Month: May 2017
American hinterlands fact of the day
…the most egalitarian places, like Utah, tend to be largely Trump-friendly. Among the 10 states (and D.C.) with the most income inequality, seven supported Clinton in 2016, while seven of the 10 most equal states supported Trump.
That is from Joel Kotkin, acerbic throughout.
Sunday assorted links
African manufacturing facts of the day
Several African countries have tried in the past to become tailors and cloth-makers to the world. Nigeria’s northern cities of Kaduna and Kano were once home to textile mills that employed 350,000 people. Yet these factories are now rusting, and employ perhaps a tenth of that number.
This mirrors a wider trend. In 1990 African countries accounted for about 9% of the developing world’s manufacturing output. By 2014 that share had slumped to 4%.
That is from The Economist.
My two favorite books about management, ever
They are:
Johnny Rogan, The Byrds: Timeless Flight Revisited, The Sequel, get the full-length edition, not the much shorter 1980 volume.
Chris Twomey, XTC: Chalkhills and Children.
…in addition to the very recent Dreaming the Beatles, which I just reviewed.
NB: These are music books and I am not even recommending them to most of you. These books only make sense if you already know a good deal about the careers of the artists involved.
Here is my advice on how to find excellent management books and management advice: pick some areas you know fairly well, be it music, sports, military campaigns, a scientific discovery, the making of a historic plane flight, or whatever. Read a very detailed book about that. Think through the lessons of that book(s). Unfortunately, books about corporations so often filter their management information through homilies, hidden agendas, NDAs, ego boosts, paybacks, and other forms of…bullshit. Music and sports books won’t, as they are too concerned with other kinds of stupid filters. But you will get the lowdown on management for the most part.
There are some special reasons why I find the Byrds and XTC fruitful areas for reading for management advice, above and beyond my knowledge of the history and the musical content. Neither group was massively profitable in a sustained manner, though they had their successes. The two histories contain both triumphs and some major mistakes. The main creators worked very consistently at their music for decades, and were not afraid to take chances or to operate with a long time horizon. Nor did they destroy themselves, even though they were fatally flawed as creators. Both histories are also studies in small group dynamics, including their eventual collapse; the Byrds are more a story of changing personnel and its costs. Both histories embody tales of retreat and also return, and an ongoing evolution of styles and media. Both stories have (relatively) happy endings, but only for those who kept at work rather than partook in indulgences. Those features may or may not apply to your own personal circumstances, choose your management books accordingly, but I those kinds of stories more interesting than say books about the Rolling Stones.
If you can find books such as these, they are among the most valuable you will read. Yet it is very hard to find them through recommendations, given the idiosyncratic nature of the content and its relevance. Of course that is precisely why they have such high marginal value.
Informal dress and social mobility, a Sicilian perspective
Roberto emails me:
There is another aspect that corroborates your theory on how casual dress is somehow connected to less mobility. Dressing in a casual but very good way is economically and “socially” expensive. When I was a young associate at the biggest law firm in Rome, casual friday was the time when my Sicilian provincial middle-lower class background was most transparent. I didn’t have the money for smart but impressive casual clothing. But above all I didn’t have the cultural and social capital to know how to dress casual in the right way. My casual dressing was made of nerdy, unfashionable and cheap clothes: you could immediately say that I haven’t accomplished anything. And I didn’t even know that there was a “rich” way to dress casual. A decent suit and tie is not that expensive but, above all, is socially and culturally accessible in a very easy, standard and replicable way.
Perhaps this is a problem that affects women more seriously than men, exactly for the same reason: women’s formal clothing is not as standard and replicable as men’s. For women, even formal business dressing reveals a lot of background.
Saturday assorted links
1. My Cato podcast on The Complacent Class. And Ben Sasse on how to raise an American adult. I am excited to read Ben’s forthcoming book.
