Year: 2016
How both sides can believe they are losing
If you read narratives of recent history from the perspective of the left and the right, each side believes it is losing. One could dismiss this as marketing strategy. If our side is winning, then why is it urgent to read my book or donate to my organization?
But I think it is possible for the each side to sincerely believe it is losing.
The left presumes that government can solve problems. We have problems. Therefore, we must be losing!
The right presumes that the government causes problems. We have problems. Therefore, we must be losing!
That is from Arnold Kling.
*Empire of Things*
The author is Frank Trentmann and the very apt subtitle is How We Became a World of Consumers, from the Fifteenth Century to the Twenty-First. I have only browsed this, but it appears both readable and well informed. It is a “big book” with 690 pp. of core text, bringing together many ideas from history and the social sciences yet in narrative form.
Monday assorted links
What should I ask Camille Paglia?
I’ll be doing a Conversations with Tyler with her, Tuesday, April 12. What should I ask her?
How does GPS change our perceptions?
Disorientation is always stressful, and before modern civilization, it was often a death sentence. Sometimes it still is. But recent studies have shown that people who use GPS, when given a pen and paper, draw less-precise maps of the areas they travel through and remember fewer details about the landmarks they pass; paradoxically, this seems to be because they make fewer mistakes getting to where they’re going. Being lost — assuming, of course, that you are eventually found — has one obvious benefit: the chance to learn about the wider world and reframe your perspective. From that standpoint, the greatest threat posed by GPS might be that we never do not know exactly where we are.
That is from a long and very interesting Kim Tingley NYT piece on the former navigation secrets of the Marshall Islanders. Here is one bit on how it works:
The Marshalls provide a crucible for navigation: 70 square miles of land, total, comprising five islands and 29 atolls, rings of coral islets that grew up around the rims of underwater volcanoes millions of years ago and now encircle gentle lagoons. These green dots and doughnuts make up two parallel north-south chains, separated from their nearest neighbors by a hundred miles on average. Swells generated by distant storms near Alaska, Antarctica, California and Indonesia travel thousands of miles to these low-lying spits of sand. When they hit, part of their energy is reflected back out to sea in arcs, like sound waves emanating from a speaker; another part curls around the atoll or island and creates a confused chop in its lee. Wave-piloting is the art of reading — by feel and by sight — these and other patterns. Detecting the minute differences in what, to an untutored eye, looks no more meaningful than a washing-machine cycle allows a ri-meto, a person of the sea in Marshallese, to determine where the nearest solid ground is — and how far off it lies — long before it is visible.
Recommended.
The economics of animated movies
An executive producer who wants to cut costs has only two choice curbs: water and hair. Those are the most expensive things to replicate accurately via animation. It’s no mistake that the characters in Minions, the most profitable movie ever made by Universal, are virtually bald and don’t seem to spend much time in the pool.
Animation, as with all formulaic and saccharine film genres, tends to bring out Hollywood’s blockbuster gambling addiction. The perverse incentives of the format means that fortune favours the spendthrift — the bigger the budget, the bigger the windfall.
“In some ways, a $90 million movie is more risky than a $150 million one,” Creutz said.
This means that when animated films flop, they flop hard. In fourth quarter 2013, DreamWorks took an $87 million writedown on Rise of the Guardians. Without the charge, the studio would have posted a small profit in the period, rather than an $83 million loss. A few months later, it had to take a $57 million writedown on Mr. Peabody and Sherman, a film that cost $145 million to make and far more to market.
Interesting throughout, here is the article by Kyle Stock.
Is the Fed favoring seniors?
If low interest rates have posed a challenge for seniors, why then have they done relatively well in terms of consumption and income? I can think of at least four reasons:
- The disappointingly slow wage and employment growth of the past decade has had less impact on seniors than on younger folks.
- Seniors’ social-security income rises with inflation, maintaining their purchasing power. It doesn’t, however, decline when prices fall — a feature from which they profited (modestly) last year.
