Month: February 2016
New Hampshire fact of the day
There are several ways of thinking about economic distress. One is inequality. Utah is the most equal state, then Alaska, Wyoming and New Hampshire. In terms of median family income, Maryland is the richest state, then New Hampshire. So the Granite State is in a sweet spot, both very rich and relatively equal. But its drug deaths exceed the national average.
That is from Scott Sumner. And this:
In contrast, the 5 states with the lowest rate of drug deaths are all in the northern plains area. (Note that the 4 most equal states and the 5 lowest drug deaths states are mostly white, but their drug death rates are vastly different.) Interestingly after the 5 plains states you have Virginia, followed by four very unequal states, with lots of poverty; Texas, New York, Mississippi and Georgia rounding out the top 10 for fewest drug deaths.
Economics isn’t everything, nor is inequality.
Given that Trump is winning, which other views should we update?
I asked this question to Nate Silver, but didn’t myself have a chance to address it. Since most of us have been surprised by the rise of Trump, presumably other, broader views must be updated too. But which ones? I see a few options, which are not for the most part mutually exclusive:
1. Social media are more powerful than we had thought, and more powerful in politics in particular.
2. Republican voters are less conservative, less “Tea Party,” and less libertarian than many people had thought. And the “periphery Republicans” are stronger and more numerous and more easily excited than we had thought.
3. Republican primary voters are more racist than we had thought.
4. Backlash against immigration and immigrants sets in more quickly, when middle class wages are stagnant, than we had thought. And true cosmopolitans are hard to find.
5. The value of commanding and dominating media attention, in a year with no clear front-runner Republican candidate, is higher than we had thought.
6. Trump is more skillful at trolling and pulling levers of public opinion than we had thought.
7. Democracy is less stable than we had thought.
8. New Yorkers are more nationally marketable than we had thought.
Perhaps all of these are true, and yet Trump’s leading role still remains a fundamental surprise. Which other hypotheses am I missing? In any case, it is time for some updating…
Addendum: Stephens-Davidowitz has numerous good thoughts, such as:
The Black Swan view of the world makes even more sense. We wrongly think things that are different are impossible.
Charisma matters more than we thought and is hard to pin down
People REALLY HATE politicians more than we thought …
Something that is off-the-charts entertaining is hard to stop. The media has a huge incentive to keep it going.
Among others.
The culture that is German, with reference to Umberto Eco
Or should that be “was Germany”?
Reviewing Mr. Eco’s fourth novel, “Baudolino” (2000), in The New York Times, Richard Bernstein wrote that it “will make you wonder how a storyteller as crafty as Mr. Eco ended up producing a novel so formulaic and cluttered as this one.”
Set amid the religious disputes and wars of the 12th century, “Baudolino” became the best-selling hardcover novel of all time in Germany and a commercial success elsewhere in the world.
That is from his NYT Jonathan Kandell obituary. The Name of the Rose remains my favorite, with Foucault’s Pendulum being the other one I enjoyed very much.
Saturday assorted links
1. “How North Korean’s biggest export is giant sculptures of African despots” (TC: that probably is not literally true).
2. Raghu Rajan and Rodney Ramcharan on the long-lasting effects of financial regulation.
3. Jeremy Bentham’s prison cooking.
4. How one Chinese entrepreneur guarantees milk safety.
5. Town hall meetings markets in everything.
Why have real interest rates fallen so much?
From Lukasz Rachel and Thomas D Smith at the Bank of England (pdf):
Long-term real interest rates across the world have fallen by about 450 basis points over the last 30 years. The co-movement in rates across both advanced and emerging economies suggests a common driver: the global neutral real rate may have fallen. In this paper we attempt to identify which secular trends could have driven such a fall. Although there is huge uncertainty, under plausible assumptions we think we can account for around 400 basis points of the 450 basis points fall. Our quantitative analysis highlights slowing global growth as one force that may have pushed down on real rates recently, but shifts in saving and investment preferences appear more important in explaining the long-term decline. We think the global saving schedule has shifted out in recent decades due to demographic forces, higher inequality and to a lesser extent the glut of precautionary saving by emerging markets. Meanwhile, desired levels of investment have fallen as a result of the falling relative price of capital, lower public investment, and due to an increase in the spread between risk-free and actual interest rates. Moreover, most of these forces look set to persist and some may even build further. This suggests that the global neutral rate may remain low and perhaps settle at (or slightly below) 1% in the medium to long run. If true, this will have widespread implications for policymakers — not least in how to manage the business cycle if monetary policy is frequently constrained by the zero lower bound.
