Month: April 2016
By Jeff Young at the Chronicle, here is one excerpt:
Jeff Young: …I asked Cowen what has surprised him most as his effort has evolved.
Tyler Cowen: I wouldn’t quite call it a surprise, but I’ve been consistently impressed over the last 10 years, more than 10 years, if you make consistently smart content on the Internet, whatever form, there is an audience there. Whether it’s MOOCS or blogs or whatever, YouTube, there really are people just hungry for stuff. How far you can push them is really impressive.
They don’t have to get every bit of it to take away a lot, and for you to give like your heart and soul, like here’s what I think is the important version of the topic, is better to, like, “Oh, are they going to understand this term?” or “Can I say elasticity?” or “Do they know this?” I think it’s a little bit of poison when you think too much that way. I’m not saying overwhelm them with words they don’t know, but if you believe in the material, I think a lot of them are going to get it. It’s like one thing I’ve really learned.
TC: …People have learned economics is about a debate, and in fact we have a new class of video. The first one just went up an hour ago. Alex and I debate education. How much is it signaling, and how much is it you actually learn?
Jeff Young: Wow. You mean university education?
Tyler Cowen: Yeah, to teach topics as a debate is an underexplored method, and we’re going to do more of this, so look at that video. It’s just Alex and I. We talk to each other. We sort of call each other names in good humor. The idea is that people maybe learn better through conflict.
You know you get some dry presentation, you sort of vaguely nod, but you never know what’s really at stake here. If you don’t know what’s at stake or why someone might disagree, maybe you don’t understand it. To try to teach this way, we’ll see how they’re received, but it’s one of the things we have coming next.
Do read the whole thing, or listen.
From VoxEU, with Enisse Kharroubi, Christian Upper, Fabrizio Zampolli:
But what if, in addition to the persistent – but not structural – hole in aggregate demand a financial bust inevitably generates, a key part of the true story has less to do with the level of aggregate demand than with its composition and impact on the structure of supply? What if what some see as a rather disappointing pre-crisis US growth performance despite a strong financial boom was actually disappointing, in part, precisely because of that boom? What if the protracted post-crisis weakness reflects in no small measure the difficulties in correcting the resource misallocations that accumulated during the previous financial boom and emerged once a financial crisis subsequently broke out?
This is indeed what we conclude by examining the experience of 21 advanced economies over the last 40 years (Borio et al. 2015). The hitherto unsuspected villain in this story is the misallocation of resources – in our case, labour – during the credit boom and its long post-crisis shadow. More generally, the findings support the view that the disappointing developments we have been witnessing may be the result of a major financial boom and bust that has left long-lasting scars on the economic tissue (e.g. BIS 2014, Borio 2014, Borio and Disyatat 2014, Rogoff 2015) rather than the reflection of a structural, deep-seated weakness in aggregate demand.
Here is the full article.
Total Wealth of Female Billionaires
1 China $95.4B
2 US 28.8
3 UK 4.9
4 Spain 4.6
5 Italy 2.4
5 Nigeria 2.4
7 Australia 1.8
8 Brazil 1.4
That is from an Ian Bremmer tweet. I suspect offshore bank accounts are not included.
His new book is titled Legislating Instability: Adam Smith, Free Banking, and the Financial Crisis of 1772. From Harvard University Press, here is one summary bit:
The central argument of my thesis is thus that the salient financial crisis of the Scottish free banking period, the obtrusive exception to the hypothesis of greater financial stability under free banking in Scotland,was, pace Adam Smith, made more rather than less likely by precisely those regulated or “unfree” elements of Scottish banking which the author of The Wealth of Nations promoted. Further, I argue that this conclusion should hardly be cause for surprise once we realize that it was none other than the oldest, largest, and most established banks in Scotland that had lobbied for Smith’s legal restrictions on banking; regulations that had the effects of raising barriers to entry, lowering competition in the provision of short-term credit, increasing the efficient scale of banking, and therefore, ultimately, amplifying the level of systematic risk in Scottish credit markets.
Finally, in support of Selgin and White, among others, I find that the relative competitiveness of the Scottish financial system — certainly in contrast to the highly bifurcated English banking sector of the time — along with the unlimited legal liability of shareholders in Scottish private banks, were sources of considerable financial stability, both in 1772 and previously.
Here is the book’s home page.
The government of Shanghai says that under new rules residents who fail to visit their elderly parents will get black marks on their credit records.
A new set of regulations released recently by the government of the eastern city says that adult children living apart from their parents should “visit or send greetings often.” Parents who think their children are not fulfilling this responsibility can file lawsuits against them for neglect.
