Month: June 2015
Paid by pages read? (model this)
Soon, the maker of the Kindle is going to flip the formula used for reimbursing some of the authors who depend on it for sales. Instead of paying these authors by the book, Amazon will soon start paying authors based on how many pages are read—not how many pages are downloaded, but how many pages are displayed on the screen long enough to be parsed. So much for the old publishing-industry cliche that it doesn’t matter how many people read your book, only how many buy it.
That is from Peter Wayner, via Craig Richardson.
Recycling is becoming less profitable in America
Aaron C. Davis has an excellent piece on this theme. Here is one bit:
Once a profitable business for cities and private employers alike, recycling in recent years has become a money-sucking enterprise. The District, Baltimore and many counties in between are contributing millions annually to prop up one of the nation’s busiest facilities here in Elkridge, Md. — but it is still losing money. In fact, almost every facility like it in the country is running in the red. And Waste Management and other recyclers say that more than 2,000 municipalities are paying to dispose of their recyclables instead of the other way around.
But why? According to Davis:
1. “A storm of falling oil prices, a strong dollar and a weakened economy in China have sent prices for American recyclables plummeting worldwide.”
2. Consumers are bringing too many items to recycling centers, and with inadequate sorting.
3. Larger bins have encouraged indiscriminate contributions: “Residents have also begun experimenting, perhaps with good intentions, tossing into recycling bins almost anything rubber, metal or plastic: garden hoses, clothes hangers, shopping bags, shoes, Christmas lights.” A lot of people simply put in their garbage.
4. Many small problems are accumulating in the user contributions to recycling, such as consumers no longer breaking down their cardboard boxes as they used to.
5. The value of recycled newsprint and glass just isn’t that high right now.
Previously I had simply assumed that recycling technologies would scale rather easily and effortlessly, but maybe that isn’t the case:
“If people feel that recycling is important — and I think they do, increasingly — then we are talking about a nationwide crisis,” said David Steiner, chief executive of Waste Management, the nation’s largest recycler…
Do read the entire article, and while you’re at it Adam Minter’s Junkyard Planet.
*Inside Out*
In what is perhaps the worst year for movies in my life, the new Pixar feature stands out as a welcome relief. Even by Pixar standards it is more adult than usual, with the main theme being the precariousness of mental health and the ease of slipping into depression. Voluntarists will object. Every scene is gorgeous, the inside jokes are rife, and I enjoyed the ongoing pokes at Silicon Valley, most of all the dreams of unicorns.
Sunday assorted links
Markets in everything 3-D printing arbitrage to curb rhino poaching
A San Francisco biotech startup has managed to 3D print fake rhino horns that carry the same genetic fingerprint as the actual horn. It plans to flood Chinese market with these cheap horns to curb poaching.
And this:
The company plans to release a beer brewed with the synthetic horn later this year in the Chinese market.
Daniel A. Bell on the China model and political meritocracy
Stein Ringen reviews The China Model, here is Gideon Rachmann. He writes:
Daniel Bell, a Canadian political philosopher who has taught at Tsinghua University in Beijing for many years, is deeply influenced by this Chinese tradition. In his new book, he has set himself the ambitious task of making the case that Chinese-style meritocracy is, in important respects, a better system of governance than western liberal democracy.
I’ve been seeing a lot of emotional reactions to this book, here are a few points:
1. The United States probably should have less democracy along some margins, if only fewer referenda in California and no state and local elections of judges, dog catchers, and the like. If a writer cites “democracy” as obviously and always good for all choices, that writer isn’t thinking clearly.
2. More generally, the Western nations are relying on democracy less, as evidenced by the growing roles for central banks and also the European Union. That may or may not be desirable, but it’s worth considering our own trends before putting the high hat on.
2. The key to long-term living standards is stability of growth, just look at Denmark. There was never a heralded “Danish economic miracle,” but the country still has finished close to the top in terms of human welfare. Whether ostensibly meritocratic non-democratic systems can deliver such outcomes remains very much up for grabs, and Bell’s book hasn’t convinced me any that they can.
3. Arguably a country’s best chance of achieving meritocracy is to have many smart individuals who are culturally central. No system of government is going to overcome the lack of that.