I believe this paper is being presented at Brookings, sometime early in March…
Will Wilkinson’s liberaltarian case for Bernie Sanders
A number of you have written in and asked for direct commentary on his recent piece and its sequel companion. And here is Vernon Smith on Bernie.
I agree with Megan McArdle that the argument doesn’t work. I would second all or most of Megan’s points about Bernie’s less positive proclivities, including the bone-crunching marginal tax rates and the foreign policy inexperience, while adding another perspective.
One approach is to ask “which of the current slate of candidates should I prefer?”
A second approach, and the one I would suggest here, is “I have a good idea — in this case liberaltarianism — how long should I wait before attaching that idea to a particular candidate?” I say wait!
A Bernie Sanders presidency, if it somehow did manage to connect up to liberaltarianism, probably would do those ideas more harm than good. In my view he is not up to being an effective President. I don’t have the interest in outlining that case at any length, but suffice to say Paul Krugman — admittedly from a different framework — seems to agree.
I enjoyed Megan’s line: “And I have a sneaking fondness for Sanders, who reminds me of any number of folks from my Upper West Side childhood.”
Did it work out for the neoconservatives to attach themselves to Bush 43? I say no. Did it work out for mainstream liberals to attach themselves to Obama? I say mostly yes. So it can go either way. How did the Varoufakis flirtation work out for the anti-austerity movement? In the comments you can debate whether latching on to Ron Paul was good for libertarian ideas, but I don’t think the answer is an obvious yes, to say the least.
It’s not that I want you to support some other candidate in Bernie’s stead, rather I would challenge the view that a candidate needs to be preferred in each and every election cycle. And as I’ve once argued, analysts, pundits, and others might do better in their commentary, and keep a more analytically detached perspective, if at least some they avoid attaching themselves to any candidate at all. We are programmed to be loyal to individual people, and perhaps causes too. While that is often admirable as a personal trait, it also can skew our judgment of policies and platforms.
Assorted flawed Friday links
1. Are soil and phosphates the ultimate Malthusian constraint? A long, rambling post but with some points of interest and importance.
2. Human-bird honey trust markets in everything. A long, rambling story, but with some speculative points of interest, including for the very foundations of economic science.
3. Are Republican cities especially at risk from job automation? A spurious correlation most likely, yet the true relationship may be interesting nonetheless.
4. Is there bond market discrimination against historically black colleges and universities? (Do they have the right measure of credit quality? I doubt it.)
5. Do three-point shooters go bankrupt at higher rates? (speculative, plus the link makes some noise, lots of noise in fact.)
Simple points about central banking and monetary policy
Central banks around the world could raise rates of price inflation, and boost aggregate demand, if they were allowed to buy corporate bonds and other higher-yielding assets. Admittedly this could require changes in law and custom in many countries
There is no economic theory which says central banks could not do this, as supposed liquidity traps would not apply. These are not nearly equivalent assets with nearly equivalent yields.
Or the central bank could monetize government purchases, such as purchases of infrastructure.
These possibilities may not be useful or beneficial in every country, but they could be done.
Yet governments do not wish, and that is what we must think more deeply about. Not “why can’t central banks halt deflation?” So if in a monetary policy or macroeconomic analysis you read the phrase “out of options,” you would do well to substitute in “governments do not wish to pursue their remaining options.”
Fly fishing Saranac lake — Winslow Homer
Monopoly markets in everything, negative interest rate edition
That’s Monopoly the board game. Here is the latest:
We may be used to paying for goods at the touch of a card or phone in shops, but now quick and easy electronic payments are making their way to the Monopoly board too.
The Monopoly Ultimate Edition replaces fake notes with an ATM and every part of the game is ‘swipe-able or scan-able’, to bring the board game into the 21st century.
The battery-operated system is designed to speed up the process of making payments to other ruthless players, as well as cut down on cheating.
