Month: February 2016

The latest and probably best estimate for TPP

From Peter A. Petri and Michael G. Plummer (pdf):

This Working Paper estimates the effects of the Trans-Pacific Partnership (TPP) using a comprehensive, quantitative trade model, updating results reported in Petri, Plummer, and Zhai (2012) with recent data and information from the agreement. The new estimates suggest that the TPP will increase annual real incomes in the United States by $131 billion, or 0.5 percent of GDP, and annual exports by $357 billion, or 9.1 percent of exports, over baseline projections by 2030, when the agreement is nearly fully implemented. Annual income gains by 2030 will be $492 billion for the world. While the United States will be the largest beneficiary of the TPP in absolute terms, the agreement will generate substantial gains for Japan, Malaysia, and Vietnam as well, and solid benefits for other members. The agreement will raise US wages but is not projected to change US employment levels; it will slightly increase “job churn” (movements of jobs between firms) and mpose adjustment costs on some workers.

I know plenty of people who don’t like parts of this deal, but not any who have produced a better net estimate of what it will do.

Hat tip goes to the ever-energetic Brad DeLong.

*Unequal Gains*

That is the forthcoming book by Peter H. Lindert and Jeffrey G. Williamson, and the subtitle is American Growth and Inequality since 1700.  The sections on recent America, while unobjectionable, are ordinary, but the early coverage of American history is very interesting indeed.  Here is one excerpt:

Why the Old South reversal of fortune?  A benign part of the story seems to have been that the colonial South was still a labor-scarce frontier region with high returns to coastal land producing export crops, like indigo, rice, and tobacco. Its decline after 1774 was echoed in two other frontier cases many decades later.  One was the dramatic relative decline of the West South Central income per capita between 1840 and 1860 — from 60 percent of the U.S. average to just 9.5 percent above it…The other was the loss of the Pacific region’s gold-discovery-generated super-incomes after the 1850s and early 1860s (the Pacific states were 213.3 percent above the US average in 1860, and the mountain states were 30.5 percent above).

I hope to report on other interesting sections of the book soon; it is due out in April.  Again, most business cycles in history have been real business cycles.

Wednesday assorted links

1. Should we have laxer conviction standards for tougher punishments?  No, but a good brain twister.

2. “Does this mean inflation isn’t transitive?”  Correct, inflation measures are not transitive.  Larry Temkin should be happy.

3. Musk personally made sure the guy’s order was cancelled.

4. “Ravens do spy on each other, it turns out, and they can infer when other birds are snooping on them.

5. “Between 1993 and 2015, cattle killed 13 people who were out for walks in the United Kingdom. Dozens more walkers received broken bones or other injuries from the animals…Murderous cattle are an understudied phenomenon…”  Link here.

6. Haiti since the earthquake.

Working as a model for stock photography — what’s it like?

I very much liked this Jonathan Kay piece, which has so many good, interesting, and separate points, here is one of them:

“One of the most important elements of the Shutterstock quality-control process is to ensure there are no logos or other brand identifiers,” she told me. “Nor can the photos contain identifiable people or locations which haven’t released their legal rights.” The blackouts here can be extremely broad, and include some of the most famous landmarks on the planet. You can’t include the Eiffel Tower in most forms of stock photography, for instance. Nor can you include anyone wearing the iconic beige-and-blue Burberry pattern. Even a tiny patch of it in the background renders an image completely unusable.

And this:

Click through the Shutterstock database, and you find that professionally shot and curated stock photos invariably exhibit what might be called calculated soullessness. The subjects project human emotions—happy, sad, confused, angry—but in a simple, one-dimensional way. There should be nothing bespeaking a complex inner life. Real human interest always will distract the audience from the intended product or idea.

In closing:

How does a photographer achieve authenticity in an age where authentic culture increasingly is built around irony? More broadly: Is the project of organizing human experience into databases of generic happy faces and sad faces still relevant to us in 2016?

Alas, I can no longer remember to whom I owe the pointer, my apologies.

File under Those New Service Sector Jobs.  And if that doesn’t suit you, here is “Calling all ‘bulky’ Alec Baldwin lookalikes”.

Amazon plans hundreds of brick and mortar stores

The Seattle company plans as many as 400 bookstores, Sandeep Mathrani, chief executive of large mall operator General Growth Properties Inc., said on an earnings call with analysts Tuesday.

“You’ve got Amazon opening brick-and-mortar bookstores and their goal is to open, as I understand, 300 to 400,” said Mr. Mathrani in response to a question about mall traffic.

That compares to the 640 stores Barnes & Noble Inc. operates and the 255 locations Books-A-Million Inc. said it had as of last summer.

The WSJ story is here, here are others.  What is the underlying business plan?  To make these iconic locations like Apple stores?  To treat all future business, in all sectors, as depending on the focality of the company behind it?  To start with books, move on to other items, and eventually steal middle-class and upper-middle class consumers away from Walmart?  Somehow use these stores to lock people in Amazon Prime?  Do you have other hypotheses?  Is this overconfident folly, or is it the “for good” return of brick and mortar bookstores to our lives?