- Many seniors own annuities or bonds that provide them with fixed payments. Because inflation has been surprisingly low, they’ve gotten more purchasing power from these fixed payments than they could have expected.
- Seniors hold more assets like stocks, bonds, and homes than do younger folks. All of these assets have appreciated a lot over the past seven years, providing seniors with a source of spending money that offsets some of the effect of low interest rates.
That is from Narayana Kocherlakota, there is more at the link. I am pleased to see a commentator make progress on this all-important problem.
Do you know what? Most other government programs favor seniors too.
Sunday assorted links
Trump, the Republican Party, and the logic of bailouts
As the possible nomination of Trump approaches, many Republicans are worried about the Party crashing. That could occur through convention warfare, a Trump nomination and an electoral disaster, or a non-Trump nomination and an electoral disaster. Maybe all of the above!
And what is wrong with the Party crashing? (Please, dear reader, consider this question from a logistic rather than a partisan point of view.) The Party contains information. Relationships. Procedures and processes and established patterns of cooperation. A well-known brand name. Organizational capital is lost if those connections are blown up and then go away. It would cost a good deal to rebuild them, whether through a new third party or through a reconstitution of the Republican Party in some new guise.
Large blocs of voters are in essence needed to help cover those fixed costs. If you tell too many voters to go away, however that might be done, the fixed costs can’t be paid the next time around and a new organization must be created, backed by some other, partially-overlapping group of voters. So during “bad times” Republicans still may wish to keep the Republican Party afloat, especially if they believe it is a viable concern over the longer haul.
This, by the way, is the same logic behind bank and corporate bailouts If the afflicted company is allowed to go under, a lot of organizational capital will be lost in what otherwise might be viable enterprises. (I am not suggesting those bailouts have zero cost, or are necessarily good, only that there is some associated benefit.)
So if you are a Republican, and considering supporting Donald Trump “for the sake of the party.” you are in essence considering whether a bailout of the Party is a good idea. Except instead of bailing out a private company with your taxes, or guaranteed credit, you are bailing out a political party with your …[fill in the blank]…
I believe that many of the people who usually claim to oppose bailouts will favor this one.
Is the refugees deal time consistent?
Just to refresh your memory, part of the deal is that newly arriving refugees in Greece get sent to Turkey, but in return the EU takes a refugee currently in Turkey. The goal is to reduce the incentive to migrate as a refugee, since you end up in Turkey rather than in Europe.
Gideon Rachman writes:
First, will the Greek authorities have the administrative capacity to process and turn around refugees arriving on their islands — as well as the many thousands already stranded in Greece? Second, will Turkey really co-operate — particularly given the fact that the EU is unlikely to deliver on all its promises? (The pledge of visa-free travel for Turks is unpopular in many EU states.) Third, will migrants desperate to get to Europe find alternative routes — perhaps via Libya, which has no properly functioning government?
Kerem Oktem summarizes the deal and makes some excellent points, including this one:
…we know that desperate people cannot be stopped. They will simply resort to new routes that will be more dangerous, more lethal and more expensive, whether it is the land borders between Turkey and Bulgaria, the boat journey from Libya to Italy or a new trajectory through Ukraine and Eastern Europe.
I find it strange that these European governments find it repugnant to allow life-saving trade in human organs, or trading away some of one’s privacy, or for that matter a free labor market. Yet they don’t seem to mind an institutionalized system of trading one refugee for another, with the explicit goal of increasing the number of Syrians who are trapped.
In essence, the wealthier Europeans are arranging for Syria, Greece, and Turkey to pay for building a stronger wall.
Saturday assorted links
2. Some British jobs, circa 1881.
3. The culture that is (was) Maryland.
4. Why do Amish start-ups have such a high success rate? And Stephen Curry can still get better (NYT).
5. I, iPhone case. Uncertainty about specs.
Not Moving to Opportunity
Labor market mobility in the United States has declined. Interstate migration is down (graph at right from Molloy, Smith, Trezzi and Wozniak) and so is in-state-migration, especially for the less well educated. Where once people responded to shocks by moving to opportunity now they are likely to stay put and retire early or take-up disability insurance. Ben Leubsdorf at the WSJ reviews some of the evidence:
“A state typically returns to normal after an adverse shock not because employment picks up, but because workers leave the state,” economists Olivier Blanchard and Lawrence Katz wrote in a 1992 paper.
