Month: May 2015

Why Manhattan children earn less when they grow up

I am late to covering this excellent piece by David Leonhardt, but it is worth your attention.  The core result is this:

Low-income children who grow up in Manhattan make less money as adults than similar low-income children who grow up elsewhere…It’s just that affluent Manhattan children don’t grow up to be quite as affluent as affluent children elsewhere.

To make the case of the affluent child concrete, if the Manhattan parents earn 400k a year, the child at age 26 averages 50k a year, compared to an average of 55k for comparable non-Manhattan kids at that same age.  David considers a few hypotheses:

1. That effect is possibly diminishing as Manhattan improves, but the changes doesn’t yet show up in the data.

2. Perhaps Manhattan parents, or Manhattan itself, teach that money is not so important.  For one thing, you get interested in culture there.  Or maybe you want to become famous more than you want to become wealthy.

3. People who grew up in Manhattan are less likely to be married at a particular age.

4. Manhattan schools are less than perfect.

I would add a few hypotheses (not claims) of my own:

5. Manhattan is a selection of the most ambitious, highest-achieving individuals from elsewhere, and thus if you grow up there ambition and achievement seem to be especially forbidding prospects.  Better not to try too hard.  Recall David Hume on the “posts of honour” appearing to be filled?

6. Manhattan is a bad place, and bad things happen in bad places.

7. Manhattan families are more likely to spoil their children, create problems of moral hazard by promising or implying future support, and have less of an internal aspirational culture.

8. If you grow up there, Manhattan appears to be the center of the known universe and you are less likely to leave it in pursuit of higher earnings.  Fewer people from New Jersey feel this same way, and so they end up in the region with the highest potential earnings for them; that is sometimes but not always New York City.  (This mechanism also means Manhattan children are more likely to remain near their parents, see #7.)

9. A lot of Manhattan wealth is linked to finance and entertainment, and other superstar markets, which are maybe “less heritable” in terms of income than that small Midwestern furniture factory.

What else?

Two new and excellent short e-Books

Jonathan Rauch, Political Realism: How Hacks, Machines, Big Money, and Back-Room Deals Can Strengthen American Democracy.  The tag “self-recommending” was made for books like this one.  According to Rauch, transparency is overrated and politics should be more transactional.

Jeffrey Towson and Jonathan Woetzel, The One Hour China Consumer Book: Five Short Stories That Explain the Brutal Fight for One Billion Customers.  The short tale of why the most successful beer companies are the state-owned enterprises is alone worth the price of this book.

And I just downloaded Hugo Dixon’s The In/Out Question, which argues the UK should try to stay in the European Union…

There is still a great stagnation

Sam Fleming reports from the FT:

The economist Andrew Smithers singles out a longer-term decline in investment as a share of GDP as a critical drag, as well as a slowdown in education improvements in recent decades. A report by the Aspen Institute and MAPI Foundation on Wednesday warned of a “significant lag in capital investment” in the US and argued this was a major contributor to low productivity growth. Whereas real GDP was in 2014 some 8.7 per cent above its level at the end of 2007, gross private domestic investment was up just 3.9 per cent in the same period, it said.

Productivity in the US rose just 0.6 per cent from a year earlier, according to the figures on Wednesday. San Francisco researchers John Fernald and Bing Wang warned in a note in February that their “best guess” is the relatively slow pace will continue. The implications from such sluggish productivity data are numerous.

The full story is here, interesting throughout.  And here is a related post from Michael Mandel.  Of course you should not infer much from quarterly productivity numbers, but that last quarter did not help, as employment went up a good deal and output did not.

For the pointer I thank Jim Olds.

What would a Tory victory mean?

The exit polls are predicting a solid Conservative victory, as is most of my Twitter feed and most importantly the bookies.  If indeed this comes to pass, it has (at least) two pretty simple implications:

1. A people “wise enough” to opt for government-owned hospitals and single-payer health care have decided they want government smaller, not bigger.  You will note “UK public spending was 36.6% of gdp in 2000, and had edged up over 50% by 2009 and 2010 and now [2013] is still in the range of 49% or so.”  The Tories are indeed the party for smaller government.

2. The verdict is sufficiently positive on the “austerity experiment” (not what I prefer to call it, but that is a different story).  I know this is literally unfathomable to the authors of the 7,243 blog posts I have read criticizing or perhaps even savagely attacking UK austerity, but here’s the nub of the matter:  If indeed the UK should have a smaller government relative to gdp, in the medium term it will make up all of the relevant lost ground, and then some.  A lot of UK voters understand that, a lot of American and British intellectuals do not, even though the latter are the ones who have studied the Solow model.  I do not a priori dismiss the “labor market scarring story,” but if there is any country where it does not seem to apply it is the UK, which has had quite a rapid labor market bounce back.

