Month: April 2017

Shall we make life easier yet?

Frictionlessness encourages bad habits. For those who resent the time suck of 1-click ordering, Domino’s has pioneered “zero-click” pizza-buying. Simply open the app and, after ten seconds, it automatically places a pre-set order. Domino’s competitors are working on a “direct-to-mouth” drone-delivery service that will send individual slices of pizza into your home via an electronic flap. Pizza experts are seeking ways around the “chewing bottleneck”.

Payments are also subject to facile externality. Three in five Britons say they spend more with a wave of the plastic than they would with cash. Ordering goods using Alexa, a voice-activated assistant, is as easy as saying its name. Tech firms are working on gesture-controlled devices that could enable payments with just a furtive glance of desire.

That is from The Economist, and the pointer is from Tyro.

In defense of northern New Jersey

John V. writes to me:

In your podcast with Ezra Klein, you said your number 1 rule for growing up in New Jersey is “Leave”. I’d encourage you to modify the rule to “Leave…but then Return!”

I grew up in Morris County, lived in the San Francisco area for 10 years after college, and moved back to NJ 3 years ago. I now live just a few towns over from where you grew up in Bergen County.

A few observations from my time back here:

1. More Affordable Than You Think

Given the access to labor markets and the available cultural amenities, Northern New Jersey is surprisingly affordable. It’s still possible to find a reasonable home in a reasonable location for ~$200k, which is close to the national median.

I lived in Palo Alto for most of my time in California. The cheapest 4-bedroom house in Palo Alto right now is $2.6M (https://www.redfin.com/CA/Palo-Alto/687-Florales-Dr-94306/home/1666194).

I live in what is perhaps the most “Palo Alto-like” of Bergen County towns, and my 4-bedroom house cost over 3x less and is almost 2x larger than the Palo Alto house above. I also can walk to the train, a Whole Foods, library, YMCA, town pool, third-wave coffee shop, etc. Not too shabby for the price!

Here’s a nice 4-bedroom house on a 1/3 of an acre for under $500k with a Walk Score of 83, train access to NYC, and good schools:
https://www.redfin.com/NJ/Westwood/363-Kinderkamack-Rd-07675/home/35886002
https://www.walkscore.com/score/363-kinderkamack-rd-westwood-nj-07675
http://www.greatschools.org/new-jersey/westwood/

Yes, property and income taxes are high, but isn’t that really just a form of consumption?

2. Quick Access to World-Class Everything

Some travel time anecdotes from my house:
– 35 minutes to Lincoln Center or Central Park on a Saturday
– 20 minutes to this water fall: http://www.teterboro-online.com/images/scenic/falls1/falls02.jpg
– Just over an hour to this beach: https://i.ytimg.com/vi/lpET7nMihwo/maxresdefault.jpg

The food is good too!
– Korean: http://www.saveur.com/korean-food-restaurants-fort-lee-nj
– Hot Dogs: http://www.seriouseats.com/2010/08/hot-dog-of-the-week-rutts-hut.html
– Turkish Bread: http://www.saveur.com/taskin-bakery-turkish-paterson-nj
– Sliders: http://www.seriouseats.com/tags/white%20manna
– Colombian: https://www.yelp.com/biz_photos/villa-de-colombia-hackensack?select=1qyI6IIONUaXi0673YgkkA

3. Extremely Diverse Middle-Class

Want to see what a successful American future could look like? Go here on a Wednesday or Saturday afternoon: https://en.wikipedia.org/wiki/Westfield_Garden_State_Plaza

Things you’ll see and hear: Five or six different languages being spoken. Russian grandmothers going for a walk. Packs of teenage girls wearing Hijabs. Orthodox Jewish moms pushing strollers. And many more groups, all reflecting the diversity and success of the surrounding towns:
https://en.wikipedia.org/wiki/Bergen_County,_New_Jersey#Community_diversity
https://en.wikipedia.org/wiki/Passaic_County,_New_Jersey#2010_Census

Northern New Jersey has undergone a lot of ethnic change and international immigration over the last 30 years. There are problems of course, including plenty of segregation. But it’s still working pretty well. The rest of the country could learn a thing or two.

Saturday assorted links

1. Did migration of the non-complacent to America help make Scandinavian social democracy stable?  And Free Exchange on parties and pies.

2. Powers and abilities of Superman.

3. “Turns out that when you live with a federal symbol up close and personal, day in and day out, it’s a little harder to think of them as majestic. Bald eagles show up in the local police blotter alongside reports of drunk fishermen passing out in the wrong bunk or taking off in someone else’s forklift.”  Link here.

4. “At 180 grams, Goslow’s egg might be the heaviest on Canadian record…The record for the heaviest chicken egg in the world was reportedly laid by a hen in New Jersey, USA in 1956. That egg was 454 grams.”  Link here.

5. Video on the Nigerian bobsleigh team.

Iron Fist is Weak

Iron Fist, the latest Marvel-Netflix, superhero show, is by far the weakest. [Mild spoilers] The show has been accused of cultural appropriation because it casts a white actor rather than an Asian as a kung-fu superhero (Iron Fist is also white in the comic book but those were unenlightened times). I could live with that if the white actor actually fit the role. Unfortunately, lead actor Finn Jones, whatever his other talents, doesn’t look imposing or powerful. Bruce Lee wasn’t a big guy but he was ripped and you could see at once that despite his charm you didn’t want to mess with this guy. In contrast, Danny Rand, as portrayed by Finn, is a sniveling, crying, whining child who can’t get over the death of his mommy. Despite having supposedly been subjected to beatings, deprivation, and fifteen years of intense martial-arts training, Rand shows none of the hardness that surviving, let alone thriving, in such an environment produces. His fist may be iron but nothing else is.

