Month: February 2017

Great Britain fact of the day

Britain has changed since 1998.

Back then, it only took workers about three years to save enough money for a down-payment on a house. Now it takes 20 years, on average, according to the Resolution Foundation, which published a landmark report on income, housing, and inequality in Britain last week.

Here is further information, via the excellent Samir Varma.

Monday assorted links

A very good sentence

“Unless the goal is to have an outright travel ban forever, and we should take the president at his word that that’s not the goal, then let’s just have calmer heads prevail and conduct the security analysis that was going to be conducted during these 90 days.”

Here is the WaPo article, citing Leon Fresco, the deputy assistant attorney general for the Office of Immigration Litigation in Obama’s Justice Department.

The Long-Term Impact of Price Controls in Medicare Part D

There is a new paper on this topic, by Gigi Moreno, Emma van Eijndhoven, Jennifer Benner, and Jeffrey Sullivan.  The upshot is to beware price controls:

Price controls for prescription drugs are once again at the forefront of policy discussions in the United States. Much of the focus has been on the potential short-term savings – in terms of lower spending – although evidence suggests price controls can dampen innovation and adversely affect long-term population health. This paper applies the Health Economics Medical Innovation Simulation, a microsimulation of older Americans, to estimate the long-term impacts of government price setting in Medicare Part D, using pricing in the Federal Veterans Health Administration program as a proxy. We find that VA-style pricing policies would save between $0.1 trillion and $0.3 trillion (US$2015) in lifetime drug spending for people born in 1949–2005. However, such savings come with social costs. After accounting for innovation spillovers, we find that price setting in Part D reduces the number of new drug introductions by as much as 25% relative to the status quo. As a result, life expectancy for the cohort born in 1991–1995 is reduced by almost 2 years relative to the status quo. Overall, we find that price controls would reduce lifetime welfare by $5.7 to $13.3 trillion (US$2015) for the US population born in 1949–2005.

I would insist that we do not have good enough models of the innovation process to really understand the price elasticity of supply.  Nonetheless it is surely not zero, and under plausible assumptions the price controls are a bad idea.

We need a new rooftop chant: “Beware analyses that neglect supply elasticities,” to sweet cadences of course.  They should play that on AM radio as well.

For the pointer I thank the still excellent Kevin Lewis.

Neglected big problems

Relearn Every Generation – We must each relearn many basic life lessons during our individual lifetimes, lessons that millions or billions of others already learned in their previous lifetimes, or that millions or billions of others are currently learning in parallel with us. There seem huge potential gains from finding better ways to learn from our ancestors and colleagues.

Changing World – Early in life we read the world around us and choose life plans and paths matched to that world. During our life the world around us changes, and we make some adaptations to that, but they seem insufficient. For example, we often seek to achieve in ways that were awarded with high status when we were young, to find that our achievements are much less valued by the new world.

Poor Matching – We match people as friends, lovers, spouses, and workers. Our distant ancestors only had a few available options for matches, and we inherited many intuitive mechanisms appropriate for that situation. But we now have a vast world with far more matches possible, and it seems like we don’t use that larger scope very well. We still rely heavily on inherited informal mechanisms. I see so many lonely and otherwise mismatched people.

Varied Commitment – We must each choose how much to commit to our careers, friends, lovers, neighborhoods, brands, etc. We do commit somewhat, but we also switch on occasion. But it isn’t remotely clear that we do this well. We must each match our commitment to the commitment choices of folks around us, and we often lack ways to commit to avoid temptations.

That is from Robin Hanson.

*Toni Erdmann*, misunderstood masterpiece (full of spoilers)

Since no major English-language critic has made my major novel observation, can a flat-out wrong claim be considered a spoiler?  I say the optimal time to read this post is in the middle of the movie, not before, not after.  I’ll put the rest of under the fold…

First, Toni Erdmann is one of the most stimulating and multi-faceted movies I’ve seen in years, “utterly unique and wholly indefinable.”  My non-spoiler plot summary is that an elite female German management consultant is called in to advise on outsourcing to Bucharest, and during the course of the movie she discovers she cannot get away from her father so easily.