Tuesday assorted links

1. “Streaming, brought to you by jets.

2. The Welfare Trait: “Over the past five years, he has accumulated a mass of evidence about the personalities of welfare claimants and concluded that individuals with aggressive, rule-breaking and anti-social tendencies — what he calls the ‘employment–resistant personality profile’ — are over-represented among benefit recipients.”

3. The Animal Soul project (photos).

4. Those new service sector jobs: “Yukigassen is professional snowball fighting…

5. Editing Wikipedia for pay.

6. “Can Wisconsin make a sex offender who’s completed his sentence wear a GPS monitor on his ankle for the rest of his life?”  Posner says yes.

7. Why pawn shop prices differ.

My conversation with Kareem Abdul-Jabbar

Here is the video, the podcast, and the transcript.  Kareem really opened up.  Here is the summary:

Kareem Abdul-Jabbar joins Tyler Cowen for a conversation on segregation, Islam, Harlem vs. LA, Earl Manigault, jazz, fighting Bruce Lee, Kareem’s conservatism, dancing with Thelonious Monk, and why no one today can shoot a skyhook.

Maybe you think of Kareem as a basketball player, but here is my introduction:

Kareem Abdul-Jabbar is one of America’s leading public intellectuals. I would describe him as an offshoot of the Harlem Renaissance, and what he and I share in common is a fascination with the character of Mycroft Holmes, the subject of Kareem’s latest book — and that of course, is Sherlock Holmes’s brother.

Here is Kareem:

I did know Amiri [Baraka]. I think the difference is I believe in what happened in Europe during what they call the Enlightenment. That needs to happen to black Americans, absolutely a type of enlightenment where they get a grasp of what is afflicting them and what the cures are.

I think that the American model is the best in the world but in order to get everybody involved in it we have to have it open to everyone. That hasn’t always been the case.

The most under-appreciated Miles Davis album?

For me [Kareem], the most under-appreciated one is Seven Steps to Heaven. And that shows, I think, Miles’ best group. There’s a big argument, what was Miles’ best group, the one that had Cannonball Adderley, Coltrane, Bill Evans, and Philly Joe Jones and Red Garland or Herbie Hancock, Ron Carter, Tony Williams, and Wayne Shorter?…number two is Porgy and Bess.

He cites Chester Himes as the underappreciated figure of the Harlem Renaissance.  And Kareem thinks like an economist:

It [my instruction] was going well with Andrew Bynum, but Andrew finally got to sign his contract for $50 million, and then at that point Andrew thought that I didn’t know anything and that he didn’t have to listen to me, and we don’t know where Andrew is right now.

Read or hear also his very interesting remarks on Islam, and where its next Enlightenment is likely to come from, not to mention Kareem on the resource curse and of course his new book (and my Straussian read of it).  And Kareem on his favorite movies, starting with The Maltese Falcon.  Self-recommending!

Kareem

Singapore fact of the day

A majority of the top dividend-paying stocks on the Straits Times Index are government-linked…

This Andy Mukherjee piece makes numerous good points about the current problems faced by Singapore, more than just the usual and focusing on the internal, and the difficulties of maintaining an adequate level of competition in the economy.

As I’ve said before, when you examine flows — such as government spending as a percentage of gdp — Singapore looks and indeed is quite free market.  When you consider stocks and wealth…well, that is a very different story.  Singapore has a strong market-oriented component, but it is not a free market miracle.

Time inconsistent, semi-fraudulent locksmiths and their enemies

I found this David Segal NYT article difficult to summarize, and surely it was difficult to title, but I found it one of the most interesting pieces I have read in weeks.  Allow me to start in the middle:

To fight lead gens, Google deploys a little-known army of volunteers, called Mappers, many of whom are engaged in a contest that takes wit and stamina. These are people around the world who propose and approve edits to Google Maps, with an assist from Google employees, all in the interest of refining the product and fighting spam — a term that in this context means anything fake and misleading.

It may seem bizarre that people would work gratis for one of the world’s richest companies. But many Mappers turn the job into a calling. For Dan Austin, who lives in Olympia, Wash., it was more like an addiction.

A former truck driver for DHL, he became a Mapper after he was laid off from his job and started fixing mistakes he had noticed on Maps while on the road. By the fall of 2011, Mr. Austin had discovered locksmith spam and was soon spending 10 hours a day, seven days a week, deleting it from Maps.

The premise is this:

The goal of lead gens is to wrest as much money as possible from every customer, according to lawsuits. The typical approach is for a phone representative to offer an estimate [for locksmith work] in the range of $35 to $90. On site, the subcontractor demands three or four times that sum, often claiming that the work was more complicated than expected. Most consumers simply blanch and pay up, in part because they are eager to get into their homes or cars.

Here is another bit from the middle:

Mr. Alverado said those fake buildings were necessary because getting to the first page in Google results now took ingenuity and cunning.

