Month: February 2017

Why have the audience ask questions at a microphone?

That is a question from Kevin Burke, who emailed it to me rather than going up to a microphone and asking.  His exact wording was “Why don’t we have better formats for soliciting audience feedback than going up in front of a microphone?”

First, I have seen event organizers move away from the questions at a microphone format to some degree.  They prefer either no Q&A, to draw upon written or social media questions, or to conduct the entire event as an interview with a single questioner or panel.  (Personally, I like to receive handwritten questions.)

That said, this format still persists.  The Hansonian point would be that questioning isn’t about questions (or answers!), or however else you might wish to put it.  Rather the point is to show various constituencies that they are being recognized by the process and given some voice.  The more cumbersome and inefficient the questioning period, the more effective this signal may be.  There are, however, problems with this approach, one of them being that the Q&A period can be hijacked by weirdos, rather than remaining the province of the boring drones you wish to placate.   Furthermore, social media-generated questions, if manipulated, may serve the signaling function more directly, as you can ensure that some specific interest group is recognized as doing the asking (“And Mildred, from the teachers union in Ohio, sent in a question about caring for the children…”)

These days there are more and better ways to ask questions than ever before, including of course Reddit and Quora.  That means audience Q&A at the mike is less about information than it used to be.  I predict a kind of bifurcation, in which events either will run away from the format altogether or embrace it all the more firmly, and that is I think what we are seeing.  How about a limiting case for the signaling approach, whereby you invite a famous person, and simply make him or her submit to audience questions, with not even a chance to respond?

Understanding the Long-Run Decline in Interstate Migration

I consider this question at some length in my forthcoming The Complacent Class, and now there is a new study by Greg Kaplan and Sam Schulhofer-Wohl, consistent with my conclusions:

We analyze the secular decline in gross interstate migration in the United States from 1991 to 2011. We argue that migration fell because of a decline in the geographic specificity of returns to occupations, together with an increase in workers’ ability to learn about other locations before moving. Micro data on earnings and occupations across space provide evidence for lower geographic specificity. Other explanations do not fit the data. A calibrated model formalizes the geographic specificity and information mechanisms and is consistent with cross-sectional and time-series evidence. Our mechanisms can explain at least half of the decline in migration.

As I put it in the book, if you are a dentist you probably are not going to move from Columbus, Ohio to Denver, Colorado for higher dentist wages.  Rather you will figure out pretty early on which location you prefer and then stay there.

Hat tip goes to the excellent Kevin Lewis.

So much of social science is in this paragraph

Saradhu Dhivar, 57, an unemployed villager, said he had daily spats with Mr. Koshle’s associates, arguing that Nimora had ample space to go “freestyle.” His food entitlements were withheld for a month, he said, until he built a toilet. It took days “to get used to this style,” he said.

There is much more:

In October, Mr. Koshle sealed a gap in the walls of a school whose large, grass-covered grounds had become a bathroom of choice. Dozens marched to his home in protest, wielding water buckets they carry for outside duty. They demolished the wall.

In December, Mr. Koshle got his police friends to stage the faux arrest of four locals he had instructed to relieve themselves outside—an attempt to strike fear, he said. He rented an auto-rickshaw with a loudspeaker, announcing that transgressors’ electricity supply would be cut.

Recently, teams of saree-clad women kept daily vigil around lakes and grassy fields from 4:30 a.m., shouting pro-toilet slogans and blowing whistles at offenders.

“Going to the toilet has become very political,” said Mr. Koshle. “You can’t imagine the hostility we’ve encountered.”

Don’t forget this:

“I like to take a walk,” said Luv Nishad, 35, a laborer in the village of Nagar, “and do my business away from where we sleep and pray.”

Here is the Niharika Mandhana WSJ story, via the excellent Samir Varma.

Three new books on topics I have worked on

Saturday assorted links

1. Brendan Nyhan reading list on the authoritarian turn and U.S. politics.

2. Ben Casnocha put a lot of time into this blog post on why people work as much as they do.  And I know why he did it.

3. In San Francisco, sometimes even the renters support NIMBYism.

4. Survival is Syria’s strategy.  And what’s behind the flare-up in eastern Ukraine?

5. “Influential Mexicans are pushing an aggressive and perhaps risky strategy to fight a likely increase in deportations of their undocumented compatriots in the U.S.: jam U.S. immigration courts in hopes of causing the already overburdened system to break down.” (WSJ)

6. “The U.S.-educated Mexican economists who negotiated the trade pact in the 1980s are worried more about their own country’s protectionist tendencies than about Donald Trump.” (WSJ)

What is behind the cost disease?

I don’t have a similar graph for subway workers, but come on. The overall pictures is that health care and education costs have managed to increase by ten times without a single cent of the gains going to teachers, doctors, or nurses. Indeed these professions seem to have lost ground salary-wise relative to others.

That is just one bit from a very excellent blog post by Scott Alexander.

