Tuesday assorted links

Comments

1. Let us hope that wars of mass mobilization are obsolete. Of course, the war to end all wars didn't. Rather than looking backwards, however, I will suggest the need to look forward. And what one sees looking forwarding are difficult challenges. Indeed, globalization has increased exponentially complex, and shared, problems that can only be addressed by robust government. We can ignore the problems and look forward to a succession of Donald Trumps, or we can address the problems with a spirit of cooperation and determination that only government can provide. Then again, maybe self-driving cars and spaceships to Mars will solve the problems.

"We can ignore the problems and look forward to a succession of Donald Trumps, or we can address the problems with a spirit of cooperation and determination that only government can provide. "

http://swopec.hhs.se/ratioi/abs/ratioi0031.htm

2: May be true in general, but the Trump (and Sanders) support in coal country isn't because of "import competition" per se, but because of domestic competition killing demand for coal.

This decision chart captured the election some time ago: is shit broken?

From the link:

"Are women people? -> No -> John Kasich"

Yes, just last week I heard Kasich talking about repealing the 19th Amendment....

Sheesh, there are idiots everywhere.

And surely if you follow the link, the justification will be along the lines of approval of a $22.50 copay for birth control instead of $20.

The actual insight is probably better captured by this buried quote: "'It’s a matter of diffuse benefits [to most people] and concentrated costs [to the industries facing trade competition],...' [Autor] said."

A basic tenet of public choice is that special interests are always more motivated to pursue their concentrated benefits than the general population is to avoid diffused costs. That's true whether the special interest is ethanol subsidies in Iowa, anti-competitive occupational licensing, or in this case concentrated protectionist benefits vs. diffuse consumer choice. The anti-trade politicians happen to be far right nationalists and far left socialists and the concentrated beneficiaries of protectionism happen to often be geographically concentrated, working at a local factory for example. Thus, the usual special interest behavior looks like voters in specific districts moving to the "extremes". For example, if all taxi drivers happened to live in the same congressional districts and both far right and far left were anti-Uber, then the data might show that car sharing services are bad for centrists.

Interestingly, when other special interest groups lose their concentrated rents and privileges, we often understand their anger, but we don't necessarily go so far as to say that they have "valid reasons to be frustrated" (as Autor does in the article), and we certainly don't say that taking away those concentrated benefits requires compensating them or providing adjustment assistance. In Thacker's example, does the case for fracking for natural gas require that we compensate coal workers for lost income? Does the case for deregulating teeth whitening require that we provide adjustment assistance to dentists? (See here [http://ij.org/case/georgia-teeth-whitening/] for explanation of teeth whitening issue, if interested.) When it comes to trade, there is some sort of cognitive bias that prevents people from treating the issue the same as any other concentrated-benefits-dispersed-costs issue. Even pro-trade economists seem to fall victim to this bias.

You make some good points. The thing about suddenly allowing imports from a certain sector is its sort of a "deus ex machina" event. One day you're going to the factory with a job, the next--due to an event you have no control over and perhaps had no way to expect--you're out of a job. Whereas, teeth whitening and the increase of fracking stems from a prolonged trend. People going to college had the ability to see there was less demand for dentists and change their decisions based on the market. Same with investments in coal mining equipment.

To an extent, workers at least are protected via unemployment, so I'm not sure anything else is needed, but I can understand the arguement

3. The oil market is complex (http://economistsview.typepad.com/economistsview/2016/04/causes-and-consequences-of-the-oil-price-decline-of-2014-2015-video.html) and permitting domestic oil to be exported has advantages and disadvantages. Ignoring either the advantages or the disadvantages is the role of the advocate, not the economist.

A little surprised #3 made it onto the list. One, the fact that lifting a ban on exports led to exports is... not interesting, right? Two, even if we think it is interesting from an "econ 101 is right" perspective, it seems like the source could be less obviously biased. (Realize we only care about the datapoint, not the screed, but still.)

Is there a highly Straussian point of #3 that I am missing?

The "highly Straussian point" (not really covered in that article) is the counterintuitive result that exporting crude oil should modestly lower US gasoline prices, rather than increasing it as one might think.

I'm shocked that the American Petroleum Institute would believe that U.S. exports of crude oil would lower U.S. gas prices. The piece by Stephen Moore is what I refer to as a masturbation essay: it's done primarily for self-satisfaction.

