Month: October 2016
1. Yemen facts of the day, the negative projections seem more or less on track.
3. Japan fact of the day: “…the number of foreign workers, though still relatively small, has nearly doubled over the past eight years, and Prime Minister Shinzo Abe’s ruling party is considering policies to speed up arrivals.” Please note the link is noisy.
4. “Professional chefs, who one might think would be an ideal demographic, are not frequent customers. Sven says they have a haughty attitude toward cookbooks.” Link here.
6. What is the most relaxing song of them all? (Frankly, it pissed me off.) And this: “But time and social change have been rough on the Beach Boys. Their best-known hits (say, “California Girls,” “Help Me, Rhonda,” “I Get Around”) are poems of unenlightened straight-male privilege, white privilege, beach privilege. It is hard to imagine that they helped anyone toward self-determination or achieving their social rights.” I say they’re mostly about melancholy, thank goodness not everything is didactic.
ARS Technica: Google Brain has created two artificial intelligences that evolved their own cryptographic algorithm to protect their messages from a third AI, which was trying to evolve its own method to crack the AI-generated crypto. The study was a success: the first two AIs learnt how to communicate securely from scratch.
Hat tip: Eli Dourado.
It is an edited collection, I have an essay on inequality in the volume. Here is the Amazon link. Here is the book’s home page, which includes a full, free pdf. There are many famous contributors, including Jason Furman and Betsey Stevenson, Martin Feldstein, Justin Wolfers, Glenn Hubbard, George Borjas, Melissa Kearney, Casey Mulligan, and others. Here is Strain’s introduction and an organization of the book in sections. Self-recommending!
According to the most recent Statistics Canada data, in 2012, women over 40 gave birth to 13,395 children, while teenagers produced 12,915. Demographers have been expecting this tipping point for decades. In 1974, the older age group gave birth to just 3,550 children while teenagers produced 38,650—and the numbers have shifted each year since. The transition has just been confirmed in the U.K. and Australia as well, while data show that men are also fathering children later in life: the average age of Canadian fathers at birth of their children was 41 in 2011, compared to 39 in 1995.
Given how much Donald Trump talks about jobs leaving America, you might think that his supporters lost out more than others. In fact, the opposite appears to be true, according to a recent analysis from Gallup.
“No matter how you measure it, there’s not any evidence that Trump supporters are more likely to have lost their job in the manufacturing sector,” Gallup senior economist Jonathan Rothwell said in a call.
The study, which analyzed how various factors predict voters’ support for the Republican presidential nominee, linked living in a manufacturing-dominated area with a 1% lower probability of supporting Trump (after controlling for race, income, and other variables).
Living in a low-manufacturing area was linked to a 1% higher probability of supporting Trump.
That is from Gus Lubin at Business Insider.
That’s the new and very direct and frank memoir by Marina Abramović. It is a narrative of how a very smart and insightful person can choose (almost) never to think like an economist, and how she might evolve from a naive Serbian virgin to one of the world’s most worldly, serene, and profound performers. Here is one part:
My parents’ marriage was like a war — I never saw them hug or kiss or express any affection toward each other. Maybe it was just an old habit from partisan days, but they both slept with loaded pistols on their bedside tables! I remember once, during a rare period when they were speaking to each other, my father came home for lunch and my mother said, “Do you want soup?” And when he said yes, she came up behind him and dumped the hot soup on his head. He screamed, pushed the table away, broke every dish in the room, and walked out.
As for her famed lover, the unreliable Ulay, the cause of her broken heart:
A small crowd was there to watch our meeting [on China’s Great Wall]. I wept as he embraced me. It was the embrace of a comrade, not a lover: the warmth had drained out of him. I would soon learn that he had impregnated his translator: Ding Xiao Song. They would marry in Beijing in December.
This book passed the core test that I wanted it to be much longer than it was. Here is a good Carl Swanson profile of the artist and the book, maybe the best piece I have read this week.
3. “Just haunting” (photo, Pakistan).
5. The footprint of Obamacare is smaller than both supporters and critics had expected. That the one part of the system that has broke is the new part is worth a ponder, however. And here is Sarah Kliff with a not entirely different perspective.
That is the topic of my latest Bloomberg column, here is one part of the argument:
As it stands, most U.S. welfare programs are tied to the institution of work. That leaves gaps in the safety net, and frequently analysts will decry this imperfect coverage. I take this criticism seriously, but I see merit in tying welfare to work as a symbolic commitment to certain American ideals. It’s as if we are putting up a big sign saying, “America is about coming here to work and get ahead!” Over time, that changes the mix of immigrants the U.S. attracts and shapes the culture for the better.
I wonder whether this cultural and symbolic commitment to work might do greater humanitarian good than a transfer policy that is on the surface more generous. If you think of the U.S. as the major source of innovation for the world, prioritizing a work ethic over comprehensive welfare coverage might prove beneficial.
If the kinds of jobs created by the modern service economy can be made more attractive, I think much (not all) of the work problem will take care of itself. Most people do wish to work in jobs they enjoy, as a source of pride, money, and social connection.
Unfortunately, I don’t have a good answer for how to get there, but I worry that permanent subsidies for those who don’t work wouldn’t lead toward solutions. That means effective safety-net policies will continue to be messy and complex. Although the universal basic income idea sounds like a good direct fix, it probably leads in the wrong direction.
