Month: April 2016

*Melancholy*, by László F. Földényi

I very much like this book, it is one of my favorites of the year so far.  It resists being excerpted, as it is an old-style think piece in the style of Montaigne, or for that matter Robert Burton.  Every page is idea-rich and should be read carefully and slowly, and that is rare these days.  Here is just one bit:

Melancholics are prominent…precisely because they are too full of life; because of them, existence overflows itself.  This explains their unappeasable sense of absence: since they have left the world of moderation, overflowing is inconceivable without being emptied.  The universe is damaged in their person; hence, melancholics’ sense of being among the elect, but also their self-hatred to the point of self-annihilation.  That makes them strong and outstanding, but also exceedingly frail.  Their strength is infinite, because they have gained knowledge of the end, but they are unhappy, since having experienced the ephemeral nature of humans, they have lost their trust in existence.  Their strength and frailty, their unhappiness and their heroism, cannot be detached from each other.  This leads us back once again to the starting point of our argument, to the Aristotelian question “Why is it that all those who have become eminent in philosophy or politics or poetry or the arts are clearly melancholic?”

Definitely recommended.

China (Paris) fact of the day

Trading volumes of the most-traded steel rebar contract in Shanghai hit a record 1.3bn tonnes today, or enough to build the Sydney Harbour Bridge 24,621 times.

If skyscrapers are the preferred metric, fret not: trades today were also equivalent to approximately 41,401 Burj Khalifas.

…One could construct around 178,082 Eiffel Towers with the above-mentioned volume of steel rebar traded today in Shanghai.

Here is the FT story.  Hat tip goes to the ever-excellent Christopher Balding.

Claire offers a Hayekian approach to transgender issues

In response to my post on transgender issues, I was sent this in an email, by a very good economist, it is lengthy so I am putting most of it under the fold, but do please read the whole thing.

First of all, I would like to thank you for contributing to this debate and for consistently sticking up for trans people and LGBT people more generally. We need more people like you who can engage in good, reasoned debate.

I would like to make a few observations in order to summarize this debate, and to use this summary to push for a fourth alternative–a sort of Hayekian alternative, which involves building upon the spontaneous order that we already have. This is assuming that there will always be a legal definition (or several overlapping definitions) of gender, ruling out option 1. Option 2 (overlapping definitions) is already a reality, which we can use to build on. Seen in that light, option 3 (the current debate) seems like a step backward, driven by emotions rather than reason.

A little background about me: I am one of three (to my knowledge) “out” trans* economists, and one of two “out” trans women. As such, I have followed the debate about trans* people since I was young, since this debate is about my very survival. In addition, I think that it is useful to look at this debate through the lens of economics and moral philosophy, since that lens helps us to see some of our blind spots.

The facts are as follows. Trans people have been going to the bathroom or using changing rooms since there have been trans people, which has been basically all of human history. This has led to a kind of tacit order in which people use bathrooms according to the binary gender nearest their own gender presentation, and this has led to no problems for the majority of the cis (i.e. not trans) population. In my own experience, the problems that trans people have faced using the bathroom are in direct proportion to the degree that one is read as trans. In my case, I tend to get read as “German lady,” and I have never had a problem using the women’s room or locker room. I know people who have had problems–this is especially a problem for trans men, butch women, and very androgynous-looking people. This has become more of an issue as people with non-binary gender identities and presentations have started to become more visible.

However, the increased visibility of trans people, the success of the LGB part of the LGBT movement, and a sense that trans people are scary deviants have led to some of the backlash that we see. This backlash is strongest among people who are just learning about our existence, or among those who think of us as sex objects–objects of desire but also of danger to their sense of masculinity or to their sense of the natural order of things. My own guess is that these people are projecting some of their own hang-ups on to us. Importantly, this backlash has been coordinated in the background by some anti-trans groups–look at the same, clunky language featured in each of these bathroom bills–and this backlash has aimed to drive trans people entirely from public spaces. I would argue that this backlash is motivated by fear and disgust, and these emotions can’t be reasoned with. However, they can be reasoned around.

