

According to the officers I interviewed, it is standard practice in the hospitals serving the Black community for police to run the names of visitors or patients while they are waiting around, and to take into custody those with warrants . . . .

The officers told me they had come into the hospital with a shooting victim who was in custody, and as was their custom, they ran the names of the men on the visitors’ list.

This account raises many questions.  Even if police officers had the time and patience to run the names of every patient and visitor in a hospital, it would violate the federal Health Insurance Portability and Accountability Act (HIPAA) for the hospital simply to provide an across-the-board list….

In addition, Lubet contacted a source in the Philadelphia police department and asked if there was any such policy.

When I asked if her account was possible, he said, “No way. There was never any such policy or standard practice.”  In addition, he told me that all of the trauma centers in Philadelphia – where police are most likely to be “waiting around,” as Goffman put it, for prisoners or shooting victims – have always been extremely protective of their patient logs.  He flatly dismissed the idea that such lists ever could have been available upon routine request as Goffman claims.  “That’s outlandish,” he said.

It would also be outlandish for police to beat and kill people without cause but since Goffman’s book has appeared we have plenty of video evidence that the type of actions she claims to have witnessed do in fact happen.

Moreover, HIPAA does not provide privacy against the police. HIPAA was written specifically so that the police can request information from hospitals. Here is the ACLU on HIPAA:

Q: Can the police get my medical information without a warrant?

A: Yes. The HIPAA rules provide a wide variety of circumstances under which medical information can be disclosed for law enforcement-related purposes without explicitly requiring a warrant.[iii] These circumstances include (1) law enforcement requests for information to identify or locate a suspect, fugitive, witness, or missing person (2) instances where there has been a crime committed on the premises of the covered entity, and (3) in a medical emergency in connection with a crime.[iv]

In other words, law enforcement is entitled to your records simply by asserting that you are a suspect or the victim of a crime.

Finally, the records in question in this case were not even patient records but visitor records. Whether or not there is an official policy on what to do while waiting at a hospital for other reasons (say to speak to a suspect) it’s plausible to me that the police in Philadelphia can and do sneak a peek at visitor records when the opportunity arises. It’s certainly the case that people who have warrants against them avoid hospitals and other institutions that keep such records for fear of arrest (and here).

I was confused by Lubet’s other big reveal, “Goffman appears to have participated in a serious felony in the course of her field work – a circumstance that seems to have escaped the notice of her teachers, her mentors, her publishers, her admirers, and even her critics.” But this didn’t escape my notice. How could it? Goffman’s crime is the climax of the book! Lubet is talking about Goffman’s action after her friend, Chuck, is murdered:

…This time, Goffman did not merely take notes – on several nights, she volunteered to do the driving.  Here is how she described it:

We started out around 3:00 a.m., with Mike in the passenger seat, his hand on his Glock as he directed me around the area.  We peered into dark houses and looked at license plates and car models as Mike spoke on the phone with others who had information about [the suspected killer’s] whereabouts.

One night, Mike thought he saw his target:

He tucked his gun in his jeans, got out of the car, and hid in the adjacent alleyway.  I waited in the car with the engine running, ready to speed off as soon as Mike ran back and got inside (p. 262).

Fortunately, Mike decided that he had the wrong man, and nobody was shot that night.

The fact that Goffman had become one of the gang is the point. A demonstration that environment trumps upbringing. She only narrowly escaped becoming trapped by the luck of the victim’s absence. The sociology professor and the thug, entirely different lives, separated by the thinnest of margins.

How much of the value of the internet is not captured in gdp?

I have been hearing this question more and more lately, even in China.  Overall I think it has gone from an underrated effect to an overrated effect.  Tim Worstall offers an introduction to this debate.

Let’s not forget that you do in fact pay for Facebook access, indirectly, when you pay for your cable connection, your iPad, and your smart phone. including the monthly bill, all of which are part of measured gdp.  The more value Facebook brings you, the more you would be willing to pay for these goods and services.  The same is true for Google and the like.  So Facebook and other internet services are part of a bundled package of market value, but that is very different from claiming they are not measured in gdp at all.

There is of course consumer surplus from the internet and Facebook, just as there is from Dunkin’ Donuts.  Might that consumer surplus be especially high?  Well, we don’t know, but don’t assume it will be.  I did some casual googling, and found a number of estimates suggesting that smart phone demand is relatively price elastic, with the iPhone a possible exception to that regularity.  That implies consumer surplus isn’t especially high, because many people aren’t willing to buy at the higher price.  I thus think Brad DeLong is far too optimistic in his estimates of ratio consumer surplus to market price.

You also could look at the literature on the demand for cable internet services.  The results are mixed, but again I don’t see a strong case for a disproportionately high consumer surplus from these services, if anything the contrary.

Now maybe these estimates are wrong, or looking at the wrong margin in some way, but the fact that I hear them mentioned so rarely gives me pause.  Cowen’s Third Law.

There is also advertising over the internet.  Let’s say Facebook is a profit maximizer.  Insofar as Facebook is of value to consumers, the company can get away with putting a lot of ads on the site.  These will spur additional market purchases, and so part of the value of the site is again captured in gdp.  Obviously some of these ad effects are simply expenditure-switching, and so there is no full capture of value, but still Facebook shows up in gdp statistics in yet another way.

Here are some previous posts on this topic.

Facts about China (America)

Roughly 50% of Chinese savings – amounting to as much as half of GDP – lie in real estate alone, with 20% in deposits, 11% in stocks, and 12% in bonds. To compare, in the United States, real estate, insurance, and pensions each account for about 20% of total savings, with 7.4% in deposits, 21% in stocks, and 33% in bonds.

