Month: June 2017

The decline of academic book sales

Michael Jubb’s recent report on (UK) Academic Books and their Future (warning ! dreaded pdf format !) — part of the Academic Book of the Future-project — makes for depressing reading.

Matthew Reisz’s piece in Times Higher Education sums it up pretty well: Worst sellers: warning of existential crisis for academic books, as “the number of individual [academic] titles sold rose by 45 per cent, from 43,000 to 63,000” between 2005 and 2014 — but (Nielsen BookScan-tracked sales figures): “show a decline for academic books of 13 per cent between 2005 and 2014, from 4.34 million to 3.76 million annually”. Add it all up, and: “this meant that average sales per title fell from 100 to 60″…

The median is likely lower yet.

That is from Michael Orthofer of Literary Saloon, by the way here is my earlier Conversation with Michael.

A Libertarian Universal Basic Income

Nobel prize winner Vernon Smith (our emeritus colleague at GMU) is a bold thinker. I have long proposed selling “government” land in the West but Vernon takes it a step further, privatize the highway network to create a permanent income fund. Essentially what Vernon is proposing is a libertarian method to fund a universal basic income. Can’t we all agree on that?

Even more than in the United States, there are many countries in the world today where the government holds trillions of dollars assets that are underutilized. Selling those assets to create a permanent income fund would be good for efficiency, liberty and equality.

…[T]he richly interconnected highway network really could be auctioned. Between major highway intersections there are alternative routes that could be auctioned to different bidders, assuring drivers of a choice of toll roads, along with state and local freeway alternatives. That competition would keep tolls affordable.

 Perhaps most important, surface transportation rights of way would be opened to new mass-transit innovations at a time when driverless vehicles are making their entrance. A few autobahns might also compete more effectively with short- to medium-haul airline routes, but you will need to resist airline opposition.

You should also consider auctioning off the Bureau of Land Management’s extensive grazing lands. Better incentives through ownership, or long-term leases, mean better stewardship and innovation. But neighboring farmers and ranchers won’t like the impact on their land prices.

How could you use the money from highway and land sales to benefit all Americans—and improve your own popularity? By creating a new Permanent Citizens Fund, invested in stocks, bonds and real estate world-wide. Every citizen would hold an equal share, with annual dividends paid in cash.

Better highways, more land for productive development plus a permanent fund sending checks to every citizen. A guaranteed basic income financed from public assets waiting to be monetized and put to work. You might even get the progressives’ vote. Have you ever made such a great deal?

If you think it’s pie in the sky, ask an Alaskan. The Alaska Permanent Fund, initiated in 1976 to distribute oil revenue, has a market value I estimate at $72,000 for each Alaskan citizen. Annual dividends began in 1982, when the public corporation that administers the fund cut the first checks for $1,000. Little wonder that Alaska is second among all the states in income equality.

Friday assorted links

1. The integration of economic history into economics.

2. What might we be learning from Google sex searches.  Is a marginal vs. infra-marginal distinction relevant here?  Maybe you search for what you are curious about because you don’t have it at the margin, rather than it being your core desire.

3. What if the Nobel Prize in economics were granted since 1901?

4. Are chess players more rational?

5. Federalism and fiscal capacity.

6. Before the internet.

Why it’s so hard to raise productivity

I am rushing to the airport (Kunming), but here is my (short) debate with Noah Smith on that topic.  Here is my closer:

The sad truth is that American productivity growth was, for the most part, considerably higher in the 1920s and 1930s, a time when most institutions were far worse than they are today, including of course public health. We didn’t even have a National Science Foundation back then. What we did have was a lot of technologies ripe for further exploitation, namely the combination of fossil fuels, electricity, powerful machines and a somewhat freer economy.

Let’s hope the internet and artificial intelligence can lead a new tech revolution, but so far it is looking like a long, tough slog.

A technological history of the White House

A modern central heating system wasn’t installed until Harry S. Truman’s term, but the AC comes first.

Navy engineers built America’s first air-conditioning system in a desperate attempt to save President James Garfield’s life. Garfield was actually on his way to escaping the heat and humidity of Washington when he was shot by an assassin in a train station on July 2, 1881. In her bookDestiny of the Republic: A Tale of Madness, Medicine and the Murder of a President,” Candice Millard describes a contraption comprising a fan pumping air through screens of cheesecloth bathed in ice water. The cooled air was then piped into Garfield’s room, bringing the temperature down to about 80 degrees. Garfield died anyway.


When electricity was installed in the White House in 1891, then-President Benjamin Harrison was so afraid of being shocked that he refused to touch the circular switches controlling the current in each room. Gas lighting was still used in conjunction with electric for some time.

The article, by Gillian Brockell, is interesting throughout.