To see what’s gone wrong, let’s start by looking through the lens of Jonathan Haidt’s moral foundations theory, which is a bit like a modern-day version of virtue ethics. Haidt identifies six moral foundations, which closely map on to the classical virtues: (1) care/harm, (2) fairness/cheating, (3) loyalty/betrayal, (4) authority/transgression, (5) sanctity/degradation, and (6) liberty/oppression. Each of these moral foundations has implications for the debate surrounding the rights of trans people to exist and to be seen in public. Furthermore, these foundations motivate a lot of the, um, motivated reasoning that we see. Let’s focus on the main motivations for the backlash, which have to do with (4) and (5). Basically, they think that we’re disgusting, disordered perverts.

To understand (4), let’s turn to the language of all of these bills. These bills cite three separate definitions of sex or gender, none of which necessarily lines up with any other. These definitions are gender assigned at birth, the gender on one’s birth certificate (which can sometimes, but not always, be revised), and one’s chromosomal makeup (which is not usually observed at birth). All of these definitions are based on the idea that trans people transgress some kind of divine or natural authority, and that we need to bring them back into line. These definitions do not allow for people to medically transition–trans women with vaginas would have to use the men’s room and trans men with penises would have to use the women’s room–instead they amount to an admonition of, “man up, faggot.” Not surprisingly, some of the leading of these advocates of these bills have been evangelical organizations and advocates of “reparative therapy” (i.e. imprisonment and/or torture) for LGBT people.

To understand (5), let’s turn to the other main justification given by the (mostly male) supporters of these bills: to protect their wives and daughters (not so much sons, I wonder why) against using the same restrooms as us. This is because they see trans women in particular–even those with vaginas–as filthy deviants whose presence is inherently degrading, while they see trans men as an amusing curiosity, if they see trans men at all. Think of the main ways in which trans women have been depicted over the past 30 years in film–as cannibal serial killers, as something to throw up at, as sexual predators, and as dead bodies found in dumpsters. Literally as trash. The current backlash feeds into a lot of these tropes, particularly the sexual predator one, while if anything, trans women have a lot more to fear from straight men, and straight men have a lot more to fear from high-school wrestling coaches turned Republican politicians.

(Meanwhile, the model response I’ve received from other women has been, “so what?”)

These are the two “moral foundations” generally used to oppose letting trans* people use the restroom. While the anti-trans movement also sometimes uses the language of care (saving us from ourselves, which has been discredited since the work of Harry Benjamin in the 1960s) and liberty/oppression (seeing themselves as the aggrieved victims of political correctness or axe-grinding about “World War T”, particularly on the alt-right), their hearts are not really in it.

So, how should the law respond to recognize the genders of trans people, while also dealing with those marginal cases of women with penises or men with vaginas using the locker room, and at the same time trying to defuse some of the violent hatred faced by trans people? Let’s start by recognizing that this is all complicated, and that the law is a blunt, often violent instrument. No single legal definition of gender can cover all relevant cases. Instead, we can build on what we already have, and we can maybe even make things a little bit easier. Furthermore, the best thing that we can do is sit back, take a deep breath, and let our emotions cool down a bit. High emotions make bad decisions.

To start, we currently have a tangle of federal, state, local, and extralegal definitions of gender. For the federal government, the genders on one’s social security card, passport, selective service registration, etc., may all differ from each other. Add to that state drivers’ licenses, state IDs, voter IDs, original and/or revised birth certificates, university documents, tax records, and whichever gender someone reads me as while showing me to the restroom. For some people this even varies over the course of the day. Some states allow for a change of legal gender (such as California), while other states deny that legal gender is really a thing (such as Illinois). On the governmental side, this setup is inconsistent and a bit Kafkaesque, although I personally have had enough resources and luck to successfully navigate that system.