By the way, there is no great stagnation:
It is not the first time Hasbro has launched an electronic edition of the iconic board game, with two previous versions on sale.
But reviews criticised the firm for slowing the game down, in part due to players having to manually enter sums of money on a fiddly ATM keypad.
The Ultimate Banking Edition will cost $25 (£29.99) when it goes on sale in the autumn.
The full story is here, via the excellent Mark Thorson.
Swiss conference on randomized control trials
Working conference on ethics of randomized trials in development economics and health policy: An opportunity for graduate students and young scholars; application deadline March 11
Applications are invited for participating in a five day working conference and summer school on ethical issues posed by randomized trials in development economics and health policy, to be held June 20-24 at the beautiful Brocher Foundation villa in Hermance, Switzerland. Participants will include Angus Deaton, Joshua Angrist, Michael Marmot, Will MacAskill, and yours truly.
The application deadline is March 11, 2016. Further information is available here. For remaining questions, please email [email protected].
Be there or be square!
Two new books on Syria and ISIS
Charles R. Lister, The Syrian Jihad: Al-Qaeda, the Islamic State and the Evolution of an Insurgency.
Fawaz A. Gerges, ISIS: A History.
I have only browsed them, and I do not feel qualified to judge the details of the contents. Nonetheless each seems more serious and better documented than the other extant writings on these topics which I have seen.
Thursday assorted links
1. Interfluidity makes his case for Bernie Sanders.
2. The grade nudge.
3. Punctuation in novels, some data from your favorites.
4. The culture and polity that is Utah: Zion curtain law to remain in effect.
5. Secret anti-languages you are not supposed to know.
6. Will Wilkinson makes the liberaltarian case for Bernie Sanders.
The political legacy of American slavery
Forthcoming, Journal of Politics, from Avidit Acharya, Matthew Blackwell, and Maya Sen:
We show that contemporary differences in political attitudes across counties in the American South in part trace their origins to slavery’s prevalence more than 150 years ago. Whites who currently live in Southern counties that had high shares of slaves in 1860 are more likely to identify as a Republican, oppose affirmative action, and express racial resentment and colder feelings toward blacks. These results cannot be explained by existing theories, including the theory of contemporary racial threat. To explain these results, we offer evidence for a new theory involving the historical persistence of political and racial attitudes. Following the Civil War, Southern whites faced political and economic incentives to reinforce existing racist norms and institutions to maintain control over the newly free African-American population. This amplified local differences in racially conservative political attitudes, which in turn have been passed down locally across generations. Our results challenge the interpretation of a vast literature on racial attitudes in the American South.
The past still matters…
The man who wants to read everything
The New Yorker has done a profile of Michael A. Orthofer, here is one excerpt:
I first contacted him in 2004, asking him if I could write for the the Complete Review; I was an undergraduate at Stanford at the time, and thought that the site was an institution, like The New York Review of Books. I was politely rebuffed. Years later, I e-mailed to ask if I could send him a galley of my first novel. He already had it, he replied—he had picked up an advance review copy for sale at the Strand, for $1.49. He went on to review the book, giving it a B, and later e-mailed to soften the blow. “Bs always have something going for them,” he explained, while a C grade indicates “steer-clear territory.” All books on the site get a rating from A+ to F, part of the site’s endearing, Robert-Christgau-like fustiness.
Michael runs Literary Saloon, one of the very best and most important blogs, focusing on foreign literature in translation.
Oddly, he spent the first six years of his life not reading, and thus he is somewhat behind. Yet he is working at it:
“I can’t imagine not doing it,” Orthofer told me. “A day in which I don’t read or write, I have trouble falling asleep.” His goal is to read a book a day, though he confesses that this is “unrealistic.” He works on weekends, too, and has written four novels that are in the drawer. His main interests, according to the site, are inline roller-skating in Central Park and building snow sculptures, some of which are big enough that he carves staircases inside them to get to the top. When he tires of working, he steps out to a library or bookstore, “to see, be around books.” Last year, and this year, he worked through Christmas.
I will continue to read him until I can no longer. The profile is interesting and humorous throughout, and it is so far my favorite magazine piece of the year.
For the pointer I thank Michael Rosenwald.