4. Most humans in history seem to have favored meritocratic rule over democracy, and before the 19th century democracy was rare, even in the limited form of male-dominated or property owner-dominated republics. It is possible that the current advantage of democracy is rooted in technology, or some other time-specific factor, which ultimately may prove temporary. That said, I still observe plenty of democracies producing relatively well-run countries, so I don’t see significant evidence that a turning point against democracy has been reached.
5. To consider comparisons which hold a greater number of factors constant, I haven’t seen many (any?) serious people argue that Taiwan or South Korea would have done better to resist their processes of democratization.
Here you can buy The China Model: Political Meritocracy and the Limits of Democracy.
Claims about Germany
When I say that growing up in Germany helps bestow independent thinking skills, I’m not saying that it’s because they’re all taught [the] Straussian art of close reading. Instead I’m arguing that society has suppressed the value of certain status indicators, and that encourages people to think for themselves. To put it another way, there are fewer tournaments for kids to go through, and the value of winning them is not so high. Germans I’ve met are incredibly humble. Nobody feels the need to perpetrate an international hoax about how desirable they are. In addition, people aren’t all drawn to the same fields like finance and consulting. They take up professions like baking or manufacturing, and work with the earnestness that comes from knowing that their work is dignified; it’s easier for them to do the equivalent of moving to Dayton to study widget machines.
That is from Dan Wang, who also offers remarks on the philosophy and writings of Peter Thiel. My reservation about Dan’s argument is that Germans may use their independent thinking skills to question the entire value of traditional metrics of success, thereby making Germany less suited to produce certain kinds of innovations.
Here is an interesting Simon Kuper FT piece on Germans, mostly positive although “Germans are frequently wrong.”
Saturday assorted links
The passthrough of labor costs to price inflation
Ekaterina V. Peneva and Jeremy B. Rudd have a new paper with the Fed (pdf):
We use a time-varying parameter/stochastic volatility VAR framework to assess how the passthrough of labor costs to price inflation has evolved over time in U.S. data. We find little evidence that changes in labor costs have had a material effect on price inflation in recent years, even for compensation measures where some degree of passthrough to prices still appears to be present. Our results cast doubt on explanations of recent inflation behavior that appeal to such mechanisms as downward nominal wage rigidity or a differential contribution of long-term and short-term unemployed workers to wage and price pressures.
Economists knew or figured that to be the case a while ago, I am glad to see it being relearned.
Sir Thomas Browne’s successful and failed neologisms
Words he successfully introduced into the English language:
medical
electricity
hallucination
inconsistent
According to the Oxford English Dictionary, Browne ranks 25th for the number of new words introduced into English, ahead of both Milton and Spenser.
Failed attempts:
tollutation [ambling]
axungious [lard-like]
deuteroscopy [the business of taking a second look]
unridiculous
I would someday like to read a Big Data paper on what predicts which neologisms will fail. In any case, that information is from Hugh Aldersey-Williams’s new book The Adventures of Sir Thomas Browne in the 21st Century, for fans of Browne only but yes I am one.
Might the NFL accept the Tullock paradox?
The chairman of the National Football League’s health and safety advisory commission believes American football could ban helmets in the future.
The NFL has tried to reduce the risk of head injuries over the last five years and recently reached an almost $1bn legal settlement with ex-players suffering with head trauma.
But some experts think helmets give the players a false sense of security.
“Can I see a time without helmets? Yes,” said Dr John York.
“It’s not around the corner, but I can see it.”
There is more here, via Michelle Dawson.
Bank of England (!) has started a blog
It is called Bank Underground, a clever title. There is one interesting post on insurance for driverless cars, and another on deflation risk.
Can you imagine the Fed doing the same? The bloggy voice and the need for institutional conformity are not always in perfect synch. Still, perhaps central banks are learning that if they do not define their own image, others will do it for them.
Let’s keep our fingers crossed…
Friday assorted links
1. The world’s largest employers.
2. Rates of return seem to be falling.
3. ” I think it’s fair to say he doesn’t have any argument against my claim, because there are no good arguments against my claim.” I agree.