Most countries get around this by having a centralized personal registry (Germany’s Personenstandregister, for instance, which is simple but difficult to change, or the Danish version, which is easier to change). For Americans, setting up a centralized registry and/or national ID would represent a significant intrusion in personal liberty, and it would further complicate our patchwork system.

However, there are things that can be done, like making it possible to leave one’s gender on an ID or passport blank (or a third option ‘X’), as Australia and India have done. And, at the state and local level, a lot can be done to remove hurdles to getting proper documentation. Here would be where a Personenstandregister would make sense, with full faith and credit applied for all federal documents. People would be able to change their register entry by affidavit, as in Ireland or Denmark. However, there would likely be some civil rights issues in the ways that certain states would apply this idea.

The idea here is to remove bureaucratic hurdles and especially not to involve the police, which can be very dangerous for trans women in particular–particularly those who are black, Latina, disabled, involved in sex work, or poor. Current practice in many jurisdictions is to arrest visibly trans women on sight and charge them with “manifesting prostitution,” or to charge _them_ with a crime when they call the police for help, as in the case of a black trans woman in Minnesota who defended herself from an attack by a drunk Nazi. Or there are cases where the police fail to prosecute murder or attempted murder against trans women, and in fact, they sometimes collaborate with murderers. We need to do more to actively combat this type of bias and to reduce the amount of contact that trans people have with a biased legal system.

All of this can be done while realizing that our binary gender system is just a shorthand model that people use to navigate a more complex world. Since this world is complex, day-to-day decisions are best made at a low level, which is why Gov. Daugaard vetoed South Dakota’s bathroom bill. A good motto for this would be, “Get the government out of our bathrooms.” This approach is Hayekian at its heart, and it can even appeal to a large number of right-thinking conservatives.

For instance, my conservative Republican father managed a trans woman employee a few years ago, well before I “came out”. This woman had to use the bathroom and locker room at work. To make this work out, the company called a meeting of all of the female employees, and they led a respectful conversation about what was going on. This effort resulted in the other women accepting the trans woman as one of their own; she got to use the locker room; and nobody felt threatened or disgusted. It was a win-win for everyone involved, and it also sent a positive message.

We need more, not less, of this kind of virtuous approach.

Very well put.  From elsewhere, here is a very good Jacqueline Rose piece on trans issues.  One of the best pieces I have read this year.  And here is a very good update on where various public disputes stand.

Yuliy Sannikov has won the Clark Award

Here is the AEA account, opening bit:

Yuliy Sannikov is a theorist who has developed new methods for analyzing continuous time dynamic games using stochastic calculus methods. His work has not only broken new ground in methodology, it has had a substantial influence on applied theory. He has significantly altered the toolbox available for studying dynamic games, and as a result of his contributions, new areas of economic inquiry have become tractable for rigorous theoretical analysis. The areas of application include the design of securities, contract theory, macroeconomics with financial frictions, market microstructure, and collusion.

Here is excellent coverage from A Fine Theorem, here is part of the opening bit:

The JBC has, in recent years, been tilted quite heavily toward applied empirical microeconomics, but the prize for Sannikov breaks that streak in striking fashion. Sannikov, it can be fairly said, is a mathematical genius and a high theorist of the first order. He is one of a very small number of people to win three gold medals at the International Math Olympiad – perhaps only Gabriel Carroll, another excellent young theorist, has an equally impressive mathematical background in his youth.

Sannikov is at Princeton…congratulations to him and them!

Technology vs the Tragedy of the Commons

Global fishing stocks are collapsing due to the tragedy of the commons and the resulting overfishing. Technology, however, suggests a possible solution:

Global Fishing Watch is the product of a technology partnership between SkyTruth, Oceana, and Google that is designed to show all of the trackable fishing activity in the ocean….

The tool uses a global feed of vessel locations extracted from Automatic Identification System (AIS) tracking data collected by satellite, revealing the movement of vessels over time. The system automatically classifies the observed patterns of movement as either “fishing” or “non-fishing” activity.

