Month: September 2016

Why do people hate the media so much?

by  Tyler Cowen in

Haven’t you noticed this?

I have a simple hypothesis.  No matter what the media tells you their job is, the feature of media that actually draws viewer interest is how media stories either raise or lower particular individuals in status.  (It’s a bit like “politics isn’t about policy.”)  That’s even true for this blog, though of course that is never my direct intention.

But now you can see why people get so teed off at the media.  The status ranking of individuals implied by a particular media source is never the same as yours, and often not even close.  You hold more of a grudge from the status slights than you get a positive and memorable charge from the status agreements.

In essence, (some) media is insulting your own personal status rankings all the time.  You might even say the media is insulting you.  Indeed that is why other people enjoy those media sources, because they take pleasure in your status, and the status of your allies, being lowered.  It’s like they get to throw a media pie in your face.

In return you resent the media.

A good rule of thumb is that if you resent the media “lots,” you are probably making a number of other emotional mistakes in your political thought.

What is wrong with African cities?

by  Tyler Cowen in

In Africa this process seems not to work as well. According to one 2007 study of 90 developing countries, Africa is the only region where urbanisation is not correlated with poverty reduction. The World Bank says that African cities “cannot be characterised as economically dense, connected, and liveable. Instead, they are crowded, disconnected, and costly.”

I say the one big problem is premature deindustrialization:

What ties them [African cities] together, and sets them apart from cities elsewhere in the world, according to the Brookings Institution, an American think-tank, is that urbanisation has not been driven by increasing agricultural productivity or by industrialisation. Instead, African cities are centres of consumption, where the rents extracted from natural resources are spent by the rich. This means that they have grown while failing to install the infrastructure that makes cities elsewhere work.

That is from The Economist, the article is interesting throughout.

The culture that is Texas high school football

by  Tyler Cowen in

After Texas high school builds $60-million stadium, rival district plans one for nearly $70 million

Need I say more?  I will nonetheless:

In Frisco, which neighbors Allen and McKinney, the district will pay $30 million over several years to use the Dallas Cowboys’ new 12,000-seat practice field for high school football and soccer games, as well as graduation ceremonies.

Here is a nice bit of fiscal illusion:

In McKinney [one of the stadium-building districts], school taxes for property owners amount to $1.63 per $100 of assessed valuation. The tax rate had been higher in the recent past, but it fell 5 cents this year, partly because the district had dropped some old debt. Because of the 5-cent decrease, district officials repeatedly note, property owners will see their taxes go down, even as the new stadium goes up.

Jim Buchanan would be proud.  And it’s a good thing we have the public sector to protect us from negative-sum status-seeking games!

The original pointer is from Adam Minter.

Sunday assorted links

by  Tyler Cowen in

1. “…we find that the real price of watches in nearly all categories falls steadily by 1.3 per cent per year, equivalent to a fall of 75 per cent over a century, showing that sustained innovation in the production of a highly complex artefact had already appeared in one important sector of the British economy by the early eighteenth century.”  Here is the article.

2. Have tasting menus become too expensive?  I say yes: ““It means D.C. is a town that has come of age, and that should worry us all.”

3. Garett Jones argues for a high-SAT immigration policy.

4. How to store your butterflies (photo).

5. My former student, Dr. Yonas Biru, who did his dissertation on the coup d’etat, is on a hunger strike.

6. Interview with Decius.  Caveat emptor, I say he has been “played” by Trump.  Still, the media of so much coverage of the “hillbilly” and “downtrodden” Trump supporters, I say let’s look at the intellectuals, anonymous though some of them may be.

7. Weiner is a splendid movie with many subtle points, including in the philosophical direction.  It is about leadership, publicity, motivation, compulsion, and what a marriage really consists of, or not.  In another life, Huma Abedin could have been a movie star.  She has exactly the right mix of distance and involvement, and she dominates every scene she is in, even when just sitting quietly in the background.  Um…I guess she is a movie star.  Starlet.  Whatever.

What I’ve been reading

by  Tyler Cowen in

1. Europe Since 1989: A History, by Philipp Ther.  And yet it is all told through the vantage point of central and eastern Europe.  Recommended, not just the usual and interesting to see “the West” treated as the periphery.  Makes you wonder if eastern Europe ever had a chance.