Most of the core action unfolds after the woman’s father comes to visit her in Bucharest, and subjects her to an escalating series of escapades, mostly with co-workers.  At least on the surface, the woman is efficient and worldly but emotionally stunted.  Her father is rude and genuine and comic and self-destructive with his blundering interventions, unable to stop offending people, grabbing the attention, and repeatedly undercutting his daughter’s self-confidence.  Everything has to be about him.  As the movie progresses, however, the daughter learns she and her father are not so different after all.

What is this movie so good at?

Humor and comic set pieces.  Staging a scene and subverting your expectations.  Creating its own world, spread across a large and sprawling canvas (it’s almost three hours long).  Expat life.  The new German nationalism.  Showing the multiple ways that women are condescended to or debased in the corporate world.  Toadying.  Rebelling by joining the establishment.  The relationship between Germany and the economically colonized parts of Eastern Europe.  The new principles of sex (and food).  The emotionally unrewarding nature of contemporary cosmopolitan life, but also the limits of rootedness.  And of course father-daughter dynamics and their persistence.

One rewarding way to watch the film is simply to track how many ways the German protagonist — in terms of her groveling, her rhetoric, and finally her complete nudity — is reduced to the status of her obsequious Romanian assistant.  That’s factor price equalization with a vengeance.

OK, so what is the catch and major spoiler?  I say this film uses a Fight Club-like trick, though unlike Hollywood it doesn’t feel the need to tell its viewers outright.

Most of the father’s Bucharest visit to his daughter never actually takes place (some of it probably does, though we cannot quite be sure).  The father leaves Bucharest, and when the daughter supposedly runs into him again at a city bar, in his disguise, while she is talking about him to her friends, he isn’t really there.  The coincidence of the encounter is too extreme and no attempt is made to explain it.  And, after the conversation, when he leaves and climbs into the largest limousine you ever have seen (he’s a music teacher back home, not a CEO), that too is a sign this isn’t really happening.  The unreality of his continuing visit also explains the succeeding odd medley of coincidences, and that she simply doesn’t tell him to cut it out and stop ruining her career.  He is haunting her imagination, and no simple physical remedy will do.

If you do not understand this point, much of the movie will seem obnoxious and overstated, or even nonsensical.  In fact a few reviewers have made this complaint (some reviews here); if your critic is employing the word “preposterous,” beware!

In my reading of the film, the handcuffs sequence is the key scene.  The father comes along and handcuffs himself to the daughter, without having a key to open them up.  That’s how she feels about her station in life.  Eventually they find someone to pick the lock, but if you’re wondering why she tolerates this behavior, and immediately afterwards takes him to a bunch of work meetings and interviews…well, think Fight Club.  She truly does carry him with her, no matter where she goes.

Also, for further clues, listen to the lyrics of the Whitney Houston song she sings at the Romanian party.

The now-famous nude party scene reflects how the daughter feels exposed and naked out in her job, much as she feels she never can escape her father.  The appearance of the “furry creature” at the party then shows that her father — as a figment — will keep on coming back, in whatever extreme manifestations might be required.

Recall in the opening scene how the father is hiring/installing an imaginary daughter?  She is mirroring this same behavior — also in a destructive way — by installing an imaginary father.  The movie’s title, Toni Erdmann, of course refers to the father’s (supposed) alter ego, not to the father himself; that should be another clue.

People, no one gets this movie.  It does have very positive reviews, but the American and British critics are missing the boat.

Toni-Erdmann

The Demand for Applause

I was reminded today of the story recounted by Solzhenitsyn in The Gulag Archipelago about how the great leader demanded applause:

At the conclusion of the conference, a tribute to Comrade Stalin was called for. Of course, everyone stood up (just as everyone had leaped to his feet during the conference at every mention of his name). … For three minutes, four minutes, five minutes, the stormy applause, rising to an ovation, continued. But palms were getting sore and raised arms were already aching. And the older people were panting from exhaustion. It was becoming insufferably silly even to those who really adored Stalin.

However, who would dare to be the first to stop? … After all, NKVD men were standing in the hall applauding and watching to see who would quit first! And in the obscure, small hall, unknown to the leader, the applause went on – six, seven, eight minutes! They were done for! Their goose was cooked! They couldn’t stop now till they collapsed with heart attacks! At the rear of the hall, which was crowded, they could of course cheat a bit, clap less frequently, less vigorously, not so eagerly – but up there with the presidium where everyone could see them?