This version of the Global Fishing Watch started with 3.7 billion data points, more than a terabyte of data from two years of satellite collection, covering the movements of 111,374 vessels during 2012 and 2013. We ran a behavioral classification model that we developed across this data set to identify when and where fishing behavior occurred. The prototype visualization contains 300 million AIS data points covering over 25,000 unique vessels. For the initial fishing activity map, the data is limited to 35 million detections from 3,125 vessels that we were able to independently verify were fishing vessels. Global Fishing Watch then displays fishing effort in terms of the number of hours each vessel spent engaged in fishing behavior, and puts it all on a map that anyone with a web browser will be able to explore.

Can vessels turn AIS off?

Sure, but that is certain to draw attention, like wearing a trenchcoat and sunglasses on a hot summer day. Global Fishing Watch will enable us to flag suspicious behaviors like suddenly disappearing, or appearing as if from nowhere, or jumping 1,000 miles and appearing to fish in the middle of Asia. It will give us the opportunity to identify who may have something to hide, and who is operating openly and transparently. Secondly, more countries and intergovernmental agencies like Regional Fisheries Management Organizations (RFMOs) are requiring AIS use within their waters, so more fishing vessels will be legally compelled to use AIS in the coming years. Many already are. For example, as of May 2014, all European Union-flagged fishing vessels over 15 meters in length are required to use AIS. Perhaps most importantly, AIS was primarily designed as a safety mechanism to help avoid collisions at sea. Turning off your AIS just to avoid being tracked puts your vessel and crew at risk of being run down by a cargo ship in the middle of the night.

Mark this as another example of the end of asymmetric information.

Hat tip: GHABS.

Titles which will not convince

If I were writing a piece advocating Universal Basic Income, I would not call it “Why Free Money Beats Bullshit Jobs.”

That is from Rutger Bregman, though please note he may not have chosen the title.  I believe such a title would not appeal to the people who have…bullshit jobs…and who are being asked to finance the free money.

This economist so transparently pandering to Trump also will not convince.  And here an actual Satanist is not so convinced by some recent claims about Ted Cruz.

Americans seem to like immigration

From a new Pew Study:

In our latest national political survey, released in March, 59% of the public say immigrants strengthen the country, while 33% describe them as a burden. In 1994, opinions were nearly the reverse: 63% said immigrants were a burden and 31% said they strengthened the country.

You will note that they views of Republicans and Democrats diverge after 2006.  Millennials are especially favorably inclined.


Venezuela doesn’t have enough money to pay for its money

Last month, De La Rue, the world’s largest currency maker, sent a letter to the central bank complaining that it was owed $71 million and would inform its shareholders if the money were not forthcoming. The letter was leaked to a Venezuelan news website and confirmed by Bloomberg News.

“It’s an unprecedented case in history that a country with such high inflation cannot get new bills,” said Jose Guerra, an opposition law maker and former director of economic research at the central bank. Late last year, the central bank ordered more than 10 billion bank notes, surpassing the 7.6 billion the U.S. Federal Reserve requested this year for an economy many times the size of Venezuela’s.

…While the cash was still arriving — at times, multiple planeloads a day — authorities set their sights on the year ahead. In late 2015, the central bank more than tripled its original order, offering tenders for some 10.2 billion bank notes, according to industry sources.

But currency companies were worried. According to company documents, De La Rue began experiencing delays in payment as early as June. Similarly, the bank was slow to pay Giesecke & Devrient and Oberthur Fiduciaire. So when the tender was offered, the government only received about 3.3 billion in bids, bank documents show.

That is from Andrew Rosati.  Here is a sad and poignant post on the suicide of Venezuela, by Joel D. Hirst.

Me on Greece, the IMF, and the European Union

Since the Greek situation is heating up again, and not in good ways, I thought I would link to a recent interview I did.  Here is one bit:

Asked about what has gone wrong with Greece’s bailouts, Professor Cowen commented that “the bailout programs were never going to work in the first place. The debt is too high and is more of a political weapon than anything which can be paid back. And the Greek economy requires very serious structural reform, more than the Greek people seem to wish to accept. That is two impossibilities in the situation right there, and then on top of that we have a dysfunctional EU, slow global growth across the board, and the refugee crisis. In that setting, can one expect anything other than failure?”