The fight scenes with Jones are, with one exception, lackluster. The exception is a fight between the Iron and Drunken fist. Drunken Fist (Zhou Cheng) portrayed by Lewis Tan steals the scene. Not only does he clearly give Iron Fist a beat down (despite the nominal outcome) he does so with humor, intelligence and charisma. Watching this scene you cannot help but think, heh, they should have made Lewis Tan the Iron Fist. In fact, Tan was considered for the role! Ironically, after meeting Danny Rand, many characters ask, “Why did this guy get chosen to be the Iron Fist?” It’s a very good question.

https://youtu.be/EB30OV6VXGU

The politics of Iron Fist are also annoying. Danny Rand inherits a powerful firm and in one of his first acts as owner he forces it, over the objections of the board, to sell its new drug at cost. What a sweet guy. Blech! The show does give some pretty good arguments for why this is a bad idea–namely it will reduce R&D and because of subsidies from charities and governments the drug will in any case go to everyone who needs its–so you could give Iron Fist a Straussian reading but I don’t give the writers that much credit.

The most serious failing of Iron Fist is that it breaks the cardinal rule: superheroes need supervillains. Outstanding performances by Vincent D’Onofrio as Kingpin and David Tennant as Kilgrave made for riveting conflict in Daredevil and Jessica Jones respectively.  Luke Cage disappointed for its lack of a supervillain. Iron Fist is even worse as it jumps from villain to villain to villain, none of whom are especially super and some of whom are not even all that villainous.

The “hand” are supposed to be the supervillains but they come in (of course) right and left versions. The “left” hand are drug dealers and assassins. But the motives, actions, and consequences of the right hand are difficult to see. Although it’s not clear how the hand operates, their leader makes a case that their actions improve society. The Iron Fist almost joins the hand until he discovers that they have a bunch of computers and surveillance equipment. Then he and sidekick Colleen Wing go on an all out killing spree. What??? I’m no fan of the NSA but surveillance isn’t necessarily evil, Batman also had his sources of information. Iron Fist, however, has difficulty controlling his anger. He acts rashly and with little thought. He sees the world in childish ways. His actions often have unintended consequences and that is why in any battle between the Iron Fist and the invisible Hand, I will take the invisible Hand.

Excerpt from my chat with Ezra

Here is one bit, from the rapid fire back-and-forth:

Ezra Klein

The rationality community.

Tyler Cowen

Well, tell me a little more what you mean. You mean Eliezer Yudkowsky?

Ezra Klein

Yeah, I mean Less Wrong, Slate Star Codex. Julia Galef, Robin Hanson. Sometimes Bryan Caplan is grouped in here. The community of people who are frontloading ideas like signaling, cognitive biases, etc.

Tyler Cowen

Well, I enjoy all those sources, and I read them. That’s obviously a kind of endorsement. But I would approve of them much more if they called themselves the irrationality community. Because it is just another kind of religion. A different set of ethoses. And there’s nothing wrong with that, but the notion that this is, like, the true, objective vantage point I find highly objectionable. And that pops up in some of those people more than others. But I think it needs to be realized it’s an extremely culturally specific way of viewing the world, and that’s one of the main things travel can teach you.

There is much more at the link, entertaining throughout, with links to the full podcast as well.

Problems with destination-based corporate taxes and the Ryan blueprint

That is a recent paper by Reuven S. Avi-Yonah and Kimberly Clausing.  It has content throughout, but this struck me as the most interesting section:

1. A U.S. pharmaceutical with foreign subsidiaries could develop its intellectual property in the United States (claiming deductions for wages, overhead and R&D), and then sell (i.e., export) the foreign rights to its Irish subsidiary (at the highest price possible). The proceeds would not be taxable. Ireland would allow that subsidiary to amortize its purchase price. This creates tax benefits in each jurisdiction by reason of the different regimes. If the Irish subsidiary manufactures drugs, the profits could be distributed up to the U.S. parent tax-free under a territorial system. If the Irish subsidiary is in danger of becoming profitable for Irish tax purposes, the U.S. parent would just sell it more IP.

2. If an Irish parent owns a U.S. subsidiary, the Irish parent can issue debt to fund the purchases of the IP. The U.S. subsidiary then invests the cash to generate more IP (expensing all equipment and deducting all salaries) and sells the IP to its parent.

3. If an Irish parent has purchased the U.S. IP rights, it would not want to license the rights to the U.S. subsidiary (income for Irish parent under Irish tax law and no deduction for U.S. subsidiary). So it just contributes the rights to another U.S. subsidiary. Could the U.S. subsidiary amortize the parent’s basis under the Blueprint? When one U.S. subsidiary licenses to another, no net tax would be paid. Any royalties would be taxable to the licensor but deductible for the payor.

4. How does the Blueprint work for services? If a U.S. hedge fund manager provides services to an offshore hedge fund, is that considered an export that is tax exempt? What if the U.S. manager develops a trading algorithm and sells it (or licenses) it to an offshore hedge fund? Are the proceeds and royalties exempt? If so, then the hedge fund becomes a giant tax shelter to the manager, because he would not pay 25% on this income–he would pay zero, with no further tax. This is much better than the current carried interest provision, which has attracted bipartisan condemnation because it enables individuals with income of many millions to pay a reduced rate. The Blueprint result is much worse.