“You have no idea,” he said, sounding a little weary when asked about competition. Israelis were his toughest rivals, he said, and they had instilled a kind of awe in him. “I can tell you point-blank, they are freaking smart,” he said. “I really admire them.”

Every single paragraph is interesting in a different and substantive way, an almost impossible achievement for a piece.

For the pointer I thank the excellent Samir Varma.

Monday assorted links

1. Diane Coyle: which books should the well-educated student read?

2. MIE: Conbody.com.

3. There is no great stagnation what would Macbeth say levitating bonsai trees.

4. ““THOUGH TACOS ARE EXPLICITLY NAMED IN THE COURSE, THEY NEED NOT BE THE FOCUS FOR YOUR RESEARCH.”  Link here.

5. Blanchard and Gagnon: “…in terms of their expected value, stocks are not overpriced today.”  The second link, however, is mine.

In the drone wars, the eagles swing the balance of power back toward the Dutch

As tech firms and law enforcement experiment with radio jammers and net-wielding interceptor drones to take down rogue quadcopters, police in the Netherlands are trialling a simpler solution: eagles. The country’s law enforcement has teamed up with a raptor training company named Guard From Above to see if birds of prey can be used to safely intercept quadcopters.

In the video demonstration above, an eagle is seen easily plucking what looks like a DJI Phantom out of the air. However, it’s not clear how dangerous this is for the bird.

File under “But at a price.”

The article is here, with an excellent video, and for the pointer I thank @alsoyourbrother.

Economics on Buying vs Renting a House

I was asked on Quora What do economists think about buying vs renting a house? Here’s my answer:

Housing is overrated as a financial investment. First, it’s not good to have a significant share of your wealth locked into a single asset. Diversification is better and it’s easier to diversify with stocks. Second, unless you are renting the basement, houses don’t pay dividends. Stocks do. You can hope that your house will accumulate in value but don’t count on it. Indeed, you should expect that as an investment your house will appreciate less than does the stock market. You didn’t expect to get a great investment and a place to live in the meantime did you? TANSTAAFL.

Another problem with houses is that home ownership locks people to location making it harder to move for jobs. The problem is especially severe because no one likes to sell at a “loss” even when it is rational to do so. So when jobs disappear and home prices fall instead of moving, people hold on for too long just hoping that things will get better. It’s troubling that both across states in the United States and across countries higher home ownership predicts higher unemployment rates. See Does High Home-Ownership Impair the Labor Market?

So why do so many people buy houses? Houses are lovely if you enjoy interior decorating, backyard barbecues and talking to your neighbors. Houses today also come bundled with a significant side asset – access to so-called public schools. One argument for school vouchers, by the way, which isn’t emphasized as much as it should be, is that vouchers would break the strong connection between where you live and what schools you attend. Poor people would have a better chance at attending good schools if schools and housing weren’t bundled together so closely

Owning a house is also a part of the “American Dream” and perhaps as a result the US tax code subsidizes houses, especially for the rich. Most economists, however, think that the United States tax code is inefficiently biased toward housing. There is no good reason to bias people away from renting and towards buying. Germany is a wealthy country and a majority of Germans get by just fine by renting. See Most Germans don’t buy their homes, they rent. Here’s why.

One final point: behavioral economics tells us that we quickly get used to big houses but we never get used to commuting. So when you have a choice, go for the smaller house closer to work.

What should I ask Nate Silver?

Nate will be doing a Conversations with Tyler, this February 16, 3:30 Arlington campus of GMU.

What should I ask him?  Please leave your answer in the comments, and the day of the event you also can use Twitter hashtag #cowensilver.

Here is the YouTube teaser for the event.  Here is the RSVP for the event.  By the way, the Kareem video and podcast will be ready  tomorrow (Tuesday) morning.

My favorite things Iowa

No, I’m not in Iowa, but I’ve never covered it before, and today seems like as good a day as any.  Here goes:

1. Painter: Grant Wood.  Here is an interpretative take on American Gothic.  It’s not by the way man and wife in the picture, but rather Wood’s sister standing next to the local dentist.

2. Novelist: I draw a blank, sorry people…Does it count that Joe Haldeman (The Forever War) was a product of the Iowa Writer’s Workshop?  There must be other examples as well.

3. Hero: Norman Borlaug.

4. Actor: John Wayne is from Iowa, but I can’t call him a favorite.  I guess he is my favorite version of…John Wayne.  If that.  Can one call Johnny Carson an actor?  I never took to him either.

5. Jazz musician: Yes there is one, Bix Beiderbecke.  Art Farmer too, and also Charlie Haden.  Yet how rarely one hears of the “Iowa jazz tradition.”

6. Guitarist: Dick Dale, don’t by the way forget his Lebanese background, which you can hear in his riffs.

7. Movie, set in: What’s Eating Gilbert Grape?  Honorable mention to the more obvious Field of Dreams, an OK but not great film in my view.

The bottom line: Who would have thought “jazz musician” would be the strongest category here?  Those Iowans are so busy with their jazz, it is amazing they have time to lobby for their ethanol subsidies.

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