2. The Korean balancing artist video (those new service sector jobs).
3. Peter Coy profile of Peter Navarro.
4. Michelle Dawson to become a knight (chevalière).
5. Indian barber cuts customers’ hair with fire (video at link with story).
Music markets in everything
Over the past eight years, Scarlatti (a pseudonym he uses to keep his avant garde hobbies separate from his straight career), his brother (aka Ancient Pine), and a childhood friend who records under the name Pendra Gon, have been countering music’s increasing ease of availability by releasing recordings on formats intentionally designed to be difficult—or even dangerous—to play: Albums with ink screenprinted over the grooves. CD-Rs that have been made into air fresheners by having herbs glued all over them. Cassettes covered in shards of actual broken glass. (Scarlatti says his two partners are largely uninvolved in Auris at this point.)
“It never really started as a record label,” Scarlatti says. “It started kind of as a weird idea about releasing music that you couldn’t listen to or purchase. We never really could manifest a logical way to implement that, which is why it sort of evolved into the label. I guess it was more of an absurdist digital performance art, is what the idea was.”
Absurdity—specifically a kind of surly noise-geek strain of neo-Dadaism—runs through all of Auris’s “anti-releases.” For a recent cassette by LATHER, who constructs noisy arrangements out of piles of broken electronics, they removed the teeth in the tape’s reels, rendering it unplayable. A sold-out tape by Unholy Triforce called Some Assembly Required came in the form of a kit that a listener would have to assemble before playing. Scarlatti released one of his own compositions as a length of unspooled magnetic tape.
Here is the full story, via Ted Gioia.
What I’ve been reading
1. Michael J. Klarman, The Framers’ Coup: The Making of the United States Constitution. Excellent author, the chapters on the time period before the Constitution are good enough to make the “best books of the year list,” the rest is a much above-average summary and distillation, but of more familiar material. At 880 pp. of clear, limpid, and instructive prose, it is a winner in any case.
2. W.H. Auden and Louis MacNeice, Letters from Iceland. More of a mutual travelogue, with alternating contributions, than a series of letters, one learns that even in 1936: “There is little stigma attached to illegitimacy. Bastards are brought up on an equal footing with legitimate children of the family.” Furthermore, “All chocolate or sweets should be bought in London.” During the trip they run into Goering, yes the Goering.
3. Richard A. Posner, The Federal Judiciary: Strengths and Weaknesses. This is a grumpy book, but I don’t mean that in a grumpy kind of way, as I like many grumpy books: “The dominant theme of this book has been judicial standpattism — more precisely, the stubborn refusal of the judiciary to adapt to modernity.” By the end, Posner gives the federal judiciary a grade between B and B+, I was surprised it was so high.
4. Duff McDonald, The Golden Passport: Harvard Business School, the Limits of Capitalism, and the Moral Failure of the MBA Elite. “In the early 1920s, HBS was still without its own buildings at Harvard, faculty were crammed together in cramped offices, and classrooms were scattered around Harvard Yard.” This is a remarkably clear and engaging survey of its subject matter, the main drawback being it never explains the rise of HBS in terms of…management, as HBS itself might do so. There is thus an odd cipher at the book’s core, plus from the discussion of Michael Jensen onward, the book descends increasingly into ad hominem attacks and unfair moralizing. This volume is an odd mix, but still worth reading for its contributions.
Stephen Ellis, This Present Darkness: A History of Nigerian Organized Crime, is one of the better books on that country: “…there are even private colleges in Lagos offering courses in credit card fraud and advance-fee fraud.”
Hugh Nibley, Approaching Zion, is a series of essays on society and theology from one of the Mormon “grandmasters.”
After Piketty: The Agenda for Economics and Inequality, edited by Heather Boushey, J. Bradford DeLong, and Marshall Steinbaum, collects many essays on the Piketty book and also on the topic more generally.
Shahab Ahmed, Before Orthodoxy: The Satanic Verses of Early Islam, “…the early Muslim community believed almost universally that the Satanic verses incident was a true historical fact.” Ahmed, a brilliant scholar at Harvard, passed away in 2015, here is a short appreciation. If they wrote books for me, someone would be working on “Islam and Strauss” right now.
Friday assorted links
1. Since the election, ETF of clean energy stocks up 11%, ETF of coal-related stocks down 2% — oh, how some of you bore me!