The director of the local paper factory, an independent and strong-minded man, stood with the presidium. Aware of all the falsity and all the impossibility of the situation, he still kept on applauding! Nine minutes! Ten! In anguish he watched the secretary of the District Party Committee, but the latter dared not stop. Insanity! To the last man! With make-believe enthusiasm on their faces, looking at each other with faint hope, the district leaders were just going to go on and on applauding till they fell where they stood, till they were carried out of the hall on stretchers! And even then those who were left would not falter…

Then, after eleven minutes, the director of the paper factory assumed a businesslike expression and sat down in his seat. And, oh, a miracle took place! Where had the universal, uninhibited, indescribable enthusiasm gone? To a man, everyone else stopped dead and sat down. They had been saved!

The squirrel had been smart enough to jump off his revolving wheel. That, however, was how they discovered who the independent people were. And that was how they went about eliminating them. That same night the factory director was arrested. They easily pasted ten years on him on the pretext of something quite different. But after he had signed Form 206, the final document of the interrogation, his interrogator reminded him:

“Don’t ever be the first to stop applauding.”

The value of presidential attention in an age of mechanical reproduction

MSNBC and Fox News are capitalizing on President Donald Trump’s TV watching habits, dramatically increasing issue advocacy advertising rates in recent weeks as companies and outside groups try to influence Trump and his top lieutenants.

The ad rates for “Morning Joe” have more than doubled post-election, according to one veteran media buyer. Trump, who reportedly watches the show most mornings, has a close relationship with “Morning Joe” host Joe Scarborough, and they talk regularly.

Fox News’ “The O’Reilly Factor” and other primetime programs on Fox News have boosted their rates about 50 percent. Trump also is a frequent viewer of the network’s primetime shows.

“The president’s media habits are so predictable, advertisers migrate to those areas,” said one media buyer.

One prominent D.C. consultant said some of his clients, including a big bank and major pharmaceutical company, were negotiating this week to buy ads on “O’Reilly” and “Morning Joe” because they knew they had a good chance of reaching the president.

That is from Daniel Lippman and Anna Palmer, via Kevin Lewis.

Saturday assorted links

Who wants more coal company pollution in water streams?

That is one of the news stories of the end of this week, namely that the Trump administration eliminated a previous Obama administration ruling on this, see Brad Plumer for details.  That sounds horrible, doesn’t it?

I took a look at the cost-benefit study (pointed out on Twitter by Claudia Sahm, or try this link, and please note it was prepared by consultants, not by the government itself).  I spent some time with these hundreds of pages, and they are not always easy to parse (my apologies to the authors for any misunderstandings).  Anyway, I quickly came upon this and related passages (p.45, passim):

In summary, the Final Rule is expected to reduce employment by 124 jobs on average each year due to decreased coal mined while an additional 280 jobs will be created from increased compliance activity on average each year.

Of course those “newly created jobs” are a cost, not a benefit, and should be switched to the other side of the ledger.  That is not what this study did.  And if I understand p.4-31 correctly, this study is using a multiplier of about 2.  This approach is completely wrong, and if it were right Appalachia would love a lot of this coal regulation for its job-creating proclivities, but of course the region doesn’t.

The claimed annual benefit from the changes, from the side of coal demand (not the only effects), is $78 million, fairly small potatoes.  Note the study doesn’t consider what are commonly the most significant costs of regulation, namely distracting the attention of managers and turning companies into legal and regulatory cultures rather than entrepreneurial cultures.  The study does mention uncertainty costs from regulation, although I could not find any quantification of them.

Furthermore, I am not able to scrutinize the introductory section “SUMMARY OF BENEFITS AND COSTS OF THE STREAM PROTECTION RULE” and figure out the final assessment of net benefits for the rule and where that assessment might come from.  I find that worrisome, and paging through the study did not put my mind at ease in this regard.

Now, I know how this works.  Many of you probably are thinking that we need to do whatever is possible to attack or shrink the coal industry, because of climate change.  Maybe so!  Maybe we want to stultify the coal companies, for reason of a greater global benefit.  But a) there is still a role for evaluating individual policy changes by partial equilibrium methods and reporting on those results accurately, and b) “putting down the coal companies,” as you might a budgie, is not what the law says is the proper goal of policy.