Anyway, electoral events may yet surprise us, but at the very least the Tories are still in the running.  Scott Sumner comments as well.  By the way, if SNP really did take 58 out of 59 Scottish seats, it does seem to me that Great Britain will split up, much to my chagrin.  So I am not overall cheered by the exit poll.

Whale fact of the day

Scientists at UBC have discovered — by accident — a rorqual whale can take a gulp of water that’s bigger than its massive body, then bounce back to its normal shape.

The whale has nerves to its mouth and tongue that can stretch to double their normal length, then snap back without damage, said Wayne Vogl, a professor in the department of cellular and physiological sciences at UBC.

“The nerves that supply these remarkably expandable tissues in the floor of the mouth of rorqual whales … are very stretchy, they’re like bungee cords,”

It was a surprising discovery, as most vertebrate nerves are more of a fixed length, said Vogl.


There is more here.

The roots of racial segregation in Baltimore

The residential segregation bill won the City Council’s approval of December 9, 1910…

Blacks simply were not allowed to live in white neighborhoods, and when it comes to mixed blocks, it was hardly the rule of law which reigned.  Blacks who moved into mixed blocks were penalized when white politicians wanted to do so.  The entire regime was extreme:

Baltimore’s innovation was the use of government legislation to achieve systematic, citywide race separation.  “Nothing like it can be found in any statute book or ordinance record of this country,” the New York Times wrote.  “It is unique in legislation, Federal, State, or municipal — an ordinance so far-reaching in the logical sequence that must result from its enforcement that it may be said to mark a new era in social legislation.”  Baltimore thus became a national leader in residential segregation.

That is from Not in My Neighborhood: How Bigotry Shaped a Great American City, by Antero Pietila.  Anyone interested in the roots of current problems in Baltimore should read this book

Spain was a weak state, and that still matters

Robin Grier (with Jerry F. Hough) puts it thus:

The great weakness of the Spanish government was not its bureaucratic nature, but its inability to build an effective bureaucracy until the 1700s. Without an effective bureaucracy, Spain was doomed to a personalistic policy process in which options and tradeoffs often were not properly weighed. Rulers could not trust the market because they were incapable of taxing decentralized economic activity.

One example of the lack of bureaucratic capability during the 1500s and 1600s is found in the example of Philip’s attempt to conquer England with the Spanish Armada. Until the 1580s Philip’s “defense department” had only one secretary assisted by a handful of clerks, none with military experience.

As he prepared to launch the Spanish Armada to try to conquer England, he doubled the number of responsible defense officials to two – one for the army and one for navy!

The ships were largely rented from Genoa. Although many of them were sunk in the failed attack, Philip did not try to build a merchant fleet of his own to match Elizabeth’s rapid expansion of her armed merchant fleet at the same time.

That is from her new and excellent The Long Process of Development: Building Markets and States in Pre-industrial England, Spain and their Colonies, recommended.  This is essential reading for the history of colonial Mexico in particular.

Books I liked but do not currently have time to write about

Ian Zack, Say No To The Devil: The Life and Musical Genius of Rev. Gary Davis.

Alexander Klose, The Container Principle: How a Box Changes the Way We Think.

Kevin Madigan, Medieval Christianity: A New History.

Marshall Sahlins, Apologies to Thucydides: Understanding History as Culture and Vice Versa.

Today, I am away, and sadly don’t even have time to be chatting with Miles Kimball, who is visiting GMU…

The end of doggie privacy?

Dogs can run, but they can’t hide from PooPrints.

BioPet Vet Lab, which specializes in canine genetic testing, is partnering with the appropriately named London borough of Barking and Dagenham to track down dog owners who fail to remove their pets’ public deposits.

Starting in September 2016, people who don’t pick up after their dogs could be fined 80 pounds, or about $125. The registration of dogs’ DNA could become mandatory five months earlier if a pilot program proves successful.

There is more here, via Ray Lopez.  And here is a related story from Vancouver.

*Digital Gold*

The author is Nathaniel Popper and the subtitle is Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money.

This excellent work is the book on Bitcoin you’ve been waiting for, most importantly it doesn’t require that you are the kind of person who wants to read a book on Bitcoin.  I devoured my copy right away, it is full of information, explanation, and good humor, definitely recommended and entertaining throughout.

Here is Popper’s piece on Bitcoin and Argentina, here is Popper on Twitter.

The rapid rise and fall of the Black Panthers

1. Circa 1970, “43 percent of blacks under 21 years of age [have]…a great respect for the [Black Panther Party].”  Many thousands of young black people joined the party.

2. The North Vietnamese “discussed releasing POWs in exchange for the release of Panthers from U.S. jails.”

3. Algeria granted the Panthers national diplomatic status and an embassy building of their own.

4. By mid-1972, the Party “was basically a local Oakland community organization once again.”

5. The Party formally closed its last office in 1982.

That is all from Joshua Bloom and Waldo E. Martin, Jr., Black Against Empire: The History and Politics of the Black Panther Party, pp.2-3.  Here is my previous post about the Black Panthers.