Month: March 2017
5. Those new service sector jobs: “That time I hired a professional masturbation coach.” The link doesn’t show “it” directly, but still I think would count as not safe for work. And is sex overrated? Safe for work.
6. Ariel Rubinstein reviews Dani Rodrik, also safe for work.
Fatigued drivers cause accidents. In response to this obvious fact, we limit bus and taxi drivers to a maximum of 10 hours of driving after 8 consecutive hours off duty. Yet when it comes to physicians, the current standard is significant more lax; first-year residents are restricted to 16-hour shifts! That already is nuts. I often teach a night class, 7:20-10 pm and I always try to teach the more difficult material early because by 9pm I am not at the top of my game. Needless to say, medical residents are far more stressed and fatigued than teachers. Moreover, while first year residents can work up to 16 hours, second year residents can work up to 24 hours straight and even up to 30! Isn’t it amazing how one year of residency can teach physicians how to function without sleep?
The current standards, which strike me as absurdly low, are actually due to restrictions put in place in 2003 and 2011–restrictions which are now being lifted. The new plan is to allow longer hours for first year residents:
Rookie doctors can work up to 24 hours straight under new work limits taking effect this summer — a move supporters say will enhance training and foes maintain will do just the opposite.A Chicago-based group that establishes work standards for U.S. medical school graduates has voted to eliminate a 16-hour cap for first-year residents. The Accreditation Council for Graduate Medical Education announced the move Friday as part of revisions that include reinstating the longer limit for rookies — the same maximum allowed for advanced residents.
An 80-hour per week limit for residents at all levels remains in place under the new rules.
The main argument in favor of long hours is that the 2003 and 2011 restrictions do not seem to have greatly improved patient safety. That is surprising but the micro and experiential evidence that fatigue makes for mistakes is so strong that the lesson to be drawn isn’t that longer hours don’t lead to mistakes–the lesson is either that the restrictions were routinely ignored (as the National Academy of Science study found), that the studies done to date are misleading for a statistical or design reason or that there is another constraint in the system that needs to be examined. One possibility for another constraint is that handoffs of patients between physicians aren’t handled well. But that means that poor handoffs are killing as many people as fatigue!
In no other field do we tolerate error as much as we do in medical care. Why does the government regulate driving hours more than medical hours? It’s not just the government. It’s amazing that in a society where McDonald’s can be sued for making people fat that the tort system hasn’t shut down absurdly long residency hours (there have been a few cases). Medical care is a peculiar field (cue Robin Hanson).
Aside from Hanson-type factors, a key factor that explains what is going on is that residents are a huge profit source for the hospitals. Much like student athletes, residents are underpaid. As a result, hospitals want to use residents as much as possible so they lobby for longer hours even at the expense of patient safety.
The state of West Virginia has paid for so many burials for indigent people who have died from drug overdoses that the funding has run out five months before the end of the current fiscal year on June 30.
Kitchen said there have been so many drug overdose deaths in West Virginia, it often takes two to three weeks for the state medical examiner to complete the required autopsies. He said families then have the added stress of not being able to carry out a funeral for weeks after a death occurs.
In standard Austrian business cycle theory, artificially low rates of interest, as driven by monetary policy, induce investors to engage in too many long-term activities and overextend the structure of production. A comeuppance later ensues, due to the malinvestments.
I suggest a very different fiscal version of this story. Imagine a government that is perpetually in debt, and with voters who do not like new taxes, if you can stretch your mind that far. There are also some constraints of borrowing. The fiscal policy of this government thus is relatively active when interest rates are low, but contractionary when interest rates are high. When interest payments eat up a smaller share of the federal budget, more goodies are given out.
In other words, with low interest rates, the government does indeed expand its activity, but in a manner oriented toward the present, through the medium of transfer spending. Unlike private entrepreneurs the government is not a profit maximizer and instead it will pursue more votes when it can.
When interest rates eventually rise, money is taken away from transfer recipients and sent back to high-saving bondholders. That is a kind of aggregate demand shock, or in Austrian terminology you could say that the structure of production had been geared too much toward the short term and now that is unsustainable and some adjustment costs will ensue.