This time might be different in some ways. Three economists wrote in a National Bureau of Economic Research working paper last year that compared with the prerecession years, mass layoffs after 2007 prompted a “muted” migration response and many workers instead dropped out of the labor force.
In a new paper, also cited by Leubsdorf, Danny Yagan at Berkeley suggests that reduced migration is only part of the problem. What has made the aftermath to the 2008-2009 recession so bad is that migration is low at the same time that it has become more necessary than ever. The 2008-2009 recession was especially localized, it hit some places harder than others and in a way that appears to be permanent. But migration has been too slow to solve the problem.
The usual story is that in-and-out migration equalizes wage, unemployment and employment rates across the nation. Some places may be harder hit than others but movement quickly makes the US into one labor market. In the aftermath of this recession, however, that isn’t happening for employment rates. Using a clever research design that looks at workers with similar education and skills doing the same jobs at the same large firms but in different locations, Yagan finds that location continues to matter years after the recession has ended. Workers who worked in the places hardest hit in the 2007-2009 recession have employment rates today that are 1% lower than similar workers in regions that were less hard hit. Convergence has been unusually slow:
I conclude that living in a hard-hit area has caused enduring joblessness and exacerbated inequality. If the latest convergence speed continues, employment differences across the United States are estimated to return to normal in the 2020s—more than a decade after the great recession.
Miami markets in everything
It was bound to happen eventually. The fact that it took Miami this long to invent a champagne machine gun is actually quite surprising considering that both items played an essential role in the formation of this great city. But it’s finally here. And it can be yours for only $459.
Jeremy Touitou is the man behind the invention, which, he says, is “the world’s first champagne gun.”
The full story is here, via Daniel Lippman, noting that here is Daniel’s recent piece on fact-checking you-know-who.
What I’ve been reading
1. Ronald Bailey, The End of Doom: Environmental Renewal in the Twenty-First Century. Good arguments all around, and he covers climate change too. My worry is a political economy one: if we can’t handle small amounts of immigration or trade competition from China without flipping out, how will we fare with forthcoming environmental problems?
2. John Gimlette, Elephant Complex: Travels in Sri Lanka. An informative and entertaining look at an under-covered country. (If you’d like a critical review instead, try this one, but I followed up on some of the criticisms and was not persuaded by the attempted takedown.) This NYT article suggests (correctly) that now is the time to visit Sri Lanka.
3. Sally Denton, The Profiteers: Bechtel and the Men Who Built the World. A good history of one epicenter of crony capitalism. I had not known what an important role Bechtel played in the early construction of nuclear power plants. Here is a good T.J. Stiles NYT review of the book.
4. Joanna Masel, Bypass Wall St.: A Biologist’s Guide to the Rat Race. Darwin plus Fred Hirsch on positional goods as applied to finance and portfolios. Unorthodox, interesting.
5. Stephen Stigler, The Seven Pillars of Statistical Wisdom. What are the seven foundational pillars of statistics? Beautifully written.
And:
Peter McPhee, Liberty or Death: The French Revolution. More of a browse so far, but I have positive impressions of this new Yale University Press book.
Jeff Gramm’s Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism is a very useful and well-researched book, focusing on shareholder rights and control issues in the earlier history of corporate America.
Cecil E. Bohanon and Michelle Albert Vachris, Pride and Profit: The Intersection of Jane Austen and Adam Smith, my blurb refers to it as a “tour de force [which] ties the worlds of economics and literature together, leaving the reader delighted and informed along the way.”
Do Americans see trade as an opportunity or a threat?
Opportunity! That is from Justin Wolfers.