2. Jeffrey Edward Green, The Eyes of the People: Democracy in an Age of Spectatorship.  “The ocular model, by contrast, is grounded on the People’s eyes and its capacity for vision, rather than on the People’s voice and its capacity for speech.”  Think of it as Exit, View, and Loyalty, for the contemporary age.

3. Naomi Duguid, Taste of Persia: A Cook’s Travels Through Armenia, Azerbaijan, Georgia, Iran, and Kurdistan.  Not only an excellent cookbook, but a good regional study in its own right.

4. Paul Bloom, Against Empathy. “Singer goes further and argues that individuals like Kravinsky [an organ donor], motivated by their cold logic and reasoning, actually do more to help people than those who are gripped by empathic feelings…”

5. Christine Woodside, Libertarians on the Prairie: Laura Ingalls Wilder, Rose Wilder Lane, and the Making of the Little House Books.  Fun and interesting, this gives you the real story behind those women and their connection to libertarianism.  Here is a short essay by the author excerpted from the book.  I cannot, however, say this book drove me to wish to read the original sources.

The new Coetzee and McEwan novels are OK but they don’t thrill me.  There is also George J. Borjas, We Wanted Workers: Unraveling the Immigration Narrative, coming out soon.

Saturday assorted links

by  Tyler Cowen

1. The geography of populist surges.  This update tells us that rural income did OK.

2. Airbnb + clapped out taxi cab = NYC on $39 a night.  This guy (NYT) pays $450 a month for a 40-square foot cubbyhole in Williamsburg.  And the homes of New Yorkers on TV are looking worse (NYT).

3. “…the phenomenon of men opting out of work is limited to the native-born.”  That is one reason why I don’t think it is just demand.

And here is Pleeps on the young men who do not wish to work.  Two points: a) the gaps he finds are actually pretty large relative to the residual that needs to be explained, and b) a lot of those young men going to school never finish and in fact they are engaged in a kind of leisured unemployment, albeit at an especially high price.  In fact, if you take non-completion seriously, the entire phenomenon becomes far more visible and obvious as a problem.  The funny thing is, in these mood-affiliated times, generally you can get people to recognize the problem if you present it in the context of degree completion only and make sure to portrays the students as pure victims of circumstance.  At lower tier schools, the completion rate is now about 38 percent.  It would be shocking if there were not an analogous problem in the job market, yes shocking.  Of course we live in shocking times.

4. “I tell her just marry anyone. Whatever. All the San Francisco guys seem like the same guy to me.”  Link here.

5. The culture that is Olive Garden markets in everything.

Hail GMU’s visionary, Dan Klein

by  Tyler Cowen in

I will second Bryan Caplan’s post:

Last week, my colleague Dan Klein kicked off the Public Choice Seminar series.  During the introduction, I recalled some of his early work.  But only after did I realize how visionary he’s been.

In 1999, when internet commerce was still in its infancy, Klein published Reputation: Studies in the Voluntary Elicitation of Good Conduct.  Seventeen years later, e-commerce towers before us, resting on a foundation of reputational incentives – everything from old-fashioned repeat business to two-sided smartphone reviews.

In 2003, long before Uber, Airbnb, or serious talk of driverless cars, Klein published The Half-Life of Policy Rationales: How New Technology Affects Old Policy Issues.  This remarkable work explores how technological change keeps making old markets failures – and the regulations that arguably address them – obsolete.  (Here’s the intro, co-authored with Fred Foldvary).  Fourteen years later, the relevance of Klein’s thesis is all around us.  Transactions costs no longer preclude peakload pricing for roads, decentralized taxis and home rentals, or full-blown caveat emptor for consumer goods.  So why not?

I’m not going to say that Klein caused these amazing 21st-century developments.  But he did foresee them more clearly than almost anyone.  Hail Dan Klein!

Some of Dan’s work, and later work (much of which is covered at MR), you will find here and here.  For instance, his later work on academic bias also was well ahead of its time and prefigured subsequent events, so this is actually a running streak.