Imagine holding an attitude that places the Trump administration as the actual defenders of the rule of law!  Besides, don’t get too worked up (p.174):

Our analysis indicates that there will be no increase in stranded reserves under any of the Alternatives.

There is, however, a very small decline in annual coal production (pp.5-20, 5-21) from the rule that had been chosen.  Water quality is improved in 262 miles of streams (7-26), in case you are wondering, that’s something but hardly a major impact and that almost entirely in underpopulated parts of the country.  All the media coverage I’ve seen implies or openly states a badly exaggerated sense of total water impact, relative to this actual estimate (are you surprised?).  Returning to the study, there is also no region-specific estimate of how large (or small) those water benefits might be, at least not that I could find (again, maybe I missed it, but I did find some language suggesting that no such estimate would be provided).

Chapter seven calculates the benefits of the resulting carbon emissions, but after reading that section my best estimate for those marginal benefits is zero, not the postulated $110 million.  The “social cost of carbon” is actually an average magnitude, and it does not measure benefits from very small changes.  Again, you might think there is an imperative to consider “this policy is conjunction with numerous other anti-coal changes,” but that is not what the law stipulates as I understand it and furthermore it hardly seems that many other anti-coal regulatory changes are on the way.

If it were up to me, I would not have overturned the coal/stream regulations, and my personal inclination is indeed to fight a war on coal.  But if you look at the grounds for evaluation specified by law, and examine the cost-benefit study with even a slightly critical mindset, we don’t know what is the right answer on this individual policy decision.  The study outlines nine different regulatory alternatives and it is not able to conclude which is best, nor is the quantitative thrust of the study aimed toward that end.

Mood affiliation aside, to strike this regulation down, as the Trump administration has done, is in fact not an indefensible action.

On a more practical political level, Trump wishes to send a signal to Appalachian voters that he is looking out for coal and looking out for them.  This is actually a very weak action, and it was chosen because for procedural reasons it was quite easy to do.  The more you complain about it, the stronger it looks, and that’s probably a more important fact than any of the particular details of this study.  Whether you like it or not, the coal debate is not really one that favors the Democrats.

Addendum: Here is the CRS paper, which seems to be derivative of other work, most of all this study.

India telephone markets in everything, hedonic pricing edition

Mobile numbers of unsuspecting girls are being sold from recharge outlets across Uttar Pradesh for prices based on their looks and are being used by men to harass them over the phone, police say.

The thriving racket has come to light after a round-the-clock police helpline, 1090, set up by chief minister Akhilesh Yadav was flooded with complaints from women about unsolicited calls. Out of the 6 lakh-odd complaints registered with the helpline in the past four years, 90% related to harassment of women on the phone.

A majority of the men – who seek to entice women with the preferred opening line ‘humain aapse dosti karna hai’ or ‘I want to make friendship with you’ – get the numbers from outlets where women go to recharge their mobile phones.

The unscrupulous rechargers save the numbers and then pass them on to those willing to pay. The number of someone considered ‘beautiful’ can command as much as Rs 500. The selling price for the number of an “ordinary looking girl” fetches Rs 50.

…Police officials say the jails will overflow if those trading in mobile numbers have to be booked.

Here is the full article, via James Crabtree.

*A Great Place to Have a War*

The author is Joshua Kurlantzick and the subtitle is America in Laos and the Birth of a Military CIA, here is one excerpt from a book I read through to the end:

It was, in fact, common knowledge among CIA clandestine officers, and surely in the embassy of Vientiane, that bombers sometimes dropped ordnance on Laos because they wanted to unload it on the way back from North Vietnam, or because they needed target practice, or because there were communists somewhere near villages in central and northern Laos, and destroying the towns might possibly kill some soldiers of Pathet Lao sympathizers.  Ronald Rickenbach, a former USAID official in Laos during the height of the bombing called it “an indiscriminate bombing of civilian population centers.”  A classified 1969 United States government survey of the effects of the bombing, the results of which were circulated among officials working in Laos, found that after interviewing people from villages across the kingdom, 97 percent of the Laotian civilians surveyed had witnessed a bombing attack, and most had witnessed more than one.  And 61 percent of the Laotian civilians interviewed for the survey had personally seen someone killed by the bombing.

By 1969, U.S. bombers were flying more missions to Laos than to Vietnam.  So, in this country, all sorts of outcomes are possible.