The active agent here is government, and lower interest rates bring too much consumption, not too much investment. An eventual reversal again creates some economic disruptions. I think of that as Hayek’s theory in reverse. When you mix that with the standard Hayekian account, I wonder how/whether those two kinds of disruptions interact.
1. Who’s complacent? (no discomfort for those exercising!)
3. I say Mississippi Delta > Bangladesh. Not close. Ask the border guards what they think.
5. My influence on Ryan Holiday (he is too nice to me).
…pay for white Irish women in the UK has outpaced counterpart male salaries since the 2000s, the report said.
The last time I was in Ireland I wasn’t blogging yet. What riches lie here, let’s give it a start:
1. Poetry: I pick Joyce’s Ulysses, then Yeats and also Seamus Heaney, especially if the word “bog” appears in the poem. A good collection is The Penguin Book of Irish Poetry, edited by Patrick Crotty. Beyond the ranks of the super-famous, you might try Louis MacNeice, from the Auden Group, or perhaps Nuala Ní Dhomhnaill, who writes in Gaelic but has been translated by other superb Irish poets into English..
2. Novel/literature: Jonathan Swift: Gulliver’s Travels. One of the very very best books for social science too, and one of my favorite books period. After Joyce, there is also Oscar Wilde, George Bernard Shaw, Samuel Beckett, Lord Dunsany, John Banville (The Untouchable), William Trevor, and Elizabeth Bowen. Iris Murdoch was born in Ireland, but does she count? More recently I have enjoyed Anne Enright, Colm Tóibín, Eimear McBride, Claire Louise-Bennett, with Mike McCormack in my pile to read soon. Roddy Doyle is probably good, but I don’t find him so readable. Colum McCann somehow isn’t Irish enough for me, but many enjoy his work. Can the Anglo-Irish Oliver Goldsmith count? His Citizen of the World remains a neglected work. The recently published volumes of Samuel Beckett’s correspondence have received rave reviews and I hope to read through them this summer. Whew! And for a country of such a small population.
3. Classical music: Hmm…we hit a roadblock here. I don’t love John Field, so I have to call this category a fail. I can’t offhand think of many first-rate Irish classical performers, can you? James Galway?
4. Popular music: My Bloody Valentine, Loveless. Certainly my favorite album post-1970s, and possibly my favorite of all time. When the Irish do something well, they do it really really well. Then there is Van Morrison, Them, Bono and U2, Rory Gallagher, Bob Geldof and The Boomtown Rats, The Pogues, The Cranberries, and Sinead O’Connor, among others. I confess to having an inordinate weakness for Gilbert O’Sullivan. Traditional Irish music would need a post of its own, but it has never commanded much of my attention.
5. Painter: Francis Bacon is the obvious and probably correct choice, but I am no longer excited to see his work. I don’t find myself seeing new things in it. Sean Scully wins runner-up. This is a slightly weak category, at least relative to some of the others.
6. Political philosopher: Edmund Burke, who looks better all the time, I am sorry to say.
8. Classical economist: Mountifort Longfield and Isaac Butt both had better understandings of supply and demand and marginalism, before the marginal revolution, than almost any other economists except for a few of the French.
9. Theologian: C.S. Lewis, you could list him under fiction as well. Here is a debate over whether he is British or Irish. Laura Miller’s The Magician’s Book: A Skeptic’s Adventures in Narnia covers Lewis, one of my favorite books from the last decade.
10. Silicon Valley entrepreneur: Patrick Collison (duh), of Stripe and Atlas, here is his superb podcast with Ezra Klein. Here is further information on the pathbreaking Stripe Atlas project.
11. Movie: There are plenty I don’t like so much, such as My Left Foot, The Wind That Shakes the Barley, Waking Ned, and The Commitments. Most people consider those pretty good. I think I’ll opt for The Crying Game and also In the Name of the Father.
12: Movie, set in: Other than the movies listed above, there is Odd Man Out (quite good), The Quiet Man, and The Secret of Roan Inish, but my clear first choice is the still-underrated masterpiece Barry Lyndon.