There is much more at the link.
This is from Adam Ozimek:
…if big firms are bargaining down wages then why do labor economists consistently find a large firm wage premium? To take one example from many, one recent study on retailers found that after controlling for individual and store characteristics, firms with at least 1,000 employees pay 9% to 11% more than those employing 10 or fewer.
Third, if firms’ bargaining power over their employees is growing, then why are they increasingly contracting out for work? Lawrence Katz and Alan Krueger argue that from 2005 to 2015, the share of workers hired out through contract companies grew from 0.6% to 3.1%. A company with labor market power wouldn’t want to contract out work to another company. They’d want to hire workers directly to take advantage of that power.
Fourth, the CEA report points to the minimum wage literature as evidence of monopsony power. Leaving aside the debate over whether the minimum wage reduces employment (I say yes, the report says no) the literature clearly shows that the minimum wage increases prices. As Daniel Aaronson and Eric French have pointed out, the monopsony model implies that the minimum wage should increase employment and output, thereby decreasing prices. That prices rise is inconsistent with the monopsony model.
I say there is plenty of monopsony in the short run in individual situations, mostly because workers carve out perks for themselves in individual firms. In other words, if firms have some short-run bargaining power, it is because they have lost the longer-run bargaining power game.
Setting the world record for using your mouth to catch a grape dropped from the greatest height: It was a dream years in the making, and all it took was a hot air balloon, walnut-sized fruits shipped specially from Georgia and a crew of Ph.D.-level engineers who gathered at a tiny Vermont airport before the sun rose on Monday morning.
The man with the plan was Brent Fraser, 35, who said he “just had a natural knack” for catching things in his mouth ever since his high school days in Barre, Vt., where buddies would chuck food toward him in the school parking lot.
The piece has some good sentences, such as:
Indeed, once things did get going, most of the few dozen attempts ended with a goggle-clad Fraser getting smacked in the face and chest by the large grapes — selected because they were easiest to see — that were traveling about 56 mph.
“How much did they hurt?” one of the engineers, Tristan Ramey, asked at one point.
“So bad,” Fraser told her. “I felt like I was being punched in the face.”
He ended up catching one from 101 feet. And finally:
Fraser, most of his face stained in purple grape juice, had to get to work to interview a prospective employee by 9 a.m.
Here is the full article, with video, via the excellent Mark Thorson.
3. Centaur warfare in the American military (NYT). One lesson is that one’s own intellectual marginal product can be difficult to predict.
WashPost: A hotel executive said a recently-passed New York law cracking down on Airbnb hosts will enable the company to raise prices for New York City hotel rooms, according to the transcript of the executive’s words on a call with shareholders last week.
This is an underdiscussed question, and it is the topic of my latest Bloomberg column. Here is one part of the argument:
Unlike the U.S., China is full of large, state-owned enterprises. That gives the Chinese government the ability to manipulate a large stock of asset wealth. The U.S. government is more dependent on flows of revenue from taxation and the private sector.
When bad economic news arrives, the Chinese government can instruct the companies it owns to spend wealth to keep workers employed. Think of this as using the companies to conduct fiscal policy rather than laying off workers, building another bridge or erecting another steel plant. Whereas Western economies take an immediate hit to income in bad times, the Chinese have been converting this into a hit to wealth, insulating themselves from major downturns.
That can be useful, but it also can be abused. Indeed, China has ended up with too few bankruptcies and significant excess capacity and lots of low-performing firms.
One problem comes when the stocks of corporate wealth are nearly exhausted, or perhaps sooner when managers of state-owned companies rebel against this policy and demand alternatives. Another problem is that too many low-productivity firms survive. So when the dramatic Chinese recession finally does come, it will be without the protective buffers of wealth that the U.S. had during its financial crisis.
The wealth vs. income distinction still does not receive enough attention in macro. There is much more at the link. I also consider under what conditions China might avoid a crack-up altogether, namely if the forces of catch-up keep on validating the ongoing malinvestments. Forecasting China is more like judging a race than just identifying a bubble. Note that “At least by traditional metrics, the Chinese system has showed signs of trouble and excess capacity at least since 2006.”
That is the title of a 2001 AER piece by Tasneem Chipty, here is the abstract:
I examine the effects of vertical integration between programming and distribution in the cable television industry. I assess the effects of ownership structure on program offerings, prices, and subscriptions, and I compare consumer welfare across integrated and unintegrated markets. The results of this analysis suggest two general conclusions. First, integrated operators tend to exclude rival program services, suggesting that certain program services cannot gain access to the distribution networks of vertically integrated cable system operators. Second, vertical integration does not harm, and may actually benefit, consumers because of the associated efficiency gains.
Out of date, yes, but still evidence that the proposed AT&T and Time-Warner merger is unlikely to damage the interests of consumers. When there is some market power at each step along the supply chain, vertical integration typically lowers margins and prices, thereby increasing consumer surplus.
For the pointer I thank John Chilton, who also points us to this review chapter by Paul Joskow. Here is a good James B. Stewart (NYT) piece on how antitrust thinking is moving backward these days, away from science more toward mood affiliation.