If the offspring still refuse to follow through with their obligations after a court tells them to, they will have their credit standing negatively impacted, Luo Peixin, deputy director of the city government’s law office, said on a news conference on April 6.
The policy, which takes effect on May 1, is part of the central government’s efforts to promote filial piety, an important aspect of Confucianism, as the country’s population rapidly ages.
Beijing enacted a law in July 2013 aimed at compelling the children of parents older than 60 to visit their parents “frequently” and make sure their financial and emotional needs are met.
Here is the story, and for the pointer I thank Jesse Reynolds, as well as a source on Twitter.
This paper quantifies the effect of global migration on the welfare of non-migrant OECD citizens. We develop an integrated, multi-country model that accounts for the interactions between the labor market, fiscal, and market size effects of migration, as well as for trade relations between countries. The model is calibrated to match the economic and demographic characteristics of the 34 OECD countries and the rest of the world, as well as trade flows between them in the year 2010. We show that recent migration flows have been beneficial for 69 percent of the non-migrant OECD population, and for 83 percent of non-migrant citizens of the 22 richest OECD countries. Winners are mainly residing in traditional immigration countries; their gains are substantial and are essentially due to the entry of immigrants from non OECD countries. Although labor market and fiscal effects are non-negligible in some countries, the greatest source of gain comes from the market size effect, i.e. the change in the variety of goods available to consumers.
…the World Bank said Nigeria’s economic growth slid to 2.8% in 2015 from 6.3% the year before, and the International Monetary Fund says this year’s growth will slip to 2.3%, slower than the population, which adds 13,000 people daily.
Factories are closing because they can’t find dollars to import parts. Supermarkets are struggling to keep shelves stocked. Power plants have virtually stopped producing electricity because they can’t pay for maintenance. New shopping malls are empty and ordinary citizens are going to lengths to find some basic goods.
…on the streets, daily frustrations are mounting. Electricity is so scarce that the country’s national power plants didn’t produce a single watt for several days last week—they couldn’t import parts and services, said two senior members of Mr. Buhari’s administration. Internet providers face similar woes.
Nigerians abroad are stuck with ATM cards they can’t use because the central bank has limited withdrawals outside the country. Bitcoin trades are up as Nigerian professionals scrounge for ways to move money—and increasingly, themselves—out of the country.
Here is the NYT article:
Can you fly an iPhone to the stars?
In an attempt to leapfrog the planets and vault into the interstellar age, a bevy of scientists and other luminaries from Silicon Valley and beyond, led by Yuri Milner, the Russian philanthropist and Internet entrepreneur, announced a plan on Tuesday to send a fleet of robots no bigger than iPhones to Alpha Centauri, the nearest star system, 4.37 light-years away.
If it all worked out — a cosmically big “if” that would occur decades and perhaps $10 billion from now — a rocket would deliver a “mother ship” carrying a thousand or so small probes to space. Once in orbit, the probes would unfold thin sails and then, propelled by powerful laser beams from Earth, set off one by one like a flock of migrating butterflies across the universe.
Within two minutes, the probes would be more than 600,000 miles from home — as far as the lasers can maintain a tight beam — and moving at a fifth of the speed of light. But it would still take 20 years for them to get to Alpha Centauri. Those that survived would zip past the stars, making measurements and beaming pictures back to Earth.
Upon reflection, I don’t think we should do it. What if the devices are traced back to us and we are exterminated or enslaved or simply demoralized? Let’s stick with those moons of Saturn.
Students at Purdue University soon will be able to apply for education funding in exchange for a percentage of their future earnings, a program that could revolutionize college financial aid at a time when costs are high.
Through its research foundation, the public college in West Lafayette, Ind. is rolling out the “Back a Boiler” program next month, using a concept known as an income-share agreement, or ISA, that would be available to rising juniors and seniors. Awards will start at $5,000 and will take into account a student’s cumulative debt. Students would repay the debt during the years immediately following college based on a fixed rate linked to their expected income, a gamble that could save them thousands of dollars as compared to traditional loans but also could cost them far more if they land high-paying jobs.
Purdue is the first American university to experiment with ISAs in more than 40 years, and if successful, could mainstream a novel alternative to private student loans.
3. “Dallas, with the highest concentration of [Craigslist] missed connections, has an impressive spread from Monday to Friday, with its inhabitants posting throughout the workday and late into the evening.” For the country as a whole, the most lovelorn days seem to be Mondays.
4. Is Hillary likely to be prosecuted? I’ve tried to avoid this topic, but I found this article both realistic and full of actual information.