Franco Modigliani and the history of Italian fascism

What is often missed—and, frankly, it would seem deliberately misrepresented in his own autobiographical works—is that in Italy, Modigliani, by age 20, was a well published fascist wunderkind, having received in 1936 an award for economics writing from the hand of Benito Mussolini himself. Further, in 1947, at age 29, Modigliani published a 75-page article whose title in English translation would be “The Organization and Direction of Production in a Socialist Economy” (Modigliani 1947), an article that affirms socialist economics. In 2004 and 2005 there appeared English translations of five fascist works by Modigliani originally published during 1937 and 1938 (all five translations are collected by Daniela Parisi in Modigliani 2007b). The socialist paper of 1947 has never been translated in its entirety, though the  Appendix to this profile contains excerpts selected and newly translated by Viviana Di Giovinazzo, to whom we are very grateful.

That is from Econ Journal Watch, by Daniel B. Klein and Ryan Daza, with Viviana Di Giovinazzo, and here is the broader page on the ideological histories of the Nobel Laureates (interesting throughout).  The point here is not to trash Modigliani, but rather to point out how thoroughly fascist ways of thinking can seep into a society.  Furthermore, fascism and other forms of authoritarianism rule are a massive tax on human creativity, as it is unlikely Modigliani could have turned his career around had his life under Mussolini’s regime persisted.

Friday assorted links

Xavier Gabaix on a strong vs. weak dollar

He emails to me:

Hi Tyler, Alex

Tyler asks Is a strong dollar better than a weak dollar? and says “Yes, for Americans though not for the world as a whole.  For the relevant thought experiment, assume an exogenous shift in noise trading boosts the value of the dollar.  That increases the wealth of individuals and institutions that are long dollars, and presumably this is the case for this country overall.”

Actually, I think that the baseline economic answer is Neither : the optimal level is just the equilibrium frictionless real business cycle level — if the dollar is above or below it, the US is worse off (and so is the rest of the world).

Why? Matteo Maggiori and I have a model to analyze such things (“International Liquidity and Exchange Rate Dynamics”, QJE 2015) – a full-fledged GE model  that allows to study in particular the effects of those noise trader shocks.
 
Short version: a strong dollar appreciation now helps the US now (as Tyler rightly says), but will force a depreciated dollar later (as this GE intertemporal model works out), which will hurt the US later. Summing over all periods, it’s a small (2nd order) negative.

Long version (see section II.D and III.B of the paper). Suppose there are 2 periods. At time 0, Tyler is right – the US is better off that period. However, that creates a trade deficit, which increases US indebtedness, and that will create a lower dollar in the future, and will hurt the US (as Tyler would rightly have said). E.g. if the equilibrium dollar yen rate is 100, and if the dollar is stronger at 105 at 0 because of a demand shock, then at period 2 it will need to be 95 (the logic also works with more than 2 periods). All in all, it’s a first order wash, and the loss comes from the 2nd order distortion terms (worked out in full detail in Proposition 8 of the NBER WP version). Likewise, a weak dollar now would hurt the US now, help the US later – again with a small negative overall.

A caveat: if the US is in a recession with high unemployment, a weak dollar is strictly better (for the US and the world), as it alleviates unemployment and increases total production.

Policy conclusion: don’t intervene, unless you have a very strong reason to think your currency is appreciated (or depreciated) – then, reverse that via FX interventions.
 
I hope that helps.
 
Continued thanks for the great blog!

Xavier
TC: My theory of exchange rates is “less intertemporal” than that, but a fantastic answer in any case.  Read also Ryan Avent on all of this.

Elizabeth Warren on vouchers that was then this is now

A taxpayer-funded voucher that paid the entire cost of educating a child (not just a partial subsidy) would open a range of opportunities to all children. . . . Fully funded vouchers would relieve parents from the terrible choice of leaving their kids in lousy schools or bankrupting themselves to escape those schools.

…the public-versus-private competition misses the central point. The problem is not vouchers; the problem is parental choice. Under current voucher schemes, children who do not use the vouchers are still assigned to public schools based on their zip codes. This means that in the overwhelming majority of cases, a bureaucrat picks the child’s school, not a parent. The only way for parents to exercise any choice is to buy a different home—which is exactly how the bidding wars started.

…Under a public school voucher program, parents, not bureaucrats, would have the power to pick schools for their children—and to choose which schools would get their children’s vouchers.

That is from her 2003 book The Two-Income Trap: Why Middle Class Parents Are (Still) Going Broke, with Amelia Warren Tyagi.  Here is the WSJ link to the full passage, Friedmanesque throughout.  The more general underlying point is that the “rent is too damn high crowd” ought to be somewhat more sympathetic to vouchers than is often currently the case.

What I’ve been reading about fascism

1. Lucy Hughes-Hallett, The Pike: Gabriele d’Annunzio Poet, Seducer and Preacher of War.  A vivid and entertaining look at a major European fascist who remains neglected by Americans (I don’t even think this book has a U.S. edition).  I was surprised how readable this book was, given its length and subject matter.  The words “rollicking” and “psychopath” come to mind.  He was nonetheless one of the most influential European writers of his time.