Rising stock-market capitalization also helps to reduce the real economy’s exposure to bank financing. The US is much more “financialized” than China, with stocks and bonds amounting to 133% and 205% of GDP, respectively, at the end of 2013. Those ratios were only 35% and 43%, respectively, in China. Meanwhile, China’s bank assets amounted to 215% of GDP – more than double America’s 95%.

That is from Sheng and Geng.

Assorted links

1. Claims about the Irish recovery (not my view, but worth a read)

2. Sticker shock for Obamacare?

3. Bronze Age Danish woman wore garment from outside of Denmark.

4. New material on John Nash, interview with Sylvia Nasar.

5. Sleeping Beauty papers: “The longest sleeper in the top 15 is a statistics paper from Karl Pearson, entitled, ‘On lines and planes of closest fit to systems of points in space’. Published in Philosophical Magazine in 1901, this paper awoke only in 2002.”

6. Why the oldest person in the world keeps on dying? (less trivial than you might think)

7. Adam Thierer on how the sharing economy overcomes lemons problems.

Is there a creeping deregulation of health care?

Nebraska became the 20th state to adopt a law that makes it possible for nurses in a variety of medical fields with most advanced degrees to practice without a doctor’s oversight. Maryland’s governor signed a similar bill into law this month, and eight more states are considering such legislation, according to the American Association of Nurse Practitioners. Now nurses in Nebraska with a master’s degree or better, known as nurse practitioners, no longer have to get a signed agreement from a doctor to be able to do what their state license allows — order and interpret diagnostic tests, prescribe medications and administer treatments.

This is especially important for rural communities.  The economist speaks:

“The doctors are fighting a losing battle,” said Uwe E. Reinhardt, a health economist at Princeton University. “The nurses are like insurgents. They are occasionally beaten back, but they’ll win in the long run. They have economics and common sense on their side.”

The full article, by Sabrina Tavernise, is here.

The Great Stagnation spreads

Chris Giles and Sam Fleming at the FT report:

Output per worker grew last year at its slowest rate since the millennium, with a slowdown evident in almost all regions, underscoring how the problem of lower productivity growth is now taking on global proportions.

The Conference Board, a think-tank, said that based on official data on output and employment from most countries, only India and sub-Saharan Africa enjoyed faster labour productivity growth last year.

Globally, the rate of growth decelerated to 2.1 per cent in 2014, compared with an annual average of 2.6 per cent between 1999 and 2006, it said.

…Bart van Ark, the Conference Board’s chief economist, said total factor productivity, which takes account of skill levels and investment as well as the number of workers, fell 0.2 per cent in 2014. “This is a global phenomenon and so we have to take it very seriously,” he said.

Economists are increasingly identifying the problem of low global productivity as one of the greatest threats to improved living standards, in rich and poor countries alike.

As you may know, I am on record as predicting that the great stagnation will end, but so far it doesn’t seem like it is happening.

Paul Krugman on productivity stagnation

That is the topic of his column today, I had not seen this very good point before:

One possibility is that the numbers are missing the reality, especially the benefits of new products and services. I get a lot of pleasure from technology that lets me watch streamed performances by my favorite musicians, but that doesn’t get counted in G.D.P. Still, new technology is supposed to serve businesses as well as consumers, and should be boosting the production of traditional as well as new goods. The big productivity gains of the period from 1995 to 2005 came largely in things like inventory control, and showed up as much or more in nontechnology businesses like retail as in high-technology industries themselves. Nothing like that is happening now.

Overall Krugman is agnostic on the stagnation argument.

Monday assorted links

1. Japanese planned markets in everything uh-oh.

2. I still prefer MapQuest.

3. And I thought rice was an inferior good.

4. How far can a Montrealer go on a hoverboard?  (guess before clicking)

5. Short video of John Nash’s recent meeting with Magnus Carlsen.

6. “…economists starting or graduating from their PhD in a recession are significantly more productive in academia over the long term than economists starting or graduating in a boom.” (speculative)

7. Is China launching the world’s biggest fiscal stimulus (again)?

8. Indians.

China fact of the day

Given that non-financial total corporate debt is estimated by McKinsey to amount to $12.5tn, Chinese companies are paying on a nominal basis some $812bn in interest payments each year. In real terms, this amounts to $1.35tn. This is not only significantly more than China’s projected total industrial profits this year; it is slightly bigger than the size of a large emerging economy such as Mexico.

The entire FT discussion is here.

Where to travel, a reader bleg

R. asks me:

I’ve been reading your blog for years and it remains my favorite. I am an attorney planning to travel for 1-2 months in Eastern/Northern Asia and Europe this fall before starting work at a law firm. Since you are so widely traveled, I would love to read a post listing the most memorable places you’ve traveled or travel experiences you’ve had.

An answer to that could fill many books, but here is a simple rule to start: follow the per capita gdp.  Perhaps my favorite travel experience of all time is Tokyo, but more generally I say master the area lying between London, Paris, Berlin, Rome, and Madrid, give or take.  There are so many high quality sights and experiences to be had there you can chunk it many different ways.

If you wish to visit the United States, specialize in the eastern seaboard, Chicago, but most of all southern Utah down to the northern rim of the Grand Canyon, much better than the southern rim but book in advance.  That latter part of the country has perhaps the world’s most compelling natural beauty, plus a good look at real American culture along the way.  For all its fame, it remains oddly under-visited (thank goodness).  Toss in San Francisco for good measure, and then drive through some godforsaken parts for a few days, the worse the better.

For the emerging economies, I say Beijing and Mumbai are good places to start, how can you not wish to be introduced to a country of a billion people or more?  Mexico City is extremely underrated, especially if you live nearby in North America, just don’t expect English to be spoken.  By the way, it is safer than you might think.  Then spend some serious time in the countryside, almost any safe (or unsafe) emerging economy can serve this function.

Voila!