The economic decline of bowling the culture that was America

by  Tyler Cowen in

Bowling alone and for peanuts too:

In 1964, “bowling legend” Don Carter was the first athlete in any sport to receive a $1 million endorsement deal ($7.6 million today). In return, bowling manufacturing company Ebonite got the rights to release the bowler’s signature model ball. At the time, the offer was 200x what professional golfer Arnold Palmer got for his endorsement with Wilson, and 100x what football star Joe Namath got from his deal with Schick razor. Additionally, Carter was already making $100,000 ($750,000) per year through tournaments, exhibitions, television appearances, and other endorsements, including Miller, Viceroys, and Wonder Bread.

…Of the 300 bowlers who competed in PBA events during the 2012-2013 season, a select few did surprisingly well. The average yearly salary of the top ten competitors was just below $155,000, with Sean Rash topping the list at $248,317. Even so, in the 1960s, top bowlers made twice as much as top football stars — today, as the highest grossing professional bowler in the world, Sean Rash makes significantly less than a rookie NFL player’s minimum base salary of $375,000.

In 1982, the bowler ranked 20th on the PBA’s money list made $51,690; today, the bowler ranked 20th earns $26,645.

The article, by Zachary Crockett, suggests numerous hypotheses for the economic decline of bowling, but ultimately the answer is not clear to me.  I would suggest the null of “non-bowling is better and now it is better yet.”  A more subtle point is that perhaps bowling had Baumol’s “cost disease,” but under some assumptions about elasticities a cost disease sector can shrink rather than ballooning as a share of gdp.

For the pointer I thank Mike Donohoo.

China facts of the day

by  Tyler Cowen in

Total outstanding mortgage loans rose more than 30 percent and new mortgage growth clocked in at 111 percent in the past year. Since June 2012, outstanding mortgage loans have grown at an annualized rate of 30 percent. Predictably, that’s pushed prices higher and higher.

In urban China, the average price per square foot of a home has risen to $171, compared to $132 in the U.S. In first-tier cities such as Beijing and Shenzhen, prices have increased by about 25 percent in the past year. A 100-city index compiled by SouFun Holdings Ltd. surged by a worrisome 14 percent in the last year. Developers are buying up land in some prime areas that would need to sell for $15,000 per square meter just to break even.

That is from Christopher Balding, there is more at the link.  Might as much as 70% of Chinese household wealth be in housing?  Here is some follow-up analysis.

Labor Force Participation and Video Games

by  Alex Tabarrok in

Here is more from Erik Hurst discussing his new research:

On average, lower-skilled men in their 20s increased “leisure time” by about four hours per week between the early 2000s and 2015. All of us face the same time endowment, so if leisure time is increasing, something else is decreasing. The decline in time spent working facilitated the increase in leisure time for lower-skilled men. The way I measure leisure time is pretty broad; it includes participating in hobbies and hanging out with friends, exercising and watching TV, sleeping, playing games, reading, and so on.

Of that four-hours-per-week increase in leisure, three of those hours were spent playing video games! The average young, lower-skilled, nonemployed man in 2014 spent about two hours per day on video games. That is the average. Twenty-five percent reported playing at least three hours per day. About 10 percent reported playing for six hours per day. The life of these nonworking, lower-skilled young men looks like what my son wishes his life was like now: not in school, not at work, and lots of video games.

How do we know technology is causing the decline in employment for these young men? As of now, I don’t know for sure. But there are suggestive signs in the data that these young, low-skilled men are making some choice to stay home. If we go to surveys that track subjective well-being—surveys that ask people to assess their overall level of happiness—lower-skilled young men in 2014 reported being much happier on average than did lower-skilled men in the early 2000s. This increase in happiness is despite their employment rate falling by 10 percentage points and the increased propensity to be living in their parents’ basement.

It’s hard to distinguish “push” unemployment that is made more pleasant by video games from “pull” unemployment created by video games. I’m not even sure that distinction matters very much, at least if we aren’t talking about banning video games to increase employment. If elderly people started playing a lot of video games (as soon they will) would we worry that this was making retirement too much fun?

I’d be interested in knowing how much video games have displaced television. I watch more television than my kids, who play more video games. It’s not obvious that this is to their detriment.

Perhaps the issue is that video games like slot machines are so enticing that young people discount the future too heavily or don’t recognize the future cost of not being in the workforce. Maybe. Perhaps what we really need is a 3D, virtual reality, total sensory simulation, awesome video game that is so expensive that it encourages people to work.