The bottom line: The strengths are quite amazing, and that’s without adjusting for population.
Late last month, famine was declared in two counties of the civil-war torn East African country of South Sudan. With 100,000 people at risk for dying of starvation in that area alone and millions more on the brink of crisis-level food shortages throughout the country, South Sudanese President Salva Kiir promised “unimpeded access” to humanitarian aid organizations working there.
A few days later the South Sudanese government hiked the fee for work permits for foreign aid workers from $100 to $10,000.
3. Are living room gigs the future of live music? (noisy video at the link) And are the best LA dumplings to be found in WeChat circles?
4. Who’s complacent?: Jimmy Buffett to launch new chain of Margaritaville retirement homes.
6. The Economist reviews The Complacent Class. And my dialogue with Josh Barro over the book. And thanks to all of you who bought and will buy, I am pleased the book has made #5 on the Washington Post non-fiction bestseller list.
It is not easy to excerpt, so do read the whole thing. But here is the closing bit:
And in any case, momentum depends on a strong, successful push at the start. This could have started better, and it needs to end smarter.
A washing machine has been launched for the Indian market, with a special mode to tackle curry stains.
Panasonic said the introduction of a ‘curry’ button followed complaints from customers struggling to fully get the food off their clothes.
It says development took two years, testing combinations of water temperature and water flow.
The machine has five other cycles aimed at the Indian consumer, including one to remove traces of hair oil.
Net revenues from border adjustment taxes and subsidies will be positive so long as the United States runs a trade deficit. But if foreign debt is not to explode, trade deficits must eventually be offset by trade surpluses in the future. Net revenues that are positive today will eventually have to turn negative. Indeed, any positive net revenues today must be offset by an equal discounted value of negative net revenues in the future.
Suppose that higher border adjustment revenues today are used to decrease other taxes—corporate tax cuts for example—leaving the budget unaffected in the short run. As trade deficits eventually turn into trade surpluses, and thus border adjustment net revenues turn from positive to negative, the other tax cuts it initially financed will still be on the books. Sooner or later, taxes will have to increase, or spending will have to be reduced, to compensate for the shortfall. Just as when the government issues debt, taxpayers get a break now, but they will have to pay off the cost of the debt in the future.
What if the exchange rate does not adjust fully? The story becomes more complicated, but the bottom line is the same. Depending on the demand and supply elasticities of imports and exports, the incidence of taxes will fall partly on US consumers, partly on foreigner producers; the incidence of subsidies will fall partly on US exporters, partly on foreign consumers. In fact, with incomplete exchange rate adjustment, it is plausible that in the short run US consumers will pay more than 100 percent of the net taxes raised—effectively financing a transfer to foreign producers as well. In any case, as trade deficits turn to surpluses, the roles will be inverted. What foreigners paid, they will get back. What US taxpayers received, they will have to give back. In the end, just as for debt finance, whatever tax breaks they got now, they will have to pay for later. On net, again, foreigners will not contribute.
Here is more of interest, self-recommending…
He’s impressed by fracking: “What’s very striking is that on some level I think fracking represents a bigger economic form of progress for our society as a whole than the innovation in Silicon Valley.”
Globalization and Trump: The onstage discussion was light on Trump, but Thiel riffed on what he sees as the political forces at play today. “I think the tide on globalization is just going out in a pretty big way,” he said, noting trends on immigration policy, trade, and more. Asked if Trump’s election was partly a rebellion against globalization, Thiel said he’s “definitely inclined to think of it in those terms.”
A “bull market in politics” has arrived: Thiel credited a colleague for having that view, and said he’s come around to the idea.
“I am not sure this is a good thing, but it is a fact that maybe politics is becoming more important and more intense, the range of outcomes is becoming greater.”
The link has a bit more content.