3. My Knowledge Wharton podcast on The Complacent Class.
4. Is some U.S. productivity being stashed overseas?
5. “The day China sees true deleveraging is the day a financial crisis begins.”
The show so far, a continuing series
In my view, the Republicans have had a very weak hand to play on health care (not enough good ideas!), but over the last week they have played it brilliantly (which is not the same thing as having good policies). Those House members who need to say “I voted to repeal Obamacare” can now do so. The Republicans also have an option on proceeding further with reform, with everyone knowing the Senate will write its own bill. The defects of what they voted for are not so significant for this reason, and the cavalier attitude of many House Republicans toward the contents of the bill makes perfect sense.
At the same time, the Republicans have the option of letting the bill die in the Senate, where it is far easier to blame the Democrats for inaction — how many American swing voters understand the fine points of the Byrd rule and filibuster anyway? If you are what I call a “fulminating Democrat,” you are actually playing into Republican hands on this one (it would have been better to have spent the week saying abortion should be legal but rare, and talking about white people).
The big victory celebration pleased Trump, but more importantly all Republicans involved learned there is a way forward on many other issues: let Congress lead the way and pull Trump out of the bully role. That lesson won’t soon be forgotten. And from Trump’s point of view, he hasn’t given up the option of later working with the Democrats to pass a more centrist version of health care reform.
I don’t see the broader American public as so impressed with the Democrats’ arguments against the bill, mostly because they are not paying attention. It doesn’t feel like it has the urgency of when Obamacare was passed, and in fact it doesn’t. No one succeeded in showing it did, because it didn’t.
I still see the Republican House majority as extremely fragile, but on this one I believe the Democrats got pwned.
How would an implosion of cable revenue affect the NBA?
That is the topic of my latest Bloomberg column, here is one bit:
The decline of TV revenue is not the same as a decline of interest in the sport. NBA basketball is alive and well; it’s just that more people are cutting the cord on cable. They still might follow the NBA through its website, or watch highlights on YouTube, or share gifs on Twitter.
That shift is likely to favor the stars and the most athletic players, because they are more likely to be featured in very short clips. As for the incentives, player salary will matter less, and the desire to become famous on the internet — and thus win lucrative endorsement contracts — will discourage team play. Expect more attempts to produce spectacular sequences, even if that doesn’t always translate into wins. “Boring” but fundamentally sound teams — which are better to watch for a 2.5 hour game — will be disfavored by this trend. Sorry, San Antonio!
Here is another:
Another possibility is that the NBA will consolidate with fantasy basketball and video gaming to augment their revenue. The NBA already has plans to introduce an e-sports product. More speculatively, if more states legalize sports gambling, the league could enter into a revenue-sharing agreement with casinos or bookmakers. Imagine redesigning the playoffs to maximize the number of decisive games and thus boost betting interest — that could mean more but shorter playoff series. At least the fantasy component of such a basketball conglomerate might redistribute some of the attention back to players who are not superstars. Gamblers also tend to be well-informed about the teams they bet on, so this direction could encourage a smarter NBA, better designed for the nerds and fanboys.
Do read the whole thing.
How much do people value health insurance?
There is a new and very good paper on that question by Amy Finkelstein, Nathaniel Hendren, and Mark Shepard (pdf). In reality, the price elasticity of demand for health insurance is quite high, at least among lower-income groups:
How much are low-income individuals willing to pay for health insurance, and what are the implications for insurance markets? Using administrative data from Massachusetts’ subsidized insurance exchange, we exploit discontinuities in the subsidy schedule to estimate willingness to pay and costs of insurance among low-income adults…For at least 70 percent of the low-income eligible population, we find that willingness to pay for insurance is far below the average cost curve – what it would cost insurers to provide coverage to all who would enroll if the premium were set equal to that WTP. Adverse selection exists, despite the presence of the coverage mandate, but is not the driving force behind low take up. We estimate that willingness to pay is only about one-third of own costs; thus even if insurers could offer actuarially fair, type-specific prices, at least 70 percent of the market would be uncovered.
That is from both the abstract and conclusion. I do understand the ideal of universal coverage, but note this:
For example, we estimate that subsidizing insurer prices by 90% would lead only about three-quarters of potential enrollees to buy insurance.