Automation, transparency, and bad behavior

From my email:

Dear Professor Cowen,
In places with weak institutions or corruption, might we want some workers to be so bad at their jobs that we can rest assured they are at least honest? Here’s my anecdote…
In New York I’m frustrated that uber drivers follow google maps so literally. They go crosstown on major boulevards like 23rd Street or 34th Street like Google Maps tells them to, when everyone knows a sidestreet would be quicker. When my driver’s app was glitching out, it took me ten minutes to persuade him that we were going in the wrong direction because he trusted his phone to the death. In NYC I long for old school cabbies who had the whole grid memorized and knew all the tricks.
But yesterday, I had to take an uber from a remote nontourist area of Sao Paulo to the airport, and I was thrilled that my uber driver was as clueless as I was. I don’t speak a word of Portuguese and I was bewildered by the city’s topography, and one hears about kidnappings and coerced tipping from unsavory drivers occasionally. But because this guy was hopeless without google maps, all I had to do to know I could trust him was to glance at his dashboard-mounted tablet and observe whether he was following the directions. That way, I knew very transparently that we were going to the airport not to his secret lair across town. If he was skilled enough to navigate without aid, his trustworthiness would have been, to my detriment, opaque.
Can this remotely be generalized? In situations where public trust is in question, it’s optimal for some workers to be bad at their jobs if it means that they have to observably rely on external guidance? For example, maybe it’s reassuring that in an airline cockpit, the first officer is relatively inexperienced, because our imagination of the captain’s additional “mentorship” role increases our confidence that things will be done by the book, like in a classroom, as opposed to expediently, like in a normal workplace?
As with my prior emails to you, I hope either that this has been interesting, or that stealing a minute of your attention is not as costly as I fear!
Matt Grossman

My paean to the iPhone after ten years

That is my latest Bloomberg column, here is the closing bit:

Finally, names can be deceiving. The iPhone isn’t fundamentally a phone, even though Steve Jobs himself thought that phone service was the killer app for the product. Instead, it’s an all-purpose communications device, music player, recorder, camera, map, adviser, software distributor and dating-enabler rolled into one. When Siri gets better it will be a companion too. As iPhones and other smartphones became more widespread, the number of phone calls I received declined. No other device has done more to make the phone less necessary. I’ll get your text or email right away.

Maybe that’s what I like about it most of all.

And from the beginning:

First, we’ve learned that, even in this age of bits and bytes, materials innovation still matters. The iPhone is behind the scenes a triumph of mining science, with a wide variety of raw materials and about 34 billion kilograms (75 billion pounds) of mined rock as an input to date, as discussed by Brian Merchant in his new and excellent book “The One Device: The Secret History of the iPhone.” A single iPhone has behind it the production of 34 kilos of gold ore, with 20.5 grams (0.72 ounces) of cyanide used to extract the most valuable parts of the gold.

Do read the whole thing.

What would a market monetarist say?

Many banks and foreign exchange companies outside of Qatar are now refusing to buy Qatari riyals, Doha News has learned.

The change has caught many people off guard. It comes after rating agencies lowered Qatar’s credit rating and put it on “negative watch” amid an ongoing Gulf dispute.

Several residents traveling in Europe, the US and Asia have contacted Doha News saying they have been unable to exchange Qatari currency in the countries they were visiting.

However, not all banks in all countries are affected. Exchanges in Jordan and Lebanon, for example, are still operating normally.

…When contacted by Doha News, the UK branch of the international exchange firm Travelex and the UK bank Halifax Bank of Scotland (HBOS) both confirmed that they were not buying riyals from customers.

The same is true at some U.S., Indian, and Pakistani banks.  Here is the full story from Doha News.

Thursday assorted links

My Conversation with Ben Sasse

Ben was wildly charming and charismatic before the crowd.  My questions tried to get at how he thinks rather than the hot button issues of the day.  Here is the transcript, audio, and video.  We covered Kansas vs. Nebraska, famous Nebraskans, Chaucer and Luther, unicameral legislatures, the decline of small towns, Ben’s prize-winning Yale Ph.d thesis on the origins of conservatism,  what he learned as a university president, Stephen Curry, Chevy Chase, Margaret Chase Smith, and much more.

Here is one bit from Ben:

Neverland and Peter Pan is a dystopian hell. Neverland is not a good place. You don’t want to get to the place where you’re physically an adult and you have no moral sense, you have no awareness of history, you have no interest in the future. Peter Pan is killing people, and he doesn’t really care; he doesn’t remember their names. It’s a really dystopian thing. Perpetual adolescence is the bad thing.

Adolescence is special. We need to figure out how to use adolescence; it’s a means to an end. So that’s what the book’s about.

I am an Augustinian in my anthropology, but Rousseau is a romantic. I think he’s wrong about lots and lots and lots of things, but I think he’s really, really smart. You have to engage him, and you have to engage people who have ideas that are different than yours because you may ultimately be converted to their view, and you need to encounter things that are big and challenging and threatening to your worldview. Or you may sometimes come to believe you’re right and be able to respond to the counterarguments, while your argument will be better. You’ll grow through it, and you’ll become more persuasive to others through it.

