Month: September 2015
1. Volkswagen and the trade agreements: “In the best of cases, the United States will emerge as the “world super-regulator.”” Bravo.
Transport for London is preparing to launch a crackdown on Uber, proposing a series of new rules that will hit the popular minicab-hailing app in one of its most popular cities.
…The proposals include a minimum five-minute wait time between ordering a private hire vehicle and it arriving, and banning operators from showing cars for hire within a smartphone app – a hallmark of the American company’s service.
No, this is not from an Ayn Rand novel.
These proposed rules so nakedly protect rent-seekers and make life worse for consumers that I don’t think they will succeed. Even if the rules fail, however, we shouldn’t be complacent about the dangers to innovation.
What made Uber different and controversial is that their Ayn Rand loving CEO followed the adage that it’s better to ask for forgiveness than permission. Uber skirted the law and went to consumers directly about whether they wanted transportation innovation. Consumers around the world responded with a resounding Yes to the Uber-referendum so regulators and rent-seekers who want to control Uber now must also fight Uber-consumers. That genie won’t go back into the bottle.
In the usual scenario, however, innovation can be quashed before consumers have a chance to know what they are missing. Had the taxi companies had an inkling of what was coming it would have been easy to to pass stricter laws in advance that would have made Uber impossible to get off the ground. Of course, in many industries today the old guard does have an inkling of what is coming and that should frighten anyone who wants to see greater innovation.
That is the new piece by Veronique de Rugy, Ryan Daza, and Daniel Klein, the abstract is this:
From 2013 to the present in 2015, the Export-Import Bank has been widely and actively discussed, because its charter was expiring and because people then wrangled (and still wrangle) over its extension and possible recharter. Working from a list of the top 200 economics blogs, we examine the discourse on the Export-Import Bank. We find that classical liberal economists were very often highly vocal in opposition to the institution, but that left economists were mostly silent. The impetus of our investigation is to promote reflection on a question of political psychology: Why weren’t left economists more opposed and more vocal on the issue?
Jeremy Horpedahl asks a related question about defending Uber and Lyft. Both pieces are from the latest issue of EconJournal Watch.
A loyal MR reader writes to me:
If you taught the principles of effective altruism to a rich person in (say) 1400, what would they have thought was the most effective thing to do with their money? What was in fact the most effective thing they could have done?
I say send some money to Henry IV. On the year 1400 Wikipedia notes:
England and the Industrial Revolution seemed to have worked out OK, and besides the Henriad provides some of Shakespeare’s most profound work, Orson Welles too.
I think you can see the problem.
But what would a rational Effective Altruist have thought at the time? How about revising those early versions of the Poor Laws?
Alternatively, 1400 also was the year Chaucer died, and he was a pretty smart guy. Since he worked for Henry’s father and was close to him, he might have given good advice, if only for self-interested reasons. But who in 1400 was the best or most logical representative of Effective Altruism? The theologian Alan of Lynn? He might have told you to invest the money in making indexes of books, which seemed to be his main interest. Jean Gerson, if one looks to France for a thought leader, focused his energies to reconciling the Great Schism in the papacy. Good idea or bad? As Zhou Enlai said…
One plausible estimate suggests this additional pollution has been killing 5 to 27 Americans each year, with that number worldwide reaching up to 404 as a maximum.
To put that number in context, the World Health Organization estimates that about seven million people die each year worldwide from air pollution. Even within the United States, early deaths from air pollution have been estimated to run about 200,000 a year, in comparison to which the losses from the Volkswagen scandal are a rounding error. For the American deaths, however, the culprits are often cars, trucks and cooking and heating emissions, so there is no single, evil, easily identified wrongdoer at fault. As Pogo recognized, often the real enemy is us.
Here are alternative estimates of the death from Volkswagen, published after my piece was set to run but the comparisons do not change fundamentally. From that same article here are two paragraphs of note:
Don Anair, deputy director of the vehicles program at the Union of Concerned Scientists, said the precise effect of the Volkswagen fraud would require intense and complex computation.
Still, he cautioned against taking the view that the Volkswagens have reversed the progress with pollution from automobiles. Since the standards went into effect from 2004 to 2009, he said, emissions of nitrogen oxides have been 90 percent lower. “It’s not like this is going to offset the majority of the benefits of these standards,” he said. “But there will be some impact, and we need to get a better handle on it.”
“Since the standards went into effect from 2004 to 2009, he said, emissions of nitrogen oxides have been 90 percent lower.” is a sentence which I fear will not receive much attention in the current debate.