4. Ben Casnocha on my dialogues with Thiel and Sachs.
5. Why various Republican proposals would make the problems with Obamacare worse.
7. Virginia Postrel has further detail on the Paulson grant to Harvard.
8. William Upton on Kansas fiscal policy. And what is the nature of Rand Paul’s tax plan?
Normative Sociology
Excellent post by Joseph Heath:
The whole “normative sociology” concept has its origins in a joke that Robert Nozick made, in Anarchy, State and Utopia, where he claimed, in an offhand way, that “Normative sociology, the study of what the causes of problems ought to be, greatly fascinates us all”(247). Despite the casual manner in which he made the remark, the observation is an astute one. Often when we study social problems, there is an almost irresistible temptation to study what we would like the cause of those problems to be (for whatever reason), to the neglect of the actual causes. When this goes uncorrected, you can get the phenomenon of “politically correct” explanations for various social problems – where there’s no hard evidence that A actually causes B, but where people, for one reason or another, think that A ought to be the explanation for B. This can lead to a situation in which denying that A is the cause of B becomes morally stigmatized, and so people affirm the connection primarily because they feel obliged to, not because they’ve been persuaded by any evidence.
Let me give just one example, to get the juices flowing. I routinely hear extraordinary causal powers being ascribed to “racism” — claims that far outstrip available evidence. Some of these claims may well be true, but there is a clear moral stigma associated with questioning the causal connection being posited – which is perverse, since the question of what causes what should be a purely empirical one. Questioning the connection, however, is likely to attract charges of seeking to “minimize racism.” (Indeed, many people, just reading the previous two sentences, will already be thinking to themselves “Oh my God, this guy is seeking to minimize racism.”) There also seems to be a sense that, because racism is an incredibly bad thing, it must also cause a lot of other bad things. But what is at work here is basically an intuition about how the moral order is organized, not one about the causal order. It’s always possible for something to be extremely bad (intrinsically, as it were), or extremely common, and yet causally not all that significant.
I actually think this sort of confusion between the moral and the causal order happens a lot. Furthermore, despite having a lot of sympathy for “qualitative” social science, I think the problem is much worse in these areas. Indeed, one of the major advantages of quantitative approaches to social science is that it makes it pretty much impossible to get away with doing normative sociology.
Incidentally, “normative sociology” doesn’t necessarily have a left-wing bias. There are lots of examples of conservatives doing it as well (e.g. rising divorce rates must be due to tolerance of homosexuality, out-of-wedlock births must be caused by the welfare system etc.) The difference is that people on the left are often more keen on solving various social problems, and so they have a set of pragmatic interests at play that can strongly bias judgement. The latter case is particularly frustrating, because if the plan is to solve some social problem by attacking its causal antecedents, then it is really important to get the causal connections right – otherwise your intervention is going to prove useless, and quite possibly counterproductive.
He goes on to discuss four reasons why people are attracted to normative sociology 1) they want to have a causal lever so they blame what they think they can change 2) they don’t want to blame or appear to blaming the victim so they avoid some explanations in favor of others 3) confusing correlation and causation 4) a metaphysical desire for bad things to have big and bad effects.
Addendum: My review of Heath’s book, Enlightenment 2.0.
Harald Uhlig on Greece and fiscal austerity
“Fiscal austerity” is a clever label that somehow has stuck, but I think it is misleading. What has really been going on that Greece has been spending borrowed money, and they kept borrowing at a faster clip than what is sustainable. Suppose you do that as a household. What has to happen? At some point, you need to stop borrowing, you need to live within your means, and you have to either try to repay your debt or default. Everyone would like to spend more than what they receive! And, of course, it limits “growth” if you can no longer do that. But who is supposed to give you the resources for living beyond your means? What gets forgotten with the “fiscal austerity” label is this. Greece is free to borrow as much as they want on private markets, but private markets were no longer willing to lend to Greece. If Europe and the ECB had not stepped in and replaced much of that lost lending, if the debt terms would not have been renegotiated, it would have had a much more drastic effect on fiscal resources in Greece. So, one could argue (and I think it is fair to argue), that the European policies actually were the opposite of “fiscal austerity” compared to the benchmark case of only borrowing on private markets.
The full interview is here, via Garett Jones. And here is your Greece fact of the day:
The Greek banks might be able to survive [under Grexit] depending on what happens to their liabilities to the Eurosystem but it isn’t encouraging that more than half of their regulatory capital comes from deferred tax assets, which only have value if the banks are profitable and the Greek government has cash to pay.
That is Matthew C. Klein, from a longer post on the pros and cons of Grexit. And here is my earlier post Is Greece Really Going to Leave the Eurozone?, still a good guide.