So I think Rousseau’s fundamental anthropological understanding of why we feel that things are broken in our soul is, he’s got a reason to blame society for everything we feel is wrong in the world, and I think there’s a lot of brokenness deep inside all of us, and so, that’s the Augustinian versus Rousseauvian sense of what’s wrong.

But I think the Emile is brilliant, both because it forces me to wrestle with ideas that I don’t agree with, or mostly don’t agree with, but I think it’s also just an incredibly good read.

Then there was this:

COWEN: …Might one argue that the more one thinks and writes about sex, the more you’re led to Rousseauian conclusions that a certain kind of constraint will prove impossible, and then one is pulled away further from Ben Sasse–like conclusions.

SASSE: That’s a really fair question. I wanted to stay away from sex 100 percent, and then ultimately I couldn’t do it.

COWEN: There’s three pages in your book about sex.

SASSE: Yeah.

COWEN: And page 33 mentions it once.

You’ll have to read the whole thing to see where Ben took that line of inquiry, his answer was excellent.

The Minimum Wage: Evidence from a Danish Discontinuity

In addition to the Seattle study, another minimum wage paper crossed my path this week and it takes a very different approach than much of the literature. In Denmark the minimum wage jumps up by 40% when a worker turns 18. Thus the authors, Kreiner, Reck and Skov, ask what happens to the employment of young people when they hit their 18th birthday? Answer: employment drops dramatically, by one-third.

A picture tells the story. On the left is measured wages by age, the jump up due to the minimum wage law is evident at age 18. On the right is the employment rate–the jump down at age 18 is also evident as is a bit of pre-loss as workers approach their 18th birthday.

The authors have administrative data covering wages, employment and hours worked for the entire workforce of Denmark so their estimates are precise.

Denmark has laws making age discrimination illegal but these do not apply when a young person turns 18 and firms may legally search for under or over-18 age workers.

A variety of restrictions mean that under-18 age workers can do less than adults (e.g. they can’t legally lift more than 25 kilos or have a driver’s license.) Thus, productivity increases at age 18, making the employment loss at this age even more dramatic.

The authors can’t tell for certain if workers are quitting or getting fired but there are few other obvious discontinuities around exactly age 18. Students are eligible for certain benefits at age 18 but the authors are able to look at sub-samples where this objection doesn’t apply and the results are robust.

In a section of the paper that adds important new evidence to the debate, the authors look at the consequence of losing a job at age 18. One year after separation only 40% of the separated workers are employed but 75% of the non-separated workers are employed. Different interpretations of this are possible. The separated workers will tend to be of lower quality than the non-separated and maybe this is correlated with less desire to have a job. Without discounting that story entirely, however, the straightforward explanation seems to me to be the most likely. Namely, the minimum wage knocks low-skill workers off the job ladder and it’s difficult to get back on until their skills improve.

Hat tip: Ben Southwood.

Can you make twenty-year-old rum in six days?

Via Samir Varma, this Wayne Curtis piece is one of my favorite essays this year, furthermore shades of Knut Wicksell’s wine aging model.  What are the problems with asynchronous, and to what extent can producers move closer to simultaneity?  Might such a transition sometimes be impossible at any cost?

The piece is hard to excerpt, but here is one fine sentence:

Yet somehow that business model is not so idiotic that it keeps people out of the industry.

If I handed out Sidney Awards as does David Brooks, this would get one from me.

Does the UK need a second Glorious Revolution?

That is the topic of my latest Bloomberg column, more or less, here is one bit from it:

That leaving is so difficult, however, may in part explain the desire to leave. In the most sophisticated cases for Brexit, there is no acceptable resolution to the negotiating dilemmas. Rather many Brexiteers think their nation’s culture and legal system need to take their own courses. For better or worse, they think England in particular simply can’t become that much more “continental.” What appeared to be a wonderful deal — free trade but no euro — actually was viewed as a Trojan horse for the disappearance of British uniqueness. Over time the encroachments of EU law and governance will clash more and more with the underlying institutions and culture of the U.K., and something will have to give. Law and culture eventually must prove congruent, but EU legal and bureaucratic powers will inevitably grow, ultimately clashing with the notion of Britain as an idiosyncratic and independent nation. Culture and law cannot remain so separate forever.

I have myself been strongly pro-Remain, but I don’t dismiss the Leavers as a bunch of ill-informed voters or hapless victims of globalization. Counterintuitively, it is the supposedly undereducated Leavers who have the more theoretical and historical perspective. It doesn’t help that they initially were promised a much weaker set of ties with the EU, and so mistrust makes all of the complaints more potent.

On top of all this, many Brexiteers suspect there won’t be any better time to leave than now, and so “Remain” is for them an impossible stance over the longer run. Returning to history, ejecting James II seemed risky and destabilizing at the time, but for the most part the decision wasn’t regretted and it was better not to have hesitated.

Do read the whole thing.