“It’s all a big bargaining game, and at the end of the day pulling the plug will have to be up to the Greeks. Everyone’s expectations are unrealistic, and everyone knows that, including the IMF and EU and many others too. But who will pull the plug? Tsipras almost did, and then backed away. In my view, sooner or later Greece will leave this arrangement because it simply isn’t workable. I don’t look forward to the resulting economic carnage.”

Asked why he thinks Europe has been unwilling to consider a debt-write off for Greece, Cowen said that “because Italy above all would be next in line, but of course Spain too and others as well.”

Here is the conclusion:

Lastly, when I asked Tyler Cowen what policies he would recommend for Greece so the country can re-boost its economy and put people back to work, [he] said this:

“Do you know the old punchline? “Well, I wouldn’t start from here.” Greece has been deindustrializing for a long time, there isn’t enough to take the place of manufacturing, and tourism just isn’t enough. The interest groups seem intractable. I’d like to see Greece have much more of a free market economy, but that’s begging the question, isn’t it? And there is the ongoing distraction and stress of having to renegotiate the agreements every few years. By the way, I can’t bench press 600 pounds.”

The full interview is here.

Thursday assorted links

1. It is harder for poor people to buy in bulk, and this matters.

2. Reactionaries respond to Douthat on reaction.  And does Girard > Hayek?

3. Now you can apply to Stripe as a team.

4. Economist Ray Fair has created a table to measure how much runners slow down with age (NYT).

5. Yao Ming cannot reform Chinese basketball.

6. Reverse helicopter drop, literally: deflationary attack on ISIS.

What drives you?

In fact, over the years, Mr. Gross has consistently asked one question of prospective employees: What drives you?

The twist is that they must pick one of three answers: money, power or fame.

Strangely to him, no one has ever picked fame.

“It is the one thing I have always wanted,” he said. “When I was starting out at Pimco in 1972, I told my mother and father that I was going to become the most famous bond manager in the world.”

And this:

At night he will wake up as many as three times to check on global markets, he says.

And this:

“My whole evening is dependent on whether I beat them [Pimco, his former employer],” Mr. Gross said. “You see, I have to prove it all over again. Every day.”

The Landon Thomas Jr. NYT Dealbook post is interesting throughout.  And here is a 2008 profile of Gross.

A market system for improving peer review?

Paul Frijters and Benno Torgler have a new six-page paper (pdf)on that topic, here is the abstract:

The current peer review system suffers from two key problems: promotion of an in-crowd whose methods, opinions and innovations it protects; and failure to represent the opinions and interests of non-peer clients. As a result, whole disciplines orient themselves toward navel-gazing research questions of little import to society or even science as a whole, and new methods and concepts must be unusually persuasive to break through. We thus suggest a more efficient and integrity-preserving system based on an open two-sided market in which buyers and sellers of peer review services would both be subject to a set of recursive quality indicators. We lay out key features we think would be important to reduce the opportunities for gaming and that improve the signals about the societal value of a contribution. Our suggestions include a level of reward offered by the author of a paper to get refereed and a level of desired quality of the referee. They include randomly selecting from a group of referees that express a willingness to accept the offered contract. They include the possibility that papers are put up by non-authors for peer-review for assessment on different criteria, such as societal relevance. And they finally include the possibility that referee reports themselves become refereed by other referees. What we envisage is that such an open market in which all elements are subject to peer review will over time lead to specialized reviewers in different criteria, and more useful signals about the nature and quality of any individual piece of work. Our incentivized market set-up would both professionalize the peer review process and make it completely transparent, an innovation long overdue.

Interesting, but the main problem with the idea is simply that no one cares.

For the pointer I thank Ben Southwood.