1. Ngdp for the ECB?
2. Soviet bus stops.
3. Can we moderns no longer understand Shakespeare? If not, when will that time arrive?
The award announcement includes a description of her work (with further links), basically she does health care economics at MIT. In particular she considers when IP restrictions might hinder rather than support further innovation. Here is her home page, she also has interesting papers on prizes. Here is her research statement (pdf), interesting throughout, a very good selection from the committee.
Elsewhere, Matthew Desmond works on eviction as a cause and not just a symptom of poverty.
MRUniversity now has its own video production team! We are continuing to work with the artists at Tilapia films to produce outstanding videos for teaching economics–these videos work great with our textbook, Modern Principles. Our in-house production team will be working to polish our “regular” videos in a way that enhances the learning experience. You can see an example of the new style in the video below featuring Tyler on signaling.
Our Principles of Economics course is now complete. You can guess what is coming soon!
I’ve found Geoffrey Miller’s earlier books quite interesting, even if I didn’t always agree with them. A few years ago, however, he had a um…Twitter mishap…and since then I’ve been wondering what would emerge from that process.
His new book is…different. Think of it as a guide to dating and mating for males, but unlike the pick-up artists he (with Max) focuses on the separating rather than the pooling equilibrium. That is, he advises men to actually be better men, and not just to send clever signals, and so the subtitle is Become the Man Women Want. Hard to argue with that, right?
The advice covers such recommendations as “Focus on the women who seem interested in you.” (p.257) and “Hang out with Intelligent People” (p.127), among other maxims. Didn’t Nietzsche come up with a few of those? Or was it Norman Vincent Peale?
Be aware that “She’s been dealing with creepy douchebags for a long time”; that’s a subheader (p.35).
Is it true that “Most guys have sexually repulsive feet, and women notice.”? (p.206) MR readers are not always the ones to ask.
At first I thought I’ve never seen a market product so cleverly designed to segregate the actual buyers from those who will find it of value, but it has lots of five-star reviews on Amazon. Sadly enough, maybe America really needs this book.
Addendum: Here is Robin Hanson’s review.
That is the title of my new piece in MIT Technology Review. It’s about a near future where bosses can measure the productivity of workers through software and surveillance more accurately than is now the case. Productivity will go up, but it is not all rosy, here is one excerpt:
Individuals don’t in fact enjoy being evaluated all the time, especially when the results are not always stellar: for most people, one piece of negative feedback outweighs five pieces of positive feedback. To the extent that measurement raises income inequality, perhaps it makes relations among the workers tenser and less friendly. Life under a meritocracy can be a little tough, unfriendly, and discouraging, especially for those whose morale is easily damaged. Privacy in this world will be harder to come by, and perhaps “second chances” will be more difficult to find, given the permanence of electronic data. We may end up favoring “goody two-shoes” personality types who were on the straight and narrow from their earliest years and disfavor those who rebelled at young ages, even if those people might end up being more creative later on.
The closer is this:
I wonder, by the way, if MIT Technology Review will tell me how many people clicked on this article.
Do read the whole thing.
Financial services accounted for a whopping 20 per cent of China’s economic growth in the second quarter of 2015, according to a recently released breakdown of GDP data by the Chinese National Bureau of Statistics.
Of course that is not a good sign for third quarter gdp, or fourth quarter gdp for that matter. The FT article is here.
D’Erasmo, Mendoza, and Zhang have a new NBER working paper on this question. It is the most serious and scientific approach to American debt sustainability I have seen, ever. Here are two key sentences:
The dynamic Laffer curves for these taxes [capital taxes in the U.S., labor taxes in Europe] peak below the level required to make the higher post-2008 debts sustainable.
The results of the applications of the empirical and structural approaches paint a bleak picture of the prospects for fiscal adjustment in advanced economies to restore fiscal solvency and make the post-2008 surge in public debt ratios sustainable.
One point the authors emphasize is that, unlike after earlier episodes of American debt binges, America today has not reestablished a comparable primary surplus. The authors suggest taxes on labor or consumption can restore fiscal solvency, but higher taxes on capital won’t work, given dynamic and Laffer curve considerations. They do not devote comparable attention to changes in the trajectory of government spending.
It is wrong to call this “science” outright, but it is the closest to science we have on these questions. There is a possibly different ungated copy here (pdf).
And along related lines, consider this new Brookings study of boosting the top tax rate to fifty percent, by Gale, Kearney, and Orszag:
We calculate the resulting change in income inequality assuming an explicit redistribution of all new revenue to households in the bottom 20 percent of the income distribution. The resulting effects on overall income inequality are exceedingly modest.
You will not hear everyone shouting that one from the rooftops. And of course it does not all get redistributed to the bottom twenty percent, believe it or not.