2. Stanley G. Payne, A History of Fascism 1914-1945.  One of the classics, readable and comprehensive and one of the best places to start.  One thing I learned from this pile of books is how hard some of those leaders worked to have the mid-level bureaucracy on their side.  The centralization often occurred at higher levels, for instance Mussolini had 72 cabinet meetings in 1933, but only 4 in 1936.  The Italian Fascist party, by the way, was disproportionately Jewish, at least pre-1938.

3. Robert O. Paxton, The Anatomy of Fascism.  Along with Payne, one of the core books to read, stronger on analysis while Payne has more historical detail.  He is especially clear on how the fascists built up and refined their political coalitions over time, and the conflicting roles of party and nation in the history of fascism.

4. R.J.B. Bosworth, Mussolini’s Italy: Life Under the Dictatorship.  I’ve only read parts of this one, but it seems to be the best detailed historical account of a non-Nazi fascist regime.  If you wish to know, for instance, how and why the Italian fascists reformed Italian public holidays, this is your go-to source.

5. Alexander de Grand, Italian Fascism: Its Origin and Development.  Highly focused and to the point, also has an A+ quality annotated bibliography.  It considers regions of Italy, demographic issues, looks at the arts, and for such a short book gives the reader a remarkably broad and multi-faceted perspective.  Overall this book emphasizes how deeply rooted fascism was in so many other Italian institutions and ways of life.

6. I’ve also been reading plenty of Benedetto Croce, including his history of Naples and History, its Theory and Practice.  He is oddly boring and non-concrete, but was a consistent opponent of the Italian fascist regime, except for the first two years of Mussolini’s rule (he later claimed that was for tactical reasons).  In any case, the reader learns that the opposing side doesn’t always have a good ability to articulate why bad events are happening.  I can recommend Fabio Fernando Rizi’s very good history and survey, Benedetto Croce and Italian Fascism.

7. Giorgio Bassani, The Garden of the Finzi-Continis.  This beautiful short novel (also a movie) is especially good on anti-Semitism in Italy, how youth process political collapse in their countries, and how events can outrace your expectations and leave you in a haze.

Some books on Italian futurism are coming in the mail.

Overall I did not conclude that we Americans are careening toward fascist outcomes.  I do not think that notion is well-suited to the great complexity of contemporary bureaucracy, nor to our more feminized and also older societies.  Furthermore, in America democracy has taken much deeper roots and the system of checks and balances, whatever its flaws, has stood for a few hundred years, contra either Italy or Germany in their fascist phases.

Still, I did not find this reading reassuring, as people will support many bad things in politics.  The Italian war in Ethiopian was remarkably popular, but exactly why?  We Americans could (again) do something quite bad, but without being fascists.

Less directly on fascism, but by no means irrelevant to the topic, I can recommend two new books:

Andrzej Franaszek, Milosz: A Biography. Long, thorough, but readable treatment, focusing on more on his poetry than the political writings.

And I have been enjoying my ongoing browse of Robert E. Lerner, Ernst Kantorowicz: A Life.

CEA Chairman no longer part of the president’s cabinet

The White House Council of Economic Advisers is being demoted by the Trump administration, which said in a statement Wednesday that the president’s cabinet won’t include the chairman of the CEA, an official that President Donald Trump also has yet to name.

The diminished stature for the CEA, which was part of President Barack Obama’s cabinet and has advised presidents for over seven decades on the economic impact of their policies, means Mr. Trump will likely rely more heavily on other advisers, such as Gary Cohn, the former Goldman Sachs president who is head of the National Economic Council, and Peter Navarro, the trade critic who is leading the National Trade Council.

Here is more from Josh Zumbrun at the WSJ.

Thursday assorted links

1. Does adjusting for household production make the great stagnation worse yet?

2. Can an Indian billionaire sell cricket to the United States?  (No, says I)

3. MIE: Domino’s pizza now offers a wedding registry service, to ease the ordering of pizza.

4. Regional average is over.

5. Scott Sumner on the stronger vs. weaker dollar.  I say imagine that foreigners decided to remit 1% of every dollar-connected foreign exchange transaction to me and Scott.  Yes there are second best possibilities, but I still think the likely answer is that America is better off.  I don’t so much worry about higher real wages that result from higher wealth.  What’s hard is specifying the ceteris paribus conditions properly, so that other changes don’t have a chance to offset the initial wealth gains.

6. Does the conflict minerals ban make sense?

In lieu of a CEA?

Vice President Mike Pence has hired Mark Calabria as his chief economist, according to several people familiar with the move.

Calabria was director of financial regulation studies at the Cato Institute, where he was a prominent voice on financial services and economic policy and an expert on mortgage and housing reform.

Before joining Cato in 2009, Calabria worked for the Senate Banking Committee, where he handled housing, mortgage finance, economics, banking and insurance for then-ranking member Richard Shelby (R-Ala.).

Here is the Politico linkMark is also a George Mason Ph.d.