Is self satisfaction the reason for your comment?

No, it's just an economist who doesn't realize they don't know how the oilfield actually works. Lifting costs being what they are around the world, the health of the industry in the US is swayed by those who own Ghawar to an extent that exporting is not yet relevant and may not be for something like a decade or so.

My link is to Mark Thoma's blog, but it actually is to an excellent video presentation by Hamilton, Kamin, and Strongin about the current oil market and is both interesting and, in many respects, counter-intuitive (i.e., they explain why up is down, down is up). I got the link to the video presentation at Thoma's blog.

Personally, whenever these discussions come up, I like to look at two links.

The first is https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W - Weekly U.S. Field Production of Crude Oil (Thousand Barrels per Day), which last week was around 8.9 million barrels, a level last seen around Oct. 2014

The second is https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTIMUS1&f=M - U.S. Imports of Crude Oil and Petroleum Products (Thousand Barrels), which has the U.S. importing 301,768,000 barrels in January 2016, or around 10 million barrels a day.

In other words, the U.S. is still producing less than 50% of the oil it consumes. This is the sort of discussion that requires American exceptionalism when talking about 'exporting' something that does not even satisfy local demand.

1. It will hard to get much more from the rich. They will move income and assets in response to tax increases.

That said, if Trump costs Republicans Congress, the Democrats will certainly try.

Which is why distributional issues need to largely be addressed ex ante by changing the rules of the game, rather than ex post by maximizing the pie without regard to distribution and then redistributing.

That is a very interesting idea. Does it also work with containing corruption?

I think arguably, depending on precisely what you would consider as corruption. If the system never allows as high a degree of concentration of wealth and power in the first place, I think it reduces the extent to which those who win under the efficiency-maximizing version of the rules are able to make sure that the system lets them keep more of the pie.

Not sure what you mean by 'largely'. The after-tax income distribution is much more uniform than the pre-tax distribution. In America, the tax code is highly progressive and that has major distributional consequences. Just because we probably can't achieve 70+% tax rates on the rich doesn't mean distributional issues are unaddressed. What successes can you point to for "changing the rules of the game"? And what does that even mean?

All economic activity takes place within a legal framework that plays a role in allocating surplus. Limited liability, intellectual property, antitrust, rules on foreign trade, who can practice which occupations, etc. Those are the rules of the game.

That distributional issues are "addressed" (and I think you overstate the progressiveness of taxation in America - when all forms of tax are factored in, not just income taxes, it is not so highly progressive) does not mean they are addressed in a way that puts people on the lower end of the spectrum in the same or better position than they would be in under a different legal framework.

The common refrain of economists opining on policy issues is that we can maximize efficiency without regard to distributional issues, maximize the size of the pie, and then redistribute ex post so that everyone is better off than under an alternative system. I don't believe the last part happens.

> That said, if Trump costs Republicans Congress, the Democrats will certainly try.

Correct. And we have only the republican party to blame. They could have nominated Rubio, who would have had coattails, but no. God damn it.

7. More inside baseball than I could ever follow. I do remember applying for grad school at two places I chose to apply solely because of the presence of two professors at those schools, not different from why seminary students would choose a particular seminary. Law is a different world, or it was when I attended law school. I never knew the ideology of my law professors, and didn't care. Today, even law students are choosing a particular law school according to the school's ideology.

That can't be wholly true, since a conservative law school applicant would have exactly one respectable law school to apply to. It's important to remember that most students, in law school as everywhere (except graduate schools of arts and sciences) are fairly derisive of their professors, whom they consider to be losers who couldn't get real jobs. So the ideology of those professors is not terribly influential.

Before you get too excited about crude oil exports you might want to look at what is happening to exports of refined products.

Since the fracking revolution started about a decade ago a the price of WTI oil has traded well below the price of Brent oil. This reflected transportation bottleneck for fracked oil produced in the interior. But at the end of 2015 this spread narrowed nearly back to the spread in the pre-fracking era.

But domestic refiners took advantage of this lower priced oil to massively increase exports of refined petroleum. By 2015 US exports of refined products were $8,604 million 2009 $ as compared to around $2,000 million 2009 $ from 1995 to 2005. At the peak these
exports were equivalent to almost 50% of petroleum imports compared to about 10% before 2005. .So net imports were much below the raw imports data usually used to portray US dependence on imported oil.