Here is how I think about these issues. The Artificial in AI can sometimes mislead so let’s start by getting rid of the A and asking instead whether more NI, Natural Intelligence, will decimate the middle class. For example, will increasing education in China decimate the American middle class? I don’t think so.
As I said in my $5 trillion to U.S. citizens (and even more taking into account the rest of the world). A reduction in cancer mortality is more likely to happen with a well-educated China than with a poorly educated China. So we have a huge amount to gain by greater NI., the brainpower of China and India in the 20th century was essentially “offline”. Instead of contributing to the world technological frontier the people of China and India were just barely feeding themselves. China and India are now coming online and I see the increase in natural intelligence as one of the most hopeful facts for the future. It’s been estimated that a reduction in cancer mortality of just 10 percent would be worth
In the case of low-skill labor the rise of China has hurt some US low-skill workers (although US workers as a whole are almost certainly better off due to lower prices). The US has historically had an abundance of highly-skilled labor and with greater education around the world we have less of a competitive advantage. In the case of high-skill labor, however, I think the opportunities for gains are much greater than with competition for low-skill labor. Ideas are what drives growth and ideas are non-rivalrous, they quickly spread around the world. The more idea creators the better for everyone. At the world level, for example, the standard of living and the growth rate of world GDP have both gotten larger as population has increased.
Greater foreign intelligence and wealth could be a threat if intelligence turns from production to destruction (this is also a). We probably can’t keep China poor, even if we tried, and any attempt to try to do so would likely backfire in the worst possible way. Thus, if we want to keep high-skill Chinese workers working on medical rather than military breakthroughs, we must preserve a peaceful world of trade. Indeed, peace and trade become ever more important the richer the world gets.
Now let’s turn from NI to AI. For the foreseeable future I see AI as being very similar to additional NI. Smart people in China aren’t perfect substitutes for smart people in the United States and there are also plenty of opportunities for complementarity. Similarly AI is not a perfect substitute for NI and there are plenty of opportunities for complementarity. An AI that drives your car, for example, complements your NI because it leaves more time for more productive tasks.
(What happens when AI does become a perfect substitute for NI? We could easily be 100 years or more from that scenario but my foresighted colleague, Robin Hanson, has a new book that discusses the implications of uploads, human intelligence copied into software—Hanson’s book is the most complete and serious scenario analysis of the implications of a new technology ever written but most of us won’t live long enough to know whether he is right although Robin might.)
Thus, the analysis of AI and NI is similar except for one important fact. As Chinese workers become better educated a significant share of the gains will go to Chinese workers (although by no means all). AI, however, is produced by capital. But in our world capital isn’t scarce. The world is awash in capital and computing power is getting ever-cheaper. AI isn’t like an oil field owned by a handful of people. AI will be cheap and ownership will be widespread. Just look at your cellphone—it’s faster and more powerful than a multi-million dollar Cray-2 supercomputer of 1990. Moreover, in 1990 there were only a handful of Cray-2s and today there are billions of cell-phone super-computers including hundreds of millions and soon billions in poor countries. The gains from AI, therefore, will flow not to capital but to consumers. So if anything the gains from more AI are even larger than the gains from more NI.
From my answer on Quora.
That was the question I had reading Joel Kotkin’s new and interesting The Human City: Urbanism for the Rest of Us. Kotkin doesn’t himself come out and say that, but it is hard to avoid seeing how his arguments point in that direction. He has two powerful arrows in his bow:
1. Birth rates in cities are too low, so highly urbanized countries such as Singapore and South Korea will have difficulty sustaining themselves. Making cities nice, while it brings human benefits, does not solve this problem and in some ways makes it worse.
2. Lots of high-density, vertical building doesn’t really make cities cheaper. In fact it sucks more talent in, and more business activity, and in the longer run makes cities more expensive. Just look at Seoul and Singapore, which have built plenty but are nonetheless considered some of the most expensive cities to live in. After all, isn’t that the increasing returns to scale story?
If I read Kotkin correctly (and this post is my interpretation of him, not a summary), he is not criticizing the policy choices of Seoul and Singapore, which have elevated those countries, or in nerdier terms you could say they have brought significant infra-marginal benefits. He is simply pointing out that liberal building does not solve the problems it is supposed to solve, most of all the margins looking forward.
Perhaps to address those problems we need to look outside the realm of the city. America, by the way, is uniquely well-positioned to do this. Singapore, short of cutting a deal with southern Malaysia, has nowhere to go, so to speak.
I say Singapore should inspire more social science. Pararg Khanna, who lives in Singapore, also has a new book out on cities and the value of interconnectivity: Connectography: Mapping the Future of Global Civiliation. I haven’t read it yet but here is his TED talk on the same.