India is a much more entrepreneurial society than the United States. That may seem surprising since India is poor and we typically associate entrepreneurship with being rich but it’s clearly true. Everyone here is on the make and open to an opportunity. You need to hire someone to fix your wifi or repair a bicycle or make a movie? You can find someone within hours. “Yes, we can do that” is the default answer to any question. Of course, it may have to be done illegally but, subject to that, it can be done. The can do attitude is especially prevalent in Mumbai but it’s true elsewhere in India as well.
Indians are entrepreneurial because they work for themselves. Overall,
95% 80-90% of Indians are self employed compared to just 10% of workers in the United States.* That is perhaps one reason why the National Academy of Science report on immigration found that “Indian immigrants are the most entrepreneurial of any group including natives.”
However, when we reverse the employment statistic–only ~15% of Indians work for a firm compared to approximately 90% of US workers we see the problem. Entrepreneurship in India isn’t a choice, it’s a requirement. Indian entrepreneurship is a consequence of India’s failed economy. As a I wrote in my Cato paper with Goldschlag, less developed countries in general, not just India, have more entrepreneurs,
If we define entrepreneurship as self-employment then there is much more entrepreneurship in poorer countries. People in poorer countries have to be entrepreneurs because there are relatively few jobs, that is to say few employers of large numbers of workers. Moreover, although not all self-employed workers have the skills or temperament for entrepreneurship, the identification of entrepreneurship with self-employment is not a definitional sleight-of-hand. Travelers to less developed economies often are surprised at how much more market oriented, dynamic and entrepreneurial these economies appear to the naked eye. Indeed, tourists are more likely to visit an actual market in a developing economy than they are at home. The visceral hustle and bustle of the town market is a display of real entrepreneurship. The greater familiarity that people in developing countries have with entrepreneurship is likely one reason why immigrants to the US are more than twice as likely to start new firms as are natives (Fairlie 2013).
The problem with developing countries is not that they lack entrepreneurs but that entrepreneurs cannot grow their firms large enough to become major employers.
The modal size of an Indian firm is 1 employee and the mean is just over 2. The mean number of employees in a US firm is closer to 20 but even though that is ten times the Indian number it obscures the real difference. The US has many small firms but what makes it different is that it also has large firms that employ lots of people. In fact, over half of all US workers are employed by the tiny minority (0.3%) of firms with over 500 employees.
Most workers in the United States work for large firms. In India, however, large firms are negligible as far as employment is concerned and that is a huge problem because large firms are more productive. India’s pre and post-colonial history all put barriers in the way of large firms that only recently have begun to fall. In Can Indian Grow?, Anantha Nageswaran and Gulzar Natarajan’s admirably clear and useful summary of the Indian economy, they summarizes some of the key issues:
Before independence, India’s colonial rulers snuﬀed out enterprise by exporting India’s raw materials to nurture businesses in their own countries. The capacity to create and nurture big businesses in the private sector in suﬃcient numbers has never been achieved since the state occupied the commanding heights of the Indian economy in the ﬁrst three decades after independence. Moreover, the post-independence legal and regulatory framework favored small businesses: the production of certain items was reserved for small-scale industries, and labor protection was emphasized rather than eﬃciency and scale. Because of India’s experience of being ruled by a foreign trading company, a suspicion of big businesses still lingers.
As a result, small firms in India don’t grow:
Most Indian ﬁrms start in the informal sector and never grow or, worse, diminish in size over time: according to a 2013 International Finance Corporation study comparing the size of thirty-ﬁve year-old ﬁrms in India, Mexico, and the United States with their size at start-up, in India the size had declined by a fourth, in Mexico the size had doubled, and in the United States the ﬁrms were ten times as large. That is deeply troubling. As ﬁrms age, they are expected to get larger and to employ more people. Since India’s experience is orthogonal to this expectation, something in the Indian business ecosystem is badly broken.
Entrepreneurship, like other factors of production, can be misallocated. India has great entrepreneurs but their hard work, creativity, and risk taking is being wasted building tiny, stunted firms.
* The figure for 95% self-employed seemed high. I checked with the authors and after tracking down the figure they found a slight error. The 95% refers to workers in the informal sector. Most firms in the informal and formal sector are small, however, so the corrected figure is that about 80-90% of Indians are self-employed.