Before we start making too much of the crude oil exports we better wait to see if it isn't just replacing exports of refined product.

The expanded exports of refined products was largely to Europe to compete against refiners using Brent oil. But now that the price spread between WTI and Brent is back to the pre-2005 levels US refiners have lost most of that price advantage.

'So net imports were much below the raw imports data usually used to portray US dependence on imported oil.'

You kow, using dollar figures this way instead of barrels (recognizing that barrels involves a lot more complication in terms of what refined products are discussed, refinery gain, etc.) is just another way to obscure the reality that the U.S. also imports refined products, from Europe, for example. In January 2016, around 30,000 barrels a day from the Netherlands - https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTIMUSNL1&f=M

It is reasonable to assume that most of what was exported from Rotterdam to the U.S. was refined product, likely for New England/East Coast needs. The data does not break down into product type, but heating oil or jet fuel are worth more in dollar terms than a barrel of crude (which generally can only produce a fraction of a barrel per refined product type), meaning that using dollars can also show how much America purchases refined product too. The U.S. imported 149,000 barrels of crude oil and petroleum product in January 2016 from that noted oil producer Germany - there is a global market in refined products, and the U.S. buys and sells on it. Simply showing how the U.S. makes money from refining South America crude does not change the fact that the U.S. requires large amounts of imports - including keeping the profit margins of Gulf Coast refineries healthy enough to keep them in business.

"The best all-purpose tweet, ever."

A better one: Not this sh*t again.

#3, id love to hear what Mr. Steven Kopits has to say about this subject.

2. Why does globalist corporatism get the centrist label? Seems pretty radical to me.

"Lifting the Oil Export Ban is Working"

There is precious little evidence to support this assertion. According to the EIA's PSW, US exports (albeit a modeled, rather than reported, number) have been running at a very modest 339,000 bpd. As a point of comparison, crude exports were running above this level in September 2014 and have regularly been above this level in the last 18 months or so.

In fact, US crude imports have been running over 8 million bpd, up 500,000 kbpd over last year's levels.

Now, virtually all of the gain is going into storage--US import dependence has grown only slightly. But imports are up sharply nevertheless.

Nor did we in the industry expect some surge in crude exports just as US production is falling. The US, as the numbers above clearly show, remains a large net importer of oil. Why would it export any at all? And, of course, the answer is to adjust quality to optimize refinery runs. Lifting the export ban was never about volumes, it was always about quality and efficiency.

"And, of course, the answer is to adjust quality to optimize refinery runs. Lifting the export ban was never about volumes, it was always about quality and efficiency."

So, it is working?

Can anyone work out what the Chinese robocop does? It moves around. Autonomously. It has a panic button. It has a taser. But what is the connection? Does it have a camera that enables a remote operator to deploy the taser? Is it, in short, a fat, slow drone?

It cannot have the software that would recognize a crime when it sees it and zap someone on their own. No one is capable of that.

So what is the point? Britain is full of CCTV cameras that now can talk to people. To tell them to stop doing that. I suppose deploying a taser to each is the next step. In case people aren't interesting in stopping what they are doing.

How long will it take before the Chinese ones are all stolen?

Great list today.

When did this happen exactly?

From 3:

"Little of this is happening now given Barack Obama’s legacy quest to halt domestic fossil fuel production"

How did the President have a legacy quest to stop something and then preside over over the biggest expansion in decades? Did the troops heading to North Dakota get lost and no one ever heard about it?

He blocked it on federal land but fracking on private property exploded. Score one for limited government.

I actually think that this was the debut of the Chinese robocop: http://www.bbc.com/news/world-asia-china-34592186

#7: Yes, those were quite interesting reflections on how empirical economics has evolved.

With all the "big data" now available to google, amazon, and dozens or hundreds of other firms and organizations, are there new econometric techniques that have been developed to analyze such data? There's an endless stream of articles about data mining, machine learning, etc. but I haven't read of specifically econometric techniques. Maybe the huge samples mean that theory takes a back seat to the data, but even if that is so, one still needs theory to interpret the empirical results.

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