The somewhat depressing and underexplored implication is that the beneficiaries do not love Obamacare as much as some of you do. In fact you may remember a result from last year, from the research of Mark Pauly, indicating that “close to half” of households covered by the unsubsidized mandate, by the standards of their own preferences, would prefer not to purchase health insurance. And that was before some of the recent rounds of premium increases, and overall these new results seem to imply even lower demands for health insurance relative to cash.
Now, I think it is an open question how much “non-paternalism” is the correct moral stance here. Maybe we should force upon people more health insurance than they would purchase in an adverse selection-free market, because a) they are ill-informed, b) they have children, or c) ex post we still need to take care of them in some way, if indeed their gamble to not purchase insurance turns out badly.
Do, however, note the words of the authors: “We conclude that the size of uncompensated care for low-income populations provides a plausible explanation for their low WTP.” In other words, many of the poor do not value health insurance nearly as much as many planners feel they ought to, in large part because they are already getting some health care.
In any case, consider a political economy point if nothing else. If you institute a policy that forces on people more health insurance than they think they wish to buy, do not be shocked if a huckster comes along offering them a supposedly better deal, and gets away with it.
Along related lines, consider also this result:
From the perspective of social welfare, to justify connecting the 5% least dense areas of North Carolina would require each adopting household value high speed wired broadband access at more than $1519 per month.
For the pointers I thank Peter Metrinko and Kevin Lewis.
William Baumol has passed away
He was one of the greatest of living economists, with contributions in numerous areas, including productivity, economics of the arts, contestable markets, environmental economics, and entrepreneurship theory. Here are previous MR entries on Baumol and his ideas.
Claims about American smiles
It turns out that countries with lots of immigration have historically relied more on nonverbal communication—and thus, people there might smile more.
For a study published in 2015, an international group of researchers looked at the number of “source countries” that have fed into various nations since the year 1500. Places like Canada and the United States are very diverse, with 63 and 83 source countries, respectively, while countries like China and Zimbabwe are fairly homogenous, with just a few nationalities represented in their populations.
After polling people from 32 countries to learn how much they felt various feelings should be expressed openly, the authors found that emotional expressiveness was correlated with diversity. In other words, when there are a lot of immigrants around, you might have to smile more to build trust and cooperation, since you don’t all speak the same language.
People in the more diverse countries also smiled for a different reason than the people in the more homogeneous nations. In the countries with more immigrants, people smiled in order to bond socially. Compared to the less-diverse nations, they were more likely to say smiles were a sign someone “wants to be a close friend of yours.” But in the countries that are more uniform, people were more likely to smile to show they were superior to one another. That might be, the authors speculate, because countries without significant influxes of outsiders tend to be more hierarchical, and nonverbal communication helps maintain these delicate power structures.
That is from Olga Khazan, file under “speculative”! Via Conor Sen.
Thursday assorted links
1. Elida Almeida music video from Cape Verde.
2. Andrew Sullivan on neo-reaction:
Among many liberals, there is an understandable impulse to raise the drawbridge, to deny certain ideas access to respectable conversation, to prevent certain concepts from being “normalized.” But the normalization has already occurred — thanks, largely, to voters across the West — and willfully blinding ourselves to the most potent political movement of the moment will not make it go away.
Here is the longer piece, of interest throughout, here is good commentary from Rod Dreher. And here is Henry on Trump through the lens of Polanyi.
3. “Man pays tribute to friend by flushing remains down 17 MLB ballpark toilets…Tom McDonald says gesture is fitting for his friend, who was a plumber.” Link here.
4. School segregation is back.
5. Those new service sector jobs: “Facebook says it will hire another 3,000 people to review videos of crime and suicides following murders shown live.”
6. A Master’s degree for 7k? (NYT)
7. A new project from Russ Roberts: “My latest econ education project is It’s a Wonderful Loaf: http://wonderfulloaf.org. It’s about the emergent order that is the market for bread. It’s an animated and annotated poem plus resources to learn quite a bit about emergent order if you want to go deeper.”