Overall, the video game worry is a bit too reminiscent of the Dungeons and Dragons panic, or the earlier panics that books and radio were ruining children’s minds, for me to jump on board.

Model this Brexit is Brexit until it’s not or is it once again?

by  Tyler Cowen in

Senior figures in the EU believe that Britain will give up on Brexit if they make negotiations as tough as possible, the Telegraph understands.

British officials are fighting to stop Europe adopting a no-compromise position in talks in the hope that the UK will change its mind about leaving the bloc.

This belief is fuelling the hardline message on issues like freedom of movement that have emerged from Berlin, Paris and Brussels in recent weeks.

More than five senior EU figures interviewed by the Telegraph this week expressed doubts that Britain would go through with Brexit when confronted by the “reality of the bureaucratic nightmare” and the “insane act of economic self-harm”, as they referred to Brexit.

One senior British official involved in the set up for the coming negotiations said the EU elite “seem to think the game is to make us change our minds”.

This stance has left officials fighting to explain to European leaders how “dangerous” a game they were playing, and how “unlikely” it was to succeed.

Here is the full story.  Speculative of course, but don’t forget this bit:

“Perhaps there was a time when this could not have got nasty,” said one source close to Mr Verhofstadt, “but when the Brexit minister calls the chief negotiator ‘Satan’ what response, really, does Britain expect?”

Do they really spell “fuelling” with two l’s?

If Trump wins, what is the best theory of why?

by  Tyler Cowen in

I can think of a few candidate theories:

1. His views are the right views, more or less, and American voters recognized this.

2. A quite significant percentage of America is very directly racist.  I don’t mean statistical discrimination here, I mean “downright racist.”

3. Give Ray Fair (NYT) his Nobel Prize right here and now, economic conditions truly predict election results at the national level.

4. The “third term Party fatigue” effect is stronger in national elections than we had thought.

5. Hillary Clinton is a weaker candidate than many people had thought.  Maybe so, but that has to be unpacked a bit more.  I would try “the Democratic national establishment doesn’t understand why much of America trusts it so little, so it keeps on doing and saying unpopular things.  Those things include elevating some candidates and also encouraging them to take particular stances.”

6. As Robert D. Putnam suggested, ethnic diversity can lower the quality of governance, and this is one step along that path toward greater fractiousness.  This may blend into racism, but much of it is simply “fear of being in the losing coalition.”  The common claim that the electorate is more polarized than before fits into this.  You might try Ezra Klein’s podcast with Arlie Hochschild.

7. America is not ready for a woman president.  Or maybe it has to be a different kind of woman president, noting that Hillary, while she has passed through many filters, has not passed through the “truly popular with normal voters filter” in the same way that say Thatcher and Merkel did.  And no, New York isn’t normal, sorry people.

8. The Democrats have plenty of policy proposals, but only the Republicans are running on ideas.  And very often an idea beats no idea, even if the idea on the table is a bad one.

I don’t agree with #1, and while #4 sounds like a plausible part of the story to me, as a truly major explanation I find it hard to square with Obama’s continuing popularity.  #3 kicks in but as a dominant force, it seems hard to elevate when median household income just grew at 5.2%, inflation is low, there is no major war, gas prices are low, and asset prices are high.

On #2, I see #5 as a more convincing statement of related ideas, while admitting #2 is a factor.  How well the Democrats do in the Senate might give us some bead on the relative import of #5.

Overall I am seeing a lot of room for #5 and #6 and #7 and #8.  Presumably 5, 6, and 8 are hard for many Democrats to admit, and I genuinely wonder how their thoughts run in the quiet of their homes.  Some are plugging hard for an extreme version of #2, but, as long as we are considering matters of prejudice, I find the gender bias of #7 easier to swallow.  We did after all just elect Obama for two terms in a row, and we have never ever had a woman president or even a serious contender before.

If, I wish to stress that word if.  But that he is still in the running, and making it close, is reason enough to ponder these questions.

Toward a theory of Marginal Revolution, the blog

by  Tyler Cowen in

I found this pretty awesome and flattering (I couldn